Tag Archives: budgeting

How to break the cycle of paycheck-to-paycheck living

This post was originally published on June 8, 2010.

Paycheck-to-paycheck living has become all too common, especially in this economic climate. Unfortunately, it’s a vicious cycle, and when you’re in the middle of it, it can feel impossible to break out of it. It seems that every time you start to get ahead, there’s a car problem or a medical emergency or some other sudden expense that lands you right back where you started. I know from personal experience.

Nothing reminds you of how unsustainable paycheck-to-paycheck living is like losing your income. My husband and I supplemented a low income with our savings account for 8 months in 2010, and I can’t help but think about how different our situation would be if we hadn’t broken free of the paycheck-to-paycheck cycle.

The good news is, it’s not impossible to break the cycle. It takes time and patience and perseverance, but you can dig yourself out of the rut of paycheck-to-paycheck living. Here’s how:

Stop blaming your income.

One of the biggest complaints of people living paycheck-to-paycheck is that they simply don’t make enough money. It’s easy to tell yourself that your income is the problem, and that making more money is the answer. The problem with that line of thinking is that lifestyle inflation usually goes hand-in-hand with income increases when you’re living paycheck-to-paycheck. The sad truth is that it doesn’t matter what you make; you will find a way to spend it all. So stop blaming your income, and start thinking of ways to fix your situation now.

I know there are people who legitimately struggle with low income. If you’re in that situation, and you’re taking advantage of all of the government programs available to help you get back on your feet and still struggling, the only advice I can give you is do what you can to survive for now. It won’t last forever. But someday when you’re earning more, remember this time. It will motivate you to save a cushion that will protect you from going through this again.

Spend less than you make.

If you’re stuck in a paycheck-to-paycheck rut, the only way to start digging your way out is to start spending less than you make. The very first step is to build a budget and cut any and all unnecessary expenses. If you’re ever going to get ahead, you need to free up some money in your budget to give yourself a cushion. Take a serious look at your spending habits. If you’re struggling to make ends meet, it’s likely that you’re overspending.

If you’ve taken a serious look at your finances, and you continue to struggle despite the fact that you’re not eating out or making unnecessary purchases, it’s possible you fall into an income category that could qualify you for government assistance. Consider taking advantage of those programs to help you dig your way out of your rut.

Save for emergencies.

If you’re living paycheck-to-paycheck, this scenario is probably familiar: every month, you try to put money in the bank, and every month something comes up that forces you to clear out your savings account. Before you can truly break the cycle, you need to be prepared for emergencies. Once you’ve cut your spending, start putting every extra cent into savings. Don’t be discouraged if you hit a few setbacks. Just keep saving. Eventually, you’ll build a cushion of $1,000-$2,000 for financial emergencies.

Pay this month’s bills with last month’s paycheck.

The ultimate goal is to get ahead of your expenses. Once you’ve saved for emergencies, it’s time to build a cushion on your checking account. If you’ve built a budget, then you should know approximately how much you spend each month. Instead of spending extra money, put it aside to put yourself ahead. Once you’ve saved an entire month’s worth of expenses, you’ll no longer be waiting until payday to send a check or restock the refrigerator.

Be disciplined.

When you’ve got several thousand dollars in the bank, it can be hard not to feel so confident in your finances that you go right back to your overspending ways. Remember, though, your savings doesn’t change your income. What I mean is, if your paychecks equal $3,000 a month, and you have $5,000 in the bank, it may feel like you can spend $3,500 a month. But remember, your savings won’t last forever, and you’ll end up right back where you started in four months. Budget according to your monthly income. If an emergency forces you to tap your emergency savings, be diligent about replenishing what you spent. Otherwise, you’ll end up living paycheck-to-paycheck again.

Simplify your money

At the start of the year, my friend Kacie inspired me to explore new options for simplifying our finances and bill pay process. I’m still working out some of the details for these new systems, but I’m going to share them with you here, in addition to the systems we already have in place for simplifying. Be sure to share your ideas in the comments!

Go paperless.

If you haven’t done it already, chances are you think about it every time you open a paper statement and see the words, “Go paperless now!” My advice is to just get it done. To keep a record of statements, open the electronic version when it becomes available and save it as a PDF on your computer. You’ll feel better without all that paper mail bogging you down, and it will simplify your filing system, too.

Automate your budget.

Rather than manually tracking expenses in a spreadsheet or on paper, sign up for a service like Mint.com. Mint will automatically track and categorize your spending. With very little management, you can see a complete picture of your spending and budget categories as well as charts showing you whether you’re on track for meeting your monthly budget limits.

Automate your bills.

Kacie has been working on this herself, and it inspired me to figure out a system that works for us. Right now, I navigate to each bill’s website and pay each bill online individually. I like the immediacy of paying online through the site, because I receive a confirmation immediately, and then it’s done.

I don’t like automatic electronic funds transfer, because it basically gives the payee unlimited access to your account forever. (I learned this the hard way when our previous health insurance company continued debiting our account for 4 months after we canceled the policy despite the fact that I elected to stop automatic debit months before we canceled. I eventually had to file a fraud claim with my bank and have them blocked from my account, at which point they sent us a letter notifying us that they were canceling the policy due to nonpayment. PFFT. FINALLY.)

Check with your bank to see how their automatic bill pay system works. Setting up each individual payee will be a pain the first time, but then it’s done and you can pay each bill through your bank’s website with a single click.

Split your paycheck to even out pay periods.

My husband is paid twice a month — on the 15th and on the last business day of the month. I try to balance our bills so that we’re paying about the same amount in fixed bills from each check, but our mortgage payment really throws that off. If we were extremely disciplined, this wouldn’t be an issue. We could just leave the surplus from the other check alone, and use it in the next pay period. Unfortunately, that’s not usually what happens. What happens is we see that surplus in the first check, and we overspend for the first two weeks of the month. Then at the end of the month after the bills clear, things are really tight until the next pay day. It’s annoying.

Kacie came up with an idea that will remedy this problem, and I’m going to give it a try myself. She decided to add up all of her fixed bills (mortgage, utilities, etc.), and have half that amount deposited from each paycheck into a separate “bill pay” checking account. The remainder of each check will be deposited into a different account for daily expenses like gas, groceries, and other purchases.

For example, to make things simple, let’s say you earn $2000 a month. Your fixed expenses total $1500. Everything else is $500 a month. After paying your fixed bills, you have $400 left out of the first check and only $100 left out of the second check. Under Kacie’s system, you would deposit $750 from each check into the bill pay account and $250 into the daily expenses account. Now you have an equal amount for daily expenses each month, and your fixed bills are covered no matter when you pay them.

It might sound complicated, but I like the simplicity of having the same amount for expenses in each pay period. The symmetry will make budgeting much easier.

Pay the bills on pay day.

To combat the confusion of tracking a million different due dates, pay bills just twice (or once) a month. Every pay day, I go through and pay all the bills that are going to be due in the next two weeks. I have a list that I work from, so I know around what time the bills will be due even if the actual date fluctuates by a day or two. Once I pay all the fixed bills, I know that whatever is left in the account is available for day-to-day expenses.

How do you keep your finances simple?

Photo credit

Is sticking to your budget hurting your savings account?

This post was originally published September 3, 2009.

piggy bank

“Wait, wait,” you’re saying. “Budgeting helps you make better decisions with your money, which should be helping your savings account. Isn’t that the whole point?!” And you’re absolutely right.

However.

This summer, I learned a valuable lesson that I want to share with you. Sometimes being too rigid in your budget can actually lead you to make bad budget decisions.

This isn’t one of those posts about how you need to treat yourself every now and then to avoid burn out. This is about how sticking to a budget can sometimes make extra money feel, well, extra. And if it’s extra, why not just spend it? You deserve it after all that hard work budgeting, right? The problem is, this mindset can prevent you from growing your savings account.

I am constantly vowing to use the snowflaking method to increase my savings, but my strict budget gets in the way. If I receive unexpected “extra money” in the middle of the month, I often end up spending it. After all, this is extra money. I’m technically sticking to my budget, right? So I can spend this money on whatever I want.

It’s a bad habit, and it’s slowing down our savings progress. If we saved this extra money instead of spending it, we would be saving a lot more.

So how do we break this bad habit? I have a plan. Part of the problem is that I feel compelled to make a plan for unexpected money right away. Whether it’s $10 or $100, I decide how to spend it immediately, and more often than not it involves spending it on something we don’t need because, hey, it’s “extra.”

From now on, unexpected money will be deposited and ignored until the following month when it can be added to the budget. It’s much easier for me to commit money to savings when I’m creating a budget than it is for me to commit unexpected money to savings when the budget has already been set for the month.

I’m hoping that adding it to a budget will help me view it as part of our income instead of “extra money.” I’m much less likely to spend our regular income than I am to spend money that I don’t include as part of our income.

Is this a problem you face? How do you combat “extra money syndrome”?

Photo by alancleaver

Are you managing your money, or is it managing you?

budgetingWhile visiting my best friend last weekend, we had an interesting discussion about budgeting. She and her husband are in the same place Tony and I were when we decided to start living frugally. They’re looking for ways to cut back after moving to a new city and taking a pay cut. Like a lot of 20-somethings, they have a lot of aspirations for their money, and they’re looking to make their dreams come true faster by saving more and spending less. They’re definitely on the right track.

During the conversation, we came to a conclusion that I think explains proper budgeting more simply than any way I’ve tried before: The problem is that many people choose the lifestyle they want, and they try to earn enough or stretch their money so they can live that lifestyle. Proper budgeting is the other way around. You need to look at how much money you have, and determine the lifestyle you can live with it.

This is the number one mistake I see new budgeters making. If you’re trying to make your income match the lifestyle you want, you’re setting yourself up for a life of debt, paycheck-to-paycheck living, and constantly feeling behind financially. Proper budgeting is about finding the best balance for spending the money you have.

Controlling my budget this way also makes it easier to increase savings. Extra money shows up as a surplus in our budget. I’m already used to getting by on less, so I’m more likely to throw extra money into savings. If I was constantly working on a deficit, that money would just be eaten up by daily spending.

I’m not against working harder to increase your income if you can do that. But don’t budget for that lifestyle until the money is in the bank.

Zero-based budgeting is the easiest way I’ve found to do this. If you’re setting up your first budget, don’t look at expenses first; look at income. Zero-based budgeting forces you to divvy up your income based on exactly what you earn. It allows for greater flexibility in your income. Some months you may earn more. Some months you have extra expenses. Creating a budget every month based on the money you have allows you to stay in control.

Remember, budgeting is about controlling your money. If you feel like you’re not in control of your money, it’s time to reevaluate your budget.

This article from my partners at Debt Advisory Centre * provides a little more budgeting advice.

Photo by think panama

*This post includes a link from one of my partners.

How much are you really spending?

At the beginning of this year, Tony was hired for a full-time teaching position, and our income doubled. That sounds like we’re making a lot more than we really are considering the fact that Tony was seriously underpaid as an adjunct professor. But for us, it’s a lot of money, and it’s finally enough to cover all expenses, save a good bit of money, and treat ourselves every now and then.

Along with the income increase, our goals increased, too. Now that we can afford to fund our savings account again, we’re working toward the lofty goal of saving for a down payment and other necessary costs that go with buying a house. We’ve set a tentative deadline for two years.

Aside from buying our car — an admittedly huge expense — and an increase in rent, we haven’t increased our major living expenses at all. We budgeted carefully for the car payment and the increase in rent, and these increases were offset a bit by a reduction in health insurance premiums, so those two things don’t affect our monthly savings allotment anyway.

One thing I’ve noticed, though, is that big expenses aren’t what really affects my budget. I always think carefully before adding a big expense. We carefully looked at our budget before adding a car payment to it, and we thoroughly discussed how much we could afford in rent before signing our lease. I know what to expect when I add a big expense. What gets me though, is the hundreds of tiny little purchases I make throughout the year. The amount is so small that I don’t give a second thought to swiping my debit card, but at the end of the month (or year), it adds up to a significant chunk.

For example, if you buy a soda from a vending machine every day on your lunch break at work, it doesn’t seem like a big deal. It’s just 50 cents a day. But that adds up to $2.50 a week, $10 a month, and $120 a year. Is a soda a day really worth $120 a year to you? If the answer is yes, then great! But most of the time, when I really think about purchases like this, it’s not worth the money to me.

My biggest vices?

  • Starbucks beverages – At $4 each, the expense adds up quickly even if I only indulge 2 or 3 times a month.
  • Movie rentals at the local video rental store – Sometimes we run out and rent a movie if it’s not available on Netflix Instant Play or Redbox. This is mostly TV shows or older movies. We pay $2-$3 a pop a few times a month for the convenience of watching something now, but if we just put it in our mail queue and wait, we wouldn’t have to pay extra at all.
  • Cute baby clothes on the clearance rack – I’m guilty of paying as much as $5.50 for a pair of pajamas just because they’re cute. Yes, it’s clearance, but he really doesn’t need any more clothing. Even if he did, I could get a much better deal at a consignment store.

A few dollars here and there doesn’t seem like a big deal at the time. We’re making more money, we can afford it, right? But these purchases add up. All together, if I buy 4 Starbucks beverages, rent two movies, and buy one outfit, that’s $25 a month I could have been saving toward our house. That adds up to $600 over the next two years that could go toward a house. The $25 isn’t the problem; the problem is that I spend $25 without even thinking about it.

This isn’t to say that I believe in total deprivation. You guys know that I’m all about budgeting for life’s little luxuries. The point is, it’s important to budget for these things. You wouldn’t drop $600 without thinking seriously about it, so why should this be any different?

Sit down and think about the little mindless purchases you make. How much are you really willing to spend when you think about it?

I enjoy treating myself to the occasional Starbucks beverage, but $16 a month seems like too much. If I limit myself to one per month, that’s only $4 a month. That’s much more reasonable to me. Even better, I could cash in MyPoints or Swagbucks (referral link) on Starbucks gift cards and get them for free.

When I really think about those movie rentals, I remind myself that I’m already paying $120 a year to rent through Netflix. I’m not willing to spend any more than that for entertainment, so I should really skip those stops at the video rental store and just wait for the things we want to watch to come in the mail.

And Judah is going to look cute in whatever he wears, whether I pay the clearance retail price or a fraction of that at a consignment store. So I should stay away from the clearance racks and be more strategic in my clothing purchases for him by shopping consignment sales and setting a seasonal budget for how much I can spend to keep him clothed.

It’s important to be mindful about every penny you spend, whether it’s several thousand dollars for a car or a few dollars for a coffee. Every penny counts, and if you’re wasting money on things that don’t really matter to you, it’s easy to sabotage your goals for the things that do matter.

Photo by alancleaver

How much is laziness costing you?

I’ve mentioned before that Tony and I use a credit card to purchase all of our gas. We pay the bill off every month before it accrues any interest, and we get 5% cash back on all fuel purchases. Since we’re not paying interest, the 5% cash back is basically free money, and keeping an active credit line is important for building and maintaining a good credit score. It’s win-win.

The credit card is through BP, and we only get 5% cash back on BP purchases, so 99% of the time we buy gas at BP. We only buy at another gas station if the cost per gallon is less than we pay per gallon with the 5% discount. Makes sense, right?

At the beginning of December, we started seeing signs at BP gas stations for a new rewards program. Fill up five times, and you receive a $10 gift card. Since we fill up at BP 99% of the time, it should have been a no brainer for us. Enrolling in their loyalty program would net us up to three $10 gift cards for 15 fill-ups in addition to our 5% cash back.

The only catch? You have to print a receipt and take it inside to the cashier to get credit for filling up.

I’m ashamed to admit that we didn’t start participating in the program until last week. It’s the end of January, and we’ve only gotten credit for two tanks of gas even though we did more driving in the month of December than we’ve ever done in a single month. We probably could have already received the $30 worth of gift cards considering all the gas we used last month with holiday travel throughout the state and the move.

The truth is, I saw the signs every time I filled up, and the only reason I didn’t take advantage of the promotion was laziness. It was cold, I didn’t want to drag the baby into the gas station, I was in a hurry and didn’t want to go inside. It was easier to pay at the pump and get on my way, so that’s what I did. But it cost me. We easily would have filled up 15 times in three months, but we probably won’t fill up enough in the next six weeks to receive all three of the $10 gift cards we could have gotten.

Granted, in the weeks after a newborn arrives, I think it’s easy for even the most frugal person to be lazy about saving money. But it’s unlike me to turn down any offer for free money, and that’s basically what I did by putting off participating in this promotion.

I see this type of thing all the time from less frugal people, too. Sometimes it’s easier to pay twice as much for an item at a gas station when you need it than it is to go to the grocery store where prices are much lower. Millions of people would rather pay higher prices for groceries across the board than clip coupons and hunt for deals. Many people spend hundreds of dollars a month on takeout because it’s easier than cooking every night.

Laziness is a harsh word, and I don’t think it applies in all cases. When time is limited, I think it makes sense to value your time over the money you could save sometimes. But my point is, how often do we choose the easy way when just a little bit of effort could save us a lot of money? If you’re taking the easy way out most of the time, you could be costing yourself a fortune.

It’s a question I’m asking myself a lot lately as we adjust to earning a higher income than we’re used to. I don’t want to be lazy about our finances. When you have a little extra money, it’s tempting to take the easy way out, but I’d rather work a little harder to save even a few dollars if that means building our savings and reaching our goals faster.

So it’s confession time: how often do you let laziness keep you from saving money? Think about it, and consider just how much you could save if you made a little extra effort in those situations the majority of the time. It could mean paying off your debt sooner, building your savings faster, going out to dinner once a month, or even taking a vacation once a year. When you make the extra effort to save most of the time, those dollars and cents add up quickly.

Are babies expensive?

Throughout my pregnancy, everyone who gave me advice agreed on a lot of things. I’d love the baby instantly. He’d grow too fast. He’d be worth all of the discomfort of pregnancy. (They were all right.)

There was one thing they couldn’t agree on, though. Half of them said to prepare myself because babies are SO expensive. The other half told me babies don’t cost much at all.

I was really curious to see who was right. Two months into parenthood, and I can see where the disagreement comes from. The answer: it depends.

Baby expenses begin long before the baby is born. We needed a car seat, somewhere for baby to sleep (we chose a bassinet for the first few weeks and a crib for later), clothes for the baby to wear, and diapers for the baby to, well, you know. The rest of the baby stuff is optional, but nice to have.

While it’s possible to buy secondhand, shop around for deals, or accept hand-me-downs (we did all three of those things), the truth is that the initial startup costs for baby can be steep. Thankfully, we have a huge support group of family and friends who gifted us with everything we needed.

Once the baby’s born, formula can be one of the biggest monthly expenses. If your baby doesn’t have special dietary concerns, off-brand formulas can provide the same nutrition for a fraction of the price. The cheapest option is breastfeeding (it’s basically free if you do it exclusively), and I’m incredibly grateful that it’s working out well for us so we can avoid the expense of formula.

Diapers are another huge monthly expense. Newborns use 8-12 diapers a day, so the costs really do add up. Buying diapers on deep discount and using coupons can cut the cost tremendously. So can cloth diapering. By hunting for deals, buying seconds (slightly imperfect but new diapers), and sticking with the economical prefolds and covers system of cloth diapering, I built a stash that will last throughout my baby’s diapering years for under $300. That works out to about $10 a month if the baby spends 2 and a half years in diapers. That number drops even lower if you use your diapers for a second or third child.

Our generous friends and family provided us with enough new clothing and hand-me-downs from Judah’s cousins to keep him clothed for the next year. He has enough outfits in each size that I can get away with doing just one load of his laundry every week. He wears the same things all the time, but that’s okay with me. When he grows out of the clothes we have for him, we can shop garage sales, thrift stores, and clearance racks to keep clothing costs down. Until he’s old enough to complain about it, he’ll be wearing the same handful of outfits every week.

These are just the expenses that you can control, though. The biggest expense for us (and one that we unfortunately can’t do anything about) is health insurance. When my husband and I were both covered by individual policies, the cost to add our son was going to be astronomical — $400 a month added to the $500 we were already paying to insure the two of us. My husband’s new job offers family insurance for about half that, which is a relief. But our health care costs are much higher as a family of three than they were as a family of two.

Later we’ll see changes in our food costs as Judah starts eating solid foods. There will also be education expenses and recreational costs as he gets older.

These expenses that you can’t control are the reason why it’s so important to save money on the expenses that you can control. Cutting costs where ever you can will make it easier to afford the expenses you can’t change.

My point is this: if you’re pregnant or want to get pregnant, how expensive (or inexpensive) your baby will be is entirely up to you. Like so many other expenses, the choices you make will affect your budget. If you buy everything brand new, pay full price for diapers and formula, and fill your baby’s closet with more clothing than he needs, the costs can be astronomical. But with a little careful planning and frugal know-how, your baby’s first year doesn’t have to affect your monthly budget that much at all.

Adjusting to our new lifestyle

This summer has been terrible for our finances. We haven’t had any income since May. Thankfully, our bills were drastically reduced for the first, oh, 6 weeks of summer while we stayed with Tony’s family. But we still had car insurance, health insurance, student loan payments, my health insurance deductible, and other expenses.

We moved into our own place in the middle of July, and ever since then we’ve been hemorrhaging money from our savings account. I try to remind myself that this is why we saved. We knew moving was going to be hard, and that Tony wouldn’t start work until August. And of course, when you start a new job, it’s always a few weeks before you receive your first paycheck.

Tony is scheduled to be paid for the first time today, and this month marks the first when we’ll be utilizing our new budget. Up until now, the name of the game has been Spend as Little as Humanly Possible, but I didn’t create a zero-based budget because we didn’t have a monthly income.

When Tony was first offered his adjunct teaching position, his salary wasn’t going to be enough to cover even our bare bones expenses. But they offered him additional classes (he’s now teaching 6), and the extra income took us barely over the edge. Thankfully, they’ve already offered him 6 classes for the spring semester, too, so we know we’ll be set until May. I’ve spent a lot of time crunching numbers, and it looks like we should be able to hang on to our savings if we can keep our budget very tight.

Unfortunately, there’s no room in our regular budget for savings. However, our regular budget is based only on my husband’s income. Any income I make through freelance work or blogging will be reserved for savings. So we’re hoping to replenish the $2,000 we spent from our emergency fund over the summer.

Our new monthly income is about 1/3 lower than our previous combined income. Our monthly savings budget took the biggest hit since we’re no longer including it in our regular budget (for now). But there are other shifting expenses. Our rent is much lower here, but we’re now paying about $500 a month for health insurance (and that will go up when the baby comes. Ugh.) We’re also spending money here and there buying things for the baby (diapers, clothing, etc.)

With new expenses and lower income, we’re trying to make major changes to our spending habits. Here are the biggest changes:

Groceries/Household Goods

I’ve jumped onto the drugstore game, and I’m doing pretty well. Unfortunately, my pregnancy has wreaked havoc on our food bill. When I go to the grocery store, I end up with tons of extra food in the cart. When I send my husband alone, our bill is lower, but I spend the week feeling like I’m starving and there’s not enough food. Sometimes I even send him out to pick things up. Harumph. I’m not sure how to get around it. I was never a big snacker before I got pregnant, but now it seems I need several snacks a day. And snacks are expensive. Hopefully my drugstore deals are offsetting our overspending on groceries. I’ll have to wait until the end of a full budget cycle to know for sure.

Entertainment

We’ve cut cable and most entertainment spending from our bill for now. I haven’t missed going out much since most days I don’t feel well enough to do anything but lay on the couch anyway. Now that we’re living in a smaller town, we’re also not tempted by recreational shopping trips that result in $50 worth of stuff from Target that we don’t need, and that definitely helps.

Utilities

This apartment is much more energy efficient than our last place. So we’re saving money on our electric bill without even trying. Yay! We tend to keep our place cooler by default, so I’m anticipating lower energy use in the cooler months — at least until December when the baby arrives.

Our goal is to make it through the year with our emergency fund intact. The really ambitious goal is to replenish what we’ve spent and save a little more on top of that. We’re still working on cutting our spending to free up more money for savings. I’ll let you know how it goes!

Photo by purpleslog

Frugal survival mode: How we’re preparing for the lean times

It’s been almost two months since my husband graduated and I quit my job to move closer to family. So far, it’s been pretty easy for us thanks to the generosity of Tony’s family. We’re staying with them while we search for a place to live in our new city. We’re spending very little beyond necessary bills like health insurance and car insurance.

Next month we’ll move again, and our monthly expenses will swell to include rent, utilities, and soon after that, baby. My husband will be working, but our income will shrink to about 1/3 of what it was when we were living in North Carolina. So we’re planning now for how we can minimize our expenses, maximize our earning power, and survive the next year of low income.

Downsizing.

We’ve set a budget for rent that’s about $200 lower than what we paid in North Carolina. Unfortunately, our low budget combined with a number of stipulations for our next apartment has made the search pretty tricky. We have a dog, so pets must be welcome. Because we plan to cloth diaper, we’ll need a place with a washer and dryer in unit (or washer/dryer hookups since we own a set). I’d also like to have a small second bedroom for a nursery. We may have to go a little over our budget to find the right place, but housing is one area that I’m willing to spend a little more on. After all, the more comfortable we are at home, the less likely we’ll be to want to spend outside the home.

Earning while we can.

We’ll have about five months from the time we move until baby comes. Our plan is to earn and save as much as we possibly can in that time. I’ll be substitute teaching and earning as much money as possible from freelance work. Tony is looking for a second part-time job, which he’ll likely keep after baby arrives. We’ll have less time and energy once the baby gets here, so we’re doing all we can to earn money while we can.

Cutting non-essential budget items.

It’s amazing how much money you can cut from the budget by cutting out all non-essentials. We learned this lesson when we first moved to North Carolina three years ago. Non-essentials include most entertainment, eating out, cable television, junk food, soda and any extras that get thrown into the cart at Target or the grocery store. If you cut spending down to the bare essentials, you’ll likely be surprised at how much your budget shrinks.

Couponing and drug storing.

Now that I’m going to be a work-at-home mom, I’m giving couponing and drug storing another chance to save money. I’ve had little luck with these methods in the past due to my busy schedule and lack of motivation, but I’ll have more time to figure things out in the five months before I have the baby, and I think I can build a pretty good stockpile in that time.

Saving and investing are on hold for now.

Before we moved, we were saving almost 50% of our income. For the next year, we’ll be lucky if we can make ends meet, so saving and investing will have to go on the back burner until we can increase our income. My hope is that we’ll be able to start saving again with the next year, but for now, we need to focus on downsizing and surviving on a limited income.

Photo by spiderpop