How do I start my growing my money mustache?

[lsalinas]

I have been living a very anti-mustachian life in Los Angeles and I realize now that needs to change.  My husband and I spend every penny that we earn.  I don’t know where to start to change.  Many of ideas in the blog are great, but I would need to slowly build up to it.  For example I don’t know how to ride a bike . . .so it would take a while for me to learn and then be proficient enough to drive it in traffic.  Also I am afraid I that if I made radical changes all at once I wouldn’t be able to sustain it and I’d be on a yo-yo diet but with my money. 

So I was thinking maybe I would start by making sure I am paying below average amount on the items in my budget (internet, cell phone bill, insurance, etc).  Any tips on websites that tell you how much average expenditures are to make sure I am in line?  I was also thinking of having a savings goal each month that gets progressively bigger.   Any thoughts or tips on where I should start? 

Thanks for your advice!

[pka222]

you've taken the first step by realizing there is a problem. 
The next step is to find out what is going out and to where and what is coming in. Do a monthly budget, everything you spend and earn, keep a record.  You can then post it here for advice on where to cut and specifics. 
As for books, you might try "your money or your life"

Get tracking and good luck

[AlmostIndependent]

Tracking is a great way to see where you need to cut. Some perennial favorites around here for the chopping block are cable TV, cell phone plans and car payments. Those are a good place to look for ways to free up some monthly cashflow right off the bat. When you figure out where you spend post here and you'll get more help than you could ever need.

[MissStache]

  Any tips on websites that tell you how much average expenditures are to make sure I am in line?  I was also thinking of having a savings goal each month that gets progressively bigger.   Any thoughts or tips on where I should start? 

Thanks for your advice!

Welcome- and kudos on wanting to change your spending habits!  One thing to keep in mind here that that we tend to spend way less than the average person on almost everything.  Where most people would think it was reasonable and normal to pay $150/month for a cell phone, we would consider that nuts!  So I'll advise you of comparing your budget to the average budget.  Average isn't Mustachian.  Badass is Mustachian!

First thing to do is look at your spending.  This weekend, sit down with bank statements, credit cards, bills, etc. and figure out where your money is going to the last dollar.  Get specific with your categories, too.  Don't just say "miscellaneous" expenses.  Look at your clothes shopping, your household goods, eating out, grocery stores, booze, entertainment, etc.

Once you have that, you'll be able to see where you can cut down and you can post here and we'll give you lots of tips.

To see what we in this forum tend to spend on- go through the "ask a mustachian" thread and look at all the case studies- those are super helpful!

[oldtoyota]

Welcome!

Since you are spending every penny you make, spend $60 more and get YNAB. This budgeting software is not for all (some folks dislike it). It also has huge fans like me. Once I started using YNAB, I could see EXACTLY where my money was going and, more importantly, where I could cut back.

I cut out more than $10,000 per year in about one month. Some folks take things slow, and some are crazy like me and do it all at once. You have to find what works for you. For now, I will tell you some of the items I cut.

YEARLY SAVINGS
--got rid of land line (savings $876)
--stopped buying clothes (hard to say for sure but at least $1000 per year)
--paid child's tuition early (savings $200)
--cancelled newspaper subscription (savings $420)
--work from home 2 days per week (savings $768)
--stopped parking at subway  (savings $960)
--gave up expensive hobby (savings $2400)
TOTAL SO FAR $5724
--No classes for adults (savings $3,000)
--No lunch out (savings $540)
--No snacks from vending machines (savings $46)
--Reduce grocery costs (savings $3600)

That is actually $12,910 and does not include saving $480 per year from switching my mobile plan.

Some things are easy peasy to cut. Some--like the mobile phone from evil T-mobile--take a long time. You could start with the easy stuff and work your way up to the more complicated items.

Also, I switched my credit card from Delta Skymiles Amex to another Amex that gives cash back on certain purchases. This turned out to be better for me.

Here's my post detailing how I saved. I've come a long way since May! And I previously thought I was frugal too. So did SO. We were both surprised at how I could cut $12K per year fairly painlessly and easily.

Oh, the outcome? I will retire about 20-30 years earlier than I thought.

https://forum.mrmoneymustache.com/share-your-badassity/i-made-crackers-and-cut-$10-000/

[oldtoyota]

PS: The other MIND BLOWING thing I learned here is that reducing expenses is almost as important as how much you save. It might even more MORE important. Think about it. Once you need less to live on, you need less for retirement!

It's basic when you think about it or if you have known that a long time, but it's mind blowing if you never thought about it that way.

[Eric]

Welcome!

Since you are spending every penny you make, spend $60 more and get YNAB. This budgeting software is not for all (some folks dislike it). It also has huge fans like me. Once I started using YNAB, I could see EXACTLY where my money was going and, more importantly, where I could cut back.

In case you're wondering, YNAB stands for You Need A Budget.  I personally just made a spreadsheet, but that's probably not for everyone.

I agree with others that tracking where every penny goes is highly effective and can actually be kind of fun in trying to come in lower than previous months, set yearly records, and such.  I'd recommend reading this MMM post if you haven't already:

http://www.mrmoneymustache.com/2012/10/08/how-to-go-from-middle-class-to-kickass/

[matchewed]

  Any tips on websites that tell you how much average expenditures are to make sure I am in line?  I was also thinking of having a savings goal each month that gets progressively bigger.   Any thoughts or tips on where I should start? 

Thanks for your advice!

Welcome- and kudos on wanting to change your spending habits!  One thing to keep in mind here that that we tend to spend way less than the average person on almost everything.  Where most people would think it was reasonable and normal to pay $150/month for a cell phone, we would consider that nuts!  So I'll advise you of comparing your budget to the average budget.  Average isn't Mustachian.  Badass is Mustachian!

First thing to do is look at your spending.  This weekend, sit down with bank statements, credit cards, bills, etc. and figure out where your money is going to the last dollar.  Get specific with your categories, too.  Don't just say "miscellaneous" expenses.  Look at your clothes shopping, your household goods, eating out, grocery stores, booze, entertainment, etc.

Once you have that, you'll be able to see where you can cut down and you can post here and we'll give you lots of tips.

To see what we in this forum tend to spend on- go through the "ask a mustachian" thread and look at all the case studies- those are super helpful!

To echo MissStache - The goal is not to just be on the left side of the bell curve for everything but to be on the tail of that curve for things that don't matter as much to you. Go ahead and be average or above for those things that are important (I mean really important not just feel important because you may not have thought about it [not to be insulting :)  ]).

It is very important to find methods that work for you to get to these goals. You can find oodles of advice in this forum and on the main site. Some will work, some won't. Just keep trying if it doesn't work out, try different methods. You will stumble, you will fail, so it goes. You will also succeed and do awesome things, so it goes.

My personal tips on starting. Reduce the expenses on entertainment, optimize your internet, ditch cable...etc. Move onto good food habits involving cooking more and eating out less. Optimize your transportation; biking, public transportation, carpool, cheap used fuel efficient car (probably in that order). And always remember this is a process. Nothing changes overnight and you will work to make it happen.

cheers

PS: The other MIND BLOWING thing I learned here is that reducing expenses is almost as important as how much you save. It might even more MORE important. Think about it. Once you need less to live on, you need less for retirement!

It's basic when you think about it or if you have known that a long time, but it's mind blowing if you never thought about it that way.

And to echo oldtoyota it is all about the percentage of your income that you save. There is probably no other concept which is more important for the first steps to understand and implement.

[oldtoyota]

Welcome!

Since you are spending every penny you make, spend $60 more and get YNAB. This budgeting software is not for all (some folks dislike it). It also has huge fans like me. Once I started using YNAB, I could see EXACTLY where my money was going and, more importantly, where I could cut back.

In case you're wondering, YNAB stands for You Need A Budget.  I personally just made a spreadsheet, but that's probably not for everyone.

I agree with others that tracking where every penny goes is highly effective and can actually be kind of fun in trying to come in lower than previous months, set yearly records, and such.  I'd recommend reading this MMM post if you haven't already:

http://www.mrmoneymustache.com/2012/10/08/how-to-go-from-middle-class-to-kickass/

Haha. Good point. I drank the koolaid and am talking like a MMM forum member now.

[savingtofreedom]

Welcome!!

I would like to reiterate that you need to sit down with your spouse and write down some goals about why you want to change your spending habits.

Without goals I think it is easier to fall off the saving wagon.  I used blow lots of money on clothing.  After reading MMM and looking at my overflowing closet I realized that my goal of early FI was much more attractive than being featured on Hoarders - kidding...

Now both my husband and I have a budget we try to stick to support in our early retirement goals.  As they say, if you don't measure it, you can't manage it.  I pretty much drive the budgeting but I have installed additional frugality in an already frugal husband.

I liked mint.com as it was a really quick way to see where I was spending my money.  YNAB also is a good rec but I was too lazy to enter everything in.

I learned to ride a bike at 30 so you can too.  The challenge I face was I have short legs so I found it imperative that I could practice on a bike where my feet could touch the ground.  You can do it!!

If you feel comfortable share your budget - the folks on here are pretty damn smart and can help make recommendations. They may throw some face punches but will be there to congratulate you too when you make progress.

[lsalinas]

Gosh I am overwhelmed at the number of people that want to help out!  Thank you for all of your pearls of wisdom! 

I took the last 7 months of expenses to get averages and then took my annual expenditures divided by 12 to get monthly estimates so you can get an idea of my spending.  It will probably make you mustachians vomit when you see it - but here goes:

Rent: 1,295

Renter & Earthquake Insurance: 38

Dental & Health & Legal bills not covered by insurance: 864   -  I expect this level of spending to only continue for another 2 years as long as my husband and I don't have anymore personal tragedies in the meantime.

Student Loans - 1,100  My loan payment schedule is 447 a month until the age of 58.  Since I don't want to pay student loans until I am that old, I pay an extra 663 a month.

Groceries - 505

Eating out - 140

Alcohol & Bars - 55

Car Loan - 370  I bought a 2012 Hyundai Accent to replace my 1999 Saturn SL2. 

Car Insurance - 168 Full coverage for  my Hyundai and my husband's Toyota Yaris.

Car Maintenance - 65

Gas - 177

Tuition, books, supplies - 250  My husband should be graduating from Culinary School in a year.

Vacation/travel - 221  This included two weekend getaways and my husband's travel back to Ecuador to see family.

Cell Phone - 146 for two phones

Clothing - 124

Internet - 47

Life Insurance - 24  Currently my husband wouldn't be able to support himself in the event of my death.  We are hoping that changes once he graduates and gets a full time job.

DirecTV - 23

Netflix - 21

Electricity - 20

Cash - 300  I have no idea where this goes.  I imagine this goes to booze, lottery tickets, fast food, and dessert items.

All the rest - 400  This is all kinds of stuff and it changes from month to month.  Trips to Target, a new printer, magazine subscriptions, eyebrow waxing, trips to the zoo.

So that is 6,354 in expenses and  my income is 6,400.  So I apologize if this gives you indigestion.  And I am ready if you need to punch me in the face! :)

[Abe]

Good job figuring out your expenses, that's the first major step.  I'd try to nail down the categories for cash and all the rest. That's about 10% of your income, and I'm betting a lot of those can go into specific categories. More importantly, reviewing your expenses in detail will reveal un-necessary purchases. That will lead you to think of better ways to make use of your money, and think harder about alternatives. It may also convince you to learn skills that you are currently paying others for. For example, my family's grocery bill used to be even higher than yours, but after seeing what money was being wasted, we found alternatives that are also healthier (cooking more at home, found a cheaper grocery store, stop eating so much dessert!)

[madage]

Student Loans - 1,100  My loan payment schedule is 447 a month until the age of 58.  Since I don't want to pay student loans until I am that old, I pay an extra 663 a month.

Welcome! Firstly, the fact that you're really attacking your student loans is fantastic! I assume the interest rate(s) on the student loans are lower than the interest on the car note? If not, definitely push all that money towards the car loan to get rid of that, then resume the assault on the student loans. Depending on how much you put down on the car, you might be able to sell it and buy something better with the proceeds. If that won't work and doing without is not an option, pay it off as quickly as possible and keep it running as long as possible. Also on the topic of vehicles, I see you have full coverage for both vehicles. Does your husband's Yaris really require full coverage? You don't have a choice with the note on the Hyundai, but you can save a bit by cutting out full coverage on the Yaris.

You did not include the amount of money you contribute to your retirement accounts (401/403, IRA's, etc). At the bare minimum, contribute enough to get the full match from your employer.

Groceries - 505

Eating out - 140

Alcohol & Bars - 55

Your food spending is high for two people, but I've seen worse. Cutting back to eating out once a month and examining your grocery spending will help there.

Cell Phone - 146 for two phones

How long are you under contract on your phones? Definitely check out the first page of the Superguide. Don't be intimidated by its length (it's getting pretty unruly), but definitely check out the bit about MVNO's. I can personally attest I.P. Daley is a fantastic guy and loves helping people with their communication needs. Either send him a PM with questions or post at the end of the Superguide and you should receive a response in short order.

Clothing - 124

Looks like you've spent $864 on clothes in the last seven months. Those should last you for at least a year. That's quite a bit more my family of four spends on clothes in a year.

Your internet bill looks reasonable to me, but see the Superguide for ways you might be able to cut back.

DirectTV and Netflix DVD plan? That's a lot of entertainment. Try an antenna and the streaming-only Netflix option to cut about $35/month.

As Abe said, you definitely need to get a handle on exactly where that $300 cash and $400 "other" is going every month and make it stop. That's a lot of money that would be better used paying off your loans. After all, your debt is an emergency!

[lsalinas]

My student loan at 6.7% interest is the highest interest rate loan that I carry, my car loan is 2.8%.  So I figure I get a higher return by paying for the student loan. 

I took a quick peak at the superguide and Madage was right - it is big!  Looking through that will be my project this weekend.  Non-Verizon network phones don't work in my area (you gotta go half a mile inland before phones start working again) so that narrows my choices, but hopefully that makes going through the guide a little easier.

I have 84,000 in retirement accounts.  I contribute 500 a month and employer kicks in 300. I think I am 70% vested right now, I will be fully vested in 2 more years. 

There are so many good suggestions here and I am getting really excited about saving money!  My husband is starting to waiver though.  He keeps looking at me like he's Greece and I'm Merkel demanding austerity measures.  However, we have been communicating more about money, so that is a step in the right direction.

[Kitty]

My student loan at 6.7% interest is the highest interest rate loan that I carry, my car loan is 2.8%.  So I figure I get a higher return by paying for the student loan. 

I took a quick peak at the superguide and Madage was right - it is big!  Looking through that will be my project this weekend.  Non-Verizon network phones don't work in my area (you gotta go half a mile inland before phones start working again) so that narrows my choices, but hopefully that makes going through the guide a little easier.

I have 84,000 in retirement accounts.  I contribute 500 a month and employer kicks in 300. I think I am 70% vested right now, I will be fully vested in 2 more years. 

There are so many good suggestions here and I am getting really excited about saving money!  My husband is starting to waiver though.  He keeps looking at me like he's Greece and I'm Merkel demanding austerity measures.  However, we have been communicating more about money, so that is a step in the right direction.

Hehe- love it! Sounds like you're making some great choices. Best of luck pinning down that cash amount to see where it goes.

[aj_yooper]

Congratulations on your interest in setting your finances right and your early moves!  It takes courage and badassity. 

As you know, your debt and spendy ways lifestyle could be a blink from calamity and bankruptcy, if an illness, accident, or unemployment hit.  Bad things do happen.  Your old plan is a boat to Hades so you are not Merkle and your husband is not Greece.  You are simply living way beyond your means and hoping it all works out.  You are on a dream boat and it is time to awaken.  Getting the husband on board is crucial to an enjoyable solution to your budget.  Ask him to start writing the checks to the bills.  This is not a money conflict that couples might have.  This is a flat out Debt and Spending Emergency! 

I think you need to get some emergency fund money collected quickly so you have some breathing room.  That means you have to take a sharp knife to the budget, as a chef would.

Best wishes.