Well, the first month of our Buy Nothing New year has been eye opening … a better way of saying it might be that it was a good? slap in the face. What I initially approached as a way to simplify our life has quickly turned into an empowering experience of attempting to reach financial freedom.
Turns out, I Really Sucked:
Before I wrote my last post, I didn’t realize how much financial literacy we were lacking. For years (yes, years), Jim has been begging me to sit down and go through our finances. He wanted to do the money snowball to knock out our debt. I’m an Avoider when it comes to money, and since my income varies, and we always seemed to have enough money, I always made an excuse to get out of the conversation. I had no idea how much we were spending each month, how much our basic overhead was, or exactly how much I was making. Quick catch-up: I own a branding & design studio … I pay myself when my clients pay me; I put a certain percentage in savings for taxes & expenses, then I get the rest.
The day after I convinced Jim that I was ready to face our finances, I opened a spreadsheet, and documented our spending categories (bills & living expenses, groceries, gas, and extras). Seeing the bills + living expenses category (the money we need to make to just survive) made me want to cry.
But you want to know what actually made me embarrassed? We went to Taco Bell at least 51 times last year. FIFTY ONE TIMES. Taco Bell is actually heaven and they have a ton of vegan options … I’m genuinely sad that we haven’t been for over a month. We went to our favorite local brunch spot at least 31 times. I stopped looking after that (because MY GOD), but I’m guessing our total of eating outside of the house was well over $5,000. And we were still spending like $700 a month at the grocery.
We’re on Our Way to a Budget:
I now know exactly how much money we spent in January. My spreadsheet has an area for income too, so it’s easy to see the difference in earnings and spending, which helps us with our goal of paying off debt.
I see people talking about budgeting all the time, but honestly, we couldn’t set a budget for any of our spending categories, because we had no idea where our money was going (well, Taco Bell, obviously …).
We’re going to continue tracking all of our spending for Jan, Feb, and March, then set a budget (divided into categories) based on our average spending and earning.
We’ve Figured Some Things Out:
While I don’t want to disclose our specific financial situation (without the permission of my partner), I can say that we were paying over $200 a month in cc interest. Again, I didn’t even realize this before … We decided to put the balance on a Balance Transfer Card. The best deal right now is the Citi Bank Double Cash Card. It’s 18 months no-interest, with a 3% transfer fee. This allows us to take the interest piece off the table, and focus on paying the debt down in the most efficient way possible. Obviously, if I didn’t think we could make that payment each month, I wouldn’t have done it, but because I now see our finances in a clear way, I know we can make it work!
Within the first week, we talked about finding ways to save money with our “must haves” (cable, phone bill, Netflix, etc.), and I believe just by chatting with customer service or downgrading our plans, we immediately started saving upwards of $500 a year.
We didn’t need anything new. I’ve appreciated this challenge, because it’s opening my eyes to how much advertising and “you need this!” is in our faces each day.
We Spent Money:
Our “extra” category wasn’t $0, and we knew it wouldn’t be. We went to the liquor store a few times, had a few expenses for outings with our family, and had some film developed that we’ve been hoarding for the past 6 years. BUT, we didn’t buy a single thing for ourselves!! I say “ourselves”, because our daughter decided she didn’t like her school rain pants, so naturally she tore them from ankle to hip. We bought her a replacement pair at the local consignment shop, and paid for 1/2 with credit I had. We went to Chipotle once, and out to eat to celebrate our baby turning 6.
New Goals for the Next Quarter:
- I want to reduce our grocery/food spending. We ate at home most of the month (we went out twice, I think), but I know there are ways to spend less. I’m meal planning a month at a time, really focusing on using what we have in our pantry/freezer, and we’re using coupons.
- I’d love to budget 1-2 weekend breakfasts at our favorite spots, and dinner out (or take out) at least once a month. Mama needs a bit of a break …
- It would be amazing if our “extra” category was a lot lower than January’s was.
- Within the quarter, we should have enough data to create a solid budget, and I’m really excited to learn more about al that.
- We don’t agree on every facet of this mission, but I’m hopeful that this process becomes less of a thing, and just becomes easy?
- If that rich relative wanted to pop into the picture, now would be a great time! ;)
Wow, that was a lot to say: this is working, and this challenge has really shifted my perspective on money. If you’ve done this, I’d love to hear from you! If you have any questions or suggestions, let me know!!