Working out a budget

This post appears in the Carnival for Financial Learning #16.

I have been working on a plan for living more frugally every day. I charted all my expenses on an Excel spreadsheet and took a good hard look at which ones I could reduce and which ones I could do away with all together. I frequently obsessively scan my spreadsheet looking for places to pare expenses. I also went back and charted my 2007 expenses so I would have something to compare. Tracking your expenses is always at the top of any list for how to get your finances under control. It helped a lot and illuminated some surprising spending habits.

I love to cook and, although I live alone, groceries were one of my biggest discretionary expenditures. I decided to spend no more than $50 a week for groceries. I've been pretty successful staying within that limit. I managed to bring my electric bill down $200 in one month by barely using my air conditioner at all. Then I installed a programmable thermostat. (Very easy to do; check out these directions over at Frugal Dad.) My new thermostat has a built-in program for the most environmentally friendly (Energy Star) settings. I have used those settings all month and will have the bill reflecting that installation in a few days. I expect it will be somewhere in between my high of two months ago and my low of last month.

Update: I got the first bill with the new thermostat and it is right on target at $149.95. My highest month was $302.54 and my lowest, the next month, was $105.34. My high month, which was $100 higher than the previous month, reflected a period where my old thermostat wasn’t working correctly and the a/c ran a lot of the time. Coupled with that, it was very hot and I had a houseguest and was not willing to expose her to no a/c so I just let it go. The next month I barely ran the thing at all. I put a little window unit in the room where I spend the most time and only used it when I absolutely had to. During that month I decided that the issue was the thermostat, as opposed to the a/c unit itself and went ahead and installed the new thermostat. This month, while I’ve had the thermostat, has been unseasonably cool here so I’m still not completely confident about how the savings will average out.

My second biggest expense, after my mortgage, is college for my son. He receives scholarships and other financial aid but there is not a lot I can do about the remainder. I do shop his textbooks every semester. I think we only bought books at the University bookstore his first semester. I do not give my son any spending money and, beginning this summer, insisted he get a job and pay half his rent. The expenses are still significant but it is what it is and he will, hopefully, be graduating in May.

Another big expense I have pared down significantly is wine buying. I have a pretty good wine collection and, again, there’s just me. I realized I really was “collecting” the wine just to collect it. I wasn’t consuming all that much and my stores were growing by leaps and bounds. Then I had to add in the expense of large wine racks to store my collection. Last year I really spent a lot of money on wine! In addition to that were liquor costs to support my frequent entertaining and the liquor/wine category on my expense spreadsheet represented a major expense in 2007. I have cut out almost all wine buying for the time being as I can live off what I have for a long time. I also, for various reasons, have cut back significantly on my entertaining and, when I do entertain, I now mostly serve wine and beer and some specific pitcher drink like Margaritas or Sea Breezes or something like that. This “drink of the day” concept has really caught on with my friends and a lot of them are doing it too! Eight months into the year and I’ve only spent one quarter of last year’s total for liquor/wine.

Mostly I just try to be more conscious about my spending and that, in and of itself, causes me to spend less. Living more consciously and frugally tends to go hand-in-hand with living in a more environmentally friendly manner but that’s for another post! I’m hoping that I will begin to see some additional funds in my account at the end of each month as a result of this more frugal living pattern, which can then be applied to my credit card debt and help keep me on track in spite of life’s little ups and downs!