Towards Financial Health - My First Month Tracking Spending
March 6, 2008 | In Report From The Field |
February 2008 was an experimental month for my husband and I with regards to our financial health. Following the program laid out in Your Money or Your Life, we tracked every penny of income and every penny spent. The results were surprising.
The dollar amounts I consider personal, but the percentages I will share. The percentages tell the real story anyway. All numbers are percentages of gross income; income tax is included in fixed expenses:
Meals Out…8.15%
Food at Home…9.76%
Junk Food at Home…2.03%
Credit Card Finance Charges…2.52%
Other variable expenses…12.08%
Total variable expenses…34.53%
+ Fixed expenses…73.29%
Total spent…107.82% of income.
Yes, we went over. Thankfully, only by 7.82%; it could have been much worse.
Why do I share this? I hope that by pointing out my red flag numbers and detailing my plan to turn my finances around, I can be an example for others who have financial difficulties. I’m a fan of the TV shows Big Spender on A&E and Maxed Out on Style. Both shows have a financial expert helping people to turn their finances around. While I’m glad I’m not on TV to be scrutinized, I plan to report my percentages monthly so you can follow along with me and see how I do.
The Red Flags
The credit card finance charges, in a word, suck. I hate this expense and I can’t wait to pay off the card. However, this month, I made a payment of 1052% of the minimum payment. I didn’t include that payment in the above calculation because it came from savings, not income. That represented approximately one fifth of the total balance. Good, but not paid off.
My other red flag numbers are the meals out, junk food, and to a certain extent, food at home. The food at home number concerns me because I know that we purchase a lot of produce, which tends to be expensive, and don’t end up cooking it before it goes bad. This angers and sickens me, both when I toss the food, and when I do the tallies at the end of the month.
Junk food consists of chips, dip, ice cream, soda, pizza, cookies, fancy coffee creamer, and hot cocoa. This is junk food we ate at home, not to be confused with any food that we ate as a meal outside of the house. That fits under the category of Meals Out, whether it was at McDonald’s or Bertucci’s. By far, the biggest items of junk food were chips with dip and pizza.
This is really an eye opener for me, because until I looked at the numbers, I would have said I had a sweet tooth. But, that’s not where the money is going. True, ice cream and cookies are sweets, but we bought the other items a lot more often. In the end, who needs junk food? Especially when health is one of my priorities.
The Meals Out red flag is ridiculous. I know that if I actually ate all 9.76% of the food I buy to eat at home, this number would be gone. Or significantly lower because it would represent a meal with friends instead of just my husband and I. Actually, last month we had two meals with friends, both of which they paid for. So, I can’t even use that as an excuse! Really, there is no excuse for this number except to say that it has to change.
The Plan For March
1. Fun Money. John and I agreed that we each get a set amount to spend however we want. Out of this fun money will come alcohol, meals out, craft items, gifts, etc. Presuming we are able to stick with this, we should drastically reduce our meals out and a few other variable expenses.
2. Focus on eating food at home. We’ve discussed a few ideas for preparing and eating meals at home easier. Batch cooking, freezing of leftovers, and designing a chart or tracking sheet for what food we have on hand, are all options to consider. Right now they are just ideas, so it will be a few weeks before I can report on whether this works for us.
3. Creating a new habit of avoiding junk food. I count 26 days left in March. I’ve heard that it takes 21 days of repeating an action for it to become a habit. Therefore, by making a conscious effort to avoid junk food through the rest of March, I will arrive at the end of the month with a new habit. At the very least, I will have a much deeper awareness of my desire for junk.
4. Aldi, discount grocery store. I’d never heard of this chain until about 8-10 months ago when a few opened near my home. I haven’t been yet, but from what I hear, they are a great deal. There is a store about five miles from our apartment, close enough to check them out and see if becoming a regular customer will help us.
Conclusion
There was some good news to come out of this experiment. First, I was afraid that we would spend twice what we earned. Thankfully, this was not the case. This month I also had no library fines. I’ve never mentioned it before, but I was notorious for “renting” library books. I’ve started writing a note on my calendar when they are due and this has worked superbly. The other piece of good news is that we managed to live almost within our means under unemployment income. Given that any job I get will pay more than unemployment, this is very encouraging.
The bad news is that we spent more than we earned. This was of course bought on time, i.e. on the credit card. I was also surprised at what we spent the money on. This was definitely a learning experience for me, and I’m looking forward to improving for the month of March.
Restaurant Photo by maxime.wojtczak; Aldi Photo by safaris
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Keep going. Aldi are great, we use them.
We find eating at home is a big money saver.
Look forward to seeing how you go this month.
I’ll probably take my first trip to Aldi this weekend. And, as part of that, our first round of bulk cooking. Hopefully, both with go well.