Wednesday, January 7, 2015

The Benefits of Pinpointing Financial "Leaks" & Tightening Budgets

Once I set up our account, it was clear to see where we had our financial leaks. For the last two years, I had made it a habit to bring my own lunch to work each day, but my husband had not. This was the first of a few different mistakes I could see that we were making. Another was the frequent trips to the convenience store and my unnecessary smaller purchases. I had cut my shopping sprees to Goodwill mostly out of our new budget, but now we had every single purchase under my close watch like a microscope.

I've learned so much about money and happiness over the last several months, and there's been some great perks to paying more attention to our debt. Here are some of my favorite changes that we've made since paying down the debt and saving up for the house.
  • Eating more [vegan] meals at home
  • Watching Netflix instead of going to the movies
  • Investing my time into The Little Red Journal
  • Removing negative energy from my life
  • Deleting my Facebook account to achieve more mental peace
  • Spending more quality time with my husband
  • Relaxing more and having a peace of mind I've not had before
  • Preparing for the arrival of our first child
So, what are some of my biggest tips to help you achieve your financial goals?

1. Track every single penny. I'm not even kidding when I say this. You should know exactly where every dollar is spent, and if you need to switch to only using a debit card, then do so. My parents refuse to get a debit card, but chances are you're in your 20s like me, and are willing to commit to using a debit card to track every transaction. If you have to use cash, then dutifully (and manually) add a transaction to your account. I've occasionally had to do this, and it's super easy,

2. Identify the "financial" leaks. That's right! Once you start paying attention to every single transaction, then you'll immediately see which categories or budgets are really giving you problems. For us, it was my trips to Goodwill (when I wasn't donating, I was buying), and my husband's frequent trips to the convenience store. Our solutions to these budgets? I will buy him his Red Bull when I go to the grocery store. They cost double at the convenience store, so he is still able to keep his habit and I'm happy that he's saving half the cost that he'd otherwise be spending on them. I also stopped needlessly shopping and have put a halt on purchasing any additional items for my wardrobe.

3. Tighten the budgets accordingly. I refuse to cut one budget: our food budget. I overspend every single month on "eating out". Yep, once the baby gets here, I'm hoping that will force us to trim the budget, but hey, I know how it is. We all have a vice, and for us, that's food. Figure out where you can trim back (can you cut cable and switch to Netflix?), and then go from there. I closely monitor our bills and if I see even a $5 or $10 increase in the bill, I will call with no mercy. (I'm looking at you AT&T and Comcast!)

So, best of luck with all of your financial goals, and let me know how I can help. Feel free to drop me an email.

Ready to pay off your debt and find your financial freedom? Check out the posts below for inspiration!
How to Create a Monthly Budget—and Stick With it!
How We Saved $16,000 in Less Than 7 Months to Purchase Our First Home
How To Pay Off $17,000 of Student Loan Debt in Less Than 18 Months
Knocking Out Student Loans One at a Time
Finance 101: 7 Reasons Why I Love
Sell your crap. Pay off your debt. Do what you love.
Reality Check: The Evolution of Your [Financial] Goals

Kelsey is a passionate vegan living in Houston, Texas, spreading the word about the benefits of eating a healthy, plant-based diet. She's also a minimalist enthusiast, a self-proclaimed financial guru of her household, and founder of The Little Red Journal.

No comments:

Post a Comment

Like what you've read? Leave a comment!