Thursday, December 4, 2008

Tightening our belts

Torsten and I are lucky. So far we haven't felt any of the effects of the recession, at least not directly. Maybe we feel it obliquely, through the decisions we make or don't make in a tight job market with the ever-present threat of layoffs--but otherwise, it hasn't really affected us.

But still, we want to be careful. We spend well within our means, and all the extra that we save goes into an FDIC-insured money market account that accrues interest at a low but steady rate and allows us access to our funds at any time. We haven't touched our 401(k)s, and we aren't worried about them--we have youth on our side, and figure that the market will go up and down a million more times before we need to start relying on our retirement funds.

We are lucky in that we earn more than we need to spend, and we have very few financial obligations, relatively speaking. But we are still trying to cut back on our spending, to pad our savings account as much as possible. Both of our jobs seem relatively secure, but I suppose you never know, and it's nice to have a backup fund. And if we don't need to rely on the backup fund for backup, it will be used as a down payment fund instead. We are lucky in that respect too--first-time home-buyers in a buyer's market. We are the injection the market needs, apparently. And we want to give it. But not quite yet.

So there are a few things that we are trying to do in order to save money:
  • Bringing lunch from home. I know, this is the tip that everyone gives, but it really makes a difference. It basically costs nothing--just add a bit more food into the meal you're cooking the night before, and you've turned one meal into two. And I don't know about the rest of the country, but a quick lunch at a sandwich shop in DC can easily add up to nearly $10. That's a lot of money over time.
  • Similarly, we're going out to eat less. This is also part of the whole healthy living thing, but it's amazing how fast the cost of restaurants adds up. And also, after our two-week honeymoon, we were both really craving healthy home cooking, so that makes it easier.
  • Not tempting ourselves. Perhaps this is the silver lining of living in DC, which doesn't have great shopping and forces you to go to the suburbs for a shopping mall. If I go to Macy's, I can drop $100 very quickly. If I don't go there, I don't spend the money. Simple as that.
  • Not going to the grocery store as often. The trick here is to actually use the stuff you have sitting in the cabinets and the freezer, instead of telling yourselves that the cupboards are bare and therefore you have to go out or order in. If we go grocery shopping, we inevitably add things to the cart that we don't really need--snacks or fancy drinks or magazines, and the tab really adds up. And we gravitate toward the new food we've purchased instead of eating what we already have. Not grocery shopping every week really helps us keep our bills down.
  • It sounds obvious, but no impulse purchases. I have the one-click purchase option on Amazon turned off so that I have to think a tad bit more about things before buying them. When I shop online, I put things in my shopping cart and save it to come back to later. And often I talk to Torsten about stuff I'm going to buy before I buy it, so that we can consider if we really need it. Bouncing ideas off each other makes it really easy to realize that you don't need something you thought you did.
  • Playing the credit card game. This definitely won't work for everyone, and I know that a lot of people say that if they spend only cash, it helps them cut back, but for us it's the opposite. When we have cash on hand it tends to fly out of our wallets, and tempt us to do things we wouldn't otherwise do, like take cabs. We have a bunch of credit cards with different rewards--for purchases at stores we shop at a lot, or travel or restaurant or grocery purchases--and we make sure to always use the right credit card for the right type of purchase. And then, and this is the key part, we pay them off completely every month. Otherwise the interest you pay by far outweighs the cash-back rewards.
So tell me, are you feeling the effects of the recession? What are you doing to make sure you can make it through?


  1. You are going to feel like you are rich if you stop spending all that money on lunch every day! If both of you are buying lunch every that is 400 dollars you are blowing a month!!

    We stopped buying lunches a long time ago. We are both in service industries, so we are definitely directly affected. If the rest of the world doesn't have money, they certainly don't have it to give to us, do they?

    We don't shop. We buy in bulk. We settle for brands that we don't love, but that do the job. I always cook dinner, and we rarely go out to eat anymore. If we do go out, we do not order alcohol. The little things add up while we hold our breath and wait.

  2. Mr. C and I had "The Talk" about what happens if one of us gets laid off. Even though we're Engineers, we know it could happen. Right now we put about 25% of our monthly income into savings. We're putting off purchases (like furniture for the lake house) until we get some money saved up- just in case something did happen.

    I pay extra towards our student loans so that we're months ahead of payments, in case we would need to miss a view to save a couple hundred dollars.

    As for saving money, I've been doing ad-matching at Wal-Mart, plus coupons. A couple weeks ago I saved $40.00 with coupons and ads. I was pretty impressed with myself.

  3. No bad effects yet- but we're in TExas and they say Texas is not in a recession. My company however has customers outside of Texas and it's gotten slower for sure.

    but as for everyday life, we do the same - eat out less, cook more, bring lunches, no internet shopping, carpooling if we can, turning off the lights, using more blankets instead of heat, etc, etc and yes, we ALWAYS Save

  4. I really need to work on making dinners that involve leftovers. I do bring my lunch to work, but it's usually a frozen meal, and I'm noticing the price of those has gone up so much that buying those costs almost as much as buying a lunch at the nearby deli! Why is food getting so expensive??

  5. You're pretty much the first person I've ever heard say that about credit cards/cash, but I feel the same way - cash is so fluid to me, while a charge on my credit card bill is something I'll have to look at again at the end of the month. And we pay ours off in full also and get free airline tickets, so its' a great benefit for us.

  6. great tips! i have also been trying to clean out my pantry--who really needs 4 cans of pineapple? i've been making fruit salad for breakfast & adding pineapple to my stir-fry. :)

    as a too-old-to-be-in-school student, i realized that i was spending waaay too much money on coffee. for the cost of 3 take-out coffees, i bought a travel mug and now i make 2 extra cups in my home coffeemaker each morning. it's so much cheaper and better for the environment!

  7. Sounds super organized.

    I am with you on no impulse purchases. I am one income and I am not so sure about job safety these days since I work in finance and I know lay-offs are coming. Not sure if I am affected, but could be.

    Ahhhhhh......recession woes.

  8. We're going to eat out more and I'm going to cut my lunches out (I don't do it very often, but it still adds up).

    I'm also going to hit the ATM less, because cash just disappears.

    We were paying loads extra on a loan, so we're still going to pay extra each month, but not as much, and then sock that money into our savings account. We have a 6-month cushion in case anything happens, but we want to pad it.

  9. i do a lot of the same things you are. i've been bringing my lunches more often and trying to spend less on groceries too by buying the generic brands or cheaper brands. the recession hasn't really hit me directly either, but i'm not going to spend like crazy waiting for it to happen!

  10. Good calls all around!

    I brown bag every day, and have a set cash budget every week - we also meal plan and only grocery shop once a week, and we eat out maybe once a month. We've been using rewards points to get 2 for 1 movie passes, and bought a coupon book this year for the first time so that when we do eat out we can cut the costs.

    I look at it like it’s a game – if I can save up, I can splurge for bigger personal things!

  11. I LOVE bringing lunch from home. In Arlington, the smallest of meals is at least $7 and when you add that up it gets WICKED expensive.

  12. We were much like you guys when first married, and had what seems now like a LOT of surplus. We didn't feel 7 years in) with 2 kids in daycare. Ouch. FWIW.

    I reconciled the bank statement yesterday and noticed significantly fewer dining purchases. Go us!! Like, maybe 4 for the whole month of November. We've been taking lunch and using the food we have, just like you said. I finished paying bills feeling GREAT, instead of feeling DISMAL.

    It works, it really does.

  13. Oops, that's

    "we didn't feel pinched until this year (7 year in)..."

  14. lunches make SUCH a difference. even out in the VA metro boonies, lunch is easily $9 a pop. i've also cut out starbucks except on "special occasions" (eg... not every morning on the way to work).

    i feel exactly the same way about cash! if i have it, i spend it on impulse buys (candy @ 7-11; drinks in the vending machine; cabs because i'm lazy). if i have to pay w/my debit card, i have to be sure i want it.

  15. I happened to get an increase in salary at a time when everyone else was losing their jobs. It strikes me as odd though I am very grateful for it. So I keep socking away money and trying not to be too spendy. I work two jobs for a reason (to save money!).

  16. I love all of your ideas. I just wish I could get Will to understand the "save now in case we need it tomorrow" thing. Will is a "I have it, so I'm going to spend it. Tomorrow will work itself out" which it usually does because *I* am resourceful.

    You're so lucky (and sensible! Wow!)

  17. We do the credit card thing too. They've paid us TONS in cash back and we've never paid any interest or late fees because we pay, in full, on time, every month.

    We rarely eat out, mostly because of the munchkins, and D ALWAYS takes his lunch. Those things alone make a huge difference. Also, add a couple of screaming or fighting kids to your grocery cart and you can get only the necessities at the grocery store because you just want to get out! lol

  18. Yeah, I'm not really doing anything different. If I pretend it's not happening it'll go away, right? No? Damn.

    In all seriousness, I am trying to cut back my spending (as always!), and I'm lucky enough to have zero debt, but isn't the circulation of cash helpful in a time like this? I've never taken an economics class in my life, but if I stop eating out don't my favorite restaurants lose income? And then wouldn't their suppliers and local farms lose income? And then wouldn't the farms not be paying for water and tractors and things? And then wouldn't the tractor manufacturers have to lay off assembly line workers? And then wouldn't there be more people on unemployment? And probably more people needing food stamps? And don't my tax dollars pay for food stamps?...

  19. You continue to amaze me, my dear. Like you, Sweets and I have not yet felt the crunch of the market. He is a nurse at one of the nation's top children's hospitals. There has been a nursing shortage for years. I think he's pretty secure. I work for a small company. The downside is the amount of projects we have is directly related to the financial health of our clients, so we have been hit like a lot of small firms. The upside is I have been here for almost 9 years, I have a very tight relationship with my bosses and I trust they will let me know if I need to spruce up my resume (just the other week, they told me not to).

    Having said that, like you, Sweets and I are watching our finances. We are a few months into a new condo and getting used to shared expenses/responsibilities. We also see belt-tightening around us due to lost jobs or fear of the future. While we are still buying what we need, we're trying not to be excessive. I think we're just trying to be smart about our money and make sure we don't dip into our savings unnecessarily. Tough times out there.

  20. I'll agree- so far I haven't really felt any effects from the recession, so my spending habits haven't changed and really- might've only gotten worse. However I agree with all those ways to save. After I buy my new couch on Sunday ($400) I am restricting myself on spending.

  21. Yes I'm feeling it because I'm actually laid off. I have been since sept. luckily i have severance till march, but i'm already feeling stressed about it.

    It's always good to be money conscious no matter what your situation. sounds like you guys are on the right track.

  22. Hey Jess, We pretty much do all the things you are doing. We were trying to save up for a down payment as well and our goal is to keep adding to that. Here are other basic ideas that you probably already know about:
    - Make coffee or tea at home
    - Meet friends out for happy hour or brunch instead of dinner
    - Go to the library for DVDs and books instead of renting or buying

  23. We try to eat out less for lunch and dinner, definitely put purchases on credit cards and pay them off, and go out less on the weekends. Staying in with friends is just as much fun.

  24. Off topic here....I finally found the time to look at your wedding phots and you both look so in love it's so obvious. The dress looked lovely on you and I'm just so happy for you guys.

    Now on to this post...I installed a (free) application on my phone that has a budget tracker in it and everytime I spend money I put it in there to track every penny. When I go over budget I stop spending. I also am trying not to touch my savings account, I bring my lunch every day to work and I cook things in large batches and freeze them for later. I also need to cut down on grocery shopping so I stop buying stuff I don't need.

  25. What a great post. I think we are just being more careful than before. The economy definitely makes you think about it more...

    1)We buy in bulk.

    2)I went black friday shopping for deals, which made a difference.

    3)I don't carry cash, so having to sign my name for a purchase or go through the ordering of it all makes me think about it a lot more.

    4)I've come to the conclusion that we don't need more STUFF. It is just more stuff, you trip over, get annoyed with--because it piles up and becomes clutter. No more BIG toys, buy a savings bond or something for the kids future. College for our kids will be way more expensive than it was for us.

  26. I'm a coupon clipper when I go grocery shopping and we do try to only visit those places every 2 weeks instead of every week. We both take our lunch to work as often as possible because Little Rock may not be DC but lunch daily here can be $8 to $9 for a sandwich, chips, and drink. Crazy!

  27. I am *definitely* feeling the effects, as evidenced by the job interview I had the other day that began with the man telling me that, thanks to the lack of funding in the city school system, they probably *won't* be hiring anyone this year because schools aren't showing interest in their programs since they can't afford them.

    In short: I am about to be in possession of a very expensive Master's degree... and am going to have an extremely difficult time finding a job.


  28. In a magazine I read, they gave two challenges to save money. I did it for two months and each of those months I was able to transfer an extra $900 to our savings account on top of what we normally save! Those two tips:

    1. $20 food challenge. You can only spend $20 on food per week which means instead of buying a whole bag of carrots, you just buy a couple of loose ones. You eat what is in your pantry, make your meals from scratch (far more healthy anyway) etc... I didnt manage $20 a week but I did manage to chop $100 a week off our food bill.

    2. Dont buy ANYTHING that isnt food unless you stop and think, "Do I really need this right now?" It curbed my spending a lot, I'd saved $400 for the month on groceries, surely I dont spend another $500 a month on unnecessary purchases!? Total eye-opener. Of course December probably isnt the month to start this challenge lol.

    As for recession, my state in Australia isnt in recession but slowly stories of redundancy are coming through the grape vine so I doubt it is far off being official.

    We dont have a mortgage for our current home anymore but do on our apartment in Melbourne so we put a lump sum on the mortgage so we could go quite a few years without paying it if necessary. While we could have used that cash for other things, we wanted to make sure our credit rating was secure at the end of the recession.

  29. My best effort so far is to pretend like I'm going to quit shopping. It's very sad.

  30. I'd like to pretend like I'm doing something but I'm not. I'm kind of always been a paycheck-to-paycheck girl and I think I will be for at least 5 more years...basically until I marry someone that makes me stop doing it.

  31. I am definitely with you on the card vs. cash mentality. I spend cash like it's nobody's business, but tend to be less irrational when there is plastic in my hand! Also, bringing lunch to work rather than eating out--that has helped, hugely!

  32. Wow, your post actually made me feel guilty for not being better! I used to shop A LOT for clothes. I only get what I need, when I need it now. I just remind myself of the full closet I have at home and talk myself back from the ledge, ya know.

    Thanks for stopping by today!

  33. Wow... you must be the only person I know who does better with cards! I sure am not one of them. Had my cc's closed and just finished paying the last one off. I have a pre-paid cc now- so I can't buy anything I can't afford. Which will make things so much better in the long run!
    I'm also all about brownbagged lunch. Way cheaper and often better than what they offer here.

  34. A year ago we stopped going out to eat every Friday in favor of getting carry-out subs as a break from cooking. Then this spring just before the baby came we stopped that. I've nearly always brown-bagged lunch, but now I find myself saying "I can't justify the expense" when I'm tempted to buy something we don't really need.

    I'm the same with cash. I KNOW how much I've charged and for what, but at the end of the day I say, "Where did all my cash go?"

  35. These are great suggestions, Jess, and it's encouraging to hear of two newlyweds being so responsible with money right from the start. When we got married, we had no debt and our first financial adviser was in SHOCK.

    That said, another easy way to avoid spending money is to move to a small town like ours that has to no place to shop and no decent place to eat out. Problem solved! :)

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