Welcome to Ask April, a no-nonsense advice column focusing on what it is you can do to correct things that need correcting. While we all know much in life is out of our control, and sometimes, our reaction is all we CAN control, we really do have a lot of personal power, thankfully. Our will is just as important as the wills of others around us, and while we need to be considerate, we also need to make sure others are equally considerate of us. It is my hope that when you write in to me, asking advice that I can help you make a good decision that somehow improves whatever situation you’ve found yourself in. As with anything I share, I recommend people don’t automatically take my word for anything, but include my advice in with the rest of the things that help them make a decision. I wish you well. Read on.
I got lucky and inherited some money recently. I say lucky because I had been fired from one job and laid off from another and have quite a bit of debt at this point. I have started a new job now, and have decided to both pay down some debts and invest in stocks and bonds with my inheritance. I will put some money into a money market savings account at my bank and I am seeing a financial advisor soon to make sure I am on track.
I am worried because I bring in a little over $2,000 each month, and I spend about $3,000. Friends have told me my income should be enough for one person to live off of, but I don’t know how. I don’t shop a lot and I eat out a lot, but I only eat out at fast food. I don’t have expensive internet or cable, and I really don’t know how to cut back.
Scared of Being Broke
Dear Scared of Being Broke,
First off, congratulations on your inheritance! I think seeing a financial advisor and investing as well as paying down debts is a really smart move. A lot of people would have just gone on an expensive vacation or something, and you have my respect for being practical.I think that gives you an advantage.
Being fired- which happened to me before, too- creates a permanent mindset. You may NEVER stop wondering if it will happen again and you may worry about finances from now on.
Popular belief tells us that worrying and thinking “negative thoughts” is poisonous, but I beg to differ. Sometimes, worrying about what could happen if things go wrong is not entirely a bad thing. Use that mindset to try to find ways to save money, cut spending permanently, and be as frugal as possible. Since I have not seen what your expenses are in contrast with your income, I don’t specifically know where you can cut costs. But you are spending a third more than what you take in, and that is bound to catch up with you. Unless you inherited millions, inheritances run out, and you need to cut back now as opposed to when it does.
I recommend a lifelong lifestyle of frugality and saving regardless of income. I will share 25 tips that got me through when times were leaner, and that kept me from going without.
- Eating out is one of the traps we fall into when we are working, especially. Face it, cooking takes time, and unless it is something you are passionate about, you may not want to work all day and come home and cook. You don’t know how many people have told me “Well, it’s JUST fast food!” The average fast food meal is almost ten dollars if you get a side and a drink. If you do that for one meal all seven days a week, that is $70, and it totals $280 a month. JUST for one meal. For one person who cooks at home, that is usually more than their entire monthly grocery bill for all the food they eat. So let’s rule out the myth that fast food is inexpensive and look for ways to eat at home most of the time. It is also much better for your health.
- Eating out for social functions can be you showing up and having a soda or a hot tea. You don’t necessarily have to eat a whole meal. The most gracious way I have seen people dodge this is to say they have dietary restrictions and they ate before they came. You don’t have to forego the gatherings. Just eat before you go out and that helps you watch your spending.
- Drinks will get you as well. If you stop for your coffee every day, you are spending about $2 to $4 per cup. Let’s average that at a $3 cup. That is $21 per week, assuming you just get one cup a day, and I’ll round it down to $20 for simplicity. Let’s multiply that by four weeks, and you are at $80 per month just for one lousy cup of coffee a day. On the other hand, if you brew your coffee at home, you might spend $10 to $20 per month. A lot of people also buy bottled drinks that are between $1.50 and $2.00 each. Tap water is free. I don’t advocate never having a sip of anything but water all of your life, but total up how many pre-packaged drinks you buy and cut back. Besides brewing coffee at home, you can also brew and bottle your own teas, which is less expensive than buying a tea to go.
- Also, try to cut carbs. Carbs make you hungrier. Drink things with little or no sugar a, because sugary drinks increase appetite. You will catch yourself having food cravings when you are not even hungry because you will have a sugar crash from all those sugary drinks.
- What about the cost of utilities? Switching electricity off when not in use is a classic way to cut bills, and getting on an energy program with both gas, and electric companies saves tons of money. You should call your utility companies and ask them about this if you haven’t already. Also, can you use LESS energy in general? Come Spring and Fall, do you wonder why you are still running the thermostat when you are comfortable without it? Is your home set up to be energy efficient? Do curtains block the strong glaring sun in Summer, and are they thick enough to keep the cold out in Winter? Does your central a/c or heating need replaced or fixed? I swear- we are saving so much on utilities each month with our new system, that it pays for itself. The best suggestions for staying comfortable in all weather comes from people who lived in times before central heating and cooling. The number one thing they did was dress for the weather indoors and outdoors. Do yourself a favor and get outside as often as possible no matter what the weather. If your body is more acclimated to the climate, it helps.
- Evaluate the rent or mortgage where you live. Do you NEED to be there, or would other living arrangements be more affordable? Can you get a roommate to help split the bills and rent/mortgage? If you own your home, can you refinance to cut costs?
- One of the biggest questions I ask people is – HOW MUCH STUFF DO YOU HAVE? I cannot tell you how many people who I know who have too much stuff, and they say so themselves. They are loaded down with things they do not use, like, or even need, and stuff they could, and should part with. How much space in the place where you live is taken up with this unnecessary stuff, and could you move to a smaller, more affordable place if you got rid of it? These things can, of course be given away, and The Kidney Foundation or a local church will gladly pick up anything you wish to part with for no cost to you. Aside from that, do you have anything of any value that you can live without that you can sell?
- Do you buy books and movies as opposed to going to the library? Change that. Also, instead of cable, can you subscribe to a service such as Netflix or Hulu? Do you HAVE to have cable?
- Do you go out with friends to drink on weekends? Scrap that and host a gathering at the house. You can get more friends more liquored up for less money right in the comfort of your own home!
- While I do not advocate looking like you just rolled out of bed all the time, I also do not advocate the popular habit advertisers have brainwashed us in to of getting rid of all our clothing every year, and buying all new clothes. That’s a spending trap and it is entirely unnecessary. Plus, can you wear clothes that are secondhand? I’ve been a thrift shop diva for as long as I can remember, and I recommend it a million times over. You can furnish your home and decorate it this way, as well.
- Budget, pay your bills, and buy the necessities first, and then see what is left over for fun money. Pay your bills and live within your means as opposed to buying things on credit, and accruing a lot of debt. It is important to HAVE a credit card for emergencies and build your credit score, but impulse shopping for fun is not what credit cards are for. I wish I had known that years ago.
- Learn to do your own home improvement. My first marriage saw us hiring people to do everything the house needed. My current marriage sees us doing almost all of it ourselves. I admit, it took me years to perfect my painting technique, but now, I’m darn good at it. My husband does plumbing and is working on our electrical wiring right now. Don’t worry, he knows how. It will take him another year to finish it all, I bet, but what is costing us hundreds would cost us thousands if we hired contractors. We likewise do all of our own yard work. Another option is to rent as opposed to owning so you don’t have to pay for home upkeep if that is more affordable.
- Look and see who you give money to besides people providing goods and services. Do you pay for everybody’s meal every time you go out? Is there somebody you are giving money to and you can’t really afford it? Are you donating too much to a charitable cause and it is hurting your pocketbook? If you need to cut back on giving money away for a while, there will always be more ways to help at a later time.
- When you do errands, do you plan your route, or do you just do whatever? You can waste gas unless you plan your errand route wisely. My mother was so smart with errand route planning, that she would take us in a perfect circle from the time we left the house to the time we returned. While that might sound anal, try it. I bet you will be surprised at how easy it is.
- Speaking of gas, how good of gas mileage does your vehicle get? Don’t drive a gas hog. Trade it in if needs be.
- Use coupons, buy generics, and find businesses that give you points or deals on gas after so many purchases. Giant Eagle and Kroger are VERY popular because of this.
- Call different pharmacies to see who has the best price of your prescription. I learned this trick the winter I was home sick from work, and had no medical insurance. I was able to cut my prescription costs drastically. Some pharmacies have a membership fee you can pay that drops the costs further, and it might cost just $20 a year to save hundreds of dollars.
- Never never never never go to the grocery hungry. It’s not an urban legend that you will spend more, it is a fact.
- Plan your meals for the whole week in advance, and draw up a shopping list. Stick to the list. Plan your other shopping the same way. Not only will it save time that you would spend running in places for something you forgot, but it will also help you see what it is you buy. You will say “Do I need this?” Never buy food you will not eat. It will wind up in the trash, and that is wasted money.
- Shop at discount places besides just the secondhand shops as much as possible and take advantage of sales. We cut our food bill by about a third when we started shopping at Aldi.
- Do not let advertisers fool you into thinking you MUST buy their product. If the ad swears this product will “make your life easier” in any way, ask yourself how you ever got by without it, and if you will be badly off if you don’t buy it. Things like egg timers are unnecessary, especially if you have a microwave that already has a timer. I use a handheld blender in my kitchen for making cakes even though most cooks have a big fancy professional grade one like all the celebrity chefs do. Those things sit on the countertop and collect dust as opposed to being used in many homes. Can you chop veggies by hand? Do you really need an electronic veggie chopping machine? Do you NEED the $500 purse when a $30 one would suffice? Heck, mine was $4 secondhand, and it suits me just fine. I’ll carry it for about six months and scrap it for another that is about $4.
- Carpool if at all possible. Even if you are the driver, people can chip in for gas money, or they can be the drivers next time. It’s better for the environment too!
- I push comes to shove- get a part time job or a job that is higher paying. It might take some time, but I believe in you.
- Do not under any circumstances have more pets than you can afford. Keep in mind that food for ONE extra furball might not be that expensive, but an emergency vet bill will. If you cannot afford to fund expensive emergencies, just donate money you would spend on pet food to a local shelter instead. It is not fair to have a pet you cannot afford to take proper care of. If you really love animals, but cannot afford them, you will not have them just for the sake of having them, and you will put their needs above your own desire to have a pet.
- Finally- and most importantly- stick to being frugal all your life. Sure, you can spend a little more when you have it. We all will, but for the most part, use penny pinching tricks forever. You never know when you will get laid off, or have a health issue, and your income suffers. Buckling under crippling debt is not rare, and sometimes cannot be avoided, but that does not mean we should not try!
I hope these suggestions have helped. Maybe there is not ONE big area that spending can be cut, but every little bit adds up. It’s not fun to cut costs and curb spending, but it is even less fun to be in serious debt. Sometimes, less really is more. Having the peace of mind that living within your means brings beats any fun buy anyday.