With the recession unfortunately still going strong, how folks are saving money seems to be the #1 topic of conversation. Our family has been trimming expenses since at least the Fall of 2007, and we have done an outstanding job! We are in a better financial position than we’ve ever been, although like everyone our retirement savings have been decimated. Because we are not looking to retire for more than 20 years, we will be patient and wait for the market to recover.
Here are some of the things we’ve been doing to navigate this recession. If there are ways YOU are saving money, please add a comment and share!
1. Budget. We have a monthly budget and we stick to it. This helps us ensure we are not spending more than we are taking in. This is such an important concept – if you are spending more than you earn you are heading toward financial crisis. Therefore, it is important to know exactly how much income you bring in each month and how much you are spending. And we pay ourselves! Savings and investments are included in our budget.
2. Emergency Fund. We’ve built up an emergency fund that will cover more than a year of living expenses. Most financial experts recommend at least 6 months, but in this environment we are tucking away well more than 6 months worth of savings. Actually, like a lot of people we are tucking away all that we can!
3. Credit Cards. We use only 1 debit card and 1 credit card. Period. On our 1 credit card 2% of what we spend goes into our kids’ 529 college saving plans. And we pay the balance off every month without exception. Two things with credit cards – keep it simple and don’t carry debt if you can.
4. Mortgage. Like most people, our mortgage is our biggest expense. First of all, we bought a house we could afford and locked in a very good 30-year fixed rate some time ago. However, we look at current interest rates weekly, and check in regularly with our mortgage broker to see if there are opportunities for us to refinance at a lower rate.
5. Energy/Fuel. Last summer when gas was over $4.00, both my husband and I carpooled to work most days. And I tried to work from home when I could. We also took advantage of the gas savings program from Price Chopper purchases. Often times we saved at least $.90 a gallon! We use heating oil, and that meant being diligent about shopping around for the right price. We are on an automatic delivery program, and after every oil delivery we called the oil company to discuss the price we were charged for the oil. EVERY TIME we were able to score the current market per gallon rate if better.
6. Home Improvement/Maintenance. Our home is our most valuable asset, and we have therefore been diligent about keeping up with home maintenance. This is something I don’t think you should sacrifice. We work it into the budget, and we do most of the work ourselves. Often times our neighbors help too. We have delayed any major home improvements, focusing more on smaller projects that will help us maintain our home’s value.
7. Cars/Maintenance. We have two cars that are paid for, and we are delaying buying anything new. Sorry GM an Chrysler. And car maintenance is another one of those things you don’t want to scrimp on because it will cost you in the end. My husband does much of the maintenance himself which helps a lot. And we use coupons!
8. Groceries and Household Expenses. Without question, I have slashed our grocery and household expenses in half using the strategies I blog about every day. I was always good with coupons, but got incredibly serious and very disciplined. Cutting our grocery and household expenses has probably made the biggest dent in our overall savings strategy. I’d guess we are saving at least $500/month, which is $6,000 per year!
9. Utilities. We review every utility expense over and over, and have cut where we can. We are keeping the heat down and running our appliances much less. And we have managed to cut our electricity usage significantly by just shutting things off and unplugging!
10. Cell Phones. We have two cell phones, and we simply buy our minutes. No monthly plans, no bills. We each pay maybe $50-$75/year. I don’t begrudge folks with the blackberries and IPod Touch phones and big monthly bills. At the end of the day we each choose where we want to allocate our dollars.
11. Holidays. With four kids and a large extended family, Christmas is one of my biggest expenses. It is a year-round project for me. I make up my Christmas list in early January, and I shop the sales all year. I buy my Christmas cards in March online at a deep discount. I stock up on all my Christmas wrapping and decorating necessities right after the holiday at 75% off. I do the same after Valentines Day, Easter, etc. I hit the 75% sales and store the goods in plastic bins for next year.
12. Clothing. Spending on clothing is one of my biggest weaknesses. I shop a lot for my kids. However, I do buy all of their clothes, coats, boots, shoes at the end of the seasons and store for the next year. I keep two bins for each child, and store Spring/Summer and Fall/Winter clothing in each bin. I have all of their spring and summer clothes already purchased, and right now I am hitting the 70% off sales to stock them up for next Fall/Winter. I’ve also let friends know that I need clothes, and they are more than happy to get rid of them! In return, I have so many kids clothes that I give to friends and family. Yeah, I know some people sell on Ebay to make a little $$ which is fine, but I’d rather help out someone I know.
13. Retirement Plans. Sure, we’ve lost a ton of money in this market downturn. However, we have continued to contribute to our 401(k) plans. We capture our employer’s company matches, and we are purchasing shares at a deep discount. Because we are not retiring for more than 20 years, we will ride out this downturn and hopefully benefit from the eventual upswing.
14. College Savings. Like our retirement plans, we are absolutely continuing our contributions to our 529 college savings plans. This is pretty much the same deal as our retirement plans, although our kids will need their money a bit sooner (our kids are still very young). I still believe 529 plans are one of the best ways to save for college and we are disciplined with our contributions. Also, 2% of what we spend on our credit card goes into the college funds so that’s a boost. And, we do take advantage of the benefits of the UPromise plan; I have all our store and credit cards registered and I get money back on what I purchase.
15. Taxes. In these difficult economic times, your accountant can be your best friend. I am no tax expert, but I knew enough to schedule a consultation with our accountant to make sure we were putting ourselves in the very best tax situation. Consulting with a good accountant, tax advisor or financial advisor can be the best money you spend.
16. Dining Out. While we probably dine out a little less than we used to, we are still heading out to restaurants. There are a lot more great coupons out there which make it much more affordable, and we buy the restaurant.com certificates. We also get a lot of
gift certificates as gifts which is great.
17. Lunch Expenses. Buying lunch every day can be a significant expense. Say both my husband and I buy lunch every work day at $8/day. That’s $80/week, $320/month, and over $3,800/year! And those take-out lunches are usually loaded with calories. Trim your budget and your waistline by packing a lunch.
18. Auctions. We use Ebay for sure. My husband is especially good with Ebay, buying a lot of auto parts and such at deep discounts. Ebay can be a great way to buy what you really want or need at a significant discount. We fix things where we can instead of buying new, and Ebay is a great resource for spare parts. Craigslist can also be a good option.
19. Spending. Like most people, we are evaluating every major expenditure. Is it something we absolutely have to have? Can we put it off? Can we afford it now? We are not afraid to just say “no” to a purchase and live with the decision. But if it is something we choose to buy, we make sure we shop around for the very best price, and use every discount/coupon available. We’ll also ask for a discount – you can almost always get 10% off a major purchase.
20. Vacations. While we have postponed a trip to Disney, we still feel it’s important to take family vacations. We just found cheaper ways to do it. Last year we went to North Conway, NH. Our lovely friends lent us their house for a couple of days. A friend gave us a stack of free passes to Storyland. It was perfect. And we went camping – the kids love it (I hate it) and it is a really inexpensive way to vacation.
So these are just some of the things we’ve done to help cut our expenses. It’s really worked, but it never ends. We still look for better ways to save some cash, and more important ways to make our dollars STRETCH.