Optimise your spending: eliminate waste in your life and budget

optimise your budget

In my last post I told you about the ERR budgeting strategy I came up with to optimise our spending and make out money go further.

Today I’ll share a bit more about the first element of it – eliminate. This is about eliminating waste and deciding what you absolutely want in your life.

Let’s get back to the time when my husband told me about the enormous, obscene amount of consumer debt we had. Now, I’d love to tell you that I kept my cool and calmly went on following the commandments of personal finance.

It was not to be!

I survived the next couple of weeks on a diet of misdirected rage, very long runs and meditation. Then I exhaled and let go of the anger.

Next I decided that only using my strengths will get us out of this mess; and analysis and research are two such strengths.

What my research showed was that every month we were spending about $3,400 more than our income. That’s a lot of money.

It was time for elimination. Here are the three areas where there was a lot of waste in our household.

What we eliminated?

When we looked at our spending patterns it was clear that three areas were responsible for about 80% of the waste in our lives and household. These were:

  • Food;
  • Insurance; and
  • Entertainment.

Waste on food

You can do a simple test if you’d like to know whether you waste on food or not. Get up, go to your waste bin and look inside. Can you see any of the food you bought last weekend inside?

If your answer is yes, you waste on food.

‘Oh, but it is not very much’ – you may think.

This is what I thought. It turned out that we wasted close to $700 per month buying food we never cooked and/or ate.

We brought this waste on food down to acceptable level – you know, the occasional limp salad – within couple of weeks.

All it took is turning the cycle of shopping for food and cooking on its head: we started planning our weekly meals and shopping for these instead of buying food and then deciding on the meals.

One simple change – eliminating waste on food – brought about a very large saving.

Waste on insurance

Being insured is prudent. Overpaying for insurance is plain silly.

This was the other large area of waste in our budget. We were overpaying on all kind of insurance: life insurance, house insurance, car insurance; you name it! There was only one reason behind that: we hadn’t bothered to shop around for insurance in a very long time.

Some may call it financial laziness!

By changing our insurance(s) – after all insurance is a very competitive area – we managed to shave off another very large chunk of monthly spending.

Waste on entertainment

I come from a hedonistic culture; I love having fun. I believe that you shouldn’t forget the Cinderella rule of personal finance: have fun and budget for it. But entertainment can become a lot like hard work.

We, for instance, were spending far too much on eating out and package holidays.

You don’t need to go to restaurants to see your friends. I thought we do; then started inviting friends around for dinner.

You know what? This is so much more fun! Even when something goes wrong with the menu – like serving ice-cream soup for desert, for example – it is healthier; you can also talk to your friends and hear what they reply.

How about the other 20%?

The rest of the waste is in ‘little’ habits you’ve developed and don’t even notice. It is in buying:

  • your forth coffee for the day;
  • another pair of shoes (yeah, I like my shoes just as much as the next woman)
  • new clothes and designer items at that.

You see, the other 20% of waste comes from all the stuff you buy but don’t value; all the things you do but don’t notice; all that you could happily live without.

What I absolutely wanted in my life?

Successfully eliminating the waste in your life and budget is also about deciding what to give up and what to keep.

Deciding what you absolutely need in your life, and therefore will keep, is a very personal matter. So, I can just tell you about the three things I kept.

Books and learning

I buy books; I’ve always bought book; and I’ll always buy books.

The only thing that changes is the format: I haven’t bought a paper book for a very long time now.

Books and learning rank very high in the hierarchy of my values. So even when we were paying off debt I allowed myself to buy books and to take advantage of opportunities for learning.

Services

What would you say if I told you that even in the debts of debt we had a lady who cleaned and ironed for us once a week?

Well, you could tell me what you think in the comments; now hear me out.

We continued buying in many services and cleaning is only one of these. We also had a gardener, we paid to have our bathrooms done up and for decorating.

Why we did it?

There are two reasons for that:

  1. I’m very frugal with my time; by continuing to pay for services we were about $900 per month better off.
  2. Well, some things are plain dangerous and can cost more in medical bills, physiotherapy and osteopathy. Building work, decoration and moving heavy stuff around qualifies.

Running

Running races is one of the things that ‘makes my heart sing’. I love the whole thing: the early morning start, the excitement at the beginning and the pain of the finish line. I even love the queues for the toilets!

I wasn’t going to give this up!

Finally…

By eliminating all waste in our lives and budget, and deciding what we absolutely need in our lives we managed to shift from $3,400 overspend to being able to make the monthly debt payments ($1,700) and save about $800 per month.

We still do a periodic inventory of our spending and find things to ‘eliminate’.

What about you: what would you eliminate from your budget and what would you absolutely keep?

16 Responses to “Optimise your spending: eliminate waste in your life and budget”

Read below or add a comment...

  1. Scott W says:

    I love to read and prefer to own my books as well and even worse I like hard cover. I know I’m a book snob but I can’t help it but I save a ton of money by buying used books from http://www.half.com. Even with shipping I tend to get $30 and $40 books delivered for about $6 a piece. Hope this helps.

  2. Most people don’t reassess their auto insurance needs. It’s important to do this once a year to get the better deal or the extra discounts. I did this when I owned a car and would get my rate lowered each time without losing coverage.

    • Maria Nedeva says:

      @Jason: Quite right, Jason. We were part of these people; the ones who don’t check and don’t shop around. Now, it’s a different story and all our insurance is about a third of what we used to pay. Also, it takes several minutes to find a better deal – search engines and price comparison sites are getting better.

  3. I keep anything health related around, with the effort to make sure the damage is minimal. For instance two years ago I quit my expensive gym and worked out on my own. That was fine, but now I have the opportunity to work out at a great gym and I write articles for them in exchange! Yes!! I am willing to spend a little more on healthy food too. As far as cleaning and services and whatnot? I can do that myself. I also prefer paper books, so I borrow them from the library or friends.

    • Maria Nedeva says:

      @Tonya: Ha, ha! ‘Snap’ about the gym – I did this for couple of years. The gym owner (who is also a friend and my trainer but we never joke about money) and I had a bartering arrangement where I used the gym free and wrote for him. Now we are semi having this arrangement still except we’ve decided to start another business together. Whether ot not you get services in is a very personal matter: I do it because working 13 hour days and travelling around for work means that there won’t be any time to see my son and husband, or have some fun, if I don’t oursource something.

  4. Eliminating excess is so important. I did this about a year, maybe a year and a half ago. We really buckled down on the meal planning, using coupons, reducing the cost of entertainment, and more. Now, like you, we spend much less and have the ability to do things like save!

    • Maria Nedeva says:

      @Josh: Yep! It is amazing how much difference simply doing this – eliminating waste – makes to one’s budget. The best thing for me was that I never felt deprived; quite the reverse – I started feeling self-riteous because not wasting is good not only for us but for the environment as well.

  5. bybee says:

    I really enjoy your writing, Maria. You have a vigorous style that is fun to read.

  6. Good tips for getting the waste elminiated from life. I would probably dump cable if it were my choice. If my job was 5 miles or less I would bike to work no problem. Bye bye Car. Food and Experiences Budgets stay.

    • Maria Nedeva says:

      @EL: Not bad choices. If it were my choice I’ll dump the TV as a whole (I haven’t watched TV for years now). We also went down to one car – my job is 4.5 miles from our house and I can walk, run or cycle there. And I do sometimes. We still need a car for other journeys but only one (and a small one at that).

  7. Wow, an extra $3,400 per month is a lot. I think most people are afraid to find out how much they’re actually spending in comparison to their earnings and remain blissfully ignorant. But once you see that number, it’s not so easy to ignore. Good work with the budget optimization!

    • Maria Nedeva says:

      @Stefanie: I agree that people are afraid to know. It is not only about money – have you noticed how people scoff bars of chocolate very quickly? It is like ‘if I do it fast no one will notice and it won’t go straight on my hips’. With overspending it is worse because there are people who never check their bank balance and have not opened a bank statement for years. These are the one who get in most trouble.

  8. Hi, Maria –

    Knocked it out of the park with this one. I especially love the practical tip for a real life wake-up-call … go look in your trash and look at how much money you’re flushing down the drain each week. The funny thing about human nature – we get in a habit (some would say a rut) and stop thinking about whether the small decisions we make day-to-day or week-to-week are in our own best financial interest.

    I recently wrote a related post looking in depth at the consumption of coffee here in America. I was inspired to write it after reading one more pearl of wisdom that you find on every financial blog (“Want to get out of debt? Stop going to Starbucks!”) but when I looked I had trouble finding a detailed analysis with facts, figures and statistics all assembled in one place. I’d love it if you could check it out and, if you like it, share it as a resource with folks at EOD or use it as a jumping-off-point in a future article. This is a newer blog and I’m thinking of modeling future content on this long-form, in-depth style of writing so I’d welcome your feedback via email or here on EOD. You can find it here:

    http://www.financialfreedomnow.org/how-much-can-you-save-by-brewing-your-own-coffee.html

    Thanks,
    Joe

  9. Michelle says:

    We have just started recently budgeting for entertainment. We like to see the free concerts in the park.

Leave a Comment...

*