Category Archives: Budgeting

Packing Lunch For Work Just Got Easier

Over the past two years of reading personal finance blogs, I’ve seen plenty of articles on packing lunches to save money. As much as I love the idea, I just couldn’t make it work. I absolutely HATED packing my lunch. Every time lunch rolled around, my sandwich was the soggiest thing I ever touched. It was disgusting.

It was so disgusting, I often found myself heading out to Subway or the local pizza shop for lunch (even with a soggy sandwich in the fridge). I was averaging about $7 a day and that added up to about $140 a month. Talk about a budget buster! Peer pressure also played a role but that’s no excuse.

Well, I am here to say that I found a solution. I started taking everything for my lunch in separate pieces. In other words, I assemble my sandwich at work and not at home. Wow, does that make a huge difference! I love packing now. I’m not sure how much my colleagues like the mayo, cheese and ham in the fridge, but they will have to live with it (and hopefully not eat it).

All I know is, we will now be saving about $140 a month on me not eating out for lunch. Also, I will be able to take leftovers to work once I start working in DC. You always need some variety!

Have any tips on motivation for packing your lunch? Sometimes it’s not as easy as you think….

Why We Use Mvelopes and How You Can Save 25%

I haven’t really talked about our budgeting system yet. I guess I’ve held back because we have a different situation than most (in not all) of you. Since I live in another state during the week, we need to be extra careful about our budget. Being away from each other can create some miscellaneous expenses here and there. Not to mention that we have added expenses related to my weekday living arrangements.

I have been a big fan of the envelope system for quite a few years. For those of you who are unaware of the envelope system, let me give you a very brief overview. The envelope system is a budgeting technique where you place cash into an envelope based on the amount that you budgeted for that category. For example, if you budget $400 a month for groceries, you place $400 cash in an envelope and use that money every time you buy them. Once the money runs out, you can’t spend any additional money on groceries unless you use money from the other envelopes (such as entertainment). This is a good system if you consistently overspend on a credit card.

Since my wife and I live apart, it’s difficult to keep cash around and make sure we each have enough for a week at a time. Therefore, we needed something that could be taken care of electronically. That is where Mvelopes comes in. Mvelopes is a web-based envelope budgeting system. You just set up your envelopes online, fund them with the click of a button and then spend with cash or debit. Once the transactions come in (they are automatically downloaded), you just tell the program which envelope to take the money out of. It’s that easy.

Even if you don’t live away from your spouse, Mvelopes is a great tool. Using the traditional technique of the envelope system (cash) can be a little messy. You are keeping a lot of cash on hand and it can be lost, stolen or spent recklessly. Mvelopes cleans up that mess by making everything electronic.

My wife and I recommend Mvelopes. It has done wonders for us and has really helped us pay off debt.

Mvelopes is running a special right now where if current members sign up new customers, the new customer will get 25% off a subscription. I will get a small commission if you sign up. However, it works the same way for you too. If you sign up for Mvelopes and then sign up some of your friends, you will receive that same commission.

Sign Up For Mvelopes and Get 25% Off Your Subscription!

P.S. The 25% off deal only lasts until January 31st. After that, the discount goes back to 20%.

Even a Small Emergency Fund Can Bail You Out

Having a small emergency fund while getting out of debt is critical. As I mentioned in other posts, one of the first steps to getting out of debt is not adding to it. Having a cash reserve, no matter how small, can make that step even easier.

Our $1,000 Emergency Fund

When we started thinking about our plan to get out of debt, we knew we had to save up some cash. Being a (mostly) big fan of Dave Ramsey, I knew that $1,000 was a good number to strive for. It’s what he recommends in his book and on his radio show. $1,000 is a relatively easy amount to save and would cover most financial emergencies. It took us a month to save for ours.

In my opinion, some individuals may need a slightly larger cash reserve while getting out of debt. Individuals who are learning of an impending layoff should be stockpiling cash. If you are in that category, you should also be paying only the minimum on your credit card (and other debt). Cash (savings) will be your friend when the layoff happens.

Emergency Fund to the Rescue

I am writing about emergency funds today to tell you about how ours saved us recently.

During the spring of 2009, I worked for the Department of Labor on an independent contractor basis. In other words, they paid me straight cash and didn’t withhold any taxes from me. It’s nice getting more cash upfront but it’s a pain when tax time rolls around. You have to constantly be aware of your tax situation and how much you anticipate owing at the end of the year. Back in August, I paid $1,500 in estimated taxes and figured that would cover my income. Well, I was wrong.

I started calculating what our tax refund would be the other day and noticed that it was looking like we were going to owe. Working for a certain financial branch of the federal government, I am held to a little higher standard when it comes to taxes. If we would owe on April 15th, our return would be examined a little closer than normal. So, to make sure we paid enough in, I depleted the emergency fund and sent all $1,000 to the US Treasury. Hopefully my calculation was wrong and we can get some of that money back. I guess it’s better to be safe than sorry.

Even though we had to deplete our account, it feels GREAT knowing that we didn’t have to rely on credit cards to get us out of the mess.

So, this little emergency is going to set us back a little. We still anticipate paying on debt this month however, it won’t be as much as originally planned. We want to get the emergency fund back up to $1,000 quickly.

What has your emergency fund saved you from?

Are You Living ‘Within Your Means’ or ‘Below Your Means’?

Recently, there was an article on CNNMoney that tried to define the phrases ‘living within your means’ and ‘living below your means’. I think they are two phrases that are completely different and here are my ‘definitions’ of them.

Living Within Your Means

To me, this phrase is too positive. Living within your means sounds like you are spending everything that you earn. That sounds more like living paycheck to paycheck. Which one sounds more positive to you? If I told someone I was living within my means, they would think that I am getting by just fine. However, since I am spending everything that I earn in order to pay the bills, mortgage, debt, etc., I am in no way saving any money. They wouldn’t think to ask if I am saving money because the phrase kind of implies that I am saving when I am not. However, living within your means also implies that you are taking on no additional debt. Since I am only buying things that I can afford based on my income, I would not be buying things that I cannot pay with cash.

If I told you that I am living paycheck to paycheck, you would probably feel bad for me. Living paycheck to paycheck is more negative and it definately applies that I am saving no money. I am here to tell you that these phrases are the same thing and there is no difference.

Living Below Your Means

When someone says that they are living below their means, I automatically think of clipping coupons and driving a 1993 Nissan Sentra. I don’t know why, but that is just what I picture. However, I feel that living below your means simply means that you are able to sustain your standard of living by spending less than you earn. You may be completely comfortable with the way you live your life financially. You just do not spend all of your income meaning you can save. You can save up for retirement, a car, a house, etc. Living below your means is they way to become The Millionaire Next Door. Living below your means will also help you get Beyond Paycheck to Paycheck.

What are your definitions of these phrases? Are they radically different than mine? Which category do you feel you fit in?

What Are You Cutting Back On?

I recently came across an article over on CNNMoney about where some Americans are cutting back in their spending. I found the results very interesting.

1. 50% of Americans plan to buy an HD or flat-panel TV in the next year

I don’t know about you, but purchasing a TV is one of the last things on my mind right now. In the article it also mentioned that only 11% of Americans believed that it was a good time to buy things they want or need. Are you telling me that a high-definition TV does not fall into the category of a want?

2. Cable and sattelite TV are way down on the list of cutbacks

For me personally, this was one of the first things to go. To be perfectly honest with you, it feels great not to have all of those channels. I am reading some great books and it even gave me the time to start this blog. I guess it kind of goes to show how addicted us Americans are to our TVs.

3. 59% of Americans plan to take a trip of 100 miles or more in the next 6 months

I was stunned when I saw this one. With gas in my area hovering around $4 a gallon (close to $5 on the west coast), taking a trip is one of the last things on my mind. I would be happy just sitting around a pool reading a book.

There were also some things that did not surprise me that much. A lot of individuals are cutting back on dining out, clothes, and out-of-the-home entertainment. I personally have been starting to purchase produce from local farmers in order to cut down on costs. I am supporting the local econmony, plus getting some great nutrition from the food. Trent over at The Simple Dollar, recently had a great article on Tens Ways to Find Bargains on Fresh Food. I am really starting to love fresh food and the tips that Trent gives are very helpful.

What are you cutting back on and are you getting real savings?

What would be the last thing that you would cut from your budget (other than food, shelter, clothing)?