26 October 2017
One of my pet peeves about personal finance is when experts make blanket suggestions on how to save money. I think the way you spend (and save!) should be based on what you value. If you do this, you’ll not only find it easier to stick to your budget, but you’ll get greater pleasure out of the money you DO spend.
Though I dislike one-size-fits-all suggestions, I love being inspired by how others are finding ways to save. I asked six of my savviest friends for their favorite ways they shave their budgets, and added in a few myself — I hope they get your wheels turning!
Saving money on food:
I don’t eat meat during the week. I have a pretty consistent rotation of small and inexpensive meals that I eat for weekday lunches and dinners. Not only does it save me money, but I don’t get decision fatigue over deciding “what’s for dinner?” — Jess Metcalf, Content Manager and newly-engaged gal
We shop almost exclusively at Aldi, which cuts our grocery bill almost in half (compared to name-brand grocery stores). I make a dinner plan based on their weekly specials, which helps us eat in for the majority of the week with plenty of leftovers for lunches. — Samantha Ray, hair and makeup artist and blogger
Food spending has been a challenge for us (to put it lightly) but we’ve made significant progress by switching to getting vegetables from a CSA box and buying meat from Costco (organic meat at normal prices). We get the box twice a month and plan our meals based on what vegetables we receive. This has challenged us to think outside our recipe box/cookbooks and has significantly cut down on the number of ingredients we buy per recipe. — Dave Kirk, finance guy and husband
I can’t even imagine how much we’ve saved over the years by almost never buying alcohol. We don’t hate drinking, but it’s just not something that’s important to us, and therefore doesn’t make sense for us to spend money on! – Em
I use cash and a calculator at the grocery store! It’s our foolproof way to not blow the grocery budget. — Valerie Keinsley, stay at home mama and online stationery shop owner
Saving money on entertainment:
I solely order water at restaurants, unless I’m celebrating something, in which case I’ll treat myself to a glass of wine or a cocktail. My mother used to own a restaurant, so I know the markup on sodas and my beloved sweet tea, and I consistently choose water instead. Unless I’m at Merritt’s, in which case, a glass bottle Cheerwine is calling my name! — Jess
We haven’t had cable for a few years after switching to an HD antenna (works for football and the Bachelor franchise) and Netflix. We recently cut Netflix as well, because you can only re-watch The Office so many times. We’ve replaced watching TV with porch date nights and reading before bed. — Dave
I stopped buying books on Amazon, and I wait for library books now. It’s an exercise in patience, especially for popular titles, but I’m saving money and learning my bookshelves. — Jess
Saving money in your relationships:
We have gotten creative with ideas on how to spend quality time together without dropping so much dough – things such as trying out a new recipe at home, sitting on the porch swing with a bottle of wine, or going out for a beer at a new brewery. These all cost around $10, which enables us to have more date nights since we aren’t dropping $50+ on a dinner out. — Elizabeth Burns, eCommerce gal and house flipper
My love language is gift giving, and I save a ton of money by shopping at the Dollar Tree for all my wrapping paper, tissue paper, and extra giftable goodies like candy, small personal care items, cards, and balloons. — Samantha
Since having our son, we’ve realized how expensive getting a babysitter AND going out to eat is, so now, most of our “date nights” are on our porch with a bottle of wine. It gets us out of the house (if only to the outside of our house), and the only thing we’re buying is a $6 bottle of Trader Joe’s wine, rather than spending $25-30 on a bottle at a restaurant. But, my city-loving wife would be crushed if that’s all we did, so we also plan out special monthly date nights when we do hire a babysitter and actually head out. Scheduling them once a month gives us something really fun to look forward to, and keeps us from being tempted to go out on a whim and spend more than we had planned. — Dave
Since having June, we’ve been very open to borrowing, buying secondhand, or accepting hand-me-downs whenever possible. I think sometimes, especially if folks plan to have multiple kids, they justify buying everything new, but we’ve found it’s just as easy to swap back and forth with friends. We’ve borrowed clothes, a crib, a bathtub, a hiking pack, and so much more! – Em
Saving money on your home:
Target is my budget Kryptonite. I go in for toothpaste and come out with a new duvet, kitchen canisters, boots, and no toothpaste. One thing that has helped me save money is that instead of going into a Target for basics like toiletries, cleaning supplies, pet products, and some food items, I signed up for Target subscriptions. I can have all of these everyday items delivered to my house regularly (free delivery!) and subscription items are discounted by an additional 5%. This way I can still get my favorite Target items without having to actually go into a store and potentially blow my budget on all of the cute stuff I don’t need. — Elizabeth
When our grocery store offers 4x the fuel points on gift cards, we buy gift cards for upcoming projects/gifts – i.e. if we’re planning a home project, we get a gift card to Lowe’s in the amount we budgeted for the project. That way we earn 4x the points, and often get up to $1 off per gallon of gas! It takes some planning, but is well worth it in the end. — Valerie
Many products come in a generic brand version, a refurbished version, or a lightly-used version that’s practically the same for a fraction of the cost. You can often buy floor models for a highly discounted price, too, which we’ve been doing a lot recently as we furnish our new home. And remember, almost everything in life is negotiable – you’ll never know if you don’t at least ask! :) — Robyn Van Dyke, photographer, blogger, and co-owner of a dental practice (with her husband!)
We utilize the Habitat Restore. Since flipping houses is one of our side hustles, we visit the Restore often for anything from exterior doors, shutters, furniture, lighting, and faucets. A lot of big box stores will give donations so you can buy new items for a fraction of the cost while contributing to a good cause. There are also neat antique finds like gorgeous vintage chandeliers and clawfoot tubs. It’s definitely worth checking out if you are sprucing up your home on a budget! – Elizabeth
Saving money on purchases:
Starting around the midpoint of the year, I begin hoarding planned purchases like a fevered squirrel until I unleash them all on Black Friday/Cyber Monday. I keep a list of things I’d like to buy and that might go sale (so far this year’s includes Winter Water Factory dresses for June, her Salt Water Sandals for next year, and Walk in Love tees for the family for next Valentine’s Day). I also, of course, include as many Christmas gifts as I can! To make so many purchases in one weekend is always a bit of a shock to my system, but it’s totally worth it for the savings. – Em
ReceiptPal! My husband found this app where you take photos of your receipts and earn cash back for them, redeemable as gift cards (including Amazon!). We’ve earned over $100 in Amazon gift cards, which we then use for household purchases to save money. He spends roughly 10 minutes a week putting in receipts. It’s slow going — you usually only earn a gift card every four months or so — but totally worth it. — Valerie
Whenever we need or want to buy anything, we wait. This does two things: it gives us time to consider if we really need or want it, and it gives us time to find the best deal. Almost everything has a sale or coupon — it’s just a matter of waiting until the sale, googling for coupons, or even buying a coupon on Ebay! Better yet, wait for the sale AND stack the coupon AND use Ebates! — Robyn
We use a credit card with 2% cash back for almost every purchase, and pay it off twice a month, every single month. I know this might be controversial to some, but for us it’s a no-brainer. We’ve earned hundreds of dollars over the years this way! – Em
Saving money on everything else:
This has been a hard lesson to come by this year, but we’ve learned there are no “sacred cows” in our budget. To accomplish our savings goals, we’ve had to take a hard look at every single budget line and readjust our perspective (and add a heaping dose of contentment and gratitude). We might not be traveling to an international destination every third year like we had hoped, for example, but we still get to spend a week with our beloved families on the beautiful Connecticut shoreline. – Em
We worked to get the “big three” — house, car, and education — right. If you choose to buy these three things below (or well below, or not at all) your means and be content, you’ll have so much more financial margin and freedom. Our first home was tiny and it was subsidized by a non-profit for $115K, and then we recently purchased our current fixer-upper home after lots of negotiation for $200K. Our first car was $5K, and we were a one-car family for a couple years until we bought two new Toyotas for a killer deal by negotiating in cash and utilizing the TrueCar App. Education is a bit harder since much of it is outside our control, but we both chose to go to an in-state university and applied for as many scholarships and grants as we could. — Robyn
I get my hair cut twice a year, and I just get it cut – no dyeing, no fancy treatments. I LOVE my stylist, but she is quite expensive, so I compromise by extending my cut as much as I can. – Em
We keep our recurring bills low and cut where possible. We’ve never had a car payment and we’ve also never had cable. We also have never had an individual phone plan, because it’s so much more cost effective to add lines to an existing plan with a sibling, parent, cousin, or friend. You all save, so it’s a win-win! — Robyn
One big way we save money is by make a monthly budget and using cash only for things like groceries, gas, and household items. It is totally worth the extra time, intentional conversation, and planning – I’d say it has improved our marriage as much as our savings! — Samantha
We intentionally fill our evenings and weekends with everyday adventures so that we’re not tempted to mindlessly browse – either in a brick and mortar or online. I only go to a mall with a specific mission, and being outdoors and together helps keep us grateful, content, and in awe of the world around us. – Em
Friends, please join the conversation: I would LOVE to hear your favorite ways to save money! And thanks to all of the folks above for sharing their wisdom! :)
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17 July 2017
If you’ve ever felt like you can’t relate to my Marvelous Money posts because I’m a weirdo who loves personal finance and you’re just an average millenial trying to keep it together, I’ve got a treat for you today!
My younger sister, Kim, is one of you (ha!). John and I have had the chance to coach her on a few money things over the years, but her finances have still been a source of frustration for her. When she mentioned at Christmas that her church was holding a Financial Peace University soon and that she wanted to attend, John and I jumped at the chance to gift a seat to her and her boyfriend, Kyle. (Though we haven’t taken Dave Ramsey’s course, we have many friends who have, and know how lifechanging it can be.) My only condition? That Kim answer my questions for Em for Marvelous readers! :)
Please welcome Kim, and get ready to be inspired!
Tell us a little bit about yourself and your background with money.
Hi, all! My name is Kim and I am Em’s younger sister. I am also a 28-year-old physical therapist who lives in Nashville, TN and got to attend Financial Peace University at the beginning of this year with my boyfriend, Kyle. Part of the reason I relocated to Nashville from Boston (where I went to grad school) was to get a jump on my student loans by taking advantage of a more competitive market and lower cost of living, while still being able to enjoy my 20s. While I don’t consider myself financially illiterate, prior to FPU, I had never made a budget or thought about how to appropriately allocate my money, and I only had an IRA because John and Emily told me to get one – and then literally walked me through it (thanks guys!).
What was your biggest money struggle before Financial Peace University?
My biggest struggle was definitely knowing how to allocate my money appropriately. I feel like the word “budget” gets a really bad rap, and I didn’t feel so kindly towards it prior to FPU, so I didn’t do very much of it… which meant that at the end of every month I was left wondering where my money had gone and/or having to wait to get groceries/gas/etc. until I got paid again, even though I wasn’t buying extravagant things. And I definitely felt strained to make my monthly rent and loan payments, even though they were both completely affordable with my salary. And since I felt strained with my bills, there was no way I felt I could save money for the future, either.
From Kyle: I felt like I never had enough money even though I made a good amount of it. I just didn’t know what happened to it all.
Why did you decide to go to FPU? What were you hoping to get out of it?
I decided to attend FPU because my finances were more stressful that I wanted them to be and I didn’t know what to do about it (and because Em offered to gift it to me – thanks girl!). I felt like I made good money, had started an IRA early, contributed to my retirement through work and still didn’t have a sound plan or goals. I just felt queasy every time I thought about long term planning, or really money at all, especially my student loans. And, I would often make rash purchases (TARGET) that I later regretted because I thought I had the money available when I really didn’t. I hoped to figure out how to not feel stressed about my money and make it work for me in achieving my goals instead of holding me back from them.
From Kyle: I wanted to establish good financial principles to live by since I knew I wasn’t living by any principles prior.
What was your biggest takeaway from FPU? What was the most helpful or impactful thing you learned?
My biggest takeaway was learning how to budget and that you HAVE to give every dollar a name – this has been CRUCIAL, y’all! I can’t tell you how much it has changed how I approach my money and my spending habits. It also really opened my eyes to where my money goes and what I value. For instance, I recently joined a gym that I LOVE but that is much more expensive than the one I used to go to. Instead of feeling guilty about this indulgence, I redistributed my budget, acknowledging that I will have to buy less clothes and lattes to be able to afford it; but, that is a CHOICE that I consciously made that I probably wouldn’t have even thought through if I hadn’t done FPU. I either would have been even more stressed about my money OR I wouldn’t have let myself join the gym, which has been really good for my health and self-esteem.
I think my budget gives me willpower – I have literally put things down in Target since FPU that I wouldn’t have thought twice about buying prior because of my budget. Every time I do that I feel really powerful, because I know I’ll have money for the things later on that I really want or need.
From Kyle: COMPOUND INTEREST (mind blown). It has been instrumental in creating a good financial structure for my future and understanding how important it is to start investing early for retirement. Putting a name to every dollar and actually budgeting has been really eye-opening.
You have talked to us and worked on your finances before. Why was FPU different or what clicked for you there?
I think the best part about FPU is how simple and accessible and easy to grasp it is. Dave is great about really breaking down each lesson, moving step by step in an organized way, and “chunking” up the weeks so you absorb each piece prior to moving on and building on what you have learned. It is very, very practical and you can walk out and immediately use what you’ve learned from Day 1, which I loved. I think the thing that was different from my conversations with you and John was how nitty-gritty and step by step it was – you have done a budget for years, so it was nice to have someone help me start from scratch (not that your budget isn’t amazing, it’s just not necessarily for beginners!).
Do you think it’s only for Christians?
Absolutely NOT!! There are definitely Christian overtones and supportive Bible verses, but at its heart, FPU is just simple, sound financial advice that everyone needs and can relate to, regardless of your faith.
If a reader was on the fence about going to FPU, what would you say to her?
GO! Give it a shot and if you don’t like it you never have to go back. But I think you’ll find value even from the first lesson. It has been one of the best things I have done for my personal development this year and has drastically improved my life.
What are you most excited about for the future?
BUYING A CAR I WON’T HAVE A PAYMENT ON! I never would have thought it was a possibility before FPU, but I’m doing it next week. Also the continued freedom and security and calm I feel about my money and my budget. And, as Kyle would say, compound interest!!!
What’s been your biggest lifestyle change since FPU?
After FPU, I was feeling all sorts of “gazelle intense” (a term Dave uses to encourage people to ferociously attack their goals) and got a second job as a PRN (or “as needed”) physical therapist in a local hospital. Now, I won’t lie and say that it’s fun giving up some weekends to work. BUT, it puts me significantly closer to being able to pay off my loans, gives me added value as a well-rounded PT down the road, and has been a welcome challenge to my brain. And I know that in the end, it will be worth it to “live like no one else so you can live (and give) like no one else.”
Anything else you’d like readers to know?
I know it feels like I only talked about the benefits of budgeting with FPU but that’s just because that is the step I am on – there is so much more to it than that! My biggest financial goal right now is paying off my student loans in full so that I can move forward to investing, retirement, saving for my kids’ college futures and GIVING BACK. Since Dave is all about streamlining the process and working step by step, I’m not thinking about those things yet – but when I do get there, I will know what to do, or at least what questions to ask to move forward towards those new financial goals.
Friends, doesn’t this interview just make your heart swell? I’m so proud of and excited for Kim!! Any other FPU graduates in the room? What was your favorite takeaway? Or does Kim’s review make you want to attend? You can find one in your area here, if you’d like!
P.S. Kim did indeed buy that car with cash last month! Yeah girl!!
8 March 2017
In my last Marvelous Money post, I shared our current Big Goal: paying off our mortgage early, in the next five years. I’ve had some questions about how and why we are doing that, so I thought we could chat about it today!
Why we are paying off our mortgage early:
Though paying off our mortgage early seems like a slam-dunk choice to us, there are pros and cons. Here are a few:
To expand a bit on these reasons:
— Save (probably many) thousands of dollars in interest payments: By paying off our mortgage more than 20 years early, John and I will save roughly $120,000 (!!!!!) That is a LOT of vacations and dance lessons and flights to see loved ones and delicious dinners out over a lifetime. That excites us!
— Reduce your nut: Megan McArdle describes your financial “nut” as “the amount of money that you absolutely have to pay every month if you don’t want scary-looking men to start repossessing your possessions.” Think: fixed expenses like car loans, student loans, mortgages, and the electric bill.
— Increase your freedom: The smaller your nut – the fewer obligations you have per month – the more freedom you have. If your nut is tiny, you can quit your job for one you love with a lower salary, or start your own business, or stay home with your kids. You can travel, or support charities that matter to you, or buy the most delicious-looking food at Whole Foods every week.
— Increase your share of ownership in an asset: As you pay off your mortgage, you’re buying more and more of your house from the bank and building equity (money in your pocket if you choose to sell one day!).
— Earn a guaranteed rate of return: You can think of eliminating a future payment as earning a guaranteed rate of return. For example, if your mortgage has a 4% interest rate, you’re effectively earning 4% interest on the money you use to pay off your loan.
On the other hand…
— It requires sacrifice and tradeoffs: This is the hard part, as we already discussed! For us, paying off our mortgage early means forgoing vacations, reducing our grocery budget, delaying clothing purchases, cooking at home, (almost) never going to the movies, not purchasing alcohol, and more.
— You potentially miss out on higher returns: The most common argument against paying off your mortgage early is that if you instead invested those extra payments in the stock market, you could earn a higher rate of return (since the stock market averages 9ish% per year over the long term). While this is true, it’s also true that most people don’t have the willpower to actually set aside that money and watch it build without dipping into it.
— You’ll eventually lose the mortgage deduction when you pay off your mortgage: This is true, but it’s still not a good reason to keep your mortgage, because the math doesn’t work out. Dave Ramsey explains more here, but the upshot is you’d always be paying more in interest than you’d save in taxes.
For us, the freedom and peace of mind we will gain from having no mortgage before June enters school far outweighs the sacrifices we’re making now and the potentially higher returns we’re missing out on.
Photo by Anna Routh – see more of our home here.
So that’s our why! Let’s talk about our how.
Very simply, we’re paying a set amount per month over and above our normal payment. Since we live and die by our budget, we’ve found that budgeting for that expense just like everything else has been the most helpful instead of waiting for “extra” funds to pop up.
When we first started attacking our mortgage three years ago (after we paid off our student loans and car loans), we did the simplest thing: we put the extra money directly toward our mortgage. (Our mortgage lender allowed us to make manual online payments, which we did every month.)
A year and a half ago, however, we decided to take things up one more notch by aiming for the best of both worlds. Since the main critique of paying off a mortgage early is that it doesn’t make sense to pay off a low interest rate mortgage when you could be earning higher rates of return by investing, we decided to invest the extra money we had been paying toward our mortgage.
So, instead of directly applying the money to our mortgage, we now transfer our extra payment (the same amount as before) to a brokerage account every month, where it is invested in a mutual fund. When we reach the full amount we need to pay off our mortgage, we’ll pay it in one lump sum. That will be a sad day for our bank account, but a happy day for our assets :)
A word of caution: I would only consider doing our “next level” system if you have a long track record of steely willpower with your money. It is so tempting to just take a little here or there as we watch that fund grow and other needs come up, but for this plan to work, you have to consider it absolutely untouchable!
Also, this approach requires a willingness to take the risk that the money you’re saving for paying off your mortgage could actually lose value.
If you’re nervous you’d be tempted or don’t want to stomach the risk, just apply the extra payments straight to your mortgage – done and done. Also a fantastic option.
Our master bedroom – photo by Callie Davis
We’ve still got a few years to go, but once we get under $100k owed, I think we’ll make a visual countdown somewhere in our home! I remember watching the Rays $90k chalkboard countdown dwindle month after month whenever we went over for dinner. SO exciting, and such a great teaching opportunity for kids!
One caveat and one piece of encouragement before I sign off of this exceedingly lost post.
Caveat: Paying off your mortgage early may not be the right money goal for you right now. Dave Ramsey considers it baby step 6 of 7, after paying off all other debt, building an emergency fund, and saving for retirement and college. It is an awesome goal, but one you should probably tackle after everything else is squared away.
Encouragement: Just because most Americans have a mortgage doesn’t mean you have to!! When you live like no one else, you get to live like no one else – free from worry about money, and at peace with whatever the future holds. If paying off your mortgage is important to you, I truly believe you can do it! I’ll be cheering you on!!
There’s about a million more things I could add to this post, but I’ll leave it there for now! If you’d like to read more about paying down debt in general (including info about how we freed up enough money in our budget to make our extra payments), click here.
I’d love to hear: Are you hoping to pay off your mortgage early? What financial goal are you working on right now? What’s holding you back from getting ahead with your finances, or where do you feel you need the most help?
23 January 2017
Two years ago, I wrote a Marvelous Money post about preparing financially for a baby. I did not, in fact, have a baby at the time, and so I took great pains to tell you to take my advice with a grain of salt. I also promised to revisit the topic at some point in the future. Today I wanted to touch on one aspect of our financial life post-baby, and I hope there will be more to come in the future. And good news! Whether or not you have kids (or ever plan to), I think you’ll find this post helpful, because it centers around what I feel is one of the most important personal finance topics to truly take to heart: trade-offs.
In preparing our 2017 budget, we decided to cancel the trip we’d planned to take to the Southwest this year.
Here’s the thing: we have the money to take this trip. It’s sitting in our bank account. But, because we also have the Very Big Goal of paying off our mortgage in the next five years, we are choosing not to take it.
(Why am I connecting these extra mortgage payments to our foregone vacation instead of, say, our extremely expensive childcare? Because we were able to take more expensive vacations and still make extra payments before we had June, it might seem to make more sense to “blame” our childcare costs for this trip cancellation. But, because childcare is a must-do, and the extra payments are something we’re choosing to do, to me it seems like the payments are squeezing out the vacation.)
Were we disappointed when we decided to postpone this trip? Yes. But, it’s hard to feel disappointed when I think about all of the marvelous adventures we’re still going to have this year. We’re going to spend ten days on an Island in Maine with my family. We’re going to use the week we would have been in the Southwest to travel to Michigan with John’s family, a trip that will cost less than $1,000 compared to the $4,500 we were estimating for the Southwest. We’re going to take two long weekend 30th birthday trips (more about those soon!). And, as I shared in my 2017 goals, we’re going to have lots of fun right where we are, having everyday adventures close to home that cost next to nothing.
I think it’s very important to carefully consider your trade offs, and make them ones you can live with. We are sacrificing a lot in the hopes of paying off our mortgage more than 20 years early – fancier vacations, new cars, clothing, going out to eat, home purchases, etc. We know that the freedom we’ll have when we own our home outright – and the cash flow we’ll have in our budget once we’re not making a monthly mortgage payment plus more every month – will be more than worth the sacrifices we’re making now.
But we also knew the trade off wouldn’t be worth it if we were miserable for eight years, living in a holding pattern, eating peanut butter and jelly every night, and never spending anything but the absolute minimum. So, we still go on vacation. We still eat out. Though compared to some of our peers we might be scrimping and saving, by many people’s measure we are living high on the hog — and that’s how we choose to see it. We feel immensely lucky to do all the fun things we get to do while still being able to save so much for our Big Goal.
Do you have a big goal, too? Paying off your student loans? Building an emergency fund? Buying a car? Saving for a down payment or an adoption? Maybe you want to pay off your mortgage, too? I’d encourage you to look at the trade offs you’re currently making, and see whether you can make any changes to both save more money AND have more fun. I truly think it’s possible, but it might take a mindset shift even more than a change in behavior. As Tony Robbins said, start rich.
I’m cheering you on!! And I’d love to hear – what big financial goal are you working toward now? What trade-offs are you making to get there?