BankerGirl

Posted by Heidi on February 26th, 2008 in About BankerGirl, credit cards, debt, frugal, household spending, saving, taxes, teaching, track expenses

I don’t balance my bank accounts in the traditional sense - and I don’t follow a strict budget.  I realize this flies in the face of most financial advice, but it works for me.  Instead, I pay myself first (direct deposit into my ING savings account), and access each one of my checking accounts online on a near daily basis to see what has cleared and categorize my income and expenses. 

Yesterday I was in the process of verifying that all of my regular bills had been paid for the month of February when I realized something strange and wonderful has been happening in my checking accounts - I have a lot more cash at the end of this month than usual.  In spite of higher-than-usual energy costs and a couple of minor ninja bills, I’m looking pretty flush.  Come to think of it, I had a few extra bucks left over at the end of January as well. 

Huh.

Once I categorized all of my expenses and made sure that all my month-end stuff was accounted for, I compared my spending with that of the same time last year.  What’s different?  For the first time in years, I am following the cardinal rule of personal finance - spend less than you make! 

Here are the details:

Spend Less

1.  I haven’t been using my “allowance” on fun (unnecessary) stuff

Each pay period, I have $200 direct deposited to a separate account to be used for things like dining out and clothes.  I haven’t been clothes shopping since before Christmas, and we have really cut back on going out to eat (see next bullet), so for the past few months I’ve been using my allowance for necessities like gas and groceries.  This has left more cash in my “regular” pay-the-bills checking account. 

2.  I quit drinking

My partner and I used to go out for dinner and drinks on a pretty regular basis - either we’d meet friends for happy hour or grab a couple of craft beers at the local brew pub on a Sunday afternoon (we love us some good beer).  Right after the New Year, I was diagnosed with a rare lung disease - and the medication I am taking is hard on my liver - so my doctor has advised me to stay away from alcohol until I’m done with the treatment (in May!).  Since I can’t drink, my fiancé has really cut back as well (or has a cocktail at home before we go out).  Last year at this time, we “only” went out once or twice a week - but when you figure $20 a night on drinks (two beers each at $4 per plus tip) - plus dinner for two - the savings really adds up!  

3.  I’ve become a more conscientious grocery shopper

I don’t think I’ll ever be a coupon clipper, but I have started flipping through the weekly grocery ads to scout for deals and planning our meals accordingly.  For example, Last week I picked up several packages of extra-lean ground turkey for $1 per pound.  The old me would just fill my cart every week with whatever looked good at the time - the new me goes in with a list and (pretty much) sticks to it.

Make More

1.  I got a second job

Most of my teaching income in going straight to wedding savings, but I make those transfers in round numbers (for example, if I’m paid $1248, I transfer the $1200 and leave the $48 in my primary DDA).  After a couple months, that’s a noticeable cushion in my regular checking account.  Either I need to start transferring the whole amount, or find a checking account that pays a better interest rate!

2.  I got a raise

I have been getting little more than costs-of-living increases from my full-time employer, but I’ve already seen a 20% increase in my teaching income since I started last August.  Every little bit helps!

3.  Lump Sum Inflows

I have a pretty sizable federal tax refund coming, and my bonus this year is my largest ever.  This money will fund our wedding account and give me enough left over to supplement our infrequent bill account and emergency savings account -keeping me from adding to my credit card debt for the wedding or household emergencies.

I’ve heard this over and over again, and it’s true for both personal finance and weight loss - it is amazing what small, incremental changes can do for your bottom line!

I can’t claim to have it all figured out, however.  The one line item on my statement of cash flows that is higher this year than last is coffee.  A new Starbucks, with a drive-thru, opened up between my home and my office in late 2007.  I treat myself almost every Friday - and on most weekend days too (there is also a coffee shop located near the dog park - and Gretchen loves the puppy lattes!).  I don’t have too much guilt about my increased coffee spending - especially since I’ve given up alcohol - but if I could cut back to just one Starbucks run per week, I’d save an additional $32 a month.  That’s a savings of nearly $400 in a year.

Something to think about for March…

Stumble it!