We’ve all reached that point with our finances that we feel like there is nothing more we can do to improve the numbers. We feel like we’re working hard and cutting back. What more can be done to maximize our financial situation? If there’s anything that I have learned from those wealthier than I, it’s that they never stop asking that question. They refuse to settle for an “okay” financial situation and they are constantly brainstorming ways to improve it. In today’s post, I want to challenge us all to re-evaluate our current situation to be sure that we can’t be doing more. This post is the first of a two-part series (read Part 2) where we will evaluate our expenses and income to tip the financial balance in our favor. First, let’s talk about the money going out and how to we can keep more of it in our pockets.
Evaluate your Expenses
Pull out that budget and go over each category with an open mind, including the ones you feel are non-negotiable. Are they really? They may be more moldable than you think. Remember your financial goals. That’s what you’re working toward. Ideally, you have chosen goals that are very important to you and your family. If you don’t have clearly defined goals, check out this article about finding your Money Motivation. What kinds of things are you willing to change to get to your dreams? Here are some options you may not have considered:
Downsize your Home
I have heard about more than one family choosing to downsize because they realized they were paying for more house than they needed. They made that decision so that they could free up more of their income to accomplish the things that are really important to them. The author of Simple Mommy Living blog explains in this post about all the benefits for their family of living in a 1,000 square feet home. They chose this house rather than a larger one so that they could focus on their family’s priorities and allow her to continue to be a stay at home mom. I recently had a conversation with a friend who was considering downsizing from their dream home so that she could stop working and be home with her kids. My husband and I are still renting right now, but these stories have really made us talk about buying a smaller home than we originally planned. Downsizing can free up a large sum of money in your monthly income for you to reallocate elsewhere. If you have dreamed of being a stay at home mom, this may be your ticket. It’s definitely worth consideration.
Reconsider your Childcare
I dread asking you to reconsider this choice because I know that you agonized for days, weeks, and maybe even months about this decision in the first place. We certainly did and we continue to question it at least once a week. Obviously, your comfort level with your current situation and your peace of mind about your child’s well-being are most important. I would never want you to have your child in a situation that makes you uncomfortable. With that being said, think about other possibilities. Do you know a stay at home mom who might appreciate the extra income from keeping your child? How about a college student who can keep your kids after school and would appreciate any amount of money? Is there a less expensive daycare in your area that you’ve been meaning to check out, but just haven’t found the time? Do you feel guilty about how much you pay your “just okay” nanny, but have been sticking with the situation to avoid conflict? It’s time to think about it.
Our first child is now a few months old so we were just introduced to the typical daycare costs about a year ago. I remember talking to friends about how frustrating the whole daycare system and expenses are and I kept hearing, “That’s just the way it is.” That may be true, but it eats me up that we have to pay full price for a week of daycare when my child only goes part time. I hate that we still pay when my child is sick and unable to go. I understand why this is standard procedure and I completely get the daycare’s business perspective, but it’s still very frustrating for this frugal Mama. We’re a part of this system right now because we need stable childcare and we like our daycare, but I’m constantly on the hunt for a cheaper alternative. This is another major expense for most families so I encourage you to invest a little time and energy in researching your options. You may find a huge cost-cutting alternative that you like even better than your current situation.
Trade in your Vehicle or (gasp!) Downsize to One Vehicle
Are you driving a really sweet vehicle that’s costing you a pretty penny in monthly payments? Dave Ramsey calls this “car poor.” It’s time to dump that sucker. There are a lot of benefits to driving a smaller, older car. First and foremost, it’s cheap! Ideally, it’s also paid in full. Don’t forget about the potential insurance savings as well. Secondly, my 2006 Corolla gets awesome gas mileage. I fill up the tank about every two weeks if we haven’t been traveling. Third, when your car has a little rust and the paint has lost its new car shine, you don’t freak out about food or dirt in your car anymore. You let kids in the car with damp bathing suits and you eat crunchy granola bars on car trips and it’s okay. This is kind of liberating and I would probably not have this attitude about a brand new car.
Before I talk to you about downsizing to one vehicle, I feel like I need to be open and tell you that we have two. We have not chosen to sell one at this time, but we’ve talked about it. Sharing a car is easier for some families than others, but it’s definitely something to consider because it can free up a large sum of money each month. If it’s not feasible for your to downsize to one vehicle, at least consider trading one or both of them for something more affordable.
Re-evaluate your Cell Phone Plan
We were so resistant to make the switch to smart phones and I almost wish we had never done it. Now that we have smart phones, it’s hard to imagine going back. It’s so convenient! Alas, it is also so expensive. We have found a way around this by being part of my parents’ family plan. It’s cheaper to pay them for our portion than for the two of us to have our own plan. If joining up with other family members won’t work for you, consider dumping the contract altogether and switching to a different service provider. Here are some thorough blog posts about MUCH cheaper options (we’re talking less than $25/month per phone!):
With most of these services, you can keep your own phone and number. Check them out. Many of us need a smartphone for our jobs, but if you can switch back to your “dumb” phone, do it. Those plans are SO much cheaper and I can’t even imagine how much free time I would discover if I ditched my smart phone. I’m sure it would be shameful.
Cut Back your Grocery Expenses
Groceries are a necessary expense, but you may be spending a lot more than you need to. Here are some articles I’ve written with a ton of information about ways to save on food and household items:
My goal when shopping at grocery stores and drug stores is to see the “you saved” number higher than the total spent. I can usually pull that off and you should be able to do so as well. Take a little time and learn how to shop smart on this important category of your budget.
Relocating to a Cheaper City
This one is a drastic change, but I’m only asking you to think about it. If your financial situation is really tight, this may be your best option. Moving to a new, less expensive area might give you the financial freedom of your dreams. It could be a wonderful new beginning for your family, especially if it helps you reach your goals. We grew up in a rural, small town and it was such a wonderful place. These areas foster community and support for one another. They’re usually safer and they have good public schools. We now live in a slightly larger rural area and we like it here, too. Best of all, the living expenses in these places can’t be beat. If you’re accustomed to city life, I’m sure it would be a challenging transition to move to a small town, but rural life is peaceful and oh so much cheaper. Again, just keep this one in the back of your mind.
Decreasing your expenses is only one half of the equation for maximizing your financial situation. Don’t forget to read the second half of this series which focuses on increasing your income. How have you cut back on the “non-negotiable” aspects of your budget? We’d love to hear your suggestions!
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