I recently spent a couple of hours going through our bank and credit card statements for 2016. Our accountant needed information on our medical expenses for our taxes. Although we spent nearly $15,000 on out-of-pocket medical expenses due to complications surrounding Aidan’s birth, what was more shocking was that most purchases on every statement were for eating out or coffee. We must have been very hungry and tired in 2016.
Out of curiosity, I decided to go back through our monthly “budgets” to see how much we spent last year. I say “budgets” because we clearly weren’t budgeting. We were merely tracking what we spent. More on that later. Here is what I found:
*We didn’t start tracking our spending until March.
You guys, we could have fully funded an IRA (and nearly a second) with what we spent on unnecessary purchases that gave us little to no pleasure.
In January of this year, we had a few large bills come due in one month. Car insurance and registration, quarterly taxes, and our annual sewer bill. We decided it was time to get serious about our budget or else we wouldn’t be able to pay everything. Looking back at the numbers, it seems silly we were worried. But at the time, we didn’t know if we could rein in our spending.
Where We Are Now
Our new spending looks like this:
In January and February combined, we spent less on eating out and coffee than we spent on eating out alone in any month of 2016. Our goal is an average of $200 per month for eating out and $40 per month for coffee. As we near the end of March, we are on track for this month as well.
How We Did It
We set a realistic budget and stuck to it.
I have always had a problem with eating out and Mr. MLM has always had a problem with lattes. It would be unrealistic to say we are never going to spend money in these ways. That would be setting us up for failure and disappointment.
We decided on $200 for eating out and $40 for coffee because that’s all we could spend in January while paying our other bills. At the time, these were shockingly low numbers and I wasn’t sure we could do it. Now it seems like a rather luxurious budget.
We also agreed that this was a budget, not a hope. When we ran out of money, that was it. This is the difference between budgeting and tracking expenses. In the past, we had hoped to spend a certain amount, but our behavior did not change after we blew past that number.
We started cooking yummy food.
A lot of the credit for this lifestyle change goes to Beth at budgetbytes.com. I started using her recipes at least three times week and this was a game changer. Now, the food we make at home is so good we are rarely tempted to eat out.
We became intentional spenders.
When we do eat out, we ask ourselves a few questions. First, do we have room in the budget? Second, is this something we truly enjoy? Third, if this isn’t something we truly enjoy, are we getting some other benefit? For example, the social aspect of meeting a friend for lunch is important even if I don’t truly enjoy the food itself.
How Low Can We Go?
If we successfully maintain our target averages for the first half of 2017, it would be an interesting challenge to reduce our budgets even more. Perhaps $100 for eating out and $25 for coffee? Stay tuned.