Tom’s first post – Getting Started
So now that you know what type of debt I’m in (and chances are you are in the same boat!) let’s talk about how we are going to get out of it. It’s a long process, so don’t think this is going to happen overnight. We did at first, and boy was we wrong! Yet, with each month that goes by we see a little more light at the end of the tunnel. After a while you find that you get excited to see how much closer you are to your goal!
So, ready to get started? Good! Here’s what we did first.
We knew what things we must pay each month, and we knew how much income we had coming in each month. These things were fixed (well, to a point – I’ll talk more about that in a minute) so now we turned our focus to our variable expenses. These include things like cell phones, cable TV, food, clothing, entertainment, etc. We went through all our receipts and checks for a month and categorized each one. Here is a sample of what ours looked like:
• Cable TV – Premium Pkg. – $96.00
• Cell Phone – 4 phones – $170.00
• High Speed Internet – $60
• TiVo – $29.95
• Dining Out – $150.00
• Groceries – $300.00
• Gym Membership – $50.00
• Entertainment – $70.00
• Newspaper & Magazines – $25.00
• Gas, Toll and Parking Fees to get to Work – $140.00
We wanted to cut out the fluff and find extra money to put towards paying off our high interest cards. So we started looking at each expense. The first thing to go with TiVo, it was a nice to have but provided no benefit other than convenience. Along the same lines we cut back our cable service and dropped most of the premium channels. That saved us another $50 per month. At the same time we started discovering without sitting in front of the TV all the time we actually got outside more and did things together as a family!
Dining out was next on our cut list. It’s no secret that eating out is expensive. However, we didn’t want to take away everything we liked. If you do that then you are setting yourself up for failure from the very start. So we decided that we would reserve eating out for special occasions, twice a month. We estimated we could save $75 by doing that.
My wife was reading over a newsletter from work and she found out that her school district actually provides reimbursement for those who take public transit. It’s a benefit that many big companies are providing now to encourage their workers to commute or take public transit. Chances are, your company might provide the same benefit! We saved $100 off our gas, toll and parking fees per month by her switching to taking the train to work. She even says she enjoys the commute now because she can catch up on her reading!
Our cell phone bill was a monster, so we knew we had to tackle it next. We had a family plan with 4 people on it. We didn’t want to get rid of our cell phones because they provide a vital way of communicating within the family and are necessary for work. However, we dropped the text messaging, insurance and multi-media features and freed up $60 per month. We’re going to watch how many minutes we use and see if we might be able to lower our plan down to use fewer minutes over the next few months.
Our entertainment budget we left alone for the time being. It’s important that you have something you enjoy doing in your budget. So we decided that going out to a few movies per month was worth it to keep us sane – as long as we don’t buy the popcorn and soda!
I ended up cancelling the newspaper and our magazine subscriptions saving another $25. You can view most of that information online nowadays. The internet we kept because my work reimburses us for the cost of the service. The last thing to go was the gym membership. Like most people, we never went and we have a big, beautiful park just up the road from us.
All in all, we managed to find an extra $390 without even really trying! You will be surprised just how much fluff you can find to cut out of your monthly expenses with little effort. Now that we had given ourselves almost a $400 raise, we were determined to put that “raise” to good use!
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It is good that you could find all those things to cut or eliminate..but you still left out some stuff. I notice that you did not mention electricity here, but with a few simple changes you can see that electric bill come down.
lulgal11 — they just cut $390 out of their budget… that’s great! It’s important to NOT make your life miserable by trying to save with every little thing – there is the quality of life factor. I think this is a great start!