Earlier this month I wrote about three financial areas where I wanted to change the way we spend and save. With an emphasis towards maintaining our savings goal of 55%, I want to continue to change spending habits. The main way I want to tackle this in January is to reduce our grocery costs. To track our spending, I set up a basic spread sheet to analyze every penny spent:
Maintaining the Savings Mindset
After setting aside 55% of take home pay into savings, I also added in an extra 1.85% of savings off the top. Normally the first thing I save is 20% of our base income, the amount I determined we need to pay our bills. Anything over this amount goes towards reducing our one remaining debt, a car payment. However, I have started taking 20% of the net pay instead of the base income. It is a small amount, this time 1.85% extra into savings.
I used the remaining amount above the base pay to make an extra half payment on the car. Because I budget a half car payment every paycheck, this made one entire payment when added with the surplus above our base pay.
But there was still a small amount left that amounted to 1.08% so that was also added to savings. 55+1.85+1.08=57.93% of income went to savings at the outset.
Tracking the Remainder
One area I really want to change is how we spent that nebulous amount of money left after savings, debt, and utilities are paid. It's the general fund which covers food, prescriptions, gas, shoes, soap, and just anything else that might come along. It isn't a set amount or percentage. Nebulous Category - It's just what's leftover after everything, including savings, is paid.
There were some utility payments due in addition to the car payment I wanted to make. What was leftover, the nebulous category, was added to the spread sheet to analyze how we would spend the remainder.
I set up several categories: Gas, Medical, Food, Non-Food, Art, Entertainment as I went along. L needed painting canvases so it went on the spreadsheet as the Art category. Peter and I spent some time together watching movies to help us decompress from the horrible fascistic state we now now live in. Nothing quite like a Bourne movie to make you feel like kicking ass and fighting the system that birthed you. We burned through the Matt Damon series online. It became the Entertainment Category along with a few other things.
The remaining categories were divided into Gas, Food, Medical, and non-food. One category that did not get added was an ATM withdrawal for cash. I believe one should always carry cash so I gave each of us some cash to put in our wallets. That ended up as 20.83% of the total. We'll call it mad money and not bother adding it into savings or a specific category. Discretionary personal spending- if it must be labeled.
Changing Lax Habits
I started the spending spread sheet with a deficit which is one reason I want to get spending from this nebulous fund category under control. We pay our credit card bill every two weeks when the paycheck comes in. There are times when purchases don't post within that period. Payday is every other Friday. Usually I would pay the balance on the credit card on payday and move on. It was always what we owed from the previous pay period. I decided to turn this on its head.
I started this pay period with an outstanding balance when the statement dropped out of sync with the pay date. I knew we would have over $100.00 in cash back which would be applied so I wasn't too worried about anything pending. For example, there was an order placed online but not charged until the shipping date. While we avoid interest because we pay within the 25 day grace period, sometimes things just slip over into the next check. It's time to change that casual approach to spending. The goal is only spend what is leftover in the account, not hold anything over until the next two week paycheck. Pay as you go.
Using the credit card had allowed me to create this bad habit. I need to change the way I use and pay the card. Instead of paying the balance on payday, I need to pay to every day I use the card. So this past two week period, I paid the card every day it was used, even if the charge had not posted.
Breaking down our expenses
In the end we spent the most on food, 48%. Some of this percentage included the outstanding balance I had carried over. This total exceeded the monetary goal I had set for reducing grocery costs in January. I had spent more than half of our previous month's grocery bill for just half a month. Worse, I realized I may not meet one of my January resolutions at this pace.
This January I have a goal of spending less than $530.00 on groceries for me and my husband. Being off my goal for the first half of January has now set me on a path towards meal planning for the rest of the month. I want to maintain my stockpile and eat what we have with minimal fresh food purchases for the rest of the month. This will definitely take more planning that I'm accustomed to.
Medical expenses came in at 11.89%. We budget medical savings from every paycheck. It is part of my three prong approach to savings: Basic Savings, Emergency Savings, and Saving for Anticipated Fixed Bills (taxes and insurance). We save money specifically for unexpected medical expenses in the emergency savings category. This 11.89% does not qualify. Instead, co pays for Rxs and doctor's appointment, along with OTC medical costs from cough drops to bandages and vitamins always come from this leftover nebulous category.
Entertainment was 6.74%. That was mostly movie rentals, a NYT subscription, and parking fees for free entertainment. Is it really free if you have to pay for parking? Gas was 5.7%. It is so nice that L isn't driving 125 miles a night any more. It's now less than 25 miles round trip. Lance's painting canvases were the entirety of 2.92% of the Art expenses. And Non food such as hygiene and cleaning products were 0.58% of the expenses.
The chart above shows the categories listed as 75.95% of the nebulous amount. The personal discretionary money came to 20.83%. The remaining amount was 3.22%. That was money not spent! And according to the rules I made for maximizing our savings, any money left over from a pay period goes into savings when the next pay check posts. This past Friday was payday so that tiny sum went into savings. It should be noted that the amount of savings is 3.22% of the nebulous fund and not 3.22% of net pay. Still though, savings is savings and every cent adds up.
Conclusion
*Keeping track of expenses was only irritating when I had to review the receipts. Taking our son's expenses out is a little problematic and requires some give and take. We use 2 of the 3 heads of lettuce so his share is 1/3...Our adult son pays for his share and his specific dietary requests. His food costs are not included in ours.
*Paying the credit card every time we use it really does keep me on track. Waiting for payday to make a payment did not provide enough accountability and planning.
*Using the spread sheet in conjunction with my calendar works well. Knowing when a prescription must be picked up and a doctor's appointment is upcoming, I can add these expenses to the spread sheet at the beginning of pay period. Anticipating a gas fill up, having the previous amounts on hand, I can round up my guesstimate for gas for the period. When the purchase is made, I can revise the amount.
*Initially I used some online credits I had amassed so we could watch movies at zero cost. When we got caught up in a series we really wanted to finish, we spent money. When we've watched one-off movies from our collection like Conan and Predator, they were free. Maybe we need to make a free watch list to sample from online. But...We also still have several hundred DVDs in our collection we can rewatch. Oh Brother, Where Art Thou?
*I need to consider meal planning as a way of life and a way to keep my budget in check.
*Other preppers prepared people who keep full pantries of 4-6 months of food have recommended creating a comprehensive list for restocking quotas. It might be time to consider this. Another thing I need to do is resume browsing the sales pages every week instead of when a need arises. I need to reassess how I restock and maintain our long-term food supply.
*I should come up with a better description than Nebulous category for the remainder of money left after savings and bills are paid. Maybe it's the influence of my Dad, the astronomer, but the name seems to encourage an vague, hazy, ill-defined approach to budgeting. And there's something to be said for changing mind sets to change habits. I'm experiencing this first hand.
