May 10, 2010

Categories to Cut (Janssen)

This year has been a year of focus for us - we've been working like crazy to pay off our student loans (both my husband and I completed masters degrees last summer) before our baby is born in July.

The interest rate was not particularly good on these loans and we really didn't want to have another required monthly expense when our overall expenses would likely be rising with the addition of a new family member.

Putting so much money toward paying off these loans means, of course, less spending in other categories, and we spent a little time looking over our budget to see where we could cut back.

We mapped out how long it would take us to pay off our loans and decided that we would be willing to entirely eliminate a few categories from our budget for the months that we were paying off our loans. That meant no spending, on either of our parts, until our loans were gone in the following categories:
  • Entertainment. We would not go to any movies or concerts or rent movies during this time period. We would use redbox codes or the library to see any movies or watch things online (like Lost, which is available for free from abc.com). We aren't huge movie watchers anyway, so this wasn't a major sacrifice.
  • Eating out. I like to cook and it costs nearly half our weekly budget to go out to dinner at an even low-end restaurant. Bart has a number of dinners that he goes to for his job anyway and I don't usually get enough satisfaction from a restaurant meal to justify the cost, so this was pretty low-impact for us.
  • Our allowances. I mentioned in an early post that Bart and I both have an allowance of $50 a month. This money is ours to spend as we will, although realistically, since we don't have a clothing budget, this money generally goes to that. We decided to freeze this category until the loans were gone, so no money would be accruing in these accounts during this time period.
Do I want to never go out to dinner again or buy myself a cute pair of shoes? Of course not. But I'm willing to do it for a finite, specified amount of time. These categories are ones I don't miss all that much over the period of a few months.

Of course, the categories you'd be willing to give up for the short-term might be different than mine. You may hate to cook or need a weekly dinner out for mental health and the idea of not going out to dinner for six months is beyond intolerable. But you might be willing to give up your cell phone for a year. Or you might be willing to get rid of cable for six months.

What categories would you be willing to freeze spending on for a few months in order to put that money toward something greater?

4 comments:

Katie Rich said...

I am impressed with your sacrifices! The Richest Man in Babylon says that most people can cut at least 10% out of their budget, but beyond that, it is easier to earn more money than cut more spending. That is what I have tried to do - so last semester along with teaching I took on 10 hours a week as a history TA. This term while I am not teaching I took on 30 hours as a TA instead of the 20 I initially thought. While it takes more of my time and adds a little stress some weeks, I feel like the amount we have been able to save towards tuition, furniture and our personal savings have been worth it for us. If earning more was not a feasible option, I am really not sure what sacrifices I could make. Probably cut the grocery budget and spend more time on coupons and looking for better deals.

Carly Jane said...

We definitely fall into that category of "penny savers." Before Raymond was born and I was teaching, we lived like we only had Jeremy's pay (as much as we could) in order to put money away into the baby account, the emergency fund, and the three month's living fund. Now that we really do only live in Jeremy's pay, we still make sacrifices to have no debt. We do not eat out (unless given a gift certificate for some special occasion), we don't buy clothes (unless with gifted money), and we don't spend any money on entertainment (including cable, but not the internet). So pretty much the same things you guys cut.

Surprisingly it isn't as bad as it sounds. We have generous families who make up for some of the lack (does that just make us moochers??) when it comes to a new shirt or some Goldenspoon. I would much rather not have debt and instead have security money in our bank accounts than all those other things.

I am like you, however, and trust that in the long run this is somewhat temporary. Someday (in about five years) Jeremy will have a stable steady salary-paying job that will ease some of the penny saving struggle. But I know we will be paying off law school loans and possibly a mortgage too... so I try not to think about it too much since we'll probably still be making lots of sacrifices!

Mary said...

Since going back to school a year ago our food budget/eating out has gone through the roof. I'm eating on campus a lot or grabbing something on the way home. Or sometimes I'll get home at 5:30 and not have time to fix anything (and forgot to get the crockpot started earlier) so we'll go grab something.

Entertainment is an area that we could also cut back on. We do not spend a ton in this area, but we could still rent less redbox movies or use the library for movies instead, etc.

Becca said...

Which is exactly why we should have done grad school in Texas :) We'd have to double both our incomes, pay ZERO taxes or tithing, and have ZERO expenses (food, rent) to be able to pay off our loans within a year!!