Sunday, July 8, 2012

Money: Making the Cuts

I really wrestled with the idea of being a stay-at-home-mom. I went back and forth for over a year. I was mostly stressed about the financial impact on cutting out my income. Questions and doubts swam laps in my head. We've always had 2 incomes, how could we make this work? My husband and I discussed it for a long time. We finally needed some hard numbers to make the decision.

Here are the details that lead us to be comfortable with our decision:

The single most important tool: the budget. 


Each month I prepare a zero balance budget. This means every dollar in our checking account is spoken for. I've got lines for mortgage, food/supplies, gas and even an emergency "cushion." I used this format to do my "what-if" scenario. I reduced the income line to John's take home pay. I was forced to see just how much we needed to cut out of our expenses in order for this dream to come true. Ouch.
I started playing with numbers. I started doing research. I started questioning things. Are we paying too much for car insurance? We've been with Company X for 10 years, I've never looked any where else. I called around to 3 other insurance companies and found a popular one that saved us $70 a month (without reducing coverages)!

I did this with every type of expense. We have 2 cars but can't be a 1 car household. Do we really need that luxurious VW TDI we bought last year? No. So, we put it up on autotrader.com and it sold within a week. We bought an older model, reliable car as a replacement which cut our car payment expense in half and lowered the insurance expense even further. Are we paying too much for cell phone service? Yes. Do I really have to shop at JCrew and Dillards? Absolutely not. Do we need to be making gourmet meals as often as we do? No. Why aren't we using more coupons? How can we save MORE money on groceries? Why don't I ever look at the grocery store fliers to plan my meals around sales? I went to my grocery store's website and realized I can load coupons onto my savings card along with personalized specials that are offered according to the items I normally buy. It's brilliant.

Of course there will be a HUGE savings when we cut out the cost of childcare. Oh man. It's equivalent to the mortgage on an expensive house. It's embarrassing.

Digging around helped us realize that we've been paying far too much for too long on many things. It allowed us to see the waste in our current budget. So, we cut out the excess and shaved it down. When I got the budget just right, I sat back and smiled. "It's going to work out, we can do this." I was amazed.

For it to work, we HAVE to stay on budget. No more frivolous trips to target to pick up junk we don't need. No more buying department store makeup. I'm okay with that. I'm pretty sure we will survive without starbucks.

Stay tuned for more ways to make it work and money saving ideas.

1 comment:

  1. You are so blessed to be making that choice to stay home. It might not always be easy but the precious time that you get to spend with your children we give you and them a lifetime of memories. There are so many frugal and fun things that you can do with them that will get you out of the house (which you will find that you need once in awhile). If it is available take them to storytime at a local library. Go for walks in your neighborhood, visit the local park. Best of luck to you!

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