Cutting Back - Part Two (aka. my ode to Mint.com)

You know, it's pretty amazing what you can do when you put your mind to it, and I have to admit I'm even surprised that we've been able to live so well on so little since adjusting our budgets. Below are a few things we've done to change our spending habits - both large and small.

1. Savings Goals: When you're paying down debts like our student loans, your savings accounts are going to suffer a bit. However, once you get rid of those payments you'll be able to direct all of those funds back into your savings accounts and build those nest-eggs. We've continued our 10% into retirement (which is typically viewed as a bare minimum), but have pared back our other savings accounts to the basics (see next point...).

2. Continue saving for big fixed expenses: Put away a little each month for property taxes, home insurance, life insurance, car insurance, holiday gifts, home maintenance, car maintenance, etc. so that you're prepared when those large expenses hit.

3. Keep your savings goals - just adjust them: Have a slush fund account? An emergency fund (you should! At least enough to cover your fixed expenses for three to six months)? A 529? Don't stop funding these accounts entirely - just figure out what you can afford to put into them right now. $25 or $50 a month? Even just a little bit will make you feel like you're still making progress towards these goals.

4. Reduce your fixed expenses: You'd be surprised how much you can save when you make a few phone calls and decide to change your lifestyle in small ways. For instance, we've made the following changes -

• We don't have cable. My husband put an antenna on the roof of the house for $25 a few years ago and that's all the TV we get. We've gotten to enjoy not having the TV on all the time. Yes, we do get Netflix, but if we needed to we would give that up and just get movies out of the library.
• Call your car/home insurance companies and see how much you can cut back. I did so recently and cut nearly $300 off of our annual car insurance costs.
• Line dry your clothes. Really. I cut nearly $30 off our power bill each month by not using the dryer.
• Clip coupons. Not for everything, but for those items that you're going to need to buy anyway.
• Cut your own hair. Or, at least, your husband's hair. Thank goodness I have a husband who's willing to let me experiment on his tresses (and who has one of the easiest haircuts ever)...and that saves us $15 a month.
• This is one of those times in your life when you may have more time than money. For example, learn how to sew to save money on alterations. I hem my husband's pants and that saves us $20 a pop.

5. Make a budget and track what you spend (and save!). With websites like Mint.com it's easier than ever - and, better yet, free! You're not going to know how much you're paying each month for, say, groceries, until you start tracking it - and I dare say you'll be surprised. On the flip side, you'll be able to watch your savings accounts grow (even though it might be slowly!) and it will feel good to get closer to those goals.

6. Food. Ah yes, despite my penchant for cutting back I'm not about to give up our passion for good eats. I'm not going to mention the basics about forgoing your lattes (that's pretty obvious), but here are some tips for eating well on a budget.

• What is a reasonable food budget? I could find just about nothing out there on specific numbers but for reference, we're spending about $300 a month, or $75 a week, to feed the three of us.
• Meal planning. Seriously, this was a life changer for me. It was like suddenly everything came into focus when I realized that, with a little pre-planning, I could use our leftovers with purpose. For example, grilling a chicken on Sunday? Make chicken tacos on Monday, chicken salad on Tuesday, and use the final bits for a pizza on Wednesday. Use the chilis in Adobo sauce you bought for your tacos on Monday to add a little heat to your pizza sauce on Wednesday. Oh, and use that cilantro for the tacos on Monday to season your salad on Tuesday. Yep, it's fantastic and yes, I have a type A personality.
• Dried beans. Learn to love them and learn to soak/cook them. In fact, learn to love everything in the bulk department at your grocer.
• You can still do organic/Whole Foods. We shop at Whole Foods and Trader Joe's every week and manage to keep our weekly food bills less than $75. It can be done. See meal planning above.
• Freeze. Buy things on sale (like chicken breasts) and freeze the extras. Make stock and freeze in batches. Make pesto and freeze in ice cube trays. Make a list of what you freeze so that you know what's in there. And, most importantly, use it.
• Use meats sparingly. We are definitely not vegetarian (my husbands hunts), but at least half of our meals each week are meatless. The savings are seen not only in our food bill, but in our waistlines.
• Garden. I'm lucky to have a husband that loves working with his hands and treats our garden like his man-cave. When we make up our dinner plans for the week I 'shop' in the garden first.

7. When you waver, remember why you're doing this. When I feel the need to go to World Market and purchase new curtains or pillows for the living room, I remember that I've given that up for the time being so that I can spend more time with my son. Talk about putting things in perspective. And, if I'm dead set on some project I want to do around the house, I head to Goodwill or a consignment shop to find inspiration at a fraction of the price.

These are just a few things that we've done to cut our spending by thousands every month - yes, thousands. It can be done and, honestly, I've found it to be quite enjoyable. I feel more in control of our spending then I ever have and I know that we're using our finances in a way that allows us to live the life we want to lead.

Cutting Back - Part One

I've always been of frugal mind, but becoming a Mom brought my natural inclination to the next level.

Having a kid helps you clarify things. My husband and I have always been savers, but seeing our finances through the lens of new parenthood made things all the more clear. For instance, when along the line had we decided that, unlike debts like credit card and car payments (which we detest), it was OK to hold onto student loan debt? Yes, there is an interest deduction for tax purposes, but, ah hem, given my husband's out of state tuition at the University of California (yes, the degree was worth it honey!), let's just say we were paying a whole lot more in interest than we were able to claim on our taxes. While we've been paying down these loans above and beyond the minimum payments for years, when our son was born all of a sudden we saw these loans for the burden that they are - monthly financial responsibilities keeping us from living on one income.

I absolutely loved the four months I spent with my son during my maternity leave and while I was at home I massaged our financial data to the point where we could have made it on one income - barely. As in, 'savings go-out-the-wazoo-and-we're-living-paycheck-to-paycheck' barely. The stickler? Those darn student loans.

We went through the whole stay-at-home Mom vs. working-Mom thing and were lucky to find a solution that presents the best of both worlds. Let's just say that I'm extremely blessed to work for an employer that was willing to work with me to find a part-time role that allows me to spend more time with my son while giving us the extra padding that we need to live without stressing about overdrafts.

And, I should add, a solution that helps us pay down those pesky student loans.

How, exactly, are we making do? After all, when you include the cost of childcare, I'm making less than 25% of what I was making previous to my maternity leave. (Ouch - it still hurts.) Plus, in an effort to prove that we can do it on one paycheck, we are living off my husband's salary and nearly 100% of what I make above and beyond childcare is going to student loan payments so we can finally rid ourselves of those debts.

Continued in Part Two...