Oftentimes, I think that we do not worry about little bits and pieces of spending and we surely do not spend enough time in figuring out where all the little dollars go. When you have big payments to make on mortgages, cars, clothes, and the like, who has time and energy to devote to $20.00 here or there. Moreover, how can it really make a difference to your overall financial situation? If it did not, it certainly would not be worth the effort to keep track of the small amounts of money that go out of our pockets.
I have started to take a different tack and, to my surprise, it seems to be paying off in helping us reach our financial goals. Honestly, before we went on this journey to take control over our finances, we just took some bills for granted, and spent money whenever on whatever. Never mind that such spending was hurting our bottom line: we just did not worry about it; there was always another credit card to take, another portion of our home equity line to tap into. Every once in a while, we would think to ourselves: we make good money, why don't we ever feel like we have it? But, we would block those thoughts out, because, the truth was, we were not spending on big ticket items, and, therefore, did not see ourselves as extravagant. Then, came the reality check: we were wasteful. Absolutely, horribly, terribly wasteful.
There is no shame in being wasteful with money if you do not mind finding yourself without enough to spend on important things. But when you realize that the debt interest alone eats up a week or so of hard-earned dollars, and getting rid of that debt becomes your priority, then every dollar really does begin to count. I like to read, so I never considered books an extravagance -- even hardcover. Also, $5.00 for a magazine or $10.00 for two every time I went to the supermarket did not feel bad to me; now, it does. Add it up -- while one $5.00 magazine is only $5.00, one per week is $260.00 -- 2 per week is double that.
But, $260.00 is not so much, standing alone. The problem is that the $260.00 per year on magazines stands right next to the $350.00 or so in downloaded songs, and the $480.00 to Blockbuster so we can rent unlimited movies and games (that we hardly rent) and the $300.00 for AOL on top of our $500.00 for online cable, not to mention the $900.00 for a gym membership that went unused and the $750.00 or more in coffee and other deli related items. And that is only a few of the items that we have reduced or eliminated in our lives.
You see, the small ticket items add up, but you don't notice them. You scratch your head and say, we work hard, we make money, we should be able to enjoy the goodies in life. But we were not getting that much pleasure from the items I just listed or some of the other things we were literally throwing money at: insurance is a necessity, but as my homeowner's crept up to double what it originally was, I never even bothered to find out why: until I got serious about our finances. Then I found out that I could save $750.00 a year by taking out a larger deductible. Honestly, my small deductible was not something that would be useful to us -- anyway, in one year, I have saved myself the difference. I just never checked before.
Since we have started really sweating the small stuff, not only do we seem to have more money, we are constantly looking out for ways to save in our spending. I check every statement to see what I spend money on individually and monthly; if something shows up that we just do not need anymore, I get rid of it. I just got rid of the monthly water delivery: it should save us at least $40.00 per month. I also am more conscious to look for discounts and sales: I do not buy at certain stores without a coupon -- in fact, I did not have a coupon with me at Bed, Bath and Beyond, so I went back with my receipt and coupon and saved myself $35.00. I turn in all my rebates within a few days of purchasing an item with a rebate -- $30.00 is then in my pocket, not someone else's.
So my best advice is to really watch and track what you spend. No, not every penny, but, look at what you are spending your money on by looking closely at your statements of every kind and keeping receipts of everything: once you get in the habit of getting receipts, it becomes normal -- then, you can use them to see where your money goes: without some method of tracking your spending, you will not realize all the places where you can cut your spending. Use your tracking software or pencil and paper, and every day or every few days, record it all: then, when you make changes, you will really notice them and their effect on your bottom line.
When you spend, think about whether or not spending that money is really worth it to you or whether it is preventing you from getting to some of your more important financial goals. I have probably managed to shave $300.00 per month (or more) from our monthly expenditures by getting rid of all the unnecessary little items and reducing the everyday spending. My husband and I ask these questions all the time: do I really need that? If I buy that, will I have to go back to the bank? If I go back to the bank, will I still be able to reduce the debts this month?
The question is actually: is this more important than paying down our debt? Reducing our debt is our major financial goal: if the answer is yes, this is more important (like getting my son plane tickets so he and his girlfriend could come to a family affair), then, we buy. If not, we do not. Most of the time, it turns out that the things we need the least are the small things that, when added together, turn out to be the big things. The big ticket items are usually important (we really are not extravagant that way) but, the little stuff, that usually is not. And we keep using that money to pay off our debt. Then, we may have money to enjoy again -- but, right now, we are living tight. We are committed to meeting our goal of getting out of debt.
I always prided myself in my generosity -- I am still generous, I am just not stupid anymore. I now pride myself in knowing that I have saved some money somewhere and I have paid more of our debts off -- take my advice, watch out for the small things: you'll be better off financially for it.