Saving With Purpose: Short Term Goals

This is the first post in a series called Saving With Purpose: Living a More Intentional Financial Life. In this series, I plan to highlight a number of specific savings goals my family has identified we would like to achieve over the next few decades.

We have all heard of SMART goals. You probably know the acronym by heart…Specific, Measurable, Achievable, etc. Identifying savings goals is no different. As I mentioned last week when first introducing this series, my family has been pretty good at saving money since getting out of debt. However, we find ourselves trying to pile up money for no specific reason, other than we recognize saving money is the smart thing to do.

This wasn’t enough for me. I want to set very specific savings goals and then track them to completion. When we accomplish the first savings goal, we’ll move to the second. When we accomplish that goal, we’ll move on to the next, and so on. Think of it as a “savings snowball.”

Of course, some goals will run concurrently, particularly the big, long-range goals such as retirement and college savings plans for the kids.

To kick things off, my wife and I sat down to identify our short-term savings goals. That is, things we hope to accomplish in the next year or two, or have already saved for, but don’t want to tap for competing priorities.

Short-Term Savings Goals

Goal 1: Save $25,000 Cash for Emergencies. Any financial planner will tell you this is the cornerstone of any solid savings plan. After all, rainy days are inevitable. Whether you are covering the costs of a new roof, a new transmission, or covering expenses during a layoff, the emergency fund is a must-have savings goal.

Most also agree that 3-6 months of expenses is a good starting place when determining how much one should save. For us, our goal amount is around eight months of expenses – we added two additional months since we are a one-income family.

Goal 2: Save $10,000 Cash in an Opportunity Fund. The problem with emergency funds is that they are only supposed to be used in an emergency. Life throws plenty of opportunities, too, and we want to be prepared for them. In our first 12 years of marriage, we had to pass on many opportunities because we were carrying debt and had little savings. We like to think of this fund as our personal line of credit – there to use and replenish as opportunities arise.

One real-life example of these types of opportunities is blogging conferences. Previously, the attendance fee, transportation and lodging made attending these types of events difficult. Now, if the right opportunity came along, I could attend such an event, which could lead to making valuable connections for building Frugal Dad.

Goal 3: Save $10,000 Cash Towards a Car Replacement Fund. Let’s face it; our cars won’t last forever. Their demise is inevitable, no matter how well we take care of them. So why not begin planning for their replacement now, rather than turning to banks or auto finance companies.

In our case, my truck will likely die first since it is several years older than our family vehicle, and has about 100,000 miles more on the engine. At current prices, I could buy a replacement truck for about $8,000 – $10.000. Accounting for a little inflation, with the hopes that my current truck lasts a few more years, and accounting for the remaining cash value of my current truck, that puts the replacement truck cash need at about $10,000.

Goal 4: Save $5,000 for Home Improvement Projects. Our house was built in 2004, so fortunately very little is in need of upgrading. However, there are a few small home improvement projects  we are interested in doing around the exterior of our home, such as installing gutters, paving a patio (or building a deck), and planting more mature trees on the property.

We’re also considering hardwood or laminate flooring in the kids’ rooms as they both suffer from allergies, and carpet seems to hold in the dust and pet dander making their symptoms worse. A few thousand dollars should cover these expenses, but we believe in saving the cash first before upgrading the home, even if other lines of credit are there.

I’m happy to report that Goal 1 is accomplished, and we are working on Goal 2 (the Opportunity Fund). We’ll save for goals 3 and 4 at the same time, with the hopes that our outside home improvement projects will be funded by late spring or early summer, and our new trees can be planted in the fall.

Stay Tuned

Next up in the series, we’ll take a look at college savings for our kids, our next big savings priority and something we know we are behind on. I’ve done some preliminary research for the costs of tuition for both kids, and the numbers are staggering. I’ll share the specific numbers with you, and our plan for reaching the goal in the next decade (even less time for our oldest – yikes!) just in case they don’t land full scholarships. Hey, a frugal dad can dream, can’t he?

Comments

  1. I also like the idea of saving for specific purposes. It sounds like you’ve got all your ‘ducks in a row’ and have planned well.
    I must say though, 25000 in savings feels very unattainable to me. I realize though, we all have to start somewhere.

  2. I don’t know anyone personally who can save (outside of retirement) $25,000 in 4-6 mos. We have $4500 in expenses each month.

  3. @Holly and @Melaniesd: It might take you longer than 4-6 months to amass an emergency fund representing 3-6 months of expenses. We saved for over a year while simultaneously paying down debt (though we did slow our savings when within striking distance of being debt free). Once all your debts are paid it is much easier to save money, even if it means backing off on retirement for a few months to get this emergency fund in place.

  4. Unless you are writing this for Trump, these are NOT short term goals. I teach personal finance and I do not know anyone who can possibly build up that sort of savings plan. It appears to be completely unrealistic. You should perhaps mention the income range attributed to such a plan.

  5. I guess I should have first defined “short-term.” My fault. I personally define short-term goals as anything less than five years, because anything longer than five years belongs in our “investments” category.

    And to those who think saving 25k is impossible, I say don’t sell yourselves short. Get out of debt, develop a second income stream, and make socking away emergency savings a top priority for a few months. You’ll be there before you know it.

  6. 25K in months?… that sounds like Suze Orman. The median income in our country is south of 50k. These folks, debt or not, will need more than months to save what is probably 70% of their annual net. It is not impossible to save that amount; however, goals must be achievable in a realistic time-frame otherwise they can be debilitating.

    If someone can commit 10% of their net to savings, THAT is a fantastic start. Remember, it was only a few years ago that the savings rate in America was -2.7%. We have a LONG way to go before the average Joe can save 25k in a few short months.

    I like your concepts; however, they are disconnected from 9 to 5′ers means — even with a second income.

  7. Frugal Dad:
    I understand the emergency savings plan may take a couple of years to achieve. However, it seemed as if you’re stating that you will be completing the other 3 (new) goals by spring or fall (6 months or so), i.e. enough to plant trees and to fund your outdoor home improvement projects. That was the $25,000 ($10000 $10000 $5000) to which I was referring.

    Not being snarky … ever heard of private tuition for 3 kids? LOL

    We don’t have a lot of debt, just a $7000 car loan and our mortgage.

    My husband earns $110,000 and these goals are still in no way achievable within 2 years, even if I went to a full-time job. Great that you are an ultra-gazelle, though (re: Dave Ramsey)!!!!

  8. The old hole to shovel ratio comes in here: except now that FD is out of debt it should be renamed the “hill to shovel” ratio. You are no longer filling in a “hole” of debt. Rather, you’re piling up a “hill” of cash. I think what several of your readers have noticed (and me too) is that your income is probably a bit higher than the average American. Thomas is exactly correct. If you are grossing 50K a year, 25K is 50% of you PRE-TAX income. After taxes and basic living expenses (food, shelter, clothing, utilities and yes in America today some form of transportation) you will not be able to reach these numbers within the time frame allotted. So while we don’t need to know your income (none of our business) it would be useful to tie some form of number to this figure. Maybe tell it to us as a percentage? Though then the clever ones here could work backwards mathematically and figure it out since we already know the target numbers. Gotta love Algebra!
    Here’s a tip I’ll toss out for your upcoming college tuition post: consider the wonders of vo-tech/trade schools. Too many parents have bought to 4-year college degree spiel. I went to college and got a four year degree. My first year salary? $25,000 (10 years ago). After 5 years I went back to night school and got a 2 year associates degree in computer programming. Started my next job at $40,000. The tuition cost was less than ¼ of what I had paid for my first degree (in real dollars, adjusted for inflation no less). Vo-tech and trade careers often beat out college degrees in the salary market. For example, an 18-month dental assistant program at our local community college costs about $9000 (total tuition, books, fees) and the starting area salary is $60K. And there are not that many jobs anymore where a 4-year degree is required. Many employers today would rather have experience, common sense, and people skills (think salesmen, entrepreneurs, medical technicians). Just ask the friends of our family whose kid dropped out of college after 2 years and started working as a Linux “Red Hat” network administrator. He’s enjoying his $150K salary now and never did take out a loan for

  9. Frugal Dad is in his peak earning years. He should be making more than the average American.

    Plus, when you are older, you should already have gone through the hurdles of your start up life expenses (house, furniture, kid’s stuff, student loans, etc.).

    I don’t think it’s unreasonable to have his goals given his position in life. He’s not some 20 something PF blogger.

  10. @Thomas: I very much appreciate your position, and we might just be picking fly specks out of the pepper here, but I didn’t state the replacement vehicle fund would be in place by spring or summer. That’s just the $5k home-improvement fund. And we’ve already made progress on the Opportunity Fund. Admittedly, the car fund will take a bit longer.

    And then you call me Suze Orman?! Them’s fighting words! No, I’m kidding. I like Suze’s advice in some cases, but agree with you that her advice rarely lines up with us average Joe’s. By the way, I’m more average than you probably think – though I do have a modestly successful blog that brings a second income (but my combined income is pretty close to most two-income families).

  11. I thought these were very attainable short-term goals. Here’s how my husband and I do it now and I’ll give an example below of how we would do it on $50,000 a year.

    We currently make $43,000 and $35,000 respectively BEFORE taxes ($78,000). We live in Houston, TX and are 26 and 27 respectively.

    After taxes, my 401k, my husband’s pension, and medical and disability plans, we take home about $62,000 a year.

    Between retirement savings ($14,000 for a Roth IRA, 401k, pension, and stocks), the emergency fund ($3750), our short-term savings ($11,000 including a car fund, home fund, and a vacation account), and investment opportunities ($3750), we sock away about 40% of our PRE-TAX money a year.

    We live on about $35,000 a year after taxes. $14,000 of that is just for the house since we have a 15 year mortgage that we are paying off in 10 years or less (actual payments, payments on principal, property taxes, and homeowners insurance). $6000 of that is for our cars (car payments for one car, gasoline, and car maintenance). That means all of our other expenses are less than $15,000 a year (including our monthly splurges like restaurants, maid service, lawn service, Massage Envy, and Netflix).

    I am not trying to brag. I am trying to convey that it is possible to reach all the short-term goals listed in the post in 5 years or less without making 6 figures.

    Here’s how I would save for it annually in 5 years or less if we made $50,000 a year before taxes:

    $7500 in taxes (15% tax bracket as married filing jointly)
    $5000 for a Roth IRA (or equivalent in 401k)
    $12000 towards our house (no more overpayments…15 years total would be fine)
    $6000 for our cars
    $5000 for stated Emergencies fund
    $2000 for stated Opportunities fund
    $2000 for stated Car Replacement fund
    $1000 for stated Home Improvement fund
    $9500 left for living expenses (our current annual expenses minus $2730 a year we spend on restaurants and fast food, $1000 annually for cable, $1170 for maid services, and $600 a year for Massage Envy)

    That $9500 would include all our other current expenses. We would still have $375 a month for food, our lawn service, and Netflix as part of our regular budget.

    It would be tight but very possible…I would truly miss cable and our maid.

    Living cheap is very possible if you only spend money on what you need and the wants you value the most. My husband and I could give up current wants for a financial goal we want more. Anybody can prioritize their wants and save a ton of money by doing it.

  12. Those are some expensive short terms goals. I look at those as long term goals though. Is there a time frame with these? To me a short term goal is more like saving for a vacation, new phone, TV, computer, stuff within a year range. These are great goals but seem more lengthly.

  13. @Frugal, sorry about the Orman comment — it was in jest. I find her to be the devil. (Her advice is generally correct, that is if you have a few million sloshing around… as she believes each of us does.) I understand your position, and if you can achieve what you’ve outlined, that is fantastic. I work very hard to commit 38% of my net to savings and know it is no easy task. I have forgone much in the way of whimsy to do this; however, I can say that I am in a far better place financially. Thankfully, instead of chasing my dreams, they now chase me. I have what I strive to teach others — options. My recommendation would be to adjust the terminology here to be long-term. Short-term goals are generally described as those you will meet in less than 12 months. With the proper know how, application and encouragement, I believe even those of modest means can build adequate saving over time.

  14. Hi Frugal Dad,

    re: conferences…here is what I did:

    1) Incorporate your business
    2) Set up a separate business checking account
    3) Get a biz tax ID
    4) Get a biz credit card (I chose the Citi with American Airlines rewards…AmEx is also good)
    5) Give all affiliate/ad networks your new business tax ID # and biz checking account #
    6) Charge all biz expenses (conferences, etc.) on your biz card
    7) Pay off biz card from earnings deposited into your biz checking account

    That way you don’t need a big $10K chunk; you know when you’re cash flow positive or not–either you have enough to pay for conferences, or you don’t.

    If you plan to go into business full-time, you’re going to have to do this anyway; might as well do it now.

    -Erica

  15. I was feeling good about setting aside a few hundred dollars for emergencies. Now I think I’ll go throw it off a bridge. Just kidding, but it would take me 25 years to save up $25,000. I sure hope anyone who can put that kind of cash together donates some money to Haiti.

  16. @Holly
    My figures leave out kids because my husband and I don’t have kids and have no plans for kids in the future. I was working an example of how WE would pull it off. Obviously it was meant as an example and everyone would have to take their own circumstances into account.

    For fun, this is what I came up with if we had a kid, made $50,000 a year, and wanted to meet the 5 year goals that Frugal Dad posted about:

    $6500 in taxes (15% tax bracket as married filing jointly minus $1000 for the child tax credit)
    $5000 for a Roth IRA (or equivalent in 401k)
    $8700 towards housing (1050 square foot apartment where we used to live)
    $6000 for cars
    $5000 for stated Emergencies fund
    $2000 for stated Opportunities fund
    $2000 for stated Car Replacement fund
    $1000 for stated Home Improvement fund
    $13800 left for living expenses – $1200 a year for utilities was the norm in that apartment, $3000 a year for food, and $300 annually for the internet…that would leave $9300 annually for the kid and things that pop up. If we had a kid, my hubby would be working since he makes more and I’d stay at home. I’d use cloth diapers like my mom did, breast feed for the first year or two, and we would get almost everything from thrift stores and garage sales. My mother had much less than $9300 a year to spend on me, so I expect we would be okay.

    If you needed more than $9300 a year, you could sell the second car and save $2000 a year on car expenses (our apartment was within walking distance of a bunch of stores). You could also cut the grocery budget another $1000 by mainly using Angel Food Ministries and supplementing from the regular grocery store. Or you could even cut back on the Roth IRA while you are trying to meet the other goals above.

    My point is simply that the goals are possible if people could simply prioritize savings over spending.

  17. Crystal- Thanks for taking the time to outline possible scenarios! It’s inspiring to say the least!

    I have been cutting out every imaginable expense just to try to save 15% pre-tax. Mortgage/prop. tax is a huge hit each month. Maybe I should sell (would have to talk the kids and hubby into that one).

    Congrats on your fine financial report!!!

  18. @Holly
    I have uber respect for the parents trying to raise a family with a house and all the extras. Saving 15% pre-tax is awesome. You are doing great!

    My mother was a single parent working for the county until I was 6 years old, so I was raised frugally to say the least. Our lifestyle increased financially when she and my step-dad got married.

    It was a big change and both my little sisters never had the extremely frugal experience…it’s a positive and a negative. My sisters will have a harder time living cheaply than I do, but they might not need to anyway. They have way more career motivation than me. :-)

    Since I have no idea where you live or what kind of housing is in your area, I’m sorry I can’t be more help. We bought a foreclosure that was in amazing condition for $114,000 three years ago. Thanks to my husband’s parents giving him the rest of the college savings account they had set up for him, we were able to put 20% down. Not everyone has that kind of help or lives in Texas where the cheap houses are…I know it’s rough on both coasts. I really hate moving, so I assume the hubby and kids would put up a fight…it might not be worth the trouble.

    After housing, the biggest expense we can really change is probably food. We are trying to lower that budget this year. Take a look at Angel Food Ministries and see if it may help you out at all…we’re trying it out this month to see if it’ll help us cut our food expenses in half. I’ve read mixed reviews, but if it tastes good and motivates us to cook at home more often, I’ll be happy.

    Anyway, you are doing great! Thanks for the words of encouragement!

  19. Yes, we live in the Northeast; we purchased our first house (tiny brick ranch) for $113,000, fixed it up and sold it 4 years later for $172,000 (only bad thing was we were actually underpriced; the houses were selling for 230,000 just 6 months later!!).

    We are in a nice house now but we bought just before the 2006 peak, so we will be stuck w/a mortgage for a L-O-N-G time.

    I am also spending $20,000 just this year for my kids’ education. Of course, this is a choice, but the public schools are pretty pathetic here. Some of the H.S.’s here have almost a 50% drop-out rate. Also have two kids in braces and my insurance barely covers costs ($7500 this year).

    We have a lot of choices in life, too many sometimes! Thanks for sharing your story…don’t know if you do this line of work, but I think you would be a great advisor/counselor for those who would like to get a better handle on their financial situation. I am interested by your method of calculations…for example, one was your real-life situation and one was a scenario…do you use percentages (mixed with logic) to get to the numbers?

    Take care readers…thanks FD for a good post with a good point!

  20. Nice list of goals.

    I especially appreciate the “Savings Snowball” idea, and actually think it’s a better use of the snowball idea… After all a snowball builts, much like a savings plan.

  21. I just absolutely LOVE this post because so many shared the actual numbers and the actual “how to” on this subject.Crystal you write with such precision on the facts and figures well I just love reading your ideas.Holly really enjoyed hearing what you had to say and the twist of children added in.Years ago I made the decision to have 1 child, husband and I worked different shifts to eliminate child care costs.I paid for undergrad and graduate education,wedding and a small gift towards first house.She is an amazing young woman and is quite frugal herself.This post gave me ideas to use for the future THANKS for the nuts and bolts!

  22. Crystal,
    Also take into account that your federal tax rate would be less than 15% (the following assumes 2009 tax year):
    50,000 pretax
    - 401K/(non-Roth) IRA contributions
    - health/dental insurance
    - standard deduction, for married people is 11,400
    - exemptions (3,650 a person, so for 2 = 7,300)
    - saver’s credit
    - 1,000 for property tax deduction (if not itemizing)
    - etc.
    Then you only pay 10% on the first 16,700 of your adjusted income, and 15% on the rest.
    We make slightly more than 50k (married w/ one child) and we paid less than 3% in federal taxes (already did 2009 taxes). I calculated if we didn’t have a child it would be about 5.5%. So even if you add in the mandatory SS and Medicare taxes many people with that income should still come out below 15% total tax.
    Sorry, I couldn’t help myself!

  23. @Holly
    Nope, I am not a financial advisor, although it is on my list of jobs to look into once my husband finishes graduate school this summer. I want him to find a stable position before I start pursuing a different career. In the meantime I like talking money with anyone who will listen. I think it’s fun.

    I work in a cubicle using other people’s software to make forms print correctly at car dealerships for $35,000 a year. I also help customers via the phone who are having problems with those forms. As I have explained to my parents, I was looking for a solid job with benefits that wasn’t based on commissions when I got out of college in 2005 with my Marketing degree. I just haven’t been motivated enough to leave yet (although the one year salary freeze we’ve had has got me making lists and posting my opinions on personal finance sites). :-)

    The numbers I used in the scenarios were based on our real numbers now. I keep a budget at home on Excel to track our expenses down to the penny every month to make sure we stay under our budgeted amounts and successfully hit all of our savings goals. I took into account what we spend our money on currently and looked at what we could give up in order to live on $50,000.

    I will admit that adding in a kid was a mental workout. I came to the conclusion we would have to give up our house since the property taxes and homeowner’s insurance nearly doubled our housing costs. The rest of those numbers were based on our real expenses while living in our last apartment…that was a much simpler life, but I really love having a house.

    If I really did have a kid, I would probably not give up the house. I would still cut most of the other luxuries, but we would keep the house. I would probably find a way to make more than $50,000 a year (Ebay, a blog, etc) or cut back on the savings goals a little. I would keep the Roth IRA because I’m a big fan of paying no additional taxes on my compound interest when I retire, but I’d cut $1000 a year off the Opportunities fund and $1000 a year off the Emergency fund. I do think everyone needs a large emergency fund (6 months of expenses minimum), but $20,000 would be fine for us since that would be about 9 months of expenses in my scenario. I also think you need money for opportunities and investments, but I’d consider the house a good investment for my family.

    Thanks for the positive remarks from Holly and Pam! I will look into financial counseling in the next 6 months…any job that lets me work through money scenarios and help people at the same time sounds like a good choice to me!

  24. Thanks Carrie! I didn’t know how the taxes would work out so I definitely rounded up to what I knew.

    Keeping in mind Carrie’s figures, at 3% the taxes would only be $1500. At 5.5% they would only be $2750. That would save my imaginary couples about $5000!

    That makes the imaginary Crystal in my scenario a little happier since she could afford to keep the house! :-)

  25. Crystal if you do decide to do anything finacial I seriously want to be one of your customers.I am really impressed with the remarks from several people on this blog on how they keep watch over their money and prepare for the future.The information given here by Erica,Holly,Carrie and Crystal is VERY smart and insightful plus just plain fun to read!!!

  26. I like the categories you’ve outlined. I like the dollar amounts – I think they’re quite reasonable. But $50K saved in five years?? If I could put back $100/month (which I can’t) it would take me 41.66 YEARS to save $50K.

    I’m disabled, on Social Security. Hubby’s a truck driver. We gross about $40K/year. Our needs are modest. We quit driving one of the cars to cut out those expenses. We don’t even have TV. We live in a semi-rural area of the Seattle metro area where the cost of living is sky-high.

    Our mortgage is $1022 a month. Another bit of advice I’m hearing frequently is to sell the place and get something smaller/cheaper. I don’t have enough to pay first/last/deposit on an apartment, much less a down payment on a new place. And we’re in the red as far as the mortgage so we’d actually owe the mortgage co. after the sale, IF we even managed to sell the place with the housing market so depressed.

    We have animals which, even though they’re necessary to my health, we don’t have any assistance with those costs. Getting rid of them is a last resort and I’d have to be literally sitting in the dark and starving to do it. :)

    And all the good personal finance bloggers talk about developing a second income stream as if you can just snap your fingers and it’s done. You’ve done it; you should know how much time and effort entrepreneurship takes. I don’t have enough money to invest in developing a business although I’m doing some consulting work which basically requires a computer and an internet connection – but how do I have enough time to do the work and still have time to market myself and my product? (I’d LOVE to hear a solution to that one and please don’t say “work efficiently” – I already do.) And yes, social security knows I’m self-employed.

    Hubby wants to go back to school but he works 12-14 hours a day. When is he going to attend classes, and more importantly, we couldn’t pay for it without student loans. Don’t most student loans require you to carry a full class load?

    I’m saving literally every dime I can. But just when I get a few hundred put back, something happens and it’s gone.

    (sigh) Sorry for the rant but it seems most of the advice out there is directed to those who have decent incomes to start with. What about those of us who don’t?

    (BTW, Angel Food Ministries doesn’t service our area.)

  27. I love the idea of an opportunity fund!

    I’m working on an emergency fund now, and keep some money in general savings for occasional stuff like travel and car repairs. It would be nice to have some dedicated cash for that! I’m planning on a 6-mo emergency fund, which will take about 5yrs to build up. A small opportunity fund shouldn’t take anywhere near that long. :)

    @ #12, I also have a stable career but anything could happen. A car accident, a severe illness, an incapacitated parent, anything like that could take me out. I’d rather have money sitting around doing nothing than find myself in need with my line of credit cut off. Just my $.02.

  28. People, remember this is a very big country with lots of income variants that do not necessarily mean you are rich :)

    I live in the Bay Area. The salaries *can* be high but the costs are astronomical as well. I’m fortunate in a way because I was born and raised here so bought my house 20 years ago but still paid $300K at that time. It’s now potentially “worth” $1.1M and it’s 80 years old, 2 bedroom and 1 bath. :)
    I don’t focus on the numbers here I focus on the strategy.

    My goal for 2010 is to sock away 40-50% of our income as we are catching up after 1.5 years of unemployment. I want an emergency fund of 8 months necessary expenses (good advice from Suze whether you like her or not) which for us would be somewhere between $40-50K. My plan is to do this in the next 10-12 months. The numbers may seem high but everything is relative.

    Focus on the strategy though the numbers are interesting. $150K mortgage? Not in my lifetime here :)

  29. This is a great article. I am totally on the same page with you and have all the same goals. I also have a dog fun in there because I have a larger dog and he tends to be on the expensive side. I find that the hardest thing is just finding the money to put in all the different places. I think I get too anxious and want them all to be full right now. Unfortunately, I know that mantra that slow and steady win the race. I do like the opportunity fund. I would be a little frightened that I may not ever be able to keep it at a goal amount.
    great article!

  30. I really think this article is very good and if its really works as stated in an opportunity fund then that is a goods idea for savings for a better prospect

  31. @crystal:
    Thanks very much for the info and suggestions. I’ve never heard of Great Food for All, I’ll be googling it when I’m done writing this.

    It just so happens our car insurance is renewing next month, and although I have great loyalty to our current company I think I’m going to have to take a chance on somebody else if they’re cheaper. Our deductible is already set at $1K.

    If I do find a cheaper rate, I’m going to stick the difference into savings. It will be a start, for sure.

  32. @Lisa
    Other than your $1022 a month mortgage, what other fixed expenses do you HAVE to pay? I suggest making a list on paper of all of these necessary expenses and seeing if you have anything left.

    By seeing your expenses on paper, you may be able to tackle one or two. Can you lower your utility bills through efficiency? Could you lower your grocery budget by planning meals around grocery sales? There are other organizations like Angel Food Ministries like Great Food for All…is there a location near you? If not, are there farmer markets or church organizations that help out in your area?

    Anyway, you get the idea. Look at your fixed expenses and cut back on those first.

    Then look at the “luxury” expenses and see if you can cut back on those too. For example, can your animals eat a cheaper food? Could you find the food they currently eat cheaper online or at a feed store? What other expenses do they incur and how could you lower them? Or could you find a cheaper internet provider?

    Again, you probably get the point. I review our own expenses every month or two just to make sure there isn’t something we might want to cut back. I just recently called our cable company to request a discount…got $20 off a month just by asking. I’m calling insurance companies this month to see if we’re getting the best rates we can with our car and house insurance.

    Once you have got all you can out of your current expenses and cut out anything unnecessary, I would look at what you have left. Be very critical and question yourself when you decide what is really necessary and what is a “luxury” expense.

    If you truly have no extra money left after making your expenses list, then you have to pursue other income streams.

    I make a little extra money by babysitting and reselling items I buy in bulk on Ebay. There are also other pet jobs like dog walking, pet sitting, and poop picker-upper that can pay pretty well. I charge $10 a night for dog sitting. I also did weekend work at a local book store for about $7 an hour a few months last year. I’m wondering if I could start a blog, but I seem happy with the ones that exist already. :-)

    My husband is teaching full-time, officiates high school basketball a couple of evenings a week, and is taking 9 hours of graduate work this semester. Last semester he took 6 hours of graduate work and officiated high school football 3-5 nights a week. This summer he is finishing off with 12 hours of graduate work and starting a new job with his new masters. My budget will be very happy since we got no help financially from anywhere…

    Anyway, that is how I tackle budgets and expenses. Hope it helps!

  33. Lisa-
    InsWeb is a great source for comparing insurance rates…I knocked off $600 last year from switching auto insurance companies. I was with the same company for 15 years (and never compared rates!) and I also have a $1000 deductible.

  34. @Ace: Only the last two goals (car replacement and home improvements) will be saved for concurrently. I basically walk these in order – emergency fund, opportunity fund, car replacement and home improvement.

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