Before Christmas, Mrs. Frugalwoods (aka Liz) had sent out an email linking to this massive post about homework to be undertaken before the Uber Frugal Month Challenge started. I got a bit behind on everything not immediately related to Christmas or the wedding in December, so I am only starting to go through it now. I figure better late than never! Since I plan to document my experiences with the entire challenge, I thought I would share my thoughts with you as I worked through my (very late) homework.
Step 1 – Establish Your Goals
Liz sent out the following questions about goals, and why people are participating in the challenge. My answers are underneath each question.
Why are you participating in this challenge?
I’m already fairly frugal (hence the title of my blog), but I want to increase this. I read about people doing things like living on 25-50% of their take home pay and saving the rest. I want to be there, achieving that high level of savings. This challenge will help me to push myself to do even better and save even more.
What do you hope to achieve?
To save 25%+ of my take home pay this month, either in my RRSP or in my wedding savings. (Any other month and I would aim for all RRSP savings, but my wedding is at the end of this month sooo …)
What are your longterm life goals?
I want to be a wife to Jordan, a mother, a homeowner, and a pet owner. I want both Jordan and I to be financially secure enough that we can afford to work less than full time and still have a great lifestyle. I want us to be saving 50%+ of our income some day and to be able to retire early. I want to do a lot of travelling. I want us to be able to afford to live close to our families, even if it means taking less well-paying jobs. I also want to be able to support my father as he gets older, if he needs it.
Where do you want to be in 10 years?
I want to be done my Masters’ degree, have a child, still be married to Jordan, and to be living in a home we own and put a big down payment on. I want to be in a job that I love and I want the same for Jordan. I want us to be saving close to, if not, 50% of our income.
What about your current lifestyle might prevent those goals from coming to fruition and what can you do about it?
I am prone to stress spending, as I’ve discussed before here. It’s an ongoing battle to find healthier coping mechanisms. I’m doing a lot better these days, but I could slip if things get super stressful again. I also know that I worry a lot about what other people think about certain things, especially my appearance. I have been working on letting go of this for a long time, but it is still something I struggle with. I spend a lot of money on my hair, which is what I feel most insecure about (I was teased about it a lot as a child and still somewhat as an adult). I recognize that I do need to let go of this and learn to be ok with the hair I have, not the hair I wish I had. This will help me to cut back on that aspect of my spending now and forever.
Step 2 – Review Last Month’s Expenses
Check! I track every penny I spend in a spreadsheet, so this was a quick and easy step for me.
Step 3 – Categorize Your Expenses
Liz classifies expenses as either fixed mandatory expenses (things that you cannot change easily within this month i.e. rent) and discretionary expenses (literally everything else – groceries, going out, etc.). For me, I only have 2 fixed mandatory expenses: my rent and my bus pass. However, the list of discretionary expenses is a bit longer:
- Bills (cell phone, laundry, internet, gym membership)
- Groceries and other household expenses
- Going out with friends
- Personal care products (the fact that this is it’s own category speaks to the vanity thing)
- Setting aside money for larger recurring expenses (Christmas gifts, haircuts)
- Un-budgeted expenses (This is a catch-all category for things that I didn’t plan or budget for that come up. It can be necessary things like new winter boots or unnecessary things like lattes)
Step 4 – What can I eliminate entirely?
For this question Liz says:
“Take a good, hard look at your Discretionary list and ask: what can be obliterated? Hint: this would be things like restaurant meals, pedicures, dog grooming, and cable. Anything that’s superfluous to your survival needs to go.”
At first when I looked at this question, my answer was “nothing!” I already have a fairly pared down budget and the things that are on there are intentional. i.e. going out with my friends is important to me, so I give myself money to do it. I could think of lots of ways to reduce the spending in my discretionary categories, but didn’t think I could eliminate them entirely.
However, upon further thought, I realized that what I really need to look at is my un-budgeted expenses category. While I had intended for this category to be for spending on things that come up unanticipated (i.e. needing to buy new boots in the middle of winter) it is actually functioning more like spending money or an allowance. I use the money in this budget category for things like meals or coffee out, or new clothes. These are all things that I don’t need (I have lots of clothes) or could avoid spending money on with better planning. In December, the majority of the money in this category went to eating out and buying coffee out. I tell myself that I avoid this by meal planning but clearly that’s not working 100%. So my plan for January is to eliminate this spending and instead use this money only for unplanned necessities.
Step 5 – Embrace the Art of Substitution / Step 6 – Reduce Your Discretionary Expenses
“For elements of life that you’d rather not delete entirely, the key is to find their frugal analogue. Substitution is how Mr. FW and live a luxurious frugal life. We don’t eliminate the things we love most–we do them for less.”
These two categories felt initially so much more comfortable to me. As I said earlier, most of the spending in my budget is there intentionally and make me happy; I don’t want to give them up. Finding cheaper ways to enjoy life and reduce the money I spend is a great alternative. So, what can I do to reduce spending and frugal substitution?
- Renegotiate my cell phone bill (my contract is up anyways, so now is a good time to do this)
- I will try my hardest to find cheaper or free gifts for people this month.
- I can try to plan activities with friends that are lower cost, like inviting them over to my house instead of going out. If we do go out, I can suggest cheaper alternatives like going for coffee instead of going for a meal.
- I can only spend money in my personal care products category to replace products that have run out, not to buy new ones.
- I can do so much to reduce my grocery costs. I can meal plan, make sure I’m scheduling time to cook each week (I’m good at doing this on weekends but less so during the week), inventory my cupboards and meal plan around that, and try to buy cheaper produce options.
That’s all I’ve gotten through so far. Stay tuned for the rest of my homework, coming sometime in the next week!