Summary

This is a blog I started with my family after trying and achieving some very real cost cutting in our budget. The key element is to involve all the players equally. Making savings part of your everyday life really can be a positive experience. The rewards are substantial in every aspect of your life. It is given our family freedom, peace of mind and well prepared kids. I hope my tips and steps will help you and your family achieve your goals as well.

These are still very good steps. Here's one more for a complete 10

Negotiate

Negotiation on purchases is not as common in the U.S. as it elseware. Everything is negotiable, bills, finance charges, prices, services. Keep that in mind when doing business. Shrug off any perceived embarrassment and proceed especially when dealing with charges on bills. Always call and ask if they can wave fees. It is certainly worth your effort when at least 50% of your requests will be honored.

When purchasing online always request a discount for multiple purchases or shipping costs. As an online retailer I am never put off by such requests.

Even in a stone and morter store you can negotiate pricing. Try it sometime, I have had it work on more than one occassion.

Do your homework, know what you should pay beforehand and you will find these efforts to your benefit.

9 Simple get started tips for cutting household expenses

1. Set Goals
2. Pitch
3. Create a Vision
4. Little Budgets Add Up
5. Let the Bank Work For You
6. Accountability and Control
7. Find Small Ways to do Big Things at Home
8. Shopping
9. Enjoy the Small Stuff

1. Set Goals

Before you start, you must be in the right mindset to ensure success. As in business, you must set goals and then work relentlessly to achieve them. Look at cost cutting as a way to improve your lifestyle. It honestly can be. Set aside the notion that you are depriving yourself and your family of much needed items. This is not the case. Think instead that you are fine tuning the machine that drives your family and yourself. Cutting where need be can free up monies for much more profitable (yes profitable) and enjoyable pursuits.

If you think of household expenditures as investments it becomes much easier to analyze their effectiveness

2. Pitch

Your family is your Team

Just like in a corporation, everyone needs to be on board for a new direction to work. Each member of the family plays a key role in the goal. Including the youngest members' voices is important. Children can be great reminders of why we are doing this and even better cheerleaders. We all need cheerleaders on our team.


Set up a family meeting (with charts and graphs if you like) explaining where you are and invite everyone to participate. Be prepared with current costs for expenses. Include: Housing, Utilities, Insurance, Car payments, Credit Card Payments , Gas, Food, Entertainment, Communications, Medical, Clothing, services and children’s allowances.

Have a goal set in mind, can be 10% or a dollar figure monthly or yearly. Also have some ideas for rewards for achieving goals.

Ask first for ideas for goals. If we save by reducing expenses, what rewards should we give ourselves? Don’t forget to include the simple things like spending more time together.

Once everybody sees the cost of doing things in a no nonsense manner, a lot of questions will come up, especially from kids. “Why do we spend so much money on medical?” Don’t be put off by teenagers and their incredulous responses to the monthly expenses for housing, medical and insurance. They have a point! Housing, Medical and Insurance are huge expenses. Nothing is sacred in this exercise, nothing.

Be patient, this exercise is designed to get everyone on board with the idea. It does not have to go into great detail at this point. Be careful and moderate when necessary. This should NOT become a finger pointing session. It’s not about fault and excessive spending. It’s about selling the idea. It does require full disclosure. This is your family, this is your team.

Kids, even teenagers are fascinated about money. It’s okay to talk about this is our income and these are our bills with the kids. Doing so helps them to take ownership, to take responsibility and to understand. Right now, you are the one bringing home the money. In just a few short years, these kids will be doing the same thing. Money is simply a tool to achieve your goals. Learning how to manage it early is good for everyone.

3. Create a Vision

Based on everybody’s ideas, create a vision statement for the family. Keep it simple and achievable. A good one could be “ We the (your name here) family, Dan, Julia, Bailey and George plan to reduce our expenses this year, 2009, by $5K by eating more meals at home, doing our own gardening and reducing our clothing expenses. As a benefit we will be spending more time together, learn to manage money better, pay down our credit cards and spend a week in Hawaii this coming Christmas season.” Post this on the refrigerator and don’t let it get buried.

4. Little Budgets Add Up in Big Ways

Don’t be afraid to give everyone a chance to do their own reductions outside of the big budget. One thing that works well for my family is having a lot of little budgets with a lot of freedom. Rather than taking your children shopping for clothing, gifts for their friends, or even toiletries, try giving them monthly, weekly and yearly budgets for these items. A budget for clothing, birthday parties, dances, sports activities, school activities (including trips), make-up, lunches, weekend activities, cell phones, etc gets kids excited. Kids quickly get it. All of sudden, it’s not your money anymore. It’s their money. Put this budget together keeping in mind what you currently spend and of course, what you can afford.

Kids that normally don't think twice about insisting upon those $200 jeans while school shopping, become a lot more aware of the $200 as a percentage of their total budget when they think of it as their money. They will make mistakes. Let them.

The easiest and most forgiving place to start is school shopping. Ask your kids to list all the clothing items they think they need for school and to put a price on it. Add it up and make adjustments based on your budget. If they have asked for more than you can afford with your budget, tell them the amount they are allotted to spend and let the kids make the adjustments. Remember, let them make mistakes. If they choose to not buy a new pair of shoes this year and opt instead for those killer jeans. Well that’s that. They wear old shoes and killer jeans. In this way, they will learn. When Christmas rolls around, they may ask for shoes instead of a new video game. Remember they are learning.

With teenagers, it works great to set up a prepaid debit/credit card. There are many available. A good forum that discusses the features and benefits of each company is http://www.prepaidcardforum.com/ You can also set up your teenager with their own checking account. Several banks have reduced or fee free accounts specifically designed for teens. However, it’s easy for teens to become overdrawn and as their parent you are responsible for their account. Prepaid cards vary in their offerings. Basically, they allow you to fill up the card with a budgeted amount and once the money is gone the card does not work anymore. There is also a detailed report of spending. It provides teens with much needed freedom and parents with some security.

For your own budget, give yourself some latitude. Freedom is a beautiful thing. In the perfect world, you would cut back in one area before you decided on going ahead with that impulse purchase. We are all guilty of impulse purchases. Sometimes they are absolutely necessary.

It is very important, though, for us to realize at the time that we are in fact choosing to reduce our expenses somewhere else to pay for our wonderful new item or expense. As long as it is a conscience decision, it is a good decision. If you absolutely have to have that new bag or you must try out that new golf course, then you must cut your spending somewhere else to pay for it. In this way, you eliminate the buyer’s remorse that comes when you open your credit card bill. You also start feeling good about your decisions because you are in control.

5. Let the Bank Work for You

Online banking is great for keeping track of your spending in specific categories. This can be enhanced by setting up multiple accounts. Your main checking account can be kept tidy by utilizing it only for monthly and annual bills that remain more or less the same month to month. Setting up automatic payments for most of the bills is a good practice on this account.

A second account can easily be set-up that includes groceries, entertainment and other categories that vary dramatically. It is much easier to keep track of expenses and budget goals this way. A monthly amount can be scheduled to be deposited in this account. This method provides accountability and freedom. A commitment to meeting the spending goals is key for this to work.

Likewise, credit card accounts have really good planning tools that categorize spending. My favorite is American Express.

6. Accountability and Control

Build a poster board or mark up on a dry erase board your top ten areas to improve. Across the top or down the side, grid style put every family member’s name. Keep track of accomplishments on a weekly or daily basis. Every improvement no matter how small needs to be rewarded with a star, with a smiley face or with a check mark. If your husband mowed the lawn this week himself, saving on the gardener bill, he gets a star. If you cut the food budget by using coupons (for items you normally would have bought) you get a smiley face. If the littlest member of the family remembers to turn off the lights in the bathroom and turns off the water while brushing her teeth, she gets a smiley face. In this simple, going back to kindergarden way, everyone gets to share in their accomplishments.

My husband also sends out group emails to everyone touting their accomplishments. We are an online family, so this works well for us.

If it is fun, it will be done

Work hard at the small things and the big things will happen. Keeping it fresh in your mind as a positive thing is key to making it an enjoyable experience. If it is fun, it will be done. Once a month take a look at where you are. Focus on the positive. Don’t be discouraged by small savings. See them as potential for growth. Switching from eating out to eating in can be a challenge at first. At first you will find yourself focusing on the costs of groceries going up. In the long run, you will see the rewards. You will improve at marketing to save money. Make it a family affair. Everyone cooks, everyone cleans up is always a good practice. It should not be a burden to any one person. It takes time as all things worthwhile do.

7. Find Small Ways to do Big Things at Home

Making your home more fuel efficient is good for long term savings. Initially you will have the added costs of purchasing florescent light bulbs and water heater blankets. But, these measures save big over a year’s time. A good online calculator for the light bulb savings can be found at http://www.sdearthtimes.com/ET_Lighting_Work.html In my home, we spent approximately $150. On florescent bulbs and a water heater blanket and realized a savings of approximately $300 in electric bills this year as a result of this one change.

Do your best to cut down on stand-by electricity. A good practice is to shut down computer power strips, cell phone chargers and game stations when not in use. They use a lot of power when you are doing something else. To prove my point, turn out the lights this evening, notice all those glowing red dots and flashing digital clocks. It’s a sign that your appliances are spending your money while you sleep. Berkeley recently did a study that 6 to 25% of electricity bills can be attributed to stand by electricity.

Cut back on your garden water usage. If you have an automated system, get to know your sprinkler controller. Open it up, review the manual. Chances are you haven’t looked in there for awhile, take some bug spray with you. During the winter in California, plants need very little water. If you are running a summer program all year long you are definitely wasting water and money.

Check how much you are watering and when. How much is too much? Well it depends on your landscape, your soil and your weather. Make a mental note to watch your landscape for a few weeks. Is it soggy? Is it drying out completely between watering? When you are watering is just as important as how much. Never water in the evening or the middle of the day. Watering in the evening will damage your plants. Watering in the middle of the day is a waste. Much of your water will evaporate. Morning is the best time.

Once you have gotten familiar with your controller, run a manual cycle and check for overspray. Those are your dollars flowing down the gutter. If you have pop-up sprinklers, invest in a small screwdriver that has a flat head on one side and a Phillips on the other. Adjust the flow of your spray heads to match the area they are watering. Keep in mind that if your timer is running early in the morning, the water pressure will be much higher. Here’s a link to a video describing how to adjust http://www.expertvillage.com/video/12170_sprinklers-water-conservation.htm

Adjust your heating and air conditioning thermostat. If you don’t have a programmable thermostat, invest in one. If your service provider is PG & E, get a free programmable thermostat here http://www.pge.com/myhome/saveenergymoney/energysavingprograms/smartac/
Program the times that you are not home to be cold in the winter and warm in the summer. The dog does not need air conditioning. In the winter, set your thermostat to warm up the house nice and toasty 15 minutes before everybody wakes in the morning. After that, your house can stay much colder during other times of the day. Likewise, in the summer heat kick on the air right before everyone gets home from work and school. Make sure it is a plan that everyone can live with and leave room for adjustments.

Another option that many power companies are providing is metered electricity for peak and off-peak hours versus flat rate electricity. You need to look into this to ensure that most of your electrical usage is off-peak (usually after 6pm and before 8am). Last year, our electric company provided lower overall electricity rates for users that opted for a shut-off allowance. In order to get the lower rate, we had to agree to allow the electric company to shut off our electricity to prevent county wide black-outs. It worked out for us. I think it only happened once. This is something that you need to visit your company’s website about. Each utility is different.

If you can afford it, think about changing out an old refrigerator, washer or air conditioner. If you buy a high rated energy star appliance the rebates can be quite good.

Replace your toilets with low flow or put a brick in your toilets. This will save a little on water with each flush and the difference is not noticeable to the user. If you have a leaky faucet, fix it. It’s simple really. This is a helpful how to site http://home.howstuffworks.com/how-to-repair-a-faucet1.htm

8. Shopping

When we plan well, we make wise decisions based on our budget and we typically
get the best price.

Take a moment to plan. Every minute you spend planning what you are going to spend saves money. Even stopping at the store for milk and bread can be an opportunity to remind yourself that your intention is to stick to your plan. Everyone has a tendency to plan well for large purchases such as homes and cars. When we plan well, we make wise decisions based on our budget and we typically get the best price. If we just spend a moment or two to apply this same reasoning to everyday purchases, it will work to our benefit. Just the act of thinking about it first helps keep our focus.

Take a break from the mall. Find bargains in your neighborhood in food, clothing and accessories. For your fruits and vegetables buy in season and if possible try a farmer’s market. These are great places to meet local farmers, bakers and cooks and cut your food budget all at the same time. This site has searchable farmer’s markets per region http://www.localharvest.org/ I highly recommend it. My area has several. Some of them also carry fresh caught fish and the best tamales and salsa I’ve ever had at reasonable prices.

My teenager regularly frequents a local clothing exchange. I highly recommend these. Although, thrift shops can be fun and you can find really nice things if you dig, clothing exchanges are more designer focused, well organized and stocked and focused on a particular age group. In our area there are several. The children’s shops are wonderful. They carry high-end items in excellent condition for a fraction of the costs. It’s also a great way to exchange items that you have grown tired of or that no longer fit. The Buffalo exchange in So. Cal is great for teens. Children’s Orchard is great for babies and small children. They are able to exchange gently worn items for new clothes. My daughter recently purchased a pair of jeans worth $200 with her $30 store credit.

Supermarket coupons are not what they used to be. But, they are still worth the effort. Every week our mailboxes are full of store ads. Just spending a few minutes reviewing the item specials at local markets can have a positive effect on your food bill. If you are out of toilet paper and the local market has it on sale and you have a coupon, then you’ve made your decision. I try to purchase the majority of our needed items at the market on sale and with coupons if I can. I’m a bit over the top with this. I also have a large pantry which allows me to stock up on items that are on sale. Anyone can do this. Make a list, try to stick to it and keep those coupons.

Know the value of items. There is no place more important for this than the big warehouse stores. In our neighborhood it is Costco and Sam’s Club. They are great for many things. But it is too easy to go over your budget at these stores. Many times the items are less expensive at a supermarket or a discount store like Target or Walmart. Costco in my area is absolutely a great place to buy big ticket items, like appliances. Their prices are at or below anywhere else and they carry better warranties and have better service. I make a point of purchasing all of our appliances, computers and electronics here. I will never forget my delight when I returned a 3 year old broken dryer old and chipped and received full credit to buy another one. They bought my loyalty that day. Although they do not extend this warranty to computers, they do offer great technical support and an extended warranty at no extra cost.

Do be careful however, when purchasing some food items and bulk plates, cleaning supplies, drinks, etc. Know the per piece cost at your local market before you buy that huge package of paper plates. Many times you are paying more and filling up your garage space at the same time.

Cook. Cooking and enjoying it is an easy way to save money. If you don’t know how, learn. If you don’t like to cook, try listening to music through the process. I really enjoy cooking. I do understand that other people don’t. I think a lot of it is how you think of it. I see it as creative time, fun time. Some of my favorite foods don’t cost much to prepare in the way of money or time. Try my simple tomato basil pasta with salad some evening and see if you don’t agree.

Tomato Basil Pasta

1) lb dried angel hair pasta
1) 8 ounce can Italian style canned tomatoes
¼ cup chopped fresh basil or 1 teaspoon dried basil
4 cloves garlic chopped
1 Tbls olive oil
1 teaspoon salt

Boil pasta according to directions al dente, retain 1 cup of the pasta water. In skillet, place oil. Warm to glistening add chopped garlic and salt. Saute about 1 minute. Add tomatoes, basil and pasta water. Allow to bubble and remove from heat. Toss with pasta. Serve with salad. Yummm. Super cheap, healthy and very nice.

Soups are really good inexpensive meals served with salad. Learning a few good recipes is enough. I make a killer potato soup that I will be happy to share if you contact me.


9. Enjoy the Small Stuff

Cutting your entertainment budget does not have to mean cutting your fun. There are lots of ways to have fun without breaking the bank. One of my favorites is an evening at the beach complete with picnic, blankets and a big fire. If you don’t live close to the beach a barbeque at your favorite park will accomplish the same thing. It’s equally wonderful as either family time or great get away romantic time. Getting in touch with nature opens us up to conversations. It’s good for the money belt and it’s good for the soul.

For the couple: Make time for each other and keep to it. Get grandparents or neighbors to babysit. Instead of going out to dinner, have a picnic. Cook a romantic meal together. Put on music, break out the good dishes, share a bottle of wine. Play a board game. Play truth or dare. Go for a long walk through the canyon. Camp out in the back yard under the stars with your heart throb.

For the kids: Take them to yard sales. Give them a few dollars each and let them go wild. Take them for a long walk and bring a bag for treasures. When you get home, make something out of their finds. Take them to the park and go down the slide with them. Take them to the beach early in the morning and let them chase the sea gulls. Let them get dirty.

For the teenagers: Have them invite their friends over for a movie and a sleepover. Set up tents in the back yard. Have each guest bring one item: liter of soda, bag of chips, cookies, etc. Another fun thing that I have done at parties is to have a decorate your own dessert table. This can be done with cookies or cupcakes or ice cream. Have a few options for toppings. Kids and teenagers like this equally.

Entertaining can be affordable at your home with a little planning. For kids parties, look for decorations first at your dollar store. For adult parties a nice entrée and salad with bread is plenty. Lasagna seems like an extravagance but is actually very reasonable for a large party. A good bottle of wine and pleasant conversation makes for a memorable evening. Another really fun time for adults is to plan each course to be served at a different house. Everyone draws straws for their course. You’ll need to plan for designated drivers for this party. Keep in mind whatever party you choose to leave time to talk and relax with your guests. Whatever you choose to serve, do most of the work long before the guests arrive. Having parties at home can be more enjoyable and relaxing. In a home you are free to roam from room to room and chat, much better than shouting across a table a crowded noisy restaurant.