Sticking to a Grocery Budget Even If You Feel Like You Might Die of Starvation

As I mentioned in my last post, I’ve been experimenting with a grocery budget—something I’ve never done. I know, gasp. It seems the first recommendation of any card carrying money-conscious person is to know where your money goes and establish a budget. Up until now, I’ve blithely ignored that advice.

That was until I received my American Express bill, which was, ahem, very high. When a cursory scan did not give me any insight, I broke out the calculator, paper, and pen. I involved a handful of Hershey’s Kisses and then I set up shop at the kitchen table.

After 15 minutes, the culprit, Groceries, rang in at over $1,000.00. Whoa. Really I could not remember buying anything with 14 carat gold on it, so I immediately rolled more chocolate munitions onto the table and contemplated a cup of coffee even though it was after 4pm. No matter how I tried to untangle the numbers they still sat there, like the lumps of curvy lines that they are, and stared blankly at me. Unmoving. Literally unmoving, because I now had to go online and pay that huge bill.

So, after walking out of Ralph’s a couple of days later, I decided that the trick may be in the credit card itself. Meaning, American Express pays 6% on groceries for up to $6,000.00 per year. This was the reason I applied for this card—I mean, what card can beat that? There is a caveat, however. Once you spend $6,000.00, you only get 1% back, not 6% anymore. I wondered if we could aim this low: $6,000 a year? This boils down to $500.00 per month. Or $16.44 cents per day for groceries.

I asked the kids if they thought we could stick to a budget of $15.00 per day (just to err on the safe side). Surprisingly, they were very agreeable, even calculating what they thought the daily amount would be in their heads.

It was a Full Send as my son calls it.

Since that day I’ve been operating on $15 a day and there are a couple of things I’ve learned since taking on this project.

You Will Get Sick of It

Of trust me, unless you are basically anorexic at heart, you will get very tired of the whole thing. The mental calculation, the fussbudgityness, the angst. You will get hungry while in the store and you may salivate when you run into your neighbor and she mentions donuts, or crackers, or split pea soup. You’ll wonder if you can subsist on $15.00 a day (or whatever amount you decide), you’ll think you will starve to death, and you’ll wonder if this is good for your kids, or husband, or pets. At 4:00 p.m., after a long day and a missed lunch, you will want to give up.

This is NOT the Time to Give Up

This is the moment when you must rally and come up with something healthy that is inexpensive. And it will be DIFFICULT. I couldn’t believe how long it took me to come up with tuna sandwiches as a lunch! Not to mention that I didn’t even need to buy tuna because we already had it—and everything else that a tuna sandwich requires.

In order to achieve this budget, you will need to get off of autopilot and really think about what you are doing. You’ll have to decide how to cook that head of broccoli and use it. Otherwise, it will go bad and now, on this low budget, you will kick yourself, and probably run in for a box of Marie Callendar’s pot pies and a whole load of things you don’t need and blow the whole experiment.

Make a Game of It

The best approach that I can see so far is to make a game of the whole endeavor. A game has special cards. In this game, they are called coupons. Coupons are interesting because even though they have dates on them and other things like specific foods, you can sometimes get a friendly cashier to credit you the $1.00 off anyway. Not unlike Poker, the savvy cashier can ”read” you. In fact, just last week I had the cashier change my coupons on two separate occasions—this has never happened to me before, but they must have Desperation Radar or hidden antennae or something. It was uncanny. Also, don’t forget online coupons and newspaper inserts. Most of all, don’t forget that like any game you will not be so good in the beginning, but you will get better.

Accept Free Food

Free food is free! If you are brave, you’ll dumpster dive. I’m too self-conscious for that, but I will take free food that is given at thrift stores and free piles (we have one at the end of our street that has a big shelf and the leftover Foodbank food is left there). I will also figure out a way to handle 11 cupcakes from my neighbor who only wanted to bake them and eat one. That’s no problem.

While You’re at it Don’t Sacrifice Nutrition

Okay, nothing to add to that except that this may be hard if you skip breakfast and have a tiny lunch like I did last Monday, you may find yourself in the candy aisle of the store and decide that you have to buy a pack of individually wrapped Recess Peanut Butter Cups for $1.99. Yeah. Don’t do that. Or do. I still stuck to the Budget so it was fine.

Don’t Go Ahead

This is the most practical tip and essential. Do not use your next day’s money. You can’t borrow into the future. Now, for example, if I spend $10.00 today, then I save $5.00. In that case, I can use that $5.00 tomorrow or anytime after. But, I can’t spend $20.00 today in the hopes that I’ll only spend $10.00 tomorrow. Somehow that never works.

On a final note, I’d say that this experiment is only for one month for my family. So far, I can see that realistically, there are some real hurdles to spending so little for a family of four hungry people. Nevertheless, it is a handy discipline to spend as little as you can for one whole month. At the end of this month, I hope to have a better sense of where we fit in on a regular basis. Right now, I expect to forge on and challenge myself to get better at organizing our meals.

Let me know your thoughts!

Andrea

January 18, 2020 0

Patience, Persistence, and Perseveration: How to Make Saving a Habit.

You’ve got the motivation. You’ve figured out that you want to save your money. But now what? I was in that position the moment I took my savings out of it’s low-interest CD and dumped it into my checking account. For years I’d tried having a joint savings and checking account, but that was ridiculous! I could switch the money back into checking any time I wanted and well, I did that each year—and ended up saving nothing.

But this year was different. This year I’ve been more successful but it required three things: persistence, patience, and perseveration.

Patience

In the beginning, I did quite a bit of research as I looked for the highest interest savings account that I could find. At the time, Synchrony had a pretty good rate, hovering around 2.25%. I did have an existing account with Synchrony that I had opened a number of years ago and so, after looking around, I decided the best bet for me was to use this account rather than get too crazy with multiple accounts from the start. Besides, I was such a techno-phobe that I was almost afraid to do anything else.

At the time, I did not have a link to my bank account so that I could transfer funds. In fact, though it’s laughable now, I had only sent them one check years ago. That amount was still there gaining interest, but I had a huge mental roadblock because I had once tried to link my accounts and I’d gotten so thoroughly confused I gave up.

Imagine if I’d been more patient.

This time I sat down and took my time. I read the instructions thoroughly on Synchrony’s website and followed them. Basically, if you’ve never set up a transfer you first have to link your banks. You will need to provide your bank account number and your routing number. The bank account number is your own account, while the routing number is the number that designates your bank. You can find these on your checks.

Each bank is a bit different, but once you fill in your account information, the initiating bank, Synchrony in my case, creates two very small deposits or withdrawals to or from the account you link up (your existing checking account). This process takes a couple of days—so again, you need to sit down, get it all organized, and be patient. A couple of days later, you will get an email that gives you further instructions. At this point you will have to check your bank account for those deposits or withdrawals, which are usually less than a dollar each, and confirm those amounts with the other bank. This is a good time to figure out how to open up your checking account online and get pretty quick using your username, password, and keeping both tabs open on the computer for cross referencing.

Perserverence

Most banks that offer higher interest rates are online, so most of the work you do establishing your account is done by you. It can seem overwhelming and you may have doubts about your ability to even save money, so you may have moments of frustration and wonder why you are even bothering. Be forewarned: this is not the time to give up!

I can say from personal experience that my ability and motivation to save money was grown exponentially because I have one lone account to transfer my savings to. The fact that it is separate from my checking account is crucial. But getting going, figuring out how to navigate the account, and how to transfer money took time and effort. Plus, it was a bit scary. The whole time I felt suspicious, like the whole account would turn out to be a scam. I approached each step with fear and trepidation, but again, persistence won out.

Perseveration

Okay, if you know what the word perseveration means, it’s meant to be kind of a joke—but not totally. Perseveration is often used in psychology and is defined as repetition of thoughts or actions. In order to get savvy about saving, you need to be prepared for a lot of repetition. Once I set up my account so that I could transfer money from my checking account to my now-functioning savings account, I had to get in and out of the account. A lot. Like, Every Day.

I know, it sounds ridiculous, but when I first tried to access my Synchrony account, it had been years since I’d checked it. I couldn’t remember anything. To top it off, when you use the account so irregularly, it seems like there is a default in the system so that it starts asking you all kinds of random questions that you did answer at some point, figured you’d remember so you didn’t write them down, and of course, forgot completely!

So, that was more hassle than I wanted on a regular basis. Now, I sort-of obsessively get into my accounts and check them, usually a couple of days each week, just to prevent rust and cobwebs from taking over. I also started religiously checking my credit cards and it keeps me more in the loop as far as spending.

Once you are set up with a decent savings account that provides you with interest and the ability to transfer funds from your checking account, you can make deposits. Start small first, transfers do usually take a couple of days to process. Remember, if you need the money in an emergency it is there—but keeping it in a separate account means that you cannot touch it immediately. Always keep some money in your checking account to cover bills and small emergencies. It is up to you to decide how much should be left in your checking account. But, there is no harm in transferring small amounts—even little bits add up and the habit of saving is worth its weight in gold.

October 25, 2019 0

The Motivation to Save

You need motivation and incentive to save money.

We all have habits that we don’t even think about, habits that we don’t even question. We brush our teeth, we take showers, we pay our bills, we answer the phone, etc. After all, we don’t say to yourself, ‘oh I am really not sure about brushing my teeth, I just can’t get off the couch today, it’s too hard. What a waste of water, my teeth are never going to be as white as I’d like them anyway.’

On the flip side, there are behaviors that we constantly question. Exercise and eating healthy often fall into this category. We tell ourselves that we are born this way, or that athletic people have some hidden genetic advantage. I know when I go jogging by myself, my internal voice tells me the entire time that I should walk. After all, I wouldn’t want to push myself too hard, right?

Yeah. Right.

But, it doesn’t have to be this way. The fact is that most of us are really setting low standards for ourselves in many ways.

When it came to saving money, I had to hit a real low point before realizing that I just couldn’t live that way anymore. For the last 13 years I have been a stay-at-home-mom. Before that I was a teacher with a pretty good salary, great health insurance, and assured retirement. At 35 I even purchased my own home. (I met my husband a year later).

When I had my son I decided to stay home with him. At that time my husband was a plumber and it was 2006—the beginning of the last recession. We had many tough years and I did try to make some side income during most of those years, but it never amounted to much. We lived in my home, while we rented out my husband’s home. That rental income really saved us.

In 2012, my husband switched back to Commercial Fishing (his original career and love was as a tug boat driver, but as jobs diminished, he found work as a plumber and in 2005 he started his own plumbing business). He purchased his own boat with cash we were able to use when we refinanced our homes. Getting started was really tough then too.

But, it wasn’t until we were audited by the IRS that a spotlight was shone onto our finances. All told, we were audited for 2012, 2013, and 2014. This meant that, as our bookkeeper, I had to do all of the tax prep for each of those years again. During those years, I was very new to preparing that type of paperwork and unfamiliar with fishing terminology. My husband is not a desk-type guy so he was of little help; our accountant treated me in an offhand way—as if I certainly couldn’t understand the business. We were at the beck-and-call of the auditor. I remember driving to different branches of Wells Fargo to get printouts of all of our deposits for one of the years. We even had to go through old emails to prove that we actually purchased a boat! After months of stress, fighting, and tears, we found out that we did not owe anything.

This meant that I’d prepared the taxes correctly. At the time that was a huge boost to my confidence after months of feeling like a complete failure.

We thought that nightmare was resolved until one day, about a year later, I went to the mail and another of those telltale envelopes was waiting for me.

Apparently, our 2014 taxes had not been resolved. With taxes and fees and late charges and charges on charges, we owed $27,000.

Oh, hello.

I would have loved to have the IRS come visit so they could find that $27,000 because at this point we were struggling. Trust me, we were not holding onto that kind of money.

We were new to fishing. The boat, like all boats, was in constant need of repair. Then, there are days of bad weather and no fish. It’s an understatement to say that it is a never-ending roller coaster ride of highs and lows.

Things got pretty ugly around our house for what seemed like a Very Long Time.

First, we couldn’t even locate a phone number to deal with the problem. Our original auditor had moved or was hiding behind the IRS Black Veil of Mystery. Other phone numbers simply handled your payment and had no access to your account at all. It was as if the representative was passing the phone around in a puny office. I pictured them chewing gum and doodling while they said, very nicely of course, ‘Okay, well your first payment is due in July.’ We called this same number over and over for like, three days, before we realized they actually didn’t have any power at all and were likely an outside company hired by the IRS.

The phone silence was literally shocking.

Finally we called an IRS Assistance group that works as a go-between with you and the IRS. We hit the nail on the head, but again, I had to prepare the taxes and organize them thoroughly and again we had to go through a back-and-forth process which took months. In the end we did owe money, about $800, that ended up being over $3,000 in late fees and interest charges.

That was last year.

We paid our past due taxes and I guess I looked around and reassessed. I was working more, my husband was working more. But we literally had nothing to show for it.

To be honest, I never felt so low. I really saw myself in a different light. Though I did not grow up rich—we were even really poor for some short stints of time, I always felt rich. My dad worked in real estate and he had some real ups and downs. But I always felt like I was on the Up Side. Underneath I felt like I was wealthy.

My view of my self and my life was really starting to wobble. At this time I didn’t sleep well. I’d wake up in the middle of the night and worry about my kids and our homes. I worried about how unprepared we were for an emergency. I noticed my thoughts—especially when the kids or I had a dentist or doctors appointment. I’d think, ‘maybe we should put it off.’ If one of us was sick I hesitated when it came to making a doctor’s appointment. I felt like a terrible parent.

I had spent months looking at numbers. Our Numbers. They were hard and cold and black and I knew I had to rally and take control before we were sunk.

The first thing I did was look at the obvious: our health insurance. I looked over our plan—it was almost $1,000.00 per month. I noticed a section in our online account and we had spent less than $500 that year. I’d had two doctor’s appointments and my kids had had one each. My husband did not have any. My insurance did not cover my prescriptions until a deductible was met—which usually happened towards the middle of the year. The thing was that we could have paid cash for our appointments and it would have been less than a months dues. I also knew that if we didn’t start saving now, we would be a real burden in retirement. It killed me to do this, but I applied for Covered California. I don’t what it is, but I have always felt strongly about paying my fair share and asking for assistance felt really crappy to me.

Still, I could see that it was a necessity.

I vowed at that moment, that if we were given a subsidy that paid for our health insurance, there was no excuse for me to not put the difference away.

That decision turned out to be a good one. One thing became very clear: that extra money must be turned over to a savings account.

No Excuses.

October 11, 2019 0

Why it’s Important that Your Money makes Money

One of the most important financial lessons I’ve learned thus far is that allowing your money to sit idle is the absolute worst mistake you can make. The reason for this can be summed up in one single word: inflation.

Inflation is the inevitable process where prices continue to rise, while the value of the dollar becomes less.

According to thepeoplehistory.com, the average price of a new car in 1970 was just over $3,500.00. A gallon of gas was 36 cents. (Shocking, right!)

While your dollar is shrinking almost across the board, it’s important to fight against inflation by keeping your money in accounts that actually earn interest.

I learned this the hard way when I realized that a good chunk of my own money—money I’d saved for years— was stuck in a CD that had a horrible interest rate. I’d kept this money in the CD, allowing it to continually reinvest. Each year I’d get a reminder letter —-something I should have read and paid attention to, and each year I missed the deadline to take it out and put it into something decent. I even had my kid’s money invested in them!

And then, one day, I WOKE UP.

I’ll be honest, it was really as if I’d just woken up—like Sleeping Beauty but Older and Less Beautiful. Definitely more tired and a little bit pissed, because I was making a 1/4 of a percent on my CD!

The amount was so low that when I walked into the bank and asked to take all of our CD’s out and put them into my checking account, the teller didn’t bat an eye, other than to say, ”well, when you take your money out early there is a fee, although the rate is so low, it’s not going to add up to much.”

You got that right.

The truth was, that I just didn’t really know that I was doing myself a grave disservice. I also did not realize how many years of this procrastination had accrued. My son was 12 by the time I figured out I’d been operating on autopilot for those years—12 years of missed opportunities to make money just by choosing wisely. I know, it’s embarrassing, but I finally did the math and I realized I was making about $50.00 a year on a CD with what I viewed as my life savings—$20,000!

(Just to give you an idea, I make almost $250.00 a year by just using a credit card that gives me points!)

The bummer was that I’d comforted myself with excuses like:

–”at least I can’t touch the money.” OR

—“I think a just saving in a bank is best anyway!”

On hindsight, I can see that those were excuses for my own laziness.

But there was something more behind this lethargy. If I really dig deep there was always a sense that trying to get a better rate seemed kind of greedy. I felt that I had enough and I felt unconsciously obligated to just take what I was getting without asking for more.

Demanding more, and even paying attention to what I was saving, seemed ungrateful on some level.

While I still have a long way to go, I now understand the foolishness of my ways. I can see now that just one major loss, one health problem, or an accident, could drive us into debt. While we are not currently in debt, we are not so far removed from the possibility.

When I finally decided to look at our finances, I realized we were coping month to month, living paycheck to paycheck, and doing this year after year. There was a tension in our home that I had ignored—a slow, energy-sucking tension that was caused by that feeling that if you stop, you’ll drown. When it dawned on me that we were allowing ourselves to accept this panicky way of living, I realized that something needed to change.

Next time I’ll talk about what my first steps were towards financial stability.

September 10, 2019 0