Before I get to how I achieved my $1,600 savings challenge in one month, I have to give a big thank you to you, my reader. Your encouragement and accountability over the last month has doubled my motivation. I never believed that I would have so many engaged readers. Let me take the opportunity to shamelessly ask you to share, like, follow, repin, and, of course, READ this blog.
If you have been reading along with me or are new today, you might already know that one of my financial goals is to save a fully funded emergency fund!
That is more than $1,600 per month! Some of you might be saying that $1,600 is more than you make a month, but the number is not the point. Let me say that again…HOW MUCH MONEY YOU MAKE IS NOT THE POINT. THE POINT IS TO WORK TOWARD YOUR EMERGENCY FUND (or maybe even Baby Step 1.)
Also, be honest with yourself and your spending. Before you judge my numbers below, be certain that you truly know how much money you spend every month. It wasn’t until I really looked at my actual spending (not what I thought I was spending) did I really decide things had to change.
The point is that $20,000 is how much my family (with a house and 3 littles) would need to have to live without ANY income for 5 months. Basically, we can live on $48,000 a year if we cut out the extras. So, anytime you read $20,000, plug in your own number –your own emergency fund. For some of you, it will be a LOT less, and for some of you it will be a LOT more.
How did I arrive at $1,600 for my one month savings challenge? Well, simple, I would like to hit my goal in one year. To do that, I will have to save more than $1,600 per month and not spend any other windfalls that come my way.
Let me also add an additional disclaimer. I believe that good financial stewardship would be to have your debts paid BEFORE you build up your emergency fund (with limited exception). (So, if you are looking for some encouragement for paying off debt, watch for my post about how I paid off $54,000 of student loans.)
Let me also add that I am not including things like my government stimulus checks in my one month savings challenge. If you received a few thousand dollars from the government over the last several months or a tax return, then by all means, save that too. But, what I want to talk about is how I have changed my lifestyle to save tens of thousands of dollars this year.
If I end up with windfalls and extra income along the way, that will just be gravy. You might notice that you have some fat to trim too. Or, maybe this was exactly what you needed to hear to make sure that you put that tax check IN THE BANK. Don’t put it IN YOUR FURNITURE.
THE GOAL: SAVE $1,600.00 EVERY MONTH FOR A YEAR
Before I get to the actual fat trimming and savings challenge. The first and most dangerous weapon in my arsenal is my BUDGET! Don’t start this challenge unless you have already started or plan to start a BUDGET. I don’t mean to simply track your checking account and stop spending when you get low. I mean, WRITE EVERY EXPENSE for the month down on paper BEFORE you even start spending, BEFORE the month even begins.
Mine stays by my bed!
I love these budget sheets from Dave Ramsey, but after using them for a few years, I have now created my own similar system. It looks a lot like a list on a yellow legal pad, but it works for me. If I get around to designing a beautiful interactive template, I will let you know!
Like I said, I have been using a budget for years. Sadly, although I watched my mother sit at our kitchen table every single week of my childhood pouring over our family finances, it didn’t click for me until years later. I did not get myself on a budget until I was just sick of being broke.
MY BUDGET SETS ME FREE.
Now, writing down a budget is not only therapeutic, it teaches you to be honest with yourself, and will give you a tremendous amount of freedom. A budget doesn’t tell you not to spend, it lets you decide exactly where you are going to spend before you do it.
Do you struggle with impulse purchases? Cokes from the gas station, coffee drive thrus, eating out? If you go ahead and tell yourself in advance how much you can spend on those items, then they convert from impulse purchases to planned purchases.
Let me tell you a secret. No one has an unlimited budget. NO ONE can purchase everything. Even Oprah and Bill Gates would likely be limited to one or two private islands and probably couldn’t purchase an entire country! When you start looking at your money under a budget, then you get to be in control. No more wondering where it went and why. You are da’ captain now.
So, the first way that I met my one month savings challenge of $1,6000 was by planning to do it. I knew that I would rather use that $1,600 for any number of fun items, so I wrote it down. And, once I decide to do something, there aren’t many people who have been able to stop me!
SO HOW DID I DO IT?
I KISSED CAR PAYMENTS GOODBYE
I see you, chic black minivan with the extra cupholders and reclining seats. (Remember, I am a mom of 3, so if a minivan doesn’t appeal to you, replace minivan with BMW or Land Rover!) I watched you go by with a little pang of jealousy in my heart. I know that I can’t have you. I climb into my used and well-loved compact vehicle with a little bit of embarrassment and a little more resolve for saving.
My husband and I decided a long time ago that car payments weren’t for us. Sadly, although we have always purchased used, reasonably priced vehicles that are extremely reliable, we never saved enough to buy outright. So, we were stuck in the same car payment loop that you are probably in. After we paid our rent or mortgage, the next check was to the car dealership or bank to pay for our car. After a few years of owning a car, it isn’t very fun to write that check while the dent in the door is staring at you.
Now, there will be no more cars in our house without saving first. Instead of making a payment to a bank every month, we make a payment to ourselves. Sometimes it is $300, other months it is $500, but we aren’t going back to a car payment, and neither should you. Why you ask?
HOW MUCH CAR PAYMENTS ACTUALLY COST.
Well, the average car payment in America is more $500.00 and is paid out over more than 5 years. (1) This means that you are paying way more than the sticker price when you buy a vehicle. Simply delaying that purchase by a year or two and paying cash can save you tens of thousands of dollars. That money then goes to purchase the next, nicer vehicle if you want.
“After six years, you’ve paid almost $33,000 for a $26,000 car, which is now worth maybe $6,000.” (1)
Our long-term goal is to pay those payments forward until we buy a Tesla! So, this month, part of the way we are reaching our goals is by paying that car payment forward.
NO CAR PAYMENT = $500 saved.
I SAID SAYONARA TO STARBUCKS
I love my lattes, iced coffees, and late-night treats at Starbucks or any other coffee shop that will have me. $5.00 for a cup of coffee has become quite routine for me and my husband. Honestly, we did a pretty good job of cutting our coffee budget for awhile until those HOLIDAY DRINKS came back.
All bets were off then. Now, I am back to restricting my weekly coffee budget to about $5.00. I also include that budget in my weekly fun money. That means I have a net $0 for January, which pushed me closer to meeting my savings challenge!
One of the ways I am still getting my coffee fix but ditching the $5.00 latte is by signing up for the MyPanera app. If you sign up now, you can get 3 free months of their coffee subscription. Now, I can silence my coffee dragon with a free cup of Panera coffee instead of defeating my budget.
Let’s be real honest though. I am not 100% off of lattes. But, I was spending $10-$15 per week at Starbucks, Panera, or other coffee shops just on coffee and treats. Just cutting my spending from that to only $5.00 per week saved me about $40.00 this month. But in truth, I combined that with my fun money to eliminate the expense entirely.
COFFEE CUT BACKS: $40.00
THE KIDS STAYED HOME!
Until I had 2 children in school, I was spending more than $1,500.00 per month just in part-time child care. This was over and above date nights, special events, or late-night meetings. Those times we would have to pay for more care.
Thankfully, we have been able to cut a good chunk of that cost by having only one child in full day care and after school care costs. But, this month my husband and I were able to replace one week of child care with our holiday vacation from work. This saved us $100.00.
Other ways to cut child care costs can be to research whether having in-home care might be more cost effective than a day care. You might be surprised that for the same price or less than an institution, you can have someone come into your home and keep your kids socially distanced!
You might also want to check out whether the local preschool option is covered by your state. In my area, there is a preschool program for ages 18 months and up that can cost mere dollars a week. Cutting preschool tuition and day care costs could save you thousands a month without cutting your child’s quality of care.
January Child Care Savings: $100
OUR RESTAURANT REHAB
When my husband and I sat down to work on our first budgets, we knew that eating out was our favorite hobby. We knew that it was killing our spending, and we knew that we had to reign it in.
We set ourselves a new goal to eat out only once per week, and to spend about $20.00 on the meal. That number grew a little when our kids started eating with us, but we still decided in advance that we would only spend about $100 per month eating out. It seemed so reasonable.
WE WERE SHOCKED EVERY SINGLE MONTH when we would look at our actual spending and see $300 or $400 per month in restaurant expenses. We never could stick to the plan. We were stopping at drive thrus on busy nights, grabbing dinner with friends, or enjoying a fun family night. It seemed so justified.
$10, $15, $5.00 add up so fast. Those quick little stop overs seem innocent, but they really add up over the month.
WE SPENT HUNDREDS OF DOLLARS EATING OUT.
You might be in denial about your own spending. Add up the amounts for an entire month, for an entire quarter, and you might be shocked like we always were.
We didn’t have an extra $300 to $400 per month to spend on food and still meet our goals (in addition to the groceries, which I will get to). Things had to change. We had to get the spending under control. But, everywhere we turned was convenience, fun new flavors, and family events.
Finally, we decided that we had to cut restaurants cold turkey. A little bit of a restaurant detox, and we saw hundreds of dollars a month stay in our savings account instead of in our stomachs. Now, we limit ourselves to one restaurant per week. And, with Covid, it is easier to stay on target. We might grab takeout as a family, share a pizza, or even brave a dining room on kids-eat-free night.
At any rate, we stopped ordering drinks, dessert, and most kids meals. It was disheartening to see that $6-$10 of our bill went to Coke or cookies. And, it is appalling that a restaurant will charge $8 for a 2 piece chicken kids meal, but $10.00 for an entire adult entrée. Who wants to take toddlers into a restaurant to pay $30 extra dollars as your kids ruin your experience! Our kids can still share that entrée and be just fine or head to McAllisters for $3.00 kids meals!
This month, we spent only $150.00 in eating out, and that saved us $300.00 compared to December. (We still used our fun money to eat out too.)
WE SPENT FUN MONEY
I want to talk for a moment about fun money. We learned, after many trials and errors, that we just weren’t going to be able to avoid every single impulse purchase we saw.
We would not always avoid the coffee line, we wouldn’t always turn down that new shirt, and we wouldn’t always be able to avoid eating out at the office.
For months (probably years) I was the nagging wife asking and asking my husband to stay out of the local Thai restaurant at lunch, to stop ordering on Amazon, and to stop driving through the coffee drive thru.
During that same time, I was justifying eating out with my kiddos, new household items, and clothing. This was costing us $100 per week in added expenses for no good reason. Now, unless the item fits another predetermined category of our budget, then we use our fun money.
HOW SPENDING FUN MONEY IMPROVED OUR MARRIAGE.
So, instead of making each other miserable with guilt, we both sat down to decide what a reasonable free spending amount would be. This money can be used for any lawful purpose without guilt from either party.
It can be used all in one day or all in one week, and we can even accumulate it toward a big item. However, we do not replenish it midweek, and we do not have to use it on any family expenses.
In our family, my husband and I each get $25.00 per week for fun money. If we want to use it to eat out for work everyday, we can. I, personally, have made it a tradition to take my children out for breakfast on Friday mornings and pay for it with my fun money.
New Christmas décor: fun money.
Chris’s new headphones: accumulated fun money.
Decide in advance what you are willing to spend to keep your marital peace! This may sound like an easy $200/month to shave off of your budget, but in our home, we found that cutting fun money actually just led to more stress and worse spending habits.
Having fun money has created a whole new level of peace and accountability in our house. No more mystery spending!
Fun money: $200. Savings: $200 and our marriage!
As a mother, grocery spending is easy to justify. It is also a quick way to defeat my one month savings challenge. I feel guiltless swiping my card yet again for the ingredients to a wholesome meal, for lunch items, or even for household products. But, when I took an honest look at what I thought that I was spending and what I was actually spending, I found the difference to be staggering.
In my house of 5 people, I can budget an entire week of homemade meals from Aldi for around $75 per week. That means, when I am on top of things (which is rarely!), I can keep our budget for 5 people eating 3 meals a day in our home to about $300 per month. (For some of my cost saving tips for stretching healthy meals or for feeding a crowd, read these).
However, when I examined our spending, because forensic accounting is a weird hobby of mine, I found that I was easily spending $600-$800 per month on groceries. And, it wasn’t just a weekly grocery store run that got me in trouble with the budget. Despite my budgeted plans, I found myself running to the local grocery store for flowers for a sick friend then picking up cookies and additional produce.
OTHER GROCERY TRAPS
Or, I would go to Costco and try 3-4 new items at $10-$20 apiece. These added up to more than just 4 reasonable grocery runs a month. They added up to 10-15 grocery runs a month and impulse purchasing along the way. So, this month, I have cut out the Costco extras, eliminated midweek grocery shopping, and planned to eat out of our own cupboard from the food that I actually planned to eat.
I will be honest that I am up and down with my food planning. One week I planned a hot, fresh, balanced meal for the family for the entire week. But, another week, we ate a smorgasbord of leftovers, peanut butter and jelly, and my personal budget-friendly favorite: eggs….lots and lots of eggs. At any rate, we ate in our own home (except for our one night of takeout!) and made a dramatic impact on our budget.
This month, I ended up spending only $305.00 on groceries. That means I saved at least $295.00 this month in keeping on a grocery budget. This included about $65.00 in groceries for two large gatherings where I was responsible for the food!
USUAL GROCERY SHOPPING WITHOUT A PLAN: $600.00
THIS MONTH’S ACTUAL GROCERY BILL: $305.00
GROCERY SAVINGS: $295.00
BIG BOX BULK
I have already confessed a number of times that I am a Costco-holic. A few years ago I didn’t get it, but much like the Chick-fil-a chicken sandwich, once I went a few times, I WAS HOOKED. It is a very dangerous place filled with mysterious treasures. And, if you find something that you like, it is very unlikely that you will find it there the next month, so you must buy it when you see it.
Someday I will be able to roam the aisles of Costco with no guilt, but for this savings challenge, I have to stick to my list. I am very honestly convinced that with a good plan and strategy, you can save a great deal of money shopping with Costco. I have found many of their prices to be comparable or even cheaper than Aldi. $5.00 Rotisserie chicken? Yes, please!
However, the problem with shopping at Costco, is that I often fall prey to the other stuff. That is the strategy of the $5.00 chicken. Only with a blindfold could I walk to the back of the store, recover the chicken, and check out. Along the way, I find a t-shirt for $8.00. I find a box of cookies that the family will enjoy, I buy new pillows, new shoes, a book, and another box of K-cups.
Be cautious of justified spending.
No single item is unreasonable. But, the Costco model is to sell in bulk. This means, that instead of spending $6.00 on a box of 12-15 k-cups, I spend $35.00 on a box of 70-100 k-cups when I have a perfectly fine reusable K-cup at home. Further, I tend to be sucked in by the clearance clothes and kids’ books. My kids, like yours, have plenty of clothes at home, more than enough toys, and a library where they can check out books for free. But, without a thought, I spend another $50.00.
So, you won’t find me skipping Costco entirely, but I am working hard to stay away from the items that I do not truly need. Instead of my usual $200-$300 bill, I am going to work hard to reduce it drastically until I reach my goals. Because I had a return this month, my Costco bill was only $70.00 in January and that included household items instead of my usual splurges!
ONE MONTH SAVINGS CHALLENGE RECAP:
Car Payment Savings: $500
Coffee savings: $40.00
Child Care Cuts: $100
Restaurant Moratorium: $300
Fun Money Savings: $200
Grocery Planning Savings: $300
Cutting Costco Savings: $150
If you want to know how I made it past the $1,600 mark, READ ON!
Cutting some items, deferring some pleasure, and being honest about what I truly spend has set me on the right track for 2021, but there are some little things that I have made a habit of changing that result in real money back in my pocket each month.
Some of these include:
Are you tired of buying diapers at the local drug store because you ran out? I have done so much research on diapers, brands, and costs, that I keep diapering down to less than $1.00 per day (sometimes less than $.50 per day).
On average I use 5 diapers a day and about 8 wipes. If you are buying drugstore diapers, your diapers likely cost more than $.35 per diaper and more than $.03 per wipe. If you purchase your diapers while they are on sale at Costco, Amazon, or Target, you can find diapers for as low as $.12 per diaper and $.01 per wipe WITHOUT COUPONS.
This can drop your monthly diaper cost by as much as $40.00 per month. Wouldn’t you rather use that money to put gas in your car or have a family meal out? Diaper savings: $40
With all of the subscription services out there, we found that we were watching less and less tv. Plus, more and more programs that we wanted to watch were available by live streaming (local football for example). So, we cut out cable entirely. We get our news online, we watch our tv on subscription services, and we watch local programming by live streaming it. This saved us more than $50.00 per month. Cable savings: $50.00
On the other hand, maybe you don’t want to cut the cable. I understand, but take a look at your subscription services. Do you really need cable, the internet, Hulu, Amazon, Disney+, Plex, and Youtube? Just cutting one of those is an extra $10.00 per month or more. Cut 2, and you can go back to having your lattes or have an extra $240 in the bank by the end of the year for Christmas gifts.
Cell phone bill.
With a little bit of research, our family and extended family were able to get on a family plan where we share data and the bill. By taking advantage of a combination of the family plan and employee discounts offered by family employers, we save about $30.00 per month on our cell phone bill as opposed to having it for only our household. Cell phone savings: $30.00 per month, or $360.00 per year! That’s enough for a family weekend away!
Our house is a firm believer that to become wealthy (in more than just finances), you also have to be generous. In our home, we believe that tithing is a central tenant of our Christian faith.
Now, as a matter of math, giving does not result in positive income. But as a matter of faith, it most certainly does. While I will not go into the amount of money we give away each month, I will tell you that if you take the steps to be generous with others –your church, your local charity, a food bank—you will see blessings come back to you in other real and tangible ways.
It might not come back to you in $$$, but it might be moving help, assistance on the side of the road, peace of mind, babysitting, health, or other blessings. You might create a network that you never expected, and you might find that your bank account is inexplicably more simple to manage. Giving: priceless.
KEEP SAVING AND KEEP READING!
I would love to share more of my cost-saving tips with you as we go through the year. Stay tuned for more in March! Keep reading, and keep me accountable to my savings goals. Here’s to ANOTHER $1,600 in February!
Let me know what your goals are and how you reached them in the comments!
(1) The Truth About Car Payments, https://www.daveramsey.com/blog/the-truth-about-car-payments