Latest posts by Kumiko Ehrmantraut (see all)
- 6 Steps All First-Time Home Buyers Should Take - September 23, 2020
How great would it be to wake up tomorrow and find that you have an extra $200 to put towards savings or paying off debt? What about having some extra money to pay for a “want” item or a new expense? Today, I want to walk you through how to look at your existing budget in a whole new way. It's no longer just a tool to track spending or to keep you organized (those are also important benefits of a budget). Today, I want you to look at your budget as a tool to generate some extra money.
The first step is to have a working budget. That means you to have realistic limits for the categories you list in your budget, and you already have an understanding of where your money is going. If you are struggling with this first step, don't fret. Here are some of my most popular posts about budgeting that will get you on your way in no time.
- How to Create a Budget (When You Really Don't Want To)
- The Ultimate Guide to the Cash Envelope System
- 4 Free Budgeting Tools Everyone Should Know About
- How to Budget When You Are Behind on Bills
When I first created my budget back in 2011, I realized that we had more expenses than income. After a small freak out moment, I decided it was time to get serious about where my money was going. After making some phone calls, and making some much-needed decisions, I was able to find an extra $200 per month hidden in my budget, which allowed me to pay for a new expense that came up.
LOOK AT YOUR FIXED EXPENSES
Back in 2011, I was in a severe motorcycle accident. It left me in the hospital for three days with a shattered wrist, two black eyes, and a bruised pelvic bone. Did I also mention that I had no health insurance at the time? To say that my budget was ready for a $13,000 medical bill is the biggest understatement of the year. I completely cut out saving, having fun, eating out, and everything else you could think of. My monthly payment for my trip to the hospital was $200/month. That was $200/mo that I didn't have.
I literally stripped my spending down to the bare minimum and was only left with fixed expenses that I had to pay, but it still wasn't enough to cover my new monthly medical payment. I had no choice but to get creative, and to start thinking about the impossible because hey, it was an impossible situation.
I started by calling my cable company. It was the first time that I have ever reached out to a company to see about lowering a fixed bill. It took talking to 4 different employees, over an hour of wait time, and being transferred to every department before I was able to speak to a manager of the billing specialist team. I explained my situation, and I simply wouldn't take no for an answer. I couldn't afford to take no for an answer. Even though he was only able to cut my monthly bill by $5, he was able to find me extra savings in areas I didn't think about. For example, by turning in my rented modem and borrowing one from a friend instead, I was able to save an additional $10 on my internet bill (which was a package deal with the cable company). Total found $15.
After realizing that I could reduce my fixed expenses for the month, I started making more phone calls. In the end, I was able to reduce my phone bill and city garbage bill. I got on a group cell phone plan with my boyfriend, and we started doing our own garbage runs instead of paying $35 to the city for our garbage cans and pick up. Total found $114.
With that being said, lowering your fixed expenses takes time and patience. It took me nearly two months of properly planned phone calls, and crazy determination. The best thing to do if you are looking at reducing your fixed expenses is to set time aside every week to make your phone calls. If you don't talk to the appropriate person one time, call them back the following week until you reach a service agent or billing manager who is willing to work with you.
FOCUS ON WHAT YOU BUY NOT THE MONEY SAVED
After reducing what I could in my fixed expenses, I started to look at other areas of my budget that I could cut back on. Since I already cut down on so much of my other spending, I decided to focus my attention where I knew I could push myself a little harder. The first place I started with was my grocery budget.
I had a grocery budget of $350, and reducing it by $50 seemed impossible. At the time, food was my ultimate splurge. I liked my Starbucks's ground coffee, and Greek yogurt. So I came up with a game plan to not just reduce my grocery bill by $50, but to make small changes in the things that I bought. I bought Folgers or generic branded ground coffee and decided to give the $.99 flavored non-Greek yogurt a try. Just by making those two small changes, I was able to save almost $30 a month. By adding a newly found coupon habit, I was able to save an additional $10/month. Total found $50.
The great thing about your grocery budget is that you have complete control. You have control over what you buy and the amount that you spend.
I have a challenge for you.
Find two things in your grocery budget that you know you could get cheaper by changing brands or trying something new. For me, it was my Starbucks's ground coffee and fancy Greek yogurt.
The next time you go to the store, look around at your options and try something new. Find a cheaper alternative to your go-to grocery favorite, and give it a try for a month. During the month, keep track of how much you buy those two things. At the end of the month, add up what your total cost was for buying those two cheaper alternatives. Then take the amount you would have paid by getting your go-to favorite and find the difference. What could you save by only changing two things on your grocery list?
Even if it's a small amount, it adds up when you add three, four or even five changes to the things you buy.
Now, you might be wondering where I found the extra $21 that I still needed to cover my new monthly medical bill. Ultimately, I decided to take it out of my “entertainment” fund. A lot of people call this their “fun fund.” To me, it was worth it to make my entire payment to cover my medical debt, then a night out at the movies. Sacrificing $21 for a movie night is well worth it compared to the $200 that it could have been, which would have left no “fun” at all for the month. At least, I could still go to a craft fair for the day or spend some money on an awesome day out.
Since 2011, I have looked over my budget and reduced spending four other times. It's important that you keep up on your fixed expenses and revisit them at least every year. There are always better deals coming out and opportunities to save. Take a hard look at what you are spending your money on and make small changes along the way. Remember, it adds up.
Finding hidden money in your budget doesn't require massive amounts of personal sacrifice. But like everything in your life, it starts with a decision. Trust me; it's a decision worth making.
Oh, by the way, after five years, I still buy the $.99 flavored non-Greek yogurt (it's now my son's favorite, and that's fine by me).
- Related: Should You Pay off Debt or Save?
Have you found hidden money in your budget? Share with us how you did it in the comments below!
I totally agree that it takes time to make all the small changes. But month after month and year after year it gets easier. After we adopted a sibling group of 3 our food bill exploded. It took time to learn how to cook affordable, easy, healthy meals. But after 2 years, we have cut our food bill in half from $1200 a month to around $600. Slowly but surely!
That’s awesome Ms. Montana!