Why do you overspend?

[globetrotter]

I was just reading the other thread where you wrote that you had a $1300 deficit each month. $2812 - $934 = $1878 for everything else for the entire month. I'm not a financial expert, but it seems to me you probably need to do a combination of reducing your spending and finding a bit more income.

Besides utilities, what other monthly bills do you have that need to be paid?

[singinjeannie]

Check the "financial adviser" thread. I just went through most of the numbers. There are a lot of them!

Mortgage: $ 934.00
Line of Credit: $ 93.00
Credit Card #1: $100.00
Credit Card #2: $ 60.00
Car paymt: $ 245.00
Preschool and other school expenses: $140.00
Sewer bill: $ 58.00 / month
Phone bill/Cable TV, Internet and cell phone: $156.00
Electricity: $ 95.00
Child charity: $ 20.00

The below are variable expenses that change

Church: $ 70.00
Groceries: $500.00
Gasoline: $300.00
Daily expenses: $100.00 (includes haircuts, donations at work, gifts, cards, pet care, all that stuff you spend money on that just sort of falls into a black hole of "where'd it go?"
Clothing: $ 50.00
Insurance: $206.00 (includes home owners, life insurance and auto)
Local RE taxes: $234.00
Propane: $ 90.00
Auto Repair: $120.00
Dental/Medical: $100.00
Fees for kids activities: $20.00

Well - there it is. This is the best estimates I could make based on past spending. We're trying to make changes!!!

-Jean

[terry1156]

If my calculations are correct your total monthly expenses are $3691 a month minus the $2812 which means you are currently running a $879 deficit. I just want to make sure I'm not laeving anything out since you said that the monthly was $1300. Here are some suggestions:

Save the $70 your currently paying for church. While I understand the want to give, you need to get your finances in order first before giving to others. Once you have your finances under control, then you will be able to give many times over.

How have you been on your credit card payments? Have you missed any? What are the rates you are currently paying on them? If you credit is still good, try to get both credit cards moved to one lower rate card.

Change you driving habits. There are some <A HREF="http://www.savingadvice.com/forums/showthread.php?t=61">good tips on saving on gas</A> which will be even more important with the price hitting new records each day. Both you and your husband so go through them to cut that expense as much as possible. That includes only using the car when necessary and learning to plan trips ahead of time to hit all your errands in one run.

[marla]

I was able to reduce my grocery bill by 30% without trying very hard through the help of <A HREF="http://www.cutouthunger.org">cutouthunger.org</A> I'm sure I could do even more if I put some effort into it. That might help lower your grocery bills a bit

[singinjeannie]

Thanks Marla and Terry.
DH and I have already cut out several hundred dollars in expenses since my first calculations, which gave me the $1300 number. I'm also coming up with $879 deficit now.

We cut out all entertainment/eating out, we reduced the amount going toward daily expenses by cutting out all unnecessary spending. Cut the internet connection bill and cut cable TV.

Thanks for the grocery tip. I'll check out that website for sure. Gotta find cheeper ways to eat!

Our credit is still very good (just had it checked recently when we tried to re-finance to help out our monthly bottom line). I haven't missed any payments nor have I been late. Our line of credit is 4%, our 10,800 CC is $4.77%, but the other card $6880 is 16.9%. (YUCK!) We're trying to do something with that one right away.

-Jean

[terry1156]

It's great to hear that your credit is still intact and good. You have done an amazing job with the debt to keep current with all that and should congratulate yourself on that. You should be able to reduce that 16.9% which will help some.

I think that the place you can save big is with your "home business." What you need to do is set up an area in your house that is exclusive for your business. I think you mentioned that you tried something earlier that didn't work out and are now doing a bit of eBay. Keep track of all those expenses since you can deduct them from your taxes.

Now, of you can make an area of 10% that is for your home business, that will cut 10% off your taxes. If you can make the area 15%, that is 15% off your taxes and if you can make it 20%, that is 20% off your taxes. So, this is how it would look come April 15th:

@ 10%

Mortgage: $ 934.00 = $93.4 x 12 = $1120 Deduction
Sewer bill: $ 58.00 / month = $5.8 x 12 = $69 Deduction
Phone bill/Cable TV, Internet and cell phone: $156.00 = $15.6 x 12 = $187 Deduction
Electricity: $ 95.00 = $9.5 x 12 = $114 Deduction
Local RE taxes: $234.00 = $23.4 x 12 = $280 Deduction
Propane: $ 90.00 = $9 x 12 = $108 Deduction

Total: $1878 deduction on your taxes. If you can devote 20% of you house to the business, you can deduct $3756 from your taxes. Since you husband is working, these can be taken against his earning. You can probably even find more depending on how carefully you keep records.

This won't help on a monthly basis. You still need to reduce the monthly fees so that you are at least breaking even. But this will give you a nice amount back on your taxes when you file and you can use it to pay down credit card debt. If you do that, that will lower those payments and I think you'll begin to see the light.

[singinjeannie]

Thanks for the positive feedback. I need that.

I have a great accountant (my sister-in-law) who always gets us every deduction she can get us. At this point this year, we've taken a loss on the one business, but intend to keep plugging away at that to try to turn it around.

The ebay thing is kind of wierd. It's not a real business at this point -- just a glorified garage sale. I'm certainly not making much on it right now!!! Do I have to claim it as income? Probably, because the IRS wants all they can get.

I should also be able to claim some of my car expenses because I do quite a bit of driving for my EcoQuest business. I've put many, many miles on the car making placements and trying to achieve sales.

Thanks for all the help.

-Jean

[lieweheksie]

I find what has helped me to tackle budget deficits is to focus on one area at a time- while keeping your eye on the others- and than get really specific. Example: I need to reduce spending on food- general category- then I focus on specifics within that- so this month I have been looking at how to save on juice (summer is here- 30C today), milk and cat food. Analyze what you eat a lot of, what you like and then look at how to reduce costs- can you get a better price, is there a cheaper alternative. What I have learnt is that when you buy a lot of something- 20 cents per can really make a difference when you are buying a 100 cans a month- probably not such a big deal for the person who only buys 10.It’s also helped me to have an estimate of what each meal should cost- X amount for breakfast, y for supper etc
One tip I got from my MIL- who raised 3 boys as a single mom working as a seamstress- very little money- is that there is very little you can’t make into a curry- if your family likes spicy food this can really help- curried beans, potatoes, vegetables, aubergines, tuna, eggs etc you name it. “ Ethnic” food is often cheap to make, and tastes good and different- remember where it originated- poor people stretching food while making it taste really good.
And on a completely different tack, what helped me get our finances and lives in better shape was to focus on gratitude. Oprah is a big fan of - Sarah ban Breathnach- wrote Simple Abundance (excellent book) and it’s one of her key principles- write down 5 things a day you have to be grateful for- and sometimes it’s only breathing. Sometimes how we feel about our money (or lack of it) is so linked to how we feel about everything else.



Hope this helps
Good luck

[terry1156]

Originally Posted by singinjeannie

The ebay thing is kind of wierd. It's not a real business at this point -- just a glorified garage sale. I'm certainly not making much on it right now!!! Do I have to claim it as income? Probably, because the IRS wants all they can get.

I should also be able to claim some of my car expenses because I do quite a bit of driving for my EcoQuest business. I've put many, many miles on the car making placements and trying to achieve sale.

Just remember that because you don't feel it is a real business doesn't mean that you can't claim it as a business on your taxes. Do you have to claim your ebay income? Yes. But you get to deduct all your expenses making that income. So all your ebay fees (even for items that didn't sell), Internet fees, all utilities and housing for the % of the house you have put to the side, ect all can be deducted.

That means you need to make a profit above several thousand dollars before you actually have to claim any income to the IRS (this works because you would have to pay mortgage, utilities etc even if you didn't have the home business). When I tell people this, al lot of them think that I'm lying or that I'm trying to cheat on taxes. I'm not, Talk to your sister in law and you will see. Or any other accountant.

You can also deduct money for the mileage you drove, but you need to have mileage records assuming that you car was also used for non business purposes. If you don't have those records, reconstruct them now the best that you can from any information you have. For example, if you have in your calendar that you went to such and such a place and know the round trip was 50 miles, you can reconstruct that.

[Tree0164]

Jeanie,
What are you paying for your phone? Is long distance included with that? Can you cut down your cable expenses to basic cable or get rid of it altogether? It says cell phones- do you both have one? If so, do you really need both-think about ditching atleast one unless you are in a contract.

Auto repair- are these past due expenses?

Food-this is probably the biggest area where you can cut down the most. I know you have teenage boys and they probably eat a ton of stuff. I have 3 boys all little still and a dh hubby. We average about $300-$350 each month. I plan my meals out. I shop the meat sales-meaning check out the reduce meat aisle where they will often take a couple of dollars off some burger or steak. Keep a price book- I can refer you to some resources if you need it. And last but not least stay out of the grocery store.

Also on your credit card debt-are those the minimum amounts of what you pay each month.

I would really like to see you set up an emergency fund of $1000 over the next few months. This way you can dip into it if you have emergencies. And then focus on getting the credit cards all set.

I know you can do this. Just your thinking has changed in the past few weeks on this.

[singinjeannie]

The auto expenses are NOT past due. That's an estimated guess of what we end up paying a year in auto repair expenses. Just in the past week I've had an auto inspection with putting tires on the car ($93.00) and I needed new shock absorbers and new front breaks to pass inspection ($141.00). We use a really cheep auto repair person who was able to do the work for us for a fraction of what the regular auto shop wanted. (The auto shop wanted $328.00 to do the same work our friend did for $141.00.) My hubby really didn't have the expertise or the proper tools to take care of these fixes. In addition, we'll need to spend about $70 in November to get the snow tires put on the car and probably another $140 to put used tires on my hubby's truck.

My hubby's truck is old and it always needs some kind of repair. Right now it needs a new gas tank and some break repair work. He just finished rebuilding the front end and he did this himself (took him 2.5 months) because we couldn't afford to have an auto body place do it. Amazing how much money cars eat up. No, I don't think we can get by with only one. We tried that for nearly 3 months and it was extremely difficult.


We are in a contract with the cell phones. While I'm really used to having them and I think they are a major convenience, I realize we don't HAVE to have them. It's nice to be able to be in touch with each other when we're out of the house. I'm looking at whether we can get out of the contract or reduce the monthly payment.

Now, how in the heck I'll find any money to put into savings is another matter entirely. I don't have anything left after the regular bills are paid. Because of the current car repairs, I have a negative (once again this month) if I look at the paycheck and all the stuff that's due or needs to happen. Joy, joy, joy. I'm so tired of this.

-Jean

I'm willing to look at anything, believe me. Here's hoping we can get this all under control.

[terry1156]

Hang in there. You're making progress and taking the right steps to get things under control. Like I mentioned before, you have done a great job on a couple of very important points...especially keeping your payments up to date. It is not hopeless by any means. It will take some rearranging and some tightening of the belt for a bit, but there is a light at the end of the tunnel.

Check with your car insurance and make sure that you don't have a deductible on your husband's truck. The insurance company will only pay what it is worth. If you haven't done that already, that should lower your car payment a bit. Another thing to consider would be finding a quality used car with low maintenance costs and selling the truck (I don't know if he needs a truck for his work or not) If you are paying $120 a month for auto repairs, you can probably find a good used car 3 - 5 years old with the same payment and it will probably get better gas mileage to cut expenses in that area.

Also make an appointment to talk with your sister-in-law about expenses you can make for your home businesses. She will be able to tell you the records you'll need to keep and what you'll need to recreate to get the best tax deduction possible. If you do it now and see how much you can save each month, then you can have your husband go to his work and adjust the amount that is withheld from the paycheck. It will mean you won't get a big refund at tax time, but it will give you more money on a month to month basis.

[mauryhall]

To pitch my hat into the ring:

My cell phone service is through Verizon. I pay about $135 total a month for 2 phones and 2000 minutes shared. The calls between the two phones are free and nights (between 9pm and 6am - what a joke...) and weekends are free.

I dropped my regular phone completely, because 911 works on all cell phones now.

I figured out how many minutes we use on average per month, and it came up to around 1700 billable minutes. (I use a phone a lot for work!) The 2000 minute plan was the closest to my usage and offers wiggle room so we don't go over. Whatever you do - don't go over on your minutes!

Finally, check your bills (ALL of your bills) each month to know exactly what you're paying for. (It seems like each month SOME company makes a convenient "Billing Error", and never in my favor...)

Keep working at this stuff - it's a marathon, not a sprint.

[miclason]

I can feel your pain.
Reasons I overspend include:
1) Growing up, my family was wealthy (coffee growers)...I could have anything I wanted, as long as I said I wanted it, it was mine!...things changed around the '80's and I had to learn to do without a lot of things to which I was accostumed....
2) Got married, had a very good job with the UN and a husband with an average-paying job...the UN left, but ex-hubby got promoted...plus, he worked for an airline, so we got used to a lot of travelling and to buying stuff we couldn't find/afford here -because abroad we could buy it because it was less expensive!!
3)necessity!...had to pay medical bills, etc, for my parents for 2+ years....(try being old and uninsured in a developing country!...their fixed expenses/month were more than what my sister and I make in a month!!!..so we used credit!!!!)...add to that the fact that I lost my job last year and had to take a paycut!!!....ouch!
Some days I swear I don't know how to get out of this mess!!...
but, on other days, I know I will, somehow, find the strength!!

[jmjj215]

SinginJeannie,
I've spent the last half hour reading this thread and sympathizing with your situation. My wife and I just had a baby four months ago, we thought we had all of the bills paid then we get the anesthesiologist bill - they just took long sending it. We just forked over almost $200 for prescriptions for some things, our car insurance premium went up by almost $100 each six months. I spent a week interviewing for an internship (I'm in college) so we're out of pay for that week. I work on an hourly basis and try to get at least 25 hours per week. If I work 25 hours per week we can break even each month because I can bring home about $1200. Our rent is $520 so of course alarms are going off in everyone's heads because our rent makes up so much of what I take home. My wife doesn't work because we thought it was important that she be a mom. I know how it feels to have things tight. We had to get an airline ticket for my wife to fly home to Alabama last month - certainly something we weren't anticipating.
A few things we've done to completely avoid debt (including student loans b/c of a scholarship):

We sit down together and "pre-spend" the money we'll use during the month. We do this during the first few days of the month.
We record every single thing we spend.
We each are allowed $5 PER MONTH to spend w/o discussing it w/ the other person. Other than that, every purchase is discussed.
We bought a 98 chevy prizm that gets great gas mileage and is low on repairs. (I don't know if you need that truck).
We've abstained from cell-phones, cable, fancy vacations, full-price movies, eating out...the list goes on.

The important thing is, we know this is going to end. I'll graduate in a year and a half and actually make some money. (Oh, by the way, I'm EXACTLY like your husband when it comes to exercising). Do you guys have a goal of increasing your income? That's the only way my wife and I can make it on such a tight budget w/ such limited income. We know things will get better. Cutting costs is one thing, but increasing your income is the other.

I sympathize with your situation. Budgeting and tracking is key! It really is. Keep on truckin'.

[singinjeannie]

Wow, Jesse! You really are good. My DH and I have never been good or disciplined and we find this extremely difficult to do. I'm already getting tired of living like this.

I'm trying to keep track of what we spend and it's so hard to do. I'm not making excuses, just telling you what it's like. I have so many things to keep in front of me on a daily basis, and writing down what we spend tends to get put to the back burner. Then a day or two goes by and I forget what the heck I spent and what I spent it on.

I am trying to find part-time employment in the evenings. I've been offered a job that pays LOUSY, but I have other interviews set up for far better jobs. Here's hoping. We really need money and need it now. I have clerical/computer skills, so can look for that type of work. I'm on the computer every day searching Monster.com and hotjobs, as well as the local newspapers for employment that would be in the evenings/weekends and would use my skills.

Thanks for the advice! We're trying.
Jean

[asrai]

Originally Posted by singinjeannie

Another one of my BIG problems is not wanting my kids to be made fun of. I don't want them dressed in 3 year old fashions because I know how cruel kids can be. My oldest boy went through several years of hell because kids chose him as the one to emotionally torture. I was forced to change schools in order to get him peace. Now, I don't want to make him (or my other kids) a target again by having them dressed like bums. So, I know I've overspent on their clothes. (Never on my own clothes, but certainly on my school-aged kids clothing.)

I get my daughter's name brand clothes mainly as hand me downs from my sister in law who gets them from her mother in law who works at the salvation army. And then anything else we need (harldey ever) I can find really nice clothes for her at Value Village. I get my own clothes there too. I'm not the most trendy person, but I don't dress in rags. It takes more time to shop this way becuase you have to look for the good stuff for a whille. Espcially since your kids are school age, but it can be done.
Or find/start a clothing swap.

[vendigirl]

Originally Posted by asrai

I get my daughter's name brand clothes mainly as hand me downs from my sister in law who gets them from her mother in law who works at the salvation army. And then anything else we need (harldey ever) I can find really nice clothes for her at Value Village. I get my own clothes there too. I'm not the most trendy person, but I don't dress in rags. It takes more time to shop this way becuase you have to look for the good stuff for a whille. Espcially since your kids are school age, but it can be done.
Or find/start a clothing swap.

Another- perhaps less frugal option is to buy all the kids' clothing during off season sales. I don't know what brands of clothes your kids like, but I hit the Gap and Old Navy for the off season sales and find fabulous deals. I buy clothes one size up from what the boys are wearing and when new clothing is needed I "shop" my storage bins of brand new sale priced clothes. I used to do this at Winner's too and stock up on high end clothing (Tommy, Polo) very cheaply. I got some gorgeous clothes, but we no longer bother with those high end items since the kids grow out of them so incredibly fast. Plus, we've moved into an era where we think it's stupid to spend $60 on a Tommy tee shirt- but that's a personal thing.

[terry1156]

Originally Posted by singinjeannie

I am trying to find part-time employment in the evenings. I've been offered a job that pays LOUSY, but I have other interviews set up for far better jobs. Here's hoping. We really need money and need it now. I have clerical/computer skills, so can look for that type of work. I'm on the computer every day searching Monster.com and hotjobs, as well as the local newspapers for employment that would be in the evenings/weekends and would use my skills.

Jean, good luck with the continued job search. I also hope you can come to an understanding with your DH regarding the need for the job. You are taking the right steps and we can all see that even with the hurdles you still have, you are making progress. You have come out of the deny it exists stage and that is a huge accomplishment in itself. Keep us up to date on how everything is going.

[singinjeannie]

Hi everyone:

I do buy many clothes at the Good Will and really bargan shop for other clothes, like Kohl's clearance sales and super-sales - with an extra 20-30% off. I get some hand-me-downs for the younger kids, but my oldest son gets no hand-me-downs. He's wearing men's clothing 34/30 pants and men's medium shirts. While he's not super-picky about name brands, he want so look decent, so I really try to get him nice things. Just this past week I spent $30.00 at the Good Will store and got him one pair of pants and a few t-shirts. I also purchased a pair of casual pants for me for $4.99 (liz wear) and an Armani suit for $7.99 that I put on ebay. The Armani suit is already going for $36.00, so that covers the cost of what I spent at the Good Will!!!

I really do try to be careful, but when there's no extra money, careful isn't enough. Not spending anything is the only answer and you can't do that.

I do have an interview on Tuesday for a job I'd very much like to have. It starts at a decent wage and would only be in the evenings, 4 nights a week. I'm praying for this one.

Anybody have any advice on what you should wear for an interview for a receptionsist position at a medical facility? Full business suit or just a pants suit? I want to look right!

Thanks!
Jean