How to reduce spending -- suggestions?

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fredflinstone
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How to reduce spending -- suggestions?

Post by fredflinstone »

Looking at my credit card summary for 2019, I was surprised and a bit disturbed by how much my wife and I spent last year. We do not live extravagantly, but our expenses really pile up fast. We are in semi-retirement now, and clearly need to do some belt-tightening. We have never felt the need to adhere to a budget until now. My question: Are there any good resources out there (preferably free or very inexpensive) that would be helpful in developing a budget and sticking to it?
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MikeG62
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Re: How to reduce spending -- suggestions?

Post by MikeG62 »

Reading your post, I'd ask if you are financially ready to retire if you are retiring to a situation where you need to do belt-tightening? Why not work a few years longer and live the life you want to live?

To your question, I use customized Excel spreadsheets for budgeting and tracking my spending. There are lot's of canned software options available (Quicken being just one of the options - I am sure other folks will chime in with others).
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stan1
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Re: How to reduce spending -- suggestions?

Post by stan1 »

Lots of threads on budgeting. The key is to establish the categories you want to track and then break out the expenses into those categories.

The most important step is understanding WHAT the money is being spent on, not WHERE. For example if you spend on average $500 per month at Amazon or Costco that doesn't tell you WHAT you bought. You can't rely on the default categorization on the statement that's coded by the vendor when the charge is made. Some payees like restaurants or utilities are easier where you can assume every charge at a Chinese restaurant is dining out. However maybe you want to separate out coffee or bars from dining out if you think that separation would be meaningful.

You can probably sit down with your wife and identify a Top 10 list of categories you'd like to track in 2020. Some idea: pets, hobbies, travel, home decor, dining out, gifts, groceries, personal care, clothing.

As for tools anything that lets you customize a category. Quicken, GNU Cash, spreadsheet.

Visibility into where the money is going may be enough and you may find you don't need to actually set a budget. Some people do want a budget. Are you going to budget $100 for eating out and then stop eating out for the rest of the month if you hit $100 in the first week?
GmanJeff
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Re: How to reduce spending -- suggestions?

Post by GmanJeff »

The two previous posts are on the money. You need only track your expenses in a basic spreadsheet, with enough granularity to know exactly what you're spending on, not just at which store/vendor. That can be eye-opening.
GlacierRunner
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Re: How to reduce spending -- suggestions?

Post by GlacierRunner »

When I was tracking money closely I used a speadsheet. For a while I used the free spreadsheet offered by pear budget. Many people swear by "you need a budget" (YNAB).
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RickBoglehead
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Re: How to reduce spending -- suggestions?

Post by RickBoglehead »

Most people have no clue what they're spending, and if they try to figure it out they're astonished. As to being surprised at the end of 2019, you get monthly statements, and someone looks at them. The year end total should not be a surprise.

I use Quicken, which tracks every expenditure no matter what account it's spent from. I can classify each expense as I see fit, to whatever level of detail I wish. Multiple threads on this.

Quicken allows you to establish a budget, then measure against it. Best bet is to track a month of expenses, then establish a budget from that.

With Quicken, you can download months of historical transactions, how far back depends on the financial institution. Of course you can also take your physical credit card statements and enter the historical transactions by hand, or a summary of them. For example, you can look at your October 2019 statement, total the restaurants, and enter $832.12 dining, $312.42 gas, etc.

One other point. Quicken allows you to reclassify expenses at any time. So, you can put all your spending on your Target account into one category called "Target spending", then later go back and reclassify specific transactions as Groceries or Clothing or whatever. While some have broad categories, clearly filling your car with gas at Costco is not the same as buying things inside Costco. Nor is buying food at Costco the same category as buying a piece of furniture or a home generator. Quicken gives you lots of flexibility.

Lastly, you can roll up categories. Travel could be broken by type of travel (vacation, visiting relatives, etc.), then by destination, then by hotel, airfare, rental car, food, etc. Travel totals it all up to one number, and the subcategories allow you to see the specifics.
Last edited by RickBoglehead on Thu Jan 16, 2020 10:42 am, edited 3 times in total.
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Re: How to reduce spending -- suggestions?

Post by livesoft »

Get to the mailbox first and throw out all those catalogs of "junk" that you don't need. Make sure all e-mails to your spouse's and your e-mail accounts block all the e-mails from such vendors, too.

Who knew that you needed a set of artistic drink glasses? Or more Christmas decorations? Or a new outfit every week? Or new shoes that you will never wear?
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Re: How to reduce spending -- suggestions?

Post by RickBoglehead »

livesoft wrote: Thu Jan 16, 2020 9:33 am Get to the mailbox first and throw out all those catalogs of "junk" that you don't need. Make sure all e-mails to your spouse's and your e-mail accounts block all the e-mails from such vendors, too.

Who knew that you needed a set of artistic drink glasses? Or more Christmas decorations? Or a new outfit every week? Or new shoes that you will never wear?
OP has not noted whether his spending concerns are related to buying things they don't need or buying things that they do need that they perhaps shouldn't be buying yet, or can't afford.

The term "junk mail" being attributed to legitimate companies that may have retail, catalog, and online presence isn't fair - since most of them do little prospecting by mail and only want to send catalogs to those that want them. A simple phone call to these companies requesting to be put on the "Do Not Mail List" allows them to respect your wishes AND save money, a win-win.

Same with blocking emails. If you don't want them, unsubscribe. Never flag emails you signed up for as SPAM. SPAM is what you don't request.
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MikeG62
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Re: How to reduce spending -- suggestions?

Post by MikeG62 »

You need to be on the same page with your spouse too. If you are tracking spending in such granularity that you are constantly asking your spouse what exactly he/she bought on this day or that day you could cause other issues (depends on the extent to which your spouse buys in to the level of tracking).

FWIW, I track our spending in 24 categories. However, one of those categories is “All Other CC Spending”. Into this category goes things that’s don’t fit into one of the other 23 categories (things like spending at home stores (bed, bath and beyond, home goods), home improvement stores (Home Depot and Lowes), clothing stores, personal care (hair/nails/etc.), AAA, ADT, all things bought at Amazon and all other stuff (not captured by one of the other 23 categories). We budget $1,700 per month on average for this category. It is what it is. We don’t manage it or worry about it. It’s covered within our budget and its part of “living our life”.

Honestly, I don’t track our spending to manage it down. I track it simply because I want to know generally where our money is going and really to make sure we are spending up to the level of our means. We have a large T&E budget line item, which is the plug between our annual WD $ amount and the total of the other 23 categories of spend (including the “all other CC spend category”) - T&E is by far the single largest category of spend for us (several times larger than the next largest line item). The first year we were retired we significantly underspent our budget because of underspend in the T&E category. I learned this is one I have to actively manage (and begin working on it the year before, planning trips and activities).

I guess the message is track your spend, but don’t let the tracking become an obsession or create issues in your marriage.

Good luck.
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StealthRabbit
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Re: How to reduce spending -- suggestions?

Post by StealthRabbit »

yes, those CC summaries can be a wake-up call for those who don't budget.

could... chop up the CC!

But best to track spending (Even using CC summary at this point)

Find out where it is going, and if it is necessary or a priority.

Then... make a plan (grabbing the identified low hanging fruit)

Retirement brings a lot of budgeting challenges / discussions / flexibility requirements.

Many changes, especially your priorities when you realize you are 'counting down to finality' and the direct deposit checks STOP.
Travel, HC, gifting, additional medical needs, eldercare, grandkids, needy parents and siblings, and LOTS of free time = big change.

Budgeting can be done as simple as monthly envelopes of cash for common spending (Food, Gas, supplies...) when monthly cash is gone... get creative or go without. Realizing what has happened to the phone bill of $7 from 30 yrs ago is a bit of a harsh discovery.


Align with spouse.
Good luck,
Dandy
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Re: How to reduce spending -- suggestions?

Post by Dandy »

For me I look at
1. entertainment - movies, pay per view, eating out, golf,
2. expenses on auto pilot- e.g.magazine subscriptions, cleaning services, landscaping services, insurance (e.g. appliance), health clubs,cable packages, cell phones, credit card interest
3. clothing, cars,
4. leasing, renting, vacations

Credit allows most of us to live (exist) well beyond our means -- or needs. e.g. you can charge a great dinner with good wine, a nice entree, dessert, and a latte. But can you afford it - on a regular basis.

The key is not necessarily eliminating things but more like doing them differently. e.g. eating out -- you don't have to eat at an expensive restaurant every time, have an appetizer and dessert every time. Cars - don't need the newest, biggest, one with all the bells and whistles, etc. don't have to lease.
Do you have a habit of looking at tv and buying a movie every night? It's cheaper than going to a movie but if you are doing it every night?

Good luck - it is hard to cut back but it is important to make some progress.
Jeep512
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Re: How to reduce spending -- suggestions?

Post by Jeep512 »

1) Find out where your money is going (this is the most important)

2) Make a Reasonable Budget (make choices important to you)

3) Implement Budget

4) Track expenditures

5) Adjust budget

Go to step 3, and repeat on a monthly basis

Quicken or a spreadsheet can help you do this. I use a spreadsheet.

The only thing different that I will add...If you REALLY want to limit expenses, don't use any credit or debit cards. Get cash out of the bank and fill up categorized envelopes with your weekly or monthly allowances for eating out, groceries, gas, recreation, etc. This is a great way to see where your money is going, and help you tighten up spending.
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Re: How to reduce spending -- suggestions?

Post by Freetime76 »

If you just retired, sometimes it takes a while for the dust to settle (buying/doing all the things you couldn’t or didn’t when you were working).

In our household, we it helps to start with the big picture, before pouncing on my husband’s lunch at McyD’s or my Panera runs.
Suggestion:

Does your spouse also see the problem? That would be Step 1, before proclaiming everything you can’t do anymore :D
Step 2. Figure out your year’s income, after taxes.
Step 3. Figure out your big picture expenses: mortgage, rent, property tax, insurances, utilities (estimated if you don’t have exact) - things that are fixed bills. These are fixed expenses. Also determine any debt payments you have to make.
Step 4. Subtract fixed expenses from income. The number left is how much discretionary income you have. Divide by 12 for an estimated amount per month you can spend on basic groceries and toiletries, the farmers market, trips, gifts, clothes, organic sea salt, restaurants, whosiwhatsits from Amazon...

Now compare the last number with your spending to see how far off you are, overall.
Ask: is what you’re spending on what you want to be doing? If not, reprioritize.

As a budgeting tool, we’ve used EveryDollar (free) for a few years. All it does is shows the month’s income vs. what we’re planning to spend on by category, and then we log items as we spend. It shows how much is left. No fancy spreadsheets, graphs, Or analysis to show that we spent 2.5% less on gas in January vs the month before...it’s just a budget. It keeps DH and I from spending the same dollars twice. The key for us is DH will use it - very easy tool.

At least you realized the situation! How many people don’t even look at their statements?
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Re: How to reduce spending -- suggestions?

Post by nvambith »

I'll repost something I said in another thread.
We created a google drive shared spreadsheet (one column per month, one row per category), and enter every expense into it by hand. It's a manual way to do what mint / personal capital could do automatically, but doing it manually really gets your hands into the data, and increases awareness of what is going on tremendously.
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Re: How to reduce spending -- suggestions?

Post by BogleMelon »

When it comes to budgeting, nothing can compete with YNAB. Not Quicken, not Mint, not a spreadsheet. But first you have to fully understand their concept as it is a completely different way of budgeting (budget only the money you have not your forecasted income..etc). Watch their videos and give it a free try.
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Re: How to reduce spending -- suggestions?

Post by Sandtrap »

fredflinstone wrote: Thu Jan 16, 2020 8:18 am Looking at my credit card summary for 2019, I was surprised and a bit disturbed by how much my wife and I spent last year. We do not live extravagantly, but our expenses really pile up fast. We are in semi-retirement now, and clearly need to do some belt-tightening. We have never felt the need to adhere to a budget until now. My question: Are there any good resources out there (preferably free or very inexpensive) that would be helpful in developing a budget and sticking to it?
There are a million useable methods to establish a budget via spreadsheet, etc.
The difficulty is in the "doing" and consistently for the long term. Like "dieting" vs "lifestyle and eating changes".

Perhaps this "semi retirement" period is transitional with income, expense, and budget fluctuations.
As long as your income and assets can absorb things during this time, as you enter retirement, the dust will settle with your new lifestyle.

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fredflinstone
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Re: How to reduce spending -- suggestions?

Post by fredflinstone »

Thank you so much everyone for all the great suggestions. This Forum is the best. I'll report back to you when I figure out the exact steps we will take.
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Re: How to reduce spending -- suggestions?

Post by SmileyFace »

fredflinstone wrote: Thu Jan 16, 2020 1:50 pm Thank you so much everyone for all the great suggestions. This Forum is the best. I'll report back to you when I figure out the exact steps we will take.
I am surprised no one above mentioned MINT - its free and not a bad method to track spending (If you don't want to pay for YNAB or Quicken and don't want to set up spreadsheets). If you like using phone apps its also very easy.
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Re: How to reduce spending -- suggestions?

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fredflinstone wrote: Thu Jan 16, 2020 8:18 am Looking at my credit card summary for 2019, I was surprised and a bit disturbed by how much my wife and I spent last year. We do not live extravagantly, but our expenses really pile up fast. We are in semi-retirement now, and clearly need to do some belt-tightening. We have never felt the need to adhere to a budget until now. My question: Are there any good resources out there (preferably free or very inexpensive) that would be helpful in developing a budget and sticking to it?
Every Dollar app. It's free, easy to set up, and track everything. :mrgreen:

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Mr. Rumples
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Re: How to reduce spending -- suggestions?

Post by Mr. Rumples »

Here is how I have done my budget for decades. It started long before the internet so I still do it all by hand. Every time there is a major life event I review it (death of spouse, retirement). I only increase it by the % I get in COLA's.

In a way its a pain to write down every single penny spent while tracking, on the other hand it made me stop and think about every expense.

I have a bucket of savings so to speak for pets, insurance premiums that I pay (vehicle, umbrella, homeowners's - I pay my own), medical, and misc such as vehicle repairs, home repairs (not improvements) and yard help.

The rest is the left over divided by 52. I am usually under that amount, so build up a reserve. That "52" number includes, gas, pet food and litter, clothing, eating out, gardening supplies (that's my main hobby), other hobbies, gifts and so on.

I know exactly where I am at any time. The pet bucket is their savings account which has been building up over 17 years. (They are old cats; alas, my pet chicken, Ms. Olivia is no longer around.)
medic
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Re: How to reduce spending -- suggestions?

Post by medic »

Before you go the route of linking all your credit cards and stuff to an online system, take a month and just stuff all the receipts for things you buy into an envelope. At the end of the month, make piles of the different spending areas, and then add up the categories. For the top 3, maybe you need to look a the itemize receipt to break it down further. As others have said the manual effort helps make the process more "real".

Do this for 2-3 months and get a sense of what your normal looks like. Doing it now, after holiday season and before vacation time is good so you can't claim oh, this just a one off.

That said, we no longer budget. We track online to do an end of year accounting, but our run rate is pretty steady +/- $5% annually which is usually if we did a larger vacation or home improvement project.
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Re: How to reduce spending -- suggestions?

Post by JoeRetire »

fredflinstone wrote: Thu Jan 16, 2020 8:18 am Looking at my credit card summary for 2019, I was surprised and a bit disturbed by how much my wife and I spent last year. We do not live extravagantly, but our expenses really pile up fast. We are in semi-retirement now, and clearly need to do some belt-tightening. We have never felt the need to adhere to a budget until now. My question: Are there any good resources out there (preferably free or very inexpensive) that would be helpful in developing a budget and sticking to it?
Budgets are a waste of time.

The best resources you and your wife have are your brains.

Sit down with your credit card statement each month. Read it through.
Get three pieces of paper. Label then Essential, Nice to Have, and A Waste.
On the Essential page, write down all the expenses that were actually essential.
One the A Waste page, write down anything that disturbs you.
Review anything that hasn't yet been categorized yet. Most should put be on the Nice to Have page.
Make sure every single item is on one and only one of the three pages.

Look over the A Waste page. Tell yourselves "We won't make that mistake again!"
Look over the Nice to Have page. Ask yourselves if those are really worthwhile or more like a waste.

Do that every month and see if your behavior changes.
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wabbott
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Re: How to reduce spending -- suggestions?

Post by wabbott »

No less of a money expert than John D. Rockefeller learned the value of tracking every dime of spending.
https://www.youneedabudget.com/a-lesson ... ckefeller/

About 15 years ago (about 5 yrs prior to retirement) I began to keep a spreadsheet with about 10 categories. I found it to be a great forecasting tool, and it provided great peace of mind prior no longer working for wages. Rather than finding it a chore, I look forward to posting the daily expenses. Every post represents more information, more knowledge, and the ability to forecast more accurately.
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Re: How to reduce spending -- suggestions?

Post by Jack FFR1846 »

RickBoglehead wrote: Thu Jan 16, 2020 9:39 am
The term "junk mail" being attributed to legitimate companies that may have retail, catalog, and online presence isn't fair - since most of them do little prospecting by mail and only want to send catalogs to those that want them.
Yah....uh....no. We get all kinds of mailings. One I truly don't understand is a local, expensive private school, grades K-6.

Our youngest is 19. Why they think we'd have any interest is beyond me and we certainly didn't ask for information. Companies buy lists and blindly send out junk.
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fredflinstone
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Re: How to reduce spending -- suggestions?

Post by fredflinstone »

I started out by listing my 2019 expenses. A real eye opener. My next step is to go over these expenses with my wife and discuss where we can cut back.
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RickBoglehead
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Re: How to reduce spending -- suggestions?

Post by RickBoglehead »

Jack FFR1846 wrote: Thu Jan 16, 2020 3:00 pm
RickBoglehead wrote: Thu Jan 16, 2020 9:39 am
The term "junk mail" being attributed to legitimate companies that may have retail, catalog, and online presence isn't fair - since most of them do little prospecting by mail and only want to send catalogs to those that want them.
Yah....uh....no. We get all kinds of mailings. One I truly don't understand is a local, expensive private school, grades K-6.

Our youngest is 19. Why they think we'd have any interest is beyond me and we certainly didn't ask for information. Companies buy lists and blindly send out junk.
Some do. Some don't. Sometimes a person gets on a specific list due to a mistake, and then companies rent that list thinking the information is right, when it's not.

You can easily go to the website of the expensive private school, find their Contact Us page, and explain that you are receiving the mailings, don't wan them, and wish to be put on their Do Not Call list. You can also request that they contact the list provider and ask that you be put on their "suppression file".

I have been getting deluged with mailings from the Council of Financial Educators, which is an IRS-Approved 501(c)(3) Non-Profit. They offer retirement planning courses, held at the local community college, for a fee, taught by one of their members. I have tried repeatedly to stop these mailings, and last week spoke directly to the person in charge of registrations and asked why they continue to spend their money mailing to someone that doesn't want their mailings. She apologized profusely, and said she would be contacting their list processing company and having me put on the Do Not Mail file. Same thing she promised months ago, and I reminded her of that. If they send more mailings after March 1 (there is leadtime in mail processing), I will start describing their unresponsiveness on social media.

I also was getting deluged with mailings offering me dinners at Ruths' Chris and other restaurants from for-profit retirement companies, and have contacted each of them to get removed, and also tried to trace down the list provider.

Then again, my career has been in the direct to consumer industry, so I get really focused on removing these mailings vs. cluttering up recycling centers and having companies waste money.
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Re: How to reduce spending -- suggestions?

Post by sunny_socal »

fredflinstone wrote: Thu Jan 16, 2020 8:18 am Looking at my credit card summary for 2019, I was surprised and a bit disturbed by how much my wife and I spent last year. We do not live extravagantly, but our expenses really pile up fast. We are in semi-retirement now, and clearly need to do some belt-tightening. We have never felt the need to adhere to a budget until now. My question: Are there any good resources out there (preferably free or very inexpensive) that would be helpful in developing a budget and sticking to it?
Google Sheets is free

The tool isn't going to solve your problem however. Read some Dave Ramsey books.
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Re: How to reduce spending -- suggestions?

Post by RickBoglehead »

JoeRetire wrote: Thu Jan 16, 2020 2:43 pm
fredflinstone wrote: Thu Jan 16, 2020 8:18 am Looking at my credit card summary for 2019, I was surprised and a bit disturbed by how much my wife and I spent last year. We do not live extravagantly, but our expenses really pile up fast. We are in semi-retirement now, and clearly need to do some belt-tightening. We have never felt the need to adhere to a budget until now. My question: Are there any good resources out there (preferably free or very inexpensive) that would be helpful in developing a budget and sticking to it?
Budgets are a waste of time.

The best resources you and your wife have are your brains.

Sit down with your credit card statement each month. Read it through.
Get three pieces of paper. Label then Essential, Nice to Have, and A Waste.
On the Essential page, write down all the expenses that were actually essential.
One the A Waste page, write down anything that disturbs you.
Review anything that hasn't yet been categorized yet. Most should put be on the Nice to Have page.
Make sure every single item is on one and only one of the three pages.

Look over the A Waste page. Tell yourselves "We won't make that mistake again!"
Look over the Nice to Have page. Ask yourselves if those are really worthwhile or more like a waste.

Do that every month and see if your behavior changes.
For you perhaps. Also for me. Not the case for everyone.

I've never had a budget. I track my spending to the penny in Quicken, since 1996. Before Quicken I used Managing Your Money. Before that I used Lotus 1-2-3. Before that I used a big green ledger pad. I don't need a budget.

Some people need budgets. Some use the envelopes with categories and put receipts in. Some setup 20 savings sub accounts. The key is that people do whatever THEY find works for them.

I've established an annual budget for our retirement that begins in 2021. I've estimated expenses based on my tight expense tracking, and adjusted for medical and traveling more, etc. Then I rounded up. Then I added $25,000. I did this because I needed to see, with my eyes, that I had 25x my projected annual expenses.

I don't expect to need a budget in retirement to limit our spending. I expect to need a budget in retirement to ensure that we hit our spending targets, i.e. that we spend enough in many important categories. In other words, I want to make sure that if we say we're going to travel, and we budget say $15,000 a year, that we don't evaluate potential travel and say "that's too expensive" and then not spend the money. Likewise, if we don't travel in year 3, then I might push to spend $15,000 + a lot of the prior year's $15,000 on year 4's travel.

Similarly, right now we go out to eat at most monthly, usually not even that. In retirement, we've said we want to try to go out at least weekly. I have budgeted 2x per week. By measuring against that budget I hope we'll do what we say.

So, while you may not need a budget to control expenses, and I may not need a budget to control expenses. some people do. OP has overspent and is trying to cut back, so they should look at all methods and see what works for them.
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Re: How to reduce spending -- suggestions?

Post by dcabler »

I was out of work for about 10 months a few years ago with time on my hands. We had an idea where our money went, but not down to the exact categories as we pay off credit cards each and every month.

High level view was pretty easy. How much did I earn, how much went to income, SS, Medicare taxes, how much went to savings. What's left is what we spent. That number itself can be an eye-opener. To get to the nitty gritty, we downloaded a year's worth of cc transactions and a year's worth of bank transactions. Most were already categorized for us, but some weren't or were categorized incorrectly. Fix that, then combine and sorted in a spreadsheet. Remove stuff like things that were paid for by me but reimbursed by my employer.

No real surprises. We spend a lot eating out. Since I was out of work it was easy to create a sensible overall food budget. Then I looked at homeowners and auto insurance and worked with our agent to change some things that made the most sense. Next, I looked at utilities. I "cut-the-cord" and now stream via Roku and have an antenna. We have a pool and I found an online calculator which helped me discover I was running the pump for way too many hours per day. Fixed that for an immediate noticeable drop in electricity costs. Swapped out the last of our incandescents. Paid attention to the thermostat. Borrowed an infrared thermometer to find hotspots around our ceiling and beefed up insulation in those places. Had a teenager at the time and noticed water bills had been steadily rising, so swapped out all shower heads to low flow and saw an immediate drop. Etc. I then created a month-by-month budget and tracked against it (again I had time on my hands). There were and still are more things we can do like finding a better mobile plan, but that'll wait.

Was good practice for retirement and told me that while we could have done it at the time, I didn't feel like there was enough margin and eventually was re-employed. We've always saved a pretty large % of our earnings, but I really stepped it up over the last 5-6 years, though we no longer track and budget. Plenty of margin now and it reminds me that I should probably do another big download and see how things look today since we do plan on retiring in the next 2-3 years with the plan to downsize by selling our house and paying cash for the next one. Plus kiddo will be out of college by then. We will still be pre-medicare, so we also make a guess based on current ACA plans and expected subsidies what we think medical insurance premiums might look like. Doubt we'll ever go back to budgeting after retirement, but will probably always do a yearly "where did it all go" exercise and continue to look for low handing fruit.

Point is, first you need to know exactly what you're spending and where it's going. Then you can see what you can do to fix some obvious things. From there, you can then create a reasonable budget and track against that, if you're so inclined.
Last edited by dcabler on Fri Jan 17, 2020 7:44 am, edited 2 times in total.
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Re: How to reduce spending -- suggestions?

Post by dcabler »

MikeG62 wrote: Thu Jan 16, 2020 9:41 am You need to be on the same page with your spouse too. If you are tracking spending in such granularity that you are constantly asking your spouse what exactly he/she bought on this day or that day you could cause other issues (depends on the extent to which your spouse buys in to the level of tracking).

FWIW, I track our spending in 24 categories. However, one of those categories is “All Other CC Spending”. Into this category goes things that’s don’t fit into one of the other 23 categories (things like spending at home stores (bed, bath and beyond, home goods), home improvement stores (Home Depot and Lowes), clothing stores, personal care (hair/nails/etc.), AAA, ADT, all things bought at Amazon and all other stuff (not captured by one of the other 23 categories). We budget $1,700 per month on average for this category. It is what it is. We don’t manage it or worry about it. It’s covered within our budget and its part of “living our life”.

Honestly, I don’t track our spending to manage it down. I track it simply because I want to know generally where our money is going and really to make sure we are spending up to the level of our means. We have a large T&E budget line item, which is the plug between our annual WD $ amount and the total of the other 23 categories of spend (including the “all other CC spend category”) - T&E is by far the single largest category of spend for us (several times larger than the next largest line item). The first year we were retired we significantly underspent our budget because of underspend in the T&E category. I learned this is one I have to actively manage (and begin working on it the year before, planning trips and activities).

I guess the message is track your spend, but don’t let the tracking become an obsession or create issues in your marriage.

Good luck.
+100% on highlighted area. I don't currently budget but back when we did when I was between jobs, I would show my spouse a monthly report of where we were vs. the budget at a very high level. It stressed her out, though admittedly it had to do as much with the budget itself as it was a constant reminder that I was between jobs. So I only did it for my own usage. Circumstances matter.
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Re: How to reduce spending -- suggestions?

Post by RickBoglehead »

dcabler wrote: Fri Jan 17, 2020 7:40 am
MikeG62 wrote: Thu Jan 16, 2020 9:41 am You need to be on the same page with your spouse too. If you are tracking spending in such granularity that you are constantly asking your spouse what exactly he/she bought on this day or that day you could cause other issues (depends on the extent to which your spouse buys in to the level of tracking).

FWIW, I track our spending in 24 categories. However, one of those categories is “All Other CC Spending”. Into this category goes things that’s don’t fit into one of the other 23 categories (things like spending at home stores (bed, bath and beyond, home goods), home improvement stores (Home Depot and Lowes), clothing stores, personal care (hair/nails/etc.), AAA, ADT, all things bought at Amazon and all other stuff (not captured by one of the other 23 categories). We budget $1,700 per month on average for this category. It is what it is. We don’t manage it or worry about it. It’s covered within our budget and its part of “living our life”.

Honestly, I don’t track our spending to manage it down. I track it simply because I want to know generally where our money is going and really to make sure we are spending up to the level of our means. We have a large T&E budget line item, which is the plug between our annual WD $ amount and the total of the other 23 categories of spend (including the “all other CC spend category”) - T&E is by far the single largest category of spend for us (several times larger than the next largest line item). The first year we were retired we significantly underspent our budget because of underspend in the T&E category. I learned this is one I have to actively manage (and begin working on it the year before, planning trips and activities).

I guess the message is track your spend, but don’t let the tracking become an obsession or create issues in your marriage.

Good luck.
+100% on highlighted area. I don't currently budget but back when we did when I was between jobs, I would show my spouse a monthly report of where we were vs. the budget at a very high level. It stressed her out, though admittedly it had to do as much with the budget itself as it was a constant reminder that I was between jobs. So I only did it for my own usage. Circumstances matter.
Had a coworker many years ago that complained about his wife's spending. He complained to her, and to us. She told him "earn more". He took away credit cards and cut them up, she got replacements. He closed accounts, she opened private lines at the department stores. He closed those, she made cash withdrawals at bank...

He complained constantly, and then talked about how he picked up takeout, or they went out to dinner 4-5 nights per week. On weekends they rented 3 - 5 videos to watch...

I pointed out to him that he and his spouse were two very similar creatures, and that he should look in the mirror before he complained. I told him that we went out to dinner every few months, and got pizza on Mondays because Dominos had a $4.99 special on Mondays. I also told him how we picked up Dominos instead of getting it delivered, not to save the driver's tip, but to allow our oldest to proudly pickup his pizza and carry it home to Mom.

Luckily my spouse and I are very much the same, just the polar opposite of my former coworker.
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Re: How to reduce spending -- suggestions?

Post by lthenderson »

fredflinstone wrote: Thu Jan 16, 2020 8:18 am My question: Are there any good resources out there (preferably free or very inexpensive) that would be helpful in developing a budget and sticking to it?
I've always taken a different tack in this. Since retirement has always been more interesting to me than how much I spend, I figured out how much I needed to save every paycheck to reach retirement at the age I wanted. I invested that money immediately. I learned to live on what I had left spending it freely. Anything extra that I didn't spend went back towards my retirement. I ended up retiring a lot earlier than I planned for. Best of all, I didn't waste tons of my life tracking every nickel I spent because it just wasn't important to my goal.
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Re: How to reduce spending -- suggestions?

Post by CyclingDuo »

fredflinstone wrote: Fri Jan 17, 2020 6:51 amI started out by listing my 2019 expenses. A real eye opener. My next step is to go over these expenses with my wife and discuss where we can cut back.
Granted, for most of us who were paid to work with budgets in our chosen careers (budgets for our departments, projects, divisions, etc...), doing it on the home front is certainly not a giant leap to do the same at home. Even if you have never done budgets before as part of your job, spending time on the home budget - as you are now - to take the first step to track where all the money is coming from and where all of it is going is the crucial ground step to budgeting awareness.

Moving beyond that first crucial step, dividing the expenses up into needs, wants, and variables helps identify where cuts could be made. We are all guilty at times of lifestyle creep leading to blurring the lines between needs and wants a bit, but reigning things back in and working together as a couple can be very rewarding in more ways than just the cash flow, but builds awareness and keeps you on task to reach goals you may have in the future.

Moving through the phases of full time employment and into semi-retirement and eventually into full-retirement will each have different "budgets". Knowing the cash flow for each phase and monitoring it is an easier task than everyone makes it out to be. In the words of the slogan from Nike - "Just Do It!"

I had suggested the Every Dollar app upthread because the free version is easy to use, and it requires you to enter each expenditure and income stream into the app throughout the month. Just the sheer act of typing in each entry yourself is a great way to "know" where the money is coming from and where it is going. The paid for version downloads all the information electronically, however in our opinion it is more beneficial for you to have to enter each expenditure yourself as it removes any denial and gets you in game plan mode much quicker.

https://www.everydollar.com/blog/zero-based-budgeting

Zero-Based Budgeting

Ever found yourself in this spot: You think you’re keeping up with your money, but some of it seems to grow wings and flutter out the window at night. We’ve all been there.

The zero-based budgeting method is just what you need. It gives all your dollars (all. of. them.) a job. Because guess what—your money isn’t magically escaping. It’s just needs something to do.

Here’s everything you need to know to make this zero-based budget life happen.

What Is Zero-Based Budgeting?

Simply put, zero-based budgeting is when all your income minus all your expenses equals zero.

This means that all the money going out should be the same amount as the money coming in. So if you make $4,000 a month, you’re giving all $4,000 a job: paying bills, saving money, paying off debt, and living life! When you add in every source of income and then subtract every single expense, your budget should end up at zero.
"Save like a pessimist, invest like an optimist." - Morgan Housel
NotWhoYouThink
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Re: How to reduce spending -- suggestions?

Post by NotWhoYouThink »

lthenderson wrote: Fri Jan 17, 2020 9:03 am
fredflinstone wrote: Thu Jan 16, 2020 8:18 am My question: Are there any good resources out there (preferably free or very inexpensive) that would be helpful in developing a budget and sticking to it?
I've always taken a different tack in this. Since retirement has always been more interesting to me than how much I spend, I figured out how much I needed to save every paycheck to reach retirement at the age I wanted. I invested that money immediately. I learned to live on what I had left spending it freely. Anything extra that I didn't spend went back towards my retirement. I ended up retiring a lot earlier than I planned for. Best of all, I didn't waste tons of my life tracking every nickel I spent because it just wasn't important to my goal.
I did that too, because it worked for me and my spouse. But we have family members that spend every dollar that comes in, and some of them twice. So a lot depends on how you are wired. No necessarily how you were raised, because the variations among family members can be huge.

Before retirement I did start keeping track of monthly spending, less income taxes, just to make sure that the combination of pension, savings, and future SS would support our spending with comfortable margin.
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Re: How to reduce spending -- suggestions?

Post by CyclingDuo »

lthenderson wrote: Fri Jan 17, 2020 9:03 amBest of all, I didn't waste tons of my life tracking every nickel I spent because it just wasn't important to my goal.
Balderdash!

It seriously does not take much time when making a budget and tracking it - be it at the work place or doing one on the home front. Login to your bank account (or expense account at work) about 2 or 3 times a month, spend 5 minutes entering all of the entries into an app and presto - it's done. 10-15 minutes a month. Or use an application or software that downloads everything automatically or when you press a button, and it takes even less time.

Either way, tons of life is not wasted. Productivity solutions are easily available to streamline it all.
"Save like a pessimist, invest like an optimist." - Morgan Housel
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Re: How to reduce spending -- suggestions?

Post by justcruisin »

We put together annual budgets, but were not tracking and were not hitting our monthly savings goals. A financial adviser that we consulted said no matter how much we made, we should track a savings goal monthly...and to budget expenses monthly to see where we really were and go from there.

We put vacation/discretionary purchases in a completely separate bucket (funded for in the previous year). I think we're slipping on the groceries/meals/bar side and trying to see where we really land. Should be interesting since we started this year.

We use an app that is very easy for us to input. Separated into our variable everyday expenses, travel and wine.
dcabler
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Re: How to reduce spending -- suggestions?

Post by dcabler »

RickBoglehead wrote: Fri Jan 17, 2020 8:26 am
dcabler wrote: Fri Jan 17, 2020 7:40 am
MikeG62 wrote: Thu Jan 16, 2020 9:41 am You need to be on the same page with your spouse too. If you are tracking spending in such granularity that you are constantly asking your spouse what exactly he/she bought on this day or that day you could cause other issues (depends on the extent to which your spouse buys in to the level of tracking).

FWIW, I track our spending in 24 categories. However, one of those categories is “All Other CC Spending”. Into this category goes things that’s don’t fit into one of the other 23 categories (things like spending at home stores (bed, bath and beyond, home goods), home improvement stores (Home Depot and Lowes), clothing stores, personal care (hair/nails/etc.), AAA, ADT, all things bought at Amazon and all other stuff (not captured by one of the other 23 categories). We budget $1,700 per month on average for this category. It is what it is. We don’t manage it or worry about it. It’s covered within our budget and its part of “living our life”.

Honestly, I don’t track our spending to manage it down. I track it simply because I want to know generally where our money is going and really to make sure we are spending up to the level of our means. We have a large T&E budget line item, which is the plug between our annual WD $ amount and the total of the other 23 categories of spend (including the “all other CC spend category”) - T&E is by far the single largest category of spend for us (several times larger than the next largest line item). The first year we were retired we significantly underspent our budget because of underspend in the T&E category. I learned this is one I have to actively manage (and begin working on it the year before, planning trips and activities).

I guess the message is track your spend, but don’t let the tracking become an obsession or create issues in your marriage.

Good luck.
+100% on highlighted area. I don't currently budget but back when we did when I was between jobs, I would show my spouse a monthly report of where we were vs. the budget at a very high level. It stressed her out, though admittedly it had to do as much with the budget itself as it was a constant reminder that I was between jobs. So I only did it for my own usage. Circumstances matter.
Had a coworker many years ago that complained about his wife's spending. He complained to her, and to us. She told him "earn more". He took away credit cards and cut them up, she got replacements. He closed accounts, she opened private lines at the department stores. He closed those, she made cash withdrawals at bank...

He complained constantly, and then talked about how he picked up takeout, or they went out to dinner 4-5 nights per week. On weekends they rented 3 - 5 videos to watch...

I pointed out to him that he and his spouse were two very similar creatures, and that he should look in the mirror before he complained. I told him that we went out to dinner every few months, and got pizza on Mondays because Dominos had a $4.99 special on Mondays. I also told him how we picked up Dominos instead of getting it delivered, not to save the driver's tip, but to allow our oldest to proudly pickup his pizza and carry it home to Mom.

Luckily my spouse and I are very much the same, just the polar opposite of my former coworker.
Interesting story! Definitely helps when both are on the same page. In the case I highlighted above, there was no question that we were on the same page on spending - she just didn't want to know the details of where we were at any given time due to the stresses already there from me being out of work. Lesson learned on my side!
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Re: How to reduce spending -- suggestions?

Post by rich126 »

fredflinstone wrote: Thu Jan 16, 2020 8:18 am Looking at my credit card summary for 2019, I was surprised and a bit disturbed by how much my wife and I spent last year. We do not live extravagantly, but our expenses really pile up fast. We are in semi-retirement now, and clearly need to do some belt-tightening. We have never felt the need to adhere to a budget until now. My question: Are there any good resources out there (preferably free or very inexpensive) that would be helpful in developing a budget and sticking to it?
This really isn't a budget but I've found that if you think you want to buy something, wait a day or so, and then think about it again. Often you realize it is something you really don't need and can do without. Impulse spending/buying, especially online can be dangerous for some people.

Or if you want to go out to eat, maybe rethink it, or go somewhere no so high end.

Personally I'm not a big fan of tracking spending into minute details. That usually indicates a bigger problem.
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Re: How to reduce spending -- suggestions?

Post by Bobby206 »

RickBoglehead wrote: Thu Jan 16, 2020 9:39 am
livesoft wrote: Thu Jan 16, 2020 9:33 am Get to the mailbox first and throw out all those catalogs of "junk" that you don't need. Make sure all e-mails to your spouse's and your e-mail accounts block all the e-mails from such vendors, too.

Who knew that you needed a set of artistic drink glasses? Or more Christmas decorations? Or a new outfit every week? Or new shoes that you will never wear?
OP has not noted whether his spending concerns are related to buying things they don't need or buying things that they do need that they perhaps shouldn't be buying yet, or can't afford.

The term "junk mail" being attributed to legitimate companies that may have retail, catalog, and online presence isn't fair - since most of them do little prospecting by mail and only want to send catalogs to those that want them. A simple phone call to these companies requesting to be put on the "Do Not Mail List" allows them to respect your wishes AND save money, a win-win.

Same with blocking emails. If you don't want them, unsubscribe. Never flag emails you signed up for as SPAM. SPAM is what you don't request.

I have made a concerted effort to get off of catalog lists for years. I actually keep track of them all. I send a letter. I would say very few large companies will take you off the list with just one letter. In some cases it's been 5 or 6 and they still send their JUNK.

As to SPAM I mark spam when it's not something I requested. Every retailer puts you on their list whether requested or not and thus that makes it SPAM to me. Of course if it actually was requested that's different.

Avoiding all that garbage is a good way for many people to reduce expenses but certainly not everybody has that particular spending problem.
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Re: How to reduce spending -- suggestions?

Post by AnonLady »

GlacierRunner wrote: Thu Jan 16, 2020 9:26 am When I was tracking money closely I used a speadsheet. For a while I used the free spreadsheet offered by pear budget. Many people swear by "you need a budget" (YNAB).
I'm one of them. Love it. I really didn't want to spend money on my budgeting software, but YNAB is so powerful and makes budgeting and sticking to that budget easy, it's worth it. Will save my more than I spent on it when I finally bit the bullet and paid for my 1 year subscription last year.

If you don't want to do software, you can do an excel spreadsheet and use cash envelopes. That's easy and close to free, if you already own excel. Or use google sheets if you don't have excel.
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Re: How to reduce spending -- suggestions?

Post by RickBoglehead »

Bobby206 wrote: Fri Jan 17, 2020 11:49 am I have made a concerted effort to get off of catalog lists for years. I actually keep track of them all. I send a letter. I would say very few large companies will take you off the list with just one letter. In some cases it's been 5 or 6 and they still send their JUNK.

As to SPAM I mark spam when it's not something I requested. Every retailer puts you on their list whether requested or not and thus that makes it SPAM to me. Of course if it actually was requested that's different.

Avoiding all that garbage is a good way for many people to reduce expenses but certainly not everybody has that particular spending problem.
There is no need to write a letter, in fact you may be sending it to the wrong address and it's not getting processed.

Pickup the phone and call, and request to be marked "Do Not Mail", "Do Not Call" and "Do Not Rent".

When you do business with a company, you automatically get added to their mailing list, which is usually explained when you place your order and provide the email address for order confirmation. You can then Opt Out. Flagging that email as SPAM is really not correct, and hurts the company sending it by lowering their reputation score which ultimately impacts their email program.

You can opt out of direct marketing from reputable firms by going through the DMA's Choice program. $2 to opt out for 10 years.
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Re: How to reduce spending -- suggestions?

Post by ElBarto »

Have you considered cutting back on Brontosaurus Burgers and just sticking to beef?
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Re: How to reduce spending -- suggestions?

Post by dm200 »

fredflinstone wrote: Thu Jan 16, 2020 8:18 am Looking at my credit card summary for 2019, I was surprised and a bit disturbed by how much my wife and I spent last year. We do not live extravagantly, but our expenses really pile up fast. We are in semi-retirement now, and clearly need to do some belt-tightening. We have never felt the need to adhere to a budget until now. My question: Are there any good resources out there (preferably free or very inexpensive) that would be helpful in developing a budget and sticking to it?
Many credit unions offer such services.
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Re: How to reduce spending -- suggestions?

Post by Royal Blue »

The issue is that most mail order companies sell their lists to other mail order companies, so do online retailers. If you're a spender, your data will be passed around like a joint at a frat house!
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Re: How to reduce spending -- suggestions?

Post by Royal Blue »

Use a cash based system. The data is very very clear, you'll spend 15-25% less if you have to part with the green stuff vs swiping or other digital payments.
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Re: How to reduce spending -- suggestions?

Post by Dregob »

livesoft wrote: Thu Jan 16, 2020 9:33 am Get to the mailbox first and throw out all those catalogs of "junk" that you don't need. Make sure all e-mails to your spouse's and your e-mail accounts block all the e-mails from such vendors, too.

Who knew that you needed a set of artistic drink glasses? Or more Christmas decorations? Or a new outfit every week? Or new shoes that you will never wear?
Agreed! Software is okay but I think most people already know what spending can be cut (if they are serious about budgeting). The issue is putting it into action.
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Re: How to reduce spending -- suggestions?

Post by RickBoglehead »

Royal Blue wrote: Fri Jan 17, 2020 12:32 pm The issue is that most mail order companies sell their lists to other mail order companies, so do online retailers. If you're a spender, your data will be passed around like a joint at a frat house!
They rent, not sell. By contacting the company that has your name, you request that they mark it Do Not Mail, Do Not Rent, and Do Not Call.
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Re: How to reduce spending -- suggestions?

Post by ge1 »

fredflinstone wrote: Thu Jan 16, 2020 8:18 am Looking at my credit card summary for 2019, I was surprised and a bit disturbed by how much my wife and I spent last year. We do not live extravagantly, but our expenses really pile up fast. We are in semi-retirement now, and clearly need to do some belt-tightening. We have never felt the need to adhere to a budget until now. My question: Are there any good resources out there (preferably free or very inexpensive) that would be helpful in developing a budget and sticking to it?
I'm not a fan of spending a ton of time on tracking stuff, but Mint is great. I have used it for over a year now and it is very simple. Mobile apps are great as well. You spend a few minutes to link your accounts and credit cards and you are good to go. Doesn't cost a penny.
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Re: How to reduce spending -- suggestions?

Post by HomeStretch »

Good advice in this thread.

If you and spouse cannot agree on the amount or type of non-essential spending, you might find it useful to give each of you a monthly “allowance” that can be spent without needing to justify it to the other. Separate personal credit cards or checking accounts can help manage the personal allowance.
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Re: How to reduce spending -- suggestions?

Post by CAsage »

For philosophy, I would suggest you read "Your money or Your life". I felt it was one of the most important "money' books I ever read, not because of the ludicrous financial advice, but because it correctly identified money and time as both limited, and made me much more conscious of consumption. As a financially comfortable semi-retiree, you may not need to cut back much, but the overall theme of valuing consumption was I felt very eye opening. For budgeting or belt tightening, lots of tools out there, and you can read Mr Money Mustache for motivation.
Salvia Clevelandii "Winifred Gilman" my favorite. YMMV; not a professional advisor.
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