How We Saved $10,000 in One Year
This is how we saved $10,000 in one year in just six steps by looking critically at our current expenses and spending habits.
Who could use a $10k raise? Just about anyone, I would guess.
And how could you go about getting an additional $10,000 this year?
You could ask your current boss for a raise.
You could get a job that pays more. (I actually did this about 15 months ago.)
And/or you could look very critically about your current budget and spending and cut or save $10,000. And I mean look critically. Be ruthless in cutting expenses! This is a short term strategy to propel you towards financial success.
Then it’s up to you what to do with it – sock it away in savings for your emergency fund or vacation fund or retirement fund or college fund. Or you could apply it towards any debt you have which has the effect of freeing up MORE money for you.
We have been in quite a financial pickle for some time now, actually since 2008 when the recession began. That’s a LONG time! So we needed to build up our emergency fund and knock out some debt. We have already made many positive steps with our finances.
As I mentioned above, I got a better paying job, but watch out, if you make more, you may have to pay more taxes. I am not a tax professional or expert, so check with your tax adviser. Don’t be unpleasantly surprised when you prepare next year’s income tax return.
We had a small homeowners claim for which we still have to pay our deductible. And we have incurred some medical expenses, again we owe the deductible. So, we have looked hard at our budget and here is how we have saved $10,000 in one year.
We Tracked our Income and Out-go
We had taken Dave Ramsey’s Financial Peace University on-line course on getting your finances in order a while ago. Check him out here. He and his organization have a ton of helpful information. He recommends a weekly budget meeting “to tell your money where to go, instead of wondering where it went.” I resisted this step for quite some time, maybe because we didn’t have that much money to deal with. Lol! I didn’t see the need until we had several months where expenses “surprised” us.
So, we began tracking our income and out-go with this free printable from Thirty Handmade Days which you can find here. It gave us a visual of our income and our obligations and it gave us a way to talk about it factually and helped remove the emotion surrounding our finances. We’ve used it for a while and tweaked it to fit our situation by whiting-out categories and writing in others. We added a column to track our income which varies from week to week. And we include the date and the day of the week the bill was due.
Our life insurance payment comes out automatically at the first of the month, so we began noting it at the end of the previous month to be sure we didn’t drain the account completely at the end of the month and get caught with an overdraft. Things are tight, have I told you?! Tailor your tools, or make your own, to fit your specific situation.
We developed our tracking sheet and started tracking. And we didn’t really have a big weekly budget meeting, we stood at the kitchen counter where the budget notebook resides and reviewed the week’s and month’s income and out-go in about 10 minutes on paydays. It has been a God-send and we have had very few nasty surprises!
We saved $10,000+ in one year by doing these 6 things:
- We drive 2 older cars. My husband’s SUV is paid for. No car payment! If we assume we would buy a little bit newer used car similar to mine, the car payment would be about $200. If we keep driving his current SUV, that’s a savings of $2400 annually.
- We eliminated credit cards. On average, an American between the ages of 18 and 65 has $4,717 of credit card debt, according to Money Magazine online article, Feb 9, 2016. NerdWallet.com found the average consumer pays an average of $2,630 per year in interest, assuming an average APR of 18%.
- I take my lunch on work days saving about $40 a week assuming an average lunch out would be $10, or $2000 per year.
- Eating breakfast at home saves us about $25 per week, about $1250 per year.
- We make our coffee at home and skip the expensive drive-thru, saving about $8 per day, $40 per week, about $2000 per year.
- We cut our cable/internet bill by $60 per month, saving $720 per year. I’ve read how others have completely cut the tie to cable and used other streaming methods, such as hulu, Amazon Prime, SlingTV, but for us this was the best option at this time. You might be able to cut even more with other methods.
These six steps save us $11,000 per year. Little expenses add up over a year, so don’t overlook them. There are two big things on our list. The first big thing is driving older cars, with one being paid off. It’s a sacrifice, but we are committed to getting out of debt and meeting our obligations. We won’t have to do this forever.
The other big one on our list is carrying no credit card debt. We have debit cards, but they keep us from incurring more debt and we are learning to live within our means. We are in a “spending fast”, meaning we don’t spend unless it is a necessity. No recreational shopping, no buying something just because someone else we know has something. It’s a season we’re in right now, but it won’t last forever.
We Still Have Fun
We still have fun, and we still splurge from time to time. We go out to eat occasionally. We are getting ready to go on a family vacation that we will be paying cash for. We’ll have quality time with family, making memories, and will not have the stress of trying to figure out how to pay the credit card bills when they arrive after the vacation. As I’ve said, this is a season of a “spending fast” and severe cut-backs so we can meet our goals of meeting our obligations and getting out of debt.
These suggestions might not work for you and your family at this time, but there may be other ways you can trim and save and do without for a time. I’d love to hear your suggestions and your successes!