Money Saving Tip #6

• Review prior tax returns to see if there is extra money you could be putting to good use during the year rather than paying it in and then receiving it back as a refund. One change I made that helped bump up my income was increasing the number of exemptions I claimed on my Federal W-4. When I first starting working I was taught to claim zero exemptions and always got get a sizeable refund each spring. I started claiming one exemption and began paying slightly less federal income tax each pay period. I will still get a small refund at the end of the year; it just won’t be a big windfall like before. I don’t recommend doing this though if you don’t have the discipline to put your “extra” money toward paying down your debt. Of course, I also don’t recommend going crazy and claiming ten exemptions. You don’t want to have to scramble in April to come up with hundreds or thousands of dollars to pay your tax liability. The IRS has an online calculator (see link below) you can use to find out roughly how many exemptions you should be claiming on your W-4. Be sure to have your most recent paystub handy if you go to the link. I have also included a link to the 2012 Federal W-4. Box #5 is where you list the number of exemptions you want to claim. The higher the number of exemptions claimed, the lower the federal tax that will be withheld from your paychecks.

• http://www.irs.gov/individuals/page/0,,id=14806,00.html

• http://www.irs.gov/pub/irs-pdf/fw4.pdf

Money Saving Tip #5

• Spend your grocery money wisely. My sister and I budget $110 per week for groceries at Meijer. We also spend $26 per week on prescription dog food. I cook dinner four times per week and we usually go out to eat on the weekends. Only buy groceries that you know you will use. Someone I know (who shall remain nameless) likes to buy several random ingredients for recipes she never actually cooks. I prefer to only buy what we need for the upcoming week. I don’t believe we should stock up on a $13 package of paper towels when we can buy a 2-pack for $3 and get by for a few weeks on that. Some people like to go to Sam’s Club and stock up and that’s great if that works for them. I just don’t prefer that. I usually grocery shop on Friday or Saturday. We always get a Meijer ad and make a shopping list. If an item is not on the list then I don’t buy it, simple as that. We do use coupons but we’re not fanatical about them. I won’t buy two $6 products just to get $0.20 off. To me that’s stupid.

Money Saving Tip #4

• Buy your pet medication online. Our dog Petie battled heart failure for years and in the end was on 7 pills per day. I paid less than half of my vet’s price by ordering his pills online from Drs. Foster and Smith. It takes a little planning ahead and you have to mail in a written prescription from your vet. It’s worth it though when you realize how much money you’re saving. Our dog Charlie is on a glucosamine supplement. I paid $60 for his first bottle of 120 pills at the vet. I just ordered his second bottle of 250 pills online for $69. I also order flea and tick preventative online. Amazon sells our dogs’ size for $57 (with shipping) for 6 doses. Walmart carries the new Pet Armour for $50 for 6 doses. I don’t know anyone who uses this though so I spent the extra $7 to get the name brand. Maybe one of you has tried it and can tell me if it works. I take pet health very seriously and would never try to save money by not taking my sick/injured pet to the vet. Their knowledge is valuable and I’m happy to pay for their time. It’s just the medicine that I’d prefer to pay less for.

Money Saving Tip #3

• Curb your entertainment spending. Be prepared to hear the words “cheap” and “no fun to hang out with” thrown at you. People who spend their money carelessly want you to do the same. Don’t be tempted! You can still have fun; just find cheaper ways to do it. Redbox movies cost $1.27 for one night. If you want to see a new release, the first matinee of the day is usually at a reduced price. Most theaters show not-quite-new kids’ movies for free on the weekends. Use coupons for a round of putt-putt or a bucket of balls at a driving range. Go out to eat earlier in the day and pay lunch prices instead of dinner. Split meals with someone or save half or your meal to bring for lunch the next day. Fill up on free sides like rolls, chips and salsa, or peanuts and you won’t leave feeling hungry.

Money Saving Tip #2

• Use cash instead of your debit card. I get cash out each biweekly payday and split it into two sections of my wallet. Once my money for the week is gone, I do my best not to tap into next week’s money unless it’s for something I seriously need. I think you can also better track your money this way. It’s not always convenient to sign onto your credit union’s website and check the balance of your account but you can always open your wallet and count the bills inside. Wait…you do use a credit union, right?

Creating a Budget

All right, now that you know where you stand financially, it’s time to develop your budget. I created a Microsoft spreadsheet and listed my paycheck dates for the month. I entered my net (take-home) pay above each check date. Then one by one I listed all of my bills in order of importance. My bills have changed over time but here is a peek at what my budget looks like today:

Net Pay                       0.00           0.00       0.00        0.00
Pay Date                     4/13            4/27        5/11       5/25
Spending $
Gas
House Bills
Dog Food
Student loan (28th)
Health Ins (9th)
Walgreens
Car Ins (June/Dec)
Phone
Checking Fee (1st)
Couch (6th)
VISA
Vacation
Total Bills                  0.00           0.00          0.00          0.00

Difference                  0.00           0.00          0.00          0.00


As you can maybe see (I can't figure out how to make this site post cells from Excel), I created formulas that calculate the total amount of bills per paycheck and the difference between that and my pay. This way I can easily make adjustments and the formulas will do the calculations for me. I always want that ending balance to be zero then I know that every penny I bring home is accounted for. I keep a zero balance in my checking account. Every time I get paid I fill out my checkbook register with everything that’s going to be paid from that paycheck. I check things off as they clear my account so I always know what’s still outstanding.

I have my budget planned for the entire year so there aren’t any surprises. I’m a planner by nature. I have my budget saved onto a jump drive and carry it with me everywhere I go.

I allow myself $80 per week in spending money. Sometime I bump that up to $90 or $100 depending on what I have planned during a two-week pay period. This spending money goes toward any expense that hasn’t already been budgeted for. Usually I spend it on going out to eat, weekend entertainment, trips to the pet store, Walmart runs, etc. Basically anything “fun” I do during the week has to fit into this $80-$100 price range. You’d be surprised at how quickly it runs out.

My rule of thumb is to pay off bills in order of due date while remaining current on everything else. For example, if I had $39.62 remaining after paying the current balance due on my bills for one paycheck, that $39.62 went to my Visa. Or Art Van. Or whatever bill was due (in full) next. I paid off my medical bills first followed by home improvement loans from my parents, furniture purchases, my auto loan and then credit cards.

It’s a slow process, it really is. But I celebrated each “victory” because I had worked hard to earn it and that truly is something to be proud of. I’m close to paying off the debt I originally set out to get rid of. This should happen on 8/3/12. It could technically happen sooner but I have two vacations planned that I have budgeted for in the meantime.

I didn’t include my student loan or my half of the home mortgage when I originally listed my debts. I think at the time those goals seemed totally unattainable. Now I’m realizing they’re really not. I owe close to $36,000 in student loans. I could probably pay that off by 2018. I haven’t decided if it would be wiser to focus on paying that or the mortgage down. We bought our house over seven years ago before the housing market got so bad. We’ll probably never be able to list it for what we paid so I think it might be smarter to shift the focus to that next.

Money Saving Tip #1

• Know where you stand. Figure out your income vs. expenses. If you aren’t making enough right now to cover your bills and are relying on credit cards, it’s time to drop whatever you’re doing and make some changes. You need to either reduce your expenses or increase your income. Let me say that again: you need to reduce your expenses or increase your income. If you already spend more than you make, you will never get ahead unless you decide to make a change. Remember, a step in the right direction is better than standing still.

The beginning

I started this blog to talk about one of my favorite topics – budgeting. People who know me know that I’m crazy about two things – budgets and Boston Terriers. I try to sneak at least one into most of my conversations. My hope is that this blog will keep me honest when I feel like cheating on my budget. The closer I get to paying off everything, the more relaxed I’m becoming about spending extra money here and there. This is the final push I need to stay on track.

If you ask me, budgeting works. I don’t make an obscene amount of money and yet I have paid off slightly over $20,000 in debt since 1/1/10. I’d like to share how I did it in case anyone out there is looking for a little direction. I didn’t read any Dave Ramsey books, I didn’t take any classes. I just sat down one day and made a plan for myself.

It all started on 9/14/09. I had just been diagnosed with multiple sclerosis. And if that wasn’t scary enough, I was also facing $2,499.85 in medical bills from months of diagnostic testing. My career and future earnings all of a sudden became uncertain. Sometime after the hopeless feelings were replaced with anger, I had a moment of mental clarity. I decided that if I didn’t have control over what was happening to my body, I would instead take control over my finances.

I plan to share the strategies I’ve used to pay off my debt and give some random tips on how to spend less. I don’t have all of the answers and of course everyone’s situation is different. All I know is what worked for me. I am single and don’t have any knowledge about kid-related expenses.

Some questions I’d like you to think about: do you have a budget? Do you know your income vs. your expenses? Do you balance your checking account? Do you know how much total debt you currently owe? Do you know where exactly your money goes every week/month/payday?