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Save Your Budget – Keep Your Home

I am a spender.

I have always enjoyed exchanging money for gifts that made people feel special. These gifts may have been a lunch, a cab ride, their toll, their this and their that. I also liked buying things for myself or spend more on general things out of mere convenience. Being able to buy what I wanted made me feel in some form of control and confidence.  For years I had a hard time holding onto it because it financed positive memories…until the market crashed, that is.

Since the crash, my wife and I took a closer look at the way we spent money. We enjoyed buying events – concerts, trips, we enjoyed nice dinners and spontaneous events, and when it was time to buy a home, we spent too much.  Sure, at the time it met all of our needs and the home we chose met the major components that were important to us: location, proximity to school, size, shape and how much.  Being that there are 6 of us and a dog we had limitations and expectations just like who is buying a home, but at the time, we had the means.

So what changed?

The impact the market had wasn’t the halt of home sales. It was a combination of two things:

  1. The length of time to purchase or sell a home tripled due to mortgage changes, challenging situations and the instability in the industry. (This entails sub-categories of multiple sale attempts due to deals falling apart often over job loss or financing issues).
  2. The average home sale price dropped significantly taking the average transaction from $350k down to $150k.

The Impact on Budget:

  1. Impact on income is pretty self-explanatory.
  2. Rising Taxes
  3. Rising Fuel
  4. Improvements necessary to keep the home in proper condition
  5. Kids getting older and asking to be in more programs which cost money
  6. Utility services, groceries and a multitude of increasing costs
  7. Rising Insurance Costs
  8. Money…money….money….

This the key reason why so many American’s have fallen victim of foreclosure. Whether you blame it on rising interest or revolving loans, they simply add to a list of expenses.

Solution

If you are in your home and this scenario sounds similar to you, you may understand that everyone wants to get paid regardless of how dry your money tree is. There is a number of things we have done that have allowed us to stay in our home, make ends meet and float until the market improves, if ever. It is time to be a boy(girl) scout. Travel light and carry only necessities, but I must prepare you that the road to improvement is not a lazy river as it takes:

“Action and Consistent Commitment to Cost Effective Choices”

1. Write down what you spend money on all the way down to the local lunch, coffee etc. This may take some collaboration and cannot be a general idea, but specifics as every dollar wasted means you moving backwards.

2. Now that you know where you spend your money, it is time to evaluate what money you have coming in over the course of the year. To identify the impact of your expenses take for example a monthly health club membership x 12 months and see how it compares to your bottom line.

3. Although you may have heard that maintaining a budget is important, here is the reason why it is imperative:

You must be aware of how much money you have coming in every month and how much is going out, period. A budget will also show you how much money you have left over each month or how much in the negative. The purpose of

4. Now its down to the details: Decide what can stay and what gets cut and what can be done better. {Side Note: Less expensive isn’t always Cost Effective. Things breaking down often has a snow balling effect. Taking preventative measures and spending a bit more to prevent a large issue is smart and long-term cost effective. }

  • Kids Programs: Often parents will send kids to private classes which cost more. Park districts are often providing comparable programs for a fraction of that dollar without sacrificing quality.
  • Child Care: I have seen an increasing amount of parents forming groups of parents that coordinate after school play dates or pick up/drop off on alternating dates so parents can save on after school care.  It’s often a form of a rotation system based on people’s schedules. One parent picks up on Monday and bring the couple of kids home, and on Tuesday the kids go home with another parent. You get 5 parents to do it and you only miss one afternoon.
  • More on Child care: I recently walked into a company where 4 parents set up a play area for kids in the middle of the work area where work got done, and baby needs were met too.
  • Memberships: Staying fit is important but it doesn’t have to be at a premium. Consider your options.
  • Costly Networking Events: There are hundreds of networking events happening all over, all the time, but when a price is assigned to it, it gives the perception that it’s a members only higher quality event. Often the outcome is no different from casual wine tasting. At the end of the day networking should be free and can be done everywhere.
  • Lunch: This one bugs me so I may go on and on about it. Often it is a pride thing with the guys especially, but gentleman if you can spend $7 at the local restaurant for a sandwich and pop, think twice. Being on the road I used to stop at the gas station for the $3 piece of junk or take myself out for a $5 – $9 yummy something else. I was hurting my budget and putting on the pounds because this fast food (regardless of calories) is often hurting you in more ways than one. Solution: Go to the grocery store and make your self a sandwich like a grown man that you are. Just like an abundant amount of gas stations out there, there is an abundance of grocery stores. Important: Buy the items you want to eat and prepare them your self. You can easily spend $7 for a grocery store to prepare you a sandwich filled with lettuce and butter. If you ask for a 1/4 lb of what ever meat you would like to eat that day, ask for 1-2 slices of cheese, and walk over to the bin of loose rolls for .59 cents – you just spend $1.89 on a fantastic sandwich and it was custom-made to order. By the way – you will not get a dirty look from the store worker because many people are doing this every day. You will not only save $5 / day but you will also notice that your weight will start to come off because you’re not adding all that butter or mayo. The grocery store is like a huge refrigerator with abundance of creativity at your finger tips. Now do the math: $5 x 5 days = $25 per week for something else. That is $100 per month for something you might need.
  • More on Food: If you go to Burger King and order a whopper it may cost you around $3 + tax, but if you order off the dollar menu you can get 2 x Jr. Whoppers for $2. You do the math.
  • Health: If you have insurance, use it. If you or your loved one gets sick through the process of your financial recovery, the process is going to fail. Make sure everyone is healthy and taking care of themselves so you don’t have any surprises.
  • Insurance, Cable and Stuff: There are a lot of option out there and this may be a good time to review them. They will differ by where you live but read the fine print, get 3 quotes and save.
  • House Improvements: You are intelligent and probably figured out that this may not be the right time to use your decorative flair. However,the functionality of your home must exist or it may snow ball into more expensive issues. You may want to consider a higher quality solution for some of your needs so they last longer and can be placed out of sight long-term. Maintain your furnace, change filters, clean gutters, install down spouts and fix foundation cracks as water will deteriorate your home quickly.
  • A night out: Everyone needs a day off but it doesn’t have to cost a bundle. Pick your dining choices wisely and every time you think T-Bone for $24 think “Roof over your head”. Do you really need a T-Bone? Maybe find a more expensive entrée, add an appetizer, and split it all between you and someone else. Just a thought. Ask for drink specials. You can also prepare in advance by going to Restaurant.com and buy a coupon for a $25 dinner for just $10. You do that 4 x month and save another $100.
  • Vacation: I am not excited about a Stay-cation. If my brain is going to let go of work I want to change my surroundings, but how can I while we’re trying to save money? Camping, 2 star hotel, coupons, home exchange, road trip vs. flight, and the list goes on. Want an ocean, go to the lake. Your budget will thank you and so will your family.
  • Coupons: I hated stopping at the house and always asking my wife for a coupon, until it started to impact our budget. Being an impulsive buyer I figured buy 1 get 1  half off was always good enough. Now I can often get 1 half off and the second one for free, but it takes some patience and communication with the one that checks the mail. Save money on office supplies, home improvements, dining, home items, hair cuts, oil changes, groceries and much more. They add up.
  • Cigarettes: Unfortunately I smoke and that is an unfortunate expense for me. However, it makes me ill when I see people walk into a store and spend $6 on a pack. If you take a trip to Lake County, IL  just west of Lake Cook and Rand Road, you can buy a carton of Marlboro equivalent smokes for $34. Most places sell cartons for $45 – $70. You do the math for every week.  Yes, quitting would be best.

The list of ways to save money goes on and on, but the hardest part is stopping yourself from buying items out of convenience because they are right there in front of you. This takes some practice and consistency. From choosing discounts at grocery stores to second-hand clothing for a 1 x event, at the end of the day the question is this:

Do you want to keep you home, your family, and your sanity?

My results are these: I lost 32 lbs by eating healthier and without excercise. I save over $3,000 per month from what I was spending before. I have some emergency money when everything wants to break at the same time.  My wife is less stressed out because we’re not in the negative all the time and she appreciates the consistent smart choices (which I could use all the brownie points that I can get), and most of all, each positive decision has led to another, making me feel more in control, more disciplined and that has helped us work closer together when issues do come up.  It’s a Win-Win.

Give it a try. You have nothing to lose.

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