So far, we've lost 18% of our retirement savings. Sadly, this is considered a small loss, compared to the 30% and 40% losses being suffered by others. We are fortunate that my husband is still 15 years from retirement age, so we have time to (hopefully) recover our losses. I'm very sad for those people who don't have this luxury.
Yesterday, I read this quote from Suze Orman,
"A lot of you have built your personal financial foundation on deceit and lies. You bought a home that you couldn't afford. You spent money like it was going out of style and it wasn't your money to spend, because why? You were borrowing it. When you borrow money, you leverage yourself. The United States of America leveraged itself so high that when it started to come down, the whole thing now has fallen down."
If this quote describes your personal financial situation, it's time to stop living a lie. It's time to get honest with yourself, take a good hard look at your finances, and make a plan. You need to STOP buying things you can't afford, and start looking for ways to cut your expenses. Financial experts are predicting that our country will soon enter a deep and long-lasting recession (possibly 5 years). If we want to survive these difficult financial times, we all must take control of our money!
Sticking our heads in the sand and pretending that none of this is happening isn't going to solve anything. Neither is worrying or panicking (I remind myself of this daily!) We can't control the stock market, so we should focus on the things that we can control.
In our household, the top 3 expense categories are:
Groceries
Insurance (health, auto, life, homeowners)
Utilities (gas, electric, telephone)
Grocery expenses are something that we do have some control over, so they are my focus for today. Several years ago, I discovered that the USDA publishes a Cost of Food at Home chart, broken down by age and gender. This chart allows you to compare your own food expenditures with the average cost of a nutritious diet at different budget levels--Thrifty, Low Cost, Moderate and Liberal. The Thrifty Food Plan is the basis for food stamp allotments.
This chart is a real eye-opener, because it's based on what people actually spend on food, not what out-of-touch bureaucrats believe to be reasonable. To accurately assess our budget, I enter all of our expenses in QuickBooks at the end of each year. I break all credit card receipts down into detailed categories, such as groceries, dining out, clothing, cleaning supplies, etc. I also keep all cash receipts in a small accordion file, broken down by month. This detailed record-keeping helps me in planning our monthly household budget, and gives me a very accurate picture of how much we spend each month on food.
It should be noted that the USDA chart shows the cost of food only, and presumes no restaurant meals. If the cost of dining out was included, the average figures would be much higher. It's very easy to spend $100 or more each month eating in restaurants, which can effect your cost average significantly. When figuring our monthly food costs, I do include the amount we spend on restaurant meals, because we do eat out a couple of times a month. I reason that I can hardly call myself thrifty if my grocery expenditures are within the Thrifty plan, but my monthly dining out expenses aren't considered.
Based on the August 2008 figures (the most recent available), the average monthly "food-at-home" costs for a family like ours are:
Thrifty-$519.13
Low Cost-$661.70
Moderate-$805.90
Liberal-$998.00
Our 2007 monthly average, including all restaurant meals, was $463.55, which put us below the December 2007 Thrifty average. Today, I plan to enter all of our expenditures, so that I can see how we compare with the August 2008 average. It will give me a jump on tax prep, and help me make an honest assessment of how much we spend, and on what, so that I can make cuts where necessary. I will update this post with my average once it's calculated.
I encourage all of you to do the same. If you feel comfortable posting your averages in the comments, it would be interesting to compare. I would also be interested in hearing your ideas for saving at the grocery store.
If we pull together, we can weather this financial storm.
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15 comments:
I need to be better about logging our expenses. Right now I'm using Excel and that seems to work well, but someday, I'd like to purchase a Quicken program.
The denial seems to be abetted by retailers. It seems advertising has gotten more intense lately, or perhaps that is just the holidays creeping up on us.
Awesome!!!
You keep amazing records! I tried, but hubby would not bring me all the reciepts. Very frustating. How do you handle that? I use my debit card, he uses cash. I guess I could just put "cash" spendage down... so I would have a better idea where it is going.
Do you break it down really far like "household stuff", "groceries", "gifts", etc.?
I may give it a whirl and see how it goes.. then decide if/how to break it down afte that.
Any suggestions on getting started?
Forgot to say.. my FIL was a stickler on keeping tract of budget. As long as I have known my husband, my FIL did not work. They lived off the interest of their money! So, he was a stickler for good reason - though I found him VERY anal about it. He kept a notebook with daily purchases listed, tallied at the bottom, broken down each month into categories.. then at the end of the year.
Lots of work.. but he really enjoyed doing it.
Rachel, I do break down the receipts into detailed categories. Each month, when I pay the credit card bill, I staple all the receipts to the statement, and then tally the breakdown on the front. This makes it easy to do all of the data entry at year-end. We run a business out of our home, so I do this partly for tax reasons, and partly because I'm a detail-freak. I would never keep track every day though!
I'm fortunate because my husband is really very good about keeping receipts. He will occasionally lose one, but most of the time he's
very thorough. Bless his heart.
I wanted to mention that if you don't have Quicken or Quickbooks, you can often find older versions dirt cheap on eBay or even at garage sales. I use an 8-year-old version of Quickbooks that I got at a garage sale for only $2!
You never know, Heather, you may end up giving lessons on budgeting should our economy keep this up!
Do you make purchases on the CC and then pay the bill off to help keep track of record keeping, earn rewards, or both?
Rachel-
Both. We pay for almost everything with our Discover card, so that we can get the Cashback Bonus, and also because it really simplifies recordkeeping. For places that don't take Discover, we also have a Visa, or we use our debit card. We rarely pay cash for anything.
The only downside to this is that sometimes the monthly credit card bill is over $1000, which can be a big shock when it arrives! We pay it off in full, every month though, without fail. We REFUSE to pay credit card interest. We never have, not once!
I'm ashamed to admit that our monthly average for all our food costs is around $700. We do eat out a lot but we're cutting back on what we spend on our groceries in the home.
I've been using more coupons and shopping around more for bargains. I don't know how much of a dent we'll make but I'd like to get our average down to $550 w/o giving up a lot of our restaurant trips.
We use a Discover card for most of our purchases too. Today I sent off my first extra principal payment that included rebate money and discover card bonus. I normally just use the bonuses to buy gift cards but since the economy is in the stink I've told close family to expect a humble Christmas.
I'd rather pay off my mortgage.
I've just found your blog and I love it!
Our grocery bill is so high and I've wondered for so long why because I do try to budget it every month but end up busting the budget over and over. Now I know, since printing out that sheet that our spending is moderate for our family. I spend between 850 and 1000 on groceries every month.
I'd still like to get our grocery budget into the "thrifty" plan. It would save me $200 per month that I could be putting into our medical savings account.
I buy all of our groceries myself and use a debit card for them so it's easy to keep accurate records, especially using Quickbooks.
Help I am not sure I am figuring it right. all the directions on the bottom threw me. I have 6 kids. I added up each individual kid and then I subtracted it 10 % because it said if you had 7 or more people take off 10% for some reason. But then it said if you added additional members to add on 10% did not make since. Am I doing it right?
Because taking to 10% off we were at $1049.00 a month for the thrifty plan.
by adding the 10% on we are at $1166.20 a month for the thrifty plan.
We spend $450. a month on groceries
and we ate out last month more then we have and out total was $170.00
So we are way under even for thrifty. I will enjoy showing my hubby these figures since he was croaking this month at our eating out total , which was high.
also on that site they have an annual expenditure per year to raise you kid that is interesting to look at .
We landed below thrifty. I spent $493 on groceries and eating out last month and the thrifty level for a family our size was $641. I just found an Aldis that isn't too far from our house, so expect to cut our grocery expenses more this month.
I think what helps us control our grocery spending the most (besides watching sales) is watching our portions and snacking habits.
You are truely amazing, Heather!
I love the way you are so organised.
I guess living in the country has it's advantages for us - as we rarely eat out.
Sorry to hear about your retirement losses - that's awful - especially when you're so careful with money.
We're still waiting to see how this crisis is going to hit us over here.
i saw an episode on oprah about that...she called it financial "honesty" too. not sure if its the same woman...but did she put america in its place!
Hi Heather, thank you very much for my PIF gift. I apologise for not letting you know sooner - it arrived on Tuesday and customs haven't messed with it.
Susan. :o)
Reading this kind of thing makes me so grateful for my husband, who is awesome at managing our money and keeps us on track. We budget $240 a month for food for a family of 3 and usually stay very close to that (holidays tend to mess it up pretty bad), although it's getting harder each month. I've been more careful to can a lot from our garden this year and we mix in cheap meals to help when food is getting low. Sometimes that's beans and rice with homemade cornbread, soup made from whatever is growing in the garden or salads that use up whatever we've got laying around. The salads are our way of using up the little bits of stuff that aren't enough for a big meal, but really make a salad substantial enough to be a whole meal.
I am below thrifty too but still need to cut back. And we have lost 45% which scares me to death. We don't owe anything except our very manageable mortgage.
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