Author Topic: Need Advice - Turning the Titanic (or: How to structure a budget)  (Read 3958 times)

SF'd

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Hi folks,

New MMM'r here - amazing forum. Thanks in advance for taking the time to read this. I'll try to keep it short for your sanity. What I'm hoping for is some advice on structuring a budget that my wife and I can stick to easily which will help us lower spending in three big areas: restaurants, groceries, and shopping. We currently spend nearly $3k/month across these three categories. I'd like to get that under $1500 and I think we can do it without dramatically changing our quality of life.

A bit of background: We are DINKs with good incomes living in San Francisco. We have separate accounts (checking, CC, and savings). I am the CFO of the family and the DW has minimal interest in our finances, but is warming up to the idea of working down our monthly costs so we can save more. We saved ~45% of our income last year, so we're not profligate, but I'd like to continue moving in the right direction.

Ideas I've come up with:
  • Set up a joint account and each contribute $750 every month for spending, groceries, or eating out. Make any qualifying purchases out of this account. This feels like it could work - has anyone done something similar?
  • Keep the separate accounts, but set up a google spreadsheet and enter all qualifying expenses. This seems kind of tedious and like we wouldn't stick to it
  • Take out $1500 cash every month and use that. This works great for groceries/restaurants (I'm fine losing the CC points) but most of our shopping is online...

Anyone have experience with one of these methods? Or another that worked for them? Thanks for helping me grow a few whiskers!

morning owl

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Re: Need Advice - Turning the Titanic (or: How to structure a budget)
« Reply #1 on: March 07, 2015, 10:43:26 AM »
I've found YNAB extremely useful for this. I used to be a frivolous spender, and not the best saver. And I could never follow a budget. But I find YNAB really works differently than other budgeting software, and makes more sense to me. It's flexible and creative and allows for changes, but really makes me think about each purchase and whether or not it's the way I want to spend my money. Since starting to use it (a short 2 months ago!) I've really stepped up my savings to a level I didn't think was possible before.

Basically it comes down to the old "paying yourself first" and figuring out priorities, for me. Once I decided to make savings a priority, then it followed that I had to change my spending habits. YNAB is just a tool to help me visualize this as it unfolds. If your accounts are separate then you can keep two different budgets, and it would still allow you to set savings and spending goals together.

MDM

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Re: Need Advice - Turning the Titanic (or: How to structure a budget)
« Reply #2 on: March 07, 2015, 01:29:09 PM »
...help us lower spending in three big areas: restaurants, groceries, and shopping. We currently spend nearly $3k/month across these three categories. I'd like to get that under $1500 and I think we can do it without dramatically changing our quality of life.
1.  Take turns cooking and don't eat out.  Alternatively, decide who will do the cooking while the other does the cleaning, etc.
2.  Don't go shopping - either in a store or online.

A budget isn't nearly as important as the actions you take to avoid the higher spending.

SF'd

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Re: Need Advice - Turning the Titanic (or: How to structure a budget)
« Reply #3 on: March 08, 2015, 02:35:26 PM »
Thanks for the quick responses MDM and morningowl. I downloaded YNAB's free trial to check out and I'm inputting data now. I've used mint in the past but it's so passive it wasn't very helpful with our spending. This should help quite a bit.

MDM - I get what you're saying, and I'd totally go with a cold-turkey style approach if I were single. I feel like a gradual ramp down in spending would be more helpful here ... ideally it'll show us both that a decent chunk of what we're spending is frivolous and won't be missed. That'll be a lot tougher if I just go in all commando with a "we're not buying anything! ever!" approach to things. Does that make sense?

DW is on-board for YNAB, so we'll see how that goes during the trial. I'll just set the budget there to $1500 and we'll see where things fall out. Thank you both for your input!

MDM

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Re: Need Advice - Turning the Titanic (or: How to structure a budget)
« Reply #4 on: March 08, 2015, 02:48:19 PM »
MDM - I get what you're saying, and I'd totally go with a cold-turkey style approach if I were single. I feel like a gradual ramp down in spending would be more helpful here ... ideally it'll show us both that a decent chunk of what we're spending is frivolous and won't be missed. That'll be a lot tougher if I just go in all commando with a "we're not buying anything! ever!" approach to things. Does that make sense?
Many ways to skin a cat, etc.  Absolutely do what works for you.  Just noting that the Titanic was a big ship and they didn't apply enough force to turn it enough before.... :)

SF'd

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Re: Need Advice - Turning the Titanic (or: How to structure a budget)
« Reply #5 on: March 08, 2015, 02:57:22 PM »
MDM - I get what you're saying, and I'd totally go with a cold-turkey style approach if I were single. I feel like a gradual ramp down in spending would be more helpful here ... ideally it'll show us both that a decent chunk of what we're spending is frivolous and won't be missed. That'll be a lot tougher if I just go in all commando with a "we're not buying anything! ever!" approach to things. Does that make sense?
Many ways to skin a cat, etc.  Absolutely do what works for you.  Just noting that the Titanic was a big ship and they didn't apply enough force to turn it enough before.... :)

Hah! Perhaps my title was more appropriate than I thought. We'll revisit this next month and see how the hull is fairing. Thanks again!

Jacana

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Re: Need Advice - Turning the Titanic (or: How to structure a budget)
« Reply #6 on: March 08, 2015, 03:23:32 PM »
I vote for option 1... A joint account with a joint credit card for joint expenses. That way you are both accountable for the spending and must coordinate better.

Just a thought, it may be easier to laser-focus on one area at a time. I agree that a gradual ramp-down might be the better approach. There are 2 of you, you are not in an emergency situation, and it takes some work, some change in routine. Too much failure across the board might just show her it's too hard and not worth it.

For example, maybe first month work out dinner meal plans. Sit down Friday or Saturday, come up with some cheap easy meals to make for Sun-Friday, go grocery shopping together and get only what you need. Then commit to making those meals each night either by cooking together or alternating duties. By focusing on that first, you'll reduce grocery bill but also as a result reduce your eating out (since you have no excuse). If you can do that for a month, it will get easier. Next month keep doing that, but add a focus on reducing unnecessary purchases. The following month keep doing both the above but also focus on taking lunch to work every day. Rinse, repeat.

Then, next time groceries comes around for a focus, try to reduce it even further by planning meals that use similar ingredients so you can buy in bulk, or cooking some freezer meals for busy days, or finding cheaper stores, etc.

Eventually the new habits become second nature and you will have more energy to focus on even more improvements.

zolotiyeruki

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Re: Need Advice - Turning the Titanic (or: How to structure a budget)
« Reply #7 on: March 09, 2015, 08:48:10 AM »
We're a single-income family, but here's what works for DW and me:
1) everything is joint.  It's not "my"/"her" money, it's "our" money.
2) we ask each other for permission to buy discretionary things.  Some things, like groceries/gas/utilities don't require discussion, but if my wife wants to go shopping for clothes, or I want to get some tools, we each run it by the other.
3) You want to curb spending? Avoid impulse purchases.  Impose a cool-off period for all discretionary purchases.  You could choose anywhere between "overnight" to 6 months.
4) Another option for curbing spending:  give yourself (and your spouse) an allowance.  Once it's gone, it's gone.  No more spending.  Now, don't you wish you hadn't bought thing X last week, since you want thing Y now and you're out of money?

Sibley

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Re: Need Advice - Turning the Titanic (or: How to structure a budget)
« Reply #8 on: March 09, 2015, 09:15:38 AM »
Regarding food, if your pantry is anything like the typical pantry I've seen, you can eat for a month or more. It might be weird, but you'd survive. Take stock of what's in there (and the fridge and freezer). Try to make things that only use what you have, or you only need to buy one or two things to make. If you're competitive, it'll turn in to a game real fast. By the time you've cleared your pantry out, you'll have set a new pattern of cooking for yourselves and it'll be easier to maintain.

In conjunction with that, set a limit on purchasing food outside the home. This could be a $ limit or an occurrence limit. (I can spend $10 on buying lunch, or I can eat lunch out once this week).

Regarding clothes shopping - don't go to the mall. Take credit cards off online websites. And go through your closets and drawers. Anything that doesn't fit goes away - goodwill, hand-me-downs, anywhere that is no longer yours. If half of what you do have doesn't fit, its very hard to find anything to wear, thus the "I have to go shopping" frame of mind.

Reevaluate once you've cleared your closets of ill-fitting clothes. Do you have things you just plain hate? Look terrible? Worn out? Were a gift and you will never wear it? Those go as well, though make sure to leave one or two "junk outfits" for when you need to get dirty. After that, if you find you actually need something, put it on a list and wait at least 4 weeks to purchase.

SF'd

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Re: Need Advice - Turning the Titanic (or: How to structure a budget)
« Reply #9 on: March 09, 2015, 10:26:42 AM »
I vote for option 1... A joint account with a joint credit card for joint expenses. That way you are both accountable for the spending and must coordinate better.

Just a thought, it may be easier to laser-focus on one area at a time. I agree that a gradual ramp-down might be the better approach. There are 2 of you, you are not in an emergency situation, and it takes some work, some change in routine. Too much failure across the board might just show her it's too hard and not worth it.

For example, maybe first month work out dinner meal plans. Sit down Friday or Saturday, come up with some cheap easy meals to make for Sun-Friday, go grocery shopping together and get only what you need. Then commit to making those meals each night either by cooking together or alternating duties. By focusing on that first, you'll reduce grocery bill but also as a result reduce your eating out (since you have no excuse). If you can do that for a month, it will get easier. Next month keep doing that, but add a focus on reducing unnecessary purchases. The following month keep doing both the above but also focus on taking lunch to work every day. Rinse, repeat.

Then, next time groceries comes around for a focus, try to reduce it even further by planning meals that use similar ingredients so you can buy in bulk, or cooking some freezer meals for busy days, or finding cheaper stores, etc.

Eventually the new habits become second nature and you will have more energy to focus on even more improvements.

Thanks Jacana. We actually did pretty much exactly this on Saturday. Went to the store together, made a list, etc. We spend $115, which will cover about 10 meals this week (we both get a few free meals at work during the week). That's down from our normal $180 or so. Part of it is being captive to a very expensive local grocery store (not quite Whole Foods level, but we don't have a car so minimal options), but most of it is our own purchasing decisions and eating out too much. I like the idea of laser-focusing on one thing at a time. Maybe this month will be focused on the making a more affordable weekly grocery trip, which also mostly solves the eating out issue. Next month we'll keep that going and hit the shopping category. As you said, we're not in an emergency situation at all, and I think that makes creating a sense of urgency pretty difficult. The ship is slowly turning!


SF'd

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Re: Need Advice - Turning the Titanic (or: How to structure a budget)
« Reply #10 on: March 09, 2015, 10:34:56 AM »
Sibley & Zolotiyeruki - thanks for your input! Impulse purchases are definitely what does it. My DW and I both were kind of shocked when we looked back at the $s for the last few months. A lot of silly little things adding up that I think we can cut out. We actually keep our pantry and our fridge/freezer pretty bare, and very little goes to waste. Part of that is not having a car and having to carry groceries home every week. You become very thoughtful about what you'll actually use (but apparently not too thoughtful about price/benefit!) when you have to carry it 5+ blocks home. I do think I'll go with a joint account that can act as a food "allowance" for starters. We can use it for groceries/cooking or for eating out, but once it's gone ... ramen time! I think having that monthly "ceiling" will help us cut the impulse purchases that make a pretty big dent in the monthly #s.

I feel like we're making some progress, and having both of us on board will sort things out pretty quickly. Thanks again for your thoughts!

FrugalSpendthrift

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Re: Need Advice - Turning the Titanic (or: How to structure a budget)
« Reply #11 on: March 09, 2015, 11:40:31 AM »
I just started trying to to live by a budget and it has been a struggle, because there is no such thing as a typical month.
 It's not like we will decide not to purchase any more food for the month, because we have already used up the food budget.

I set up my budget in Mint, with the automatic rollover, so that it averages out over time.  It'll start March's budget with February's leftover amount.  It has definitely helped me limit my spending on entertainment, checking mint right now, I can see that I went over my entertainment budget by $33 last month, so it reduces this months budget by that amount.  There are some things that I wanted to purchase, that I will probably delay another month. 

The biggest improvement in our food budget has been from meal planning.  If we list out recipes for the week and do our grocery shopping on sunday, then we eliminate the temptation of eating out, because the menu plan is written on the whiteboard in the kitchen.  Also, when cleaning up dinner, I package some for the next days lunch, which eliminates another temptation to order out.  Focusing on my habits and what triggers them can reduce spending without feeling deprived.

Narrow down your categories better than just 'shopping' and it'll be easier to adjust your behavior.  One of my addictions is tools, I will never have enough tools, but when I get a new temptation, I spend some time using some of the old tools and focus on appreciating the things that I already have.  If the problem for you is clothes, then go shopping in your own closet and rediscover some of the older things that you haven't worn in a while.  Focus on your behavior and figure out what is triggering that behavior.