Tightening Our Belts

For the last four or five months, we’ve had a renewed focus on tightening our belts at the Walsh house. It’s paid off quite handsomely.

Our daughter is a sophomore in college and our sixteen-year-old son is now looking at colleges. I’m reminded of a saying from one of my former managers: “Poverty is an excellent motivator.”

Yes, the college bills mount, and I sometimes awake to pangs of anxiety over this, but there are other expenses that we have a lot more control over, and while much smaller, have the same effect on our efforts to get ahead financially.

Food has been the most obvious for us. Before turning over this new leaf, we were spending upwards of $2,000 per month on food, sometimes as much as $2,500 for a three-person household (daughter is on the college meal plan, so that’s a done deal). This figure includes dining out, quick-e-mart purchases, and weekly groceries. Even over the holidays, we were able to cut this by $250 to $350 per month by packing lunches and eating at home.

We’ve also cut back on shopping for clothes and things for the house.

I use a computer program to aggregate and classify all our expenses, and set budgets in each area.  It has a feature where I’ve set up alerts that go to my email telling me when we’re nearing our limits.

More than anything else, this has been motivated by a desire to save for something specific that’s got us going on this path.

What is that, you ask? Real estate.

Last summer we bought a rental property in the mid-west, and the extra cash flow that it generates is really nice. So nice that we decided we want more of it. But we don’t want to cash out IRA’s, or other savings vehicles, so we have to accumulate cash from our income for the down payment on our next unit.

Pretty sexy stuff, huh. Budgeting, expense tracking, and rental units. I’ll bet you just can’t wait to hear more.

Seriously, I realize it’s not as appealing as a hot stock tip, but it’s something everyone can use, and it’s actually the most powerful lever we all have to pull in our efforts to improve our financial position.  I’ve seen a lot of family’s financial pictures, and nothing we might do will help improve our odds of never running out of money like tightening our belts and reducing what we spend.

It sounds dreadful, and I’d be lying if I said there weren’t times when I want to splurge. And, of course, from time to time I still do.  But on a smaller scale: I just bought myself a pair of vans with phurry lining. They cost me sixty bucks, and my wife and kids chastise me for dressing beyond my years, but they are hands down the most comfortable thing I’ve ever put on my feet. Trust me when I say I will get my money’s worth out of these shoes.