Control Expenses and Reduce Debt

By: GenXinvestor
Image courtesy of Stuart Miles / FreeDigitalPhotos.net

Image courtesy of Stuart Miles / FreeDigitalPhotos.net

Financial success often involves controlling expenses and reducing one’s personal debt load. If you want to eliminate debt the first step will always be to control your expenses. While this is often easier said than done, I’m focusing hard on planning out my family’s spending by doing 3 things.

Planning our Meals and Shopping with A Grocery List

After our mortgage payments, the grocery bill is our second largest expense. Now that we are getting settled into our new home, I’ve been focusing on reining in some of our unnecessary and wasteful spending. This is the little stuff that adds up to big money over time. Over the past few months we’ve been very busy with selling our old home and moving into our new one. After looking through our credit card statements, I’ve noticed that we’ve been spending a lot of money on eating out and all the little things you need when you move into a new place.

My goal this month will be to better plan out our monthly spending. I want to get back into the habit of making a grocery list before I go grocery shopping. It’s amazing what gets tossed into the cart without even thinking about it. How many times do you get home from the grocery store and don’t even really have supplies to make a couple of meals. That will be another area of my focus – to start planning out our family meals again. I’m hoping that more effort in that area will mean we eat out less which reduces our expenses and saves us money.

Separating Need from Wants when it comes to Big Spending

When it comes to big spending you really want to separate your “wants” from your “needs.” Since our move, we’ve have some major spending to do on furniture and some small home renovations. So it’s important that we prioritize and carefully consider major household purchases and renovation expenses.

For those items that we do consider to be necessities, I’ll shop around and price compare and see if salespeople will match their competitor’s prices. I do lots of research on products that I’m looking to buy. Once I’ve narrowed things down, I look for deals or upcoming sales to see if I can get it for cheaper. I might even take a look at Kijiji or Craigslist to see if I can get the item used. Sometimes you can find really great deals on those websites, especially on things like furniture.

When it comes to making big spending decisions, I always take my time and try to “sleep on it.” I do so for one really important reason: it’s easy to get caught up in the excitement of buying a new car, new TV, new furniture etc. Psychological studies have found that the human brain is hard-wired to seek instant gratification. So my approach keeps me in check so I don’t make hasty decisions that I may come to regret later.

That approach also saves me from aggressive sales tactics and marketing ploys. How many times have you heard a salesperson say “the sale ends today” – or tomorrow for that matter. When I purchased my new car I ran into just that scenario. I ended up buying the car the next day because it truly was the best possible deal that I could get at the time. So it’s a good idea to always carefully consider any major purchase. If you do good research upfront, you’ll have a better appreciation of what deals are out there and be in a better position to assess whether or not you’re getting the best deal for your money.

Save Money Up-Front and Pay Cash For Big Ticket Items

My focus will be to try and save up the money first and pay cash instead of using our credit cards for major purchases. My grandparents never bought anything that they couldn’t pay for with cash. Even things like furniture and vehicles they always saved up the money in advance. The reason is that they lived through the Great Depression and learned first-hand about the dark side of being in debt and owing money to others. They resolved to never allow themselves to incur debt for anything that they deemed to be a luxury. Those are things like vehicles and furniture, large homes etc – the very things that many people now regard as necessities.

When they did have to take on mortgage debt, their first priority was to pay it off ASAP. That’s because they recognized that until you pay something off completely you really don’t own it. If you don’t fully own it, then it can be taken away from you and repossessed. We’ve seen this happen during the U.S. housing crisis, where banks repossessed peoples’ homes who defaulted on their mortgages, and even in new reality TV shows about repo men coming for your car, or boat etc.

Those are 3 things that I hope will help get my family budget back on track so we can boost our savings and achieve my 2015 goals.

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