Tuesday, February 19, 2013

2013 budgeting

I've come up with new "budgeting" attempts the past two years and they've been flops. I didn't stick with my spreadsheet in 2011. I ran out of time to post all my purchases last year.

So at this point I'm somewhat embarrassed to be introducing yet another strategy, but hey! Third time's the charm, right? Right.

We let ourselves live pretty freely last year, without worrying too much about a budget. After saving for the wedding it was nice to have a year just to relax. We didn't go into any debt, but we didn't put a whole lot into savings either. This year we're going to tighten it up a bit. I drew up a really detailed budget and we have monthly goals for each category. (We've actually made a big change this year and we're fully combining our finances. I started to write about that here but it made this post even longer, so I'll go into it separately, if anyone is interested.) Keeping track of how much we've spent is our sticking point. There are basically three options that you see most commonly:

Track spending with receipts. D used to do this and it drove me nuts. His half of the table was perpetually covered in tattered old receipts that he needed to either enter or confirm in Quicken. Now we only save receipts for things we might need to return and once the return date is passed we toss them.

Track spending with an online program, like Mint. In theory I love this idea and I know other people have had great success with it, but I'm slightly freaked out by the idea of handing access to all my finances over to anyone. I know they are supposed to be totally secure. It still freaks me out. We also weren't sure how well it would work with our joint/personal set up.

Give yourself a certain amount of cash and when it's gone you're done. This will never, ever work for me. If I have cash, it disappears almost instantly. I spend it in the vending machine on snacks I don't need. I buy random items at the drugstore when I'm walking past. I think it's because there's no record of it so I never have to admit I spent it. I hate putting charges of under $5 on my credit card, so I'll just resist those things if I don't have cash. I love my credit cards and I love the cash back rewards.

tracking
{tracking}

Instead, we're testing out a new system that combines the concept of the cash allowance with our credit cards. D designed little cards for us that will slip behind our credit cards. Each card has different denominations on it to represent the money we have to spend that month. The idea is that they function like punch cards, except that neither of us carries around a hole punch (which would be way more fun), so we just have to cross them out with a pen. Our joint card has our "entertainment", "groceries" and "household miscellaneous" categories on it while our personal spending cards just have our allowances. I've already budgeted for our set expenses (phone, internet/cable, hair cuts, etc) so those don't need to get recorded anywhere.

I do most of the grocery shopping so I carry the joint punch card and D brings home receipts so we can mark them off as necessary. I know, we're back to receipts! But it will be relatively easy compared to entering them on the computer.

Will this work? I don't know but it's the best idea we came up with, so we're going with it.

I'm terrified of our grocery budget because we currently spend at least 1.5x that much almost every month. I think we can hit it, though. Honestly, a huge portion of that excess is coming directly from our fancy cheese and alcohol consumption. I'm not going to cut those out but I am going to try to be aware of how they fit in our overall budget. We'll make up for it with lots of farmer's market eggs and veggies and judicious use of cheaper cuts of meat from suppliers we're comfortable with. I also bought a 10 lb bag of my favorite black lentils which D thought was crazy but he'll soon realize how genius it was.

If we can't hit it we'll re-evaluate. I'd just like to be able to put more money in savings and it seems impossible given LA rental prices and the fact that we'll be paying off our student loans for another 5 - 10 years.

And once again I ask myself, as I do every year, can we live without cable? And then I hear that Game of Thrones is starting again and I put it on the back burner. But if it comes down to Humboldt Fog vs. HBO, I think the cheese might win.

P.S. - Can I just tell you how grateful I am that we started this project in the shortest month of the year? We really need to re-calibrate our spending.

62 comments:

  1. I'm looking forward to seeing if this works. Oh, and - delurking to tell you how much I've enjoyed reading your past budget/shopping hiatus posts. You're the first hit I got when I searched "shopping hiatus" (I'm on one now)!

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    1. Thanks, dear - I love that so many people find budgeting as interesting as I do! I hope your hiatus is going well!

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  2. This sounds interesting...I too cannot carry cash, but this punch card system sounds intriguing. I always have to hide emergency 20s in all of my purses so I don't spend it!

    As for Game of Thrones, you could always either rent the discs when they come out or have an awesome friend who lets you come over for marathons on demand. I have a few friends that watch True Blood like that. It's an excellent reason to have them over on a weeknight!

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  3. Interesting. Keep us updated! I, too, am trying to save & combine finances with my hubs and it's really, really strange to me.

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  4. Gosh, it makes me feel so good to read this! I feel like I am constantly trying to scrimp and getting nowhere. I did cut the cable out, but with loans and groceries and rent and phone bills and everything else - my savings is staying the same but not growing.

    There's got to be a way, while still allowing yourself to live! :)

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    1. I keep telling myself that when we finally have our loans paid off it's going to be like getting a huge raise! Although, of course, we plan to just redirect the money that was going towards loan payments into savings, so it won't actually feel any different, but I'm really looking forward to that day.

      I wish there was an easy answer but we're in the same boat - I feel like we're fairly careful but there's just so little left over at the end of each month.

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  5. I'd be interested in your combined finance post. My husband and I are 100% combined--one account. We each have our own credit cards that we pay out of the one account. Surprisingly, I find it easier to save this way. When I had my own account I'd see $400 or $500 at the end of the month and it didn't seem like much, so I felt I might as well spend it. But when I see $1000 or $1200 it makes me feel like we are saving and should continue. I also find it helps with my own spending habits; not because I feel like my husband would "disapprove," per se, but because I am spending OUR money--money that could be used for a trip to Spain or a new car when one of ours finally dies or retirement. Teamwork was a surprising motivator for me.

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    1. So interesting! I'll post more but we aren't quite as combined as you (have separate accounts for our allowances). I've also found that the teamwork aspect is surprisingly motivating, which I didn't really expect. It makes it easier for me to hold off on things I might otherwise purchase.

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  6. I recently ditched cable for a Roku box and I love it! I wasn't watching much "live" tv anyway, and for the few shows I don't get (mostly HBO and the occasional Bravo guilty pleasure) it's a fun excuse to have a night in with friends...at the home of a friend who has cable!

    Thanks for sharing your budgeting tips with us, it's always such a good reminder at this time of year :)

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    1. I have had "look into Roku" on my to do list for almost a year. I'm not sure why I haven't gotten around to it, but I will now! Glad to hear you're enjoying yours. I guess I need to figure out what we can get on it and how much our internet will cost if we ditch cable (we have it bundled right now).

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  7. My husband and I also revamped our budget this month, so it was fun to read about your system. When it comes to tracking spending, one way that's worked really well for me is to check our credit card account online every few days and then enter each charge amount into a categorized spreadsheet. Way less clutter than having to hang onto receipts. And pretty fast and painless. Also, for what it's worth, when we got rid of cable, we weren't sure we could make it. But between Netflix and Hulu, I really don't miss having it at all.

    Thanks for posting about this... great topic!

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    1. You're dedicated! I get really lazy about tracking spending, so I let it accumulate and then have a ton of catch up to do. It makes no sense because I normally love spreadsheets and I know it wouldn't take that much time out of my day. How do you handle occasional cash or check purchases? Or do you do everything on CC?

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    2. I love spreadsheets, too, which helps... as does keeping up with it pretty frequently. I've also learned that it helps to keep the spreadsheet simple. We usually just use checks for utilities, etc., and I budget for those fixed expenses separately. And we don't use cash too often, so when we do it's usually memorable enough that I remember to enter the expense. I like to use the credit card for easier tracking and for the cash back. (We pay it off in full every month.)

      So looking forward to hearing about how your new budget pans out, Rachel. Love your blog!

      Melissa
      starlitnights.org

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  8. hmm, great idea. I always really struggle with budgeting so I love seeing new ideas.

    I think that I may start doing the cash thing. We do that for joint monthly spending (food, rent, household needs) but I should do that for my personal use as well

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  9. I use an app on my phone, Expenditure, which is really good for tracking, and a friend recommended one called EEBA - I don't think it's stored online (maybe) but you can export it and email to you. Definitely a good idea to start in Feb!

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    1. Thanks, Lynne - making a note of Expenditure in case I need more detailed tracking! Now that I have a smart phone it makes things like that so much easier.

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  10. I use MINT a lot. I literally track every penny I spend. I didn't start out that way but, my competitive personality kicked in full gear once I started budgeting and I constantly wanted to find new ways for my and my boyfriend to spend wisely without sacrificing all the things we love to do (and of course, eat!). If it makes you feel any better, I was pretty nervous to use MINT when I first started out as well as it does give them a lot of personal info but, a few co workers of mine used it so I trusted their advice and gave it a shot and I LOVE IT!!! Also, if you read the security page on MINT it shows you exactly what they have access to and all their encryption etc etc. Most of that is hard to understand anyways but, they have great reviews.

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    1. I can totally see how the competitive part would take over (in a good way!). I'm much better about saving when I'm being pretty dedicated to it.

      Logically, I feel sure that MINT is secure but somehow it still makes me nervous (I know, that makes no sense at all and I'm aware of it). But if our tracking system isn't working well enough I might give in because people do rave about it.

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    2. Good luck!! I'm sure you'll get a system going that works great!

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  11. keeping track of spending is tricky. i tried mint, but there were errors in their system so it didn't work right for me (but that was 3 years ago, maybe it's fixed now). i have been using a spreadsheet for 6 or 7 years now where i religiously track everything i spend - but that's a lot of work and it's not for everyone and i don't know how that would work for 2 ppl. but the one year i didn't track, i didn't save any money, so i went right back to my spreadsheet system.
    i've also been on a spending diet in feb - the short month really does help! i'm probably going to blow a bunch of money on trips and home stuff later this spring, but just wanted to test myself to do it.
    would love to hear how you and D combined your finances. there are so many different ways to do it, so i like to hear the pros and cons of each.

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    1. Julia, you are amazing! That is a long time to keep a spreadsheet going! Everything is a little more difficult with two people, I find. I'm great about checking my own accounts but I'm still getting used to keeping good track of our joint accounts. Hopefully I'll get better as I go along.

      The interesting thing about money is that we all have such individual relationships with it, which means we all need slightly different systems. I love hearing about everyone else's.

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  12. i'd love to hear about completely joining finances. i recently got married & figuring out a budgeting system that works & combining our finances has been tricky! it's always helpful to me to hear other people's ideas on saving, spending, budgeting, etc.

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    1. I'll have it coming up soon! Our system isn't unusual, but it was surprisingly difficult for me to combine finances (we waited a looong time) and so we did preserve some individual accounts to make it easier.

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  13. These are great tips for budgeting. definitely resources i need to check on since I'll be starting to handle a lot of my own finances now that I'm out of school and working!

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  14. Your whole first paragraph under "Give yourself a certain amount of cash and when it's gone you're done" is me. Your budget card idea is something I may have to try.

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  15. I love your budget card idea, and it really is wonderful to hear about other people's attempts to budget and live within their means. My husband and I just got married and I'm still working on changing my name, and then joining bank accounts...I'd love to hear your thoughts on that process. Thank you for sharing!

    Hilary
    inpursuitoflovely.blogspot.com

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    1. I'll have the post up soon! I didn't change my name, so that was one less task I had to take care of and then we waited over a year to finally get around to merging our accounts! Spoiler - it was kind of a pain and I'm currently missing a paycheck because of it (not permanently, just can't figure out where it got deposited).

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  16. This sounds like a great idea, would you mind sharing a .pdf version of the card/a way to print it at home?

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    1. Hi, Christina! Hmmmmm ... the only issue I see is that the amount of money in each category will be different for everyone. Let me fool around with it to see if there's a way to make a template that people could use and modify for themselves. We use Adobe Illustrator for everything at home but not everyone has the software, so I usually try to make writeable PDFs but the constraints are kind of weird.

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    2. I second Christina's comment! it would be awesome to have this at home!

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    3. Ah, I see. Maybe you could upload like 3 options: one a little less than yours, yours, and one a little more? Just a thought, but perhaps its too much of a hassle! Thanks for sharing regardless!

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  17. For the last 6 years I've been doing this and it works like a charm - buy Quicken. It costs some money, but there's no annual fee or anything. Put all of your expenses on a credit card. A few times a month download your credit card expenditures and bank accounts into Quicken - allocate everything to a category. Then as often as you want to (monthly, weekly, daily) it's easy to run a quick graph that shows you your spending in each category. When I was living on an extremely tight budget in school I would also give myself some 'free' money (that I didn't have to track) - I think it was about $60 a month. Everything other than that I was accountable for (to myself - but still). The other nice thing about this is it keeps all my financial records in one spot. Want to know how much I spent on electricity in November 2009? Coming right up!

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    1. Quicken is what D used to use but he ended up having to combine paper receipts and downloaded information, which is what drove me nuts!

      If this rougher tracking system doesn't work, then we'll probably move back to Quicken since we already own it. We'll have to figure out how to set it up with multiple accounts, though.

      It's amazing that you enter all your electricity bills and everything! I'm in awe.

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  18. I love this! Ive been following your blog for quite some time and this I would have to say I will have to start putting to use. When i have money its gone, not the best at keeping it. I love to plan and organzie so receipts tend to be easier for me to keep. I will be sharing this with some of my messy friends!

    Thanks Rachel

    Best,
    Nina
    www.instyledeals.com

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  19. So interesting thank you! And also keen to hear about combining finances. We've been married for four years and although fairly combined a lot is still separate and so we're not really maximising what we do have. This year we also want to save, I looked at the various apps, haven't seen a single one I like so far. I think though it's time to give it a real push. I love the punch card system you have, real time tracking of spending seems to make so much sense. Good luck!

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    1. Finding a system that works for you is tricky! We all have really individual relationships with money and our spending patterns vary so much that you can read a million reviews of a system and still not know if it will work for you. I'll let you guys know how it goes.

      We are almost entirely combined now but we still have a couple of separate accounts. I'll detail it out in a post later on.

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  20. Thanks for this Rachel, your sharing of the day to day things is the best! Just the way you write and explain, pragmatic but passionate and charming at the same time :)

    You guys are inspiring me to make some financial changes, without fearing it will make my life miserable.. I've just moved to a new city and a new country for a new job, and the rent here is insane but my salary is the same, so need to make a "few" adjustments to make it here. Think I need to buy a tiny hole puncher and carry it around, I am sure it will make it a lot more fun :)

    xoxo from denmark

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    1. That is so tough! Rent is high(ish) in Los Angeles, but not nearly as crazy as some areas and we still have trouble figuring out how to save and be able to have fun. It's rough when rent takes up such a big portion of your take home pay!

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  21. Hi Rachel-

    I love this post! I am trying to get in to a system of spending less, saving more and I'm finding it to be very difficult. Thanks for linking back to your previous budgeting attempts, one system doesn't work for everyone so its nice to see different ideas that might help!

    I am currently using Mint -- I like it but I don't think I'm using it to the full potential. I also keep a spreadsheet tracking my credit card usage/payments but I find it takes a lot of time and its easy for me to forget to log everything in! So I'm still trying to find a system that makes sense for me.

    I'm looking forward to future posts about finances/budgeting/etc!

    Best,
    Laura

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  22. PUNCH CARDS??

    i love you, but you're crazy.

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    1. Lady, you know we just embrace the crazy around here.

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  23. Sounds like a great plan and I would love to hear about the combining of finances.
    Also, would love to hear what you plan to do with all those lentils!

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  24. What a great post, we could all learn something from this.

    xoxo
    Mags
    http://magsmind22.blogspot.com

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  25. I started tracking everything in a spreadsheet & haven't looked back. (I don't want to give any online site/app access to all my financial accounts because I'm paranoid.) I have all our expenses listed in Estimated/Actual columns, with certain categories broken out to track exactly where we spent the allocated money. It took a few months to figure out realistic numbers to plug into the Estimated column, but they're pretty accurate now. At the end of each month, if the Estimated is higher than the Actual, I transfer the difference to our savings account. If we've done *really* well staying under budget, I'll transfer the What We Earned-What We Spent difference to savings. (Estimated is always less than What We Earned because otherwise would be a horrible idea.)

    I never used to carry cash, but since I quit my old job to work at a coffee shop, I always have tip money. I don't actually keep track of what I use that for (since it's impossible to know exactly how much I'll make every day), but I do have a line for cash withdrawals on the budget sheet. I care more about knowing that we pulled money out than what we spent it on. Everything else gets tracked from online accounts and put into the categories I have set up. The only receipts I keep are grocery store/Target-type receipts, since the things we buy there can fall into separate categories. Once they're entered, they get tossed. I also pay off the credit card every Friday & record the amount paid. It helps to get weekly spending snapshots.

    Re: paying off loans, Dave Ramsey's method worked pretty well for us. We didn't have much debt overall, but we paid it off rather quickly.

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    1. I love this! It's weird, I'm so obsessive about spreadsheets and I love budgets, but I can never stick with my budgeting spreadsheets. I get behind and then get overwhelmed. So impressed that you make it work.

      We have a fairly large chunk of student debt, but that's it. I know people love Dave Ramsey but I still haven't read anything by him. Maybe I'll finally look into it.

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    2. Cliff's Notes version of Dave Ramsey: put your loans in order from smallest to largest. Pay the minimum on everything but the smallest and throw all the spare dollars in your budget at that one. Once that one is paid off, move onto the next one, paying minimum + whatever you were paying on the smallest loan. Continue until it's all gone. (Income should = expenditures, but we kept saving money while we did this. And we still use credit cards, but don't tell Dave Ramsey.)

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  26. Oh - to add to the novel-length comment I wrote - we didn't get cable when we moved, and we don't really miss it. It's easy enough to watch certain things online/on DVD, and if we *really* want to watch something, we generally have friends or relatives who also want to watch it, so we have Top Chef or An Idiot Abroad nights.

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  27. I love the little cards - making saving cute! Any chance you would be willing to share the template?

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    1. I'm working on it and hopefully I'll have a template to share soon! I need to make it write-able so people can fill in their own amounts, but that always means a struggle with Adobe.

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  28. I would love a post on combining accounts! I find it to be a delicate matter. My fiance and I have been together for 6 1/2 years (lots of college prolonged the engagement ;) )and while we do have a joint account, we each still have our separate accounts that our checks go into. We initially got the joint account because once we moved in together groceries, rent, bills, etc all seemed easier to pay from one account, rather than endlessly shuffling money around.

    Now that we are going to be married, I feel it is logical to make the joint account our primary. I just feel strange suggesting it because my fiance is the breadwinner and I don't want him to feel I am micromanaging his hard earned money...but when we are married is it 'ours'? Perhaps it is just my own insecurities of not bringing enough money to the table. No one likes a mooch.

    Either way I would really like to read about your experience with it

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    1. It sounds like you are in exactly the same situation that we were! I'll have that post up soon.

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  29. This actually seems like a very logical way to do things! make sure to keep us updated so that we know how easy/hard this way of tracking is! My husband and I always grapple with the best way of doing this. We have not landed on a great solution yet either. So please, let us know how things are going!

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  30. I liked Mint for my personal finances, but it just didn't function very well for my fiance and I when we tried to add our joint account to the mix - he was never able to add it to his profile, and I kept getting the wrong alerts/data. It might be fixed now (or we might have been too dumb to figure it out), but it wasn't worth spending a lot of time on since we both check our online bank statements/credit card statements almost daily.

    I would love a post on your transition from separate to joined finances if you feel comfortable sharing. I'm getting married in June and we're still trying to figure out the best way to get our money in order--it seems like the options are unlimited. Right now, our joint account is just for mortgage, utilities, and groceries. We'd like to get to a point where we have most of our money in the "common pot" (including joint savings, investments, etc), but still have some fun money in personal accounts so we don't have to justify every purchase. We've both been in the work world for a while and are used to having/managing our own money, so I know it will be a challenge to find the right balance.

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    1. I'll have the combining money post up soon! It sounds like you are going to have a similar transition (although we chose to keep our retirements separate, we're mostly joint now).

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  31. Third time's the charm!
    My fiance and I wanted to keep our budget in order so we decited that we would only go to the store once a week. We sit down once a week, make a menu for each day as well as grocery list of all the things we'll need for the week. That way we don't buy a lot of unnecessary things and keep our budget in check.
    I don't know how it is in the United States but in Iceland the Ministry of Welfare releases a consumption norm for a regular family so you can have some measurement of what is 'normal'. This norm is usually used for those in financial troubles but since it is not that strickt my fiance and I try to use the norm to keep our spending in check. This way we manage to put something in saving at the same time I'm still in graduate school. We don't eat instant noodles every night but this way we need to put thought into what we eat, some night something light and others we make something fancy :)

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  33. I would love to read about your decision to combine your bank accounts. I've been living with my boyfriend for five years and although marriage is in our future, I'm still kind of freaked out about the idea of combining finances that way. Which seems silly, since money is pretty fluid between us already.

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  34. I love that you are budgeting! I think cable is an EXCELLENT way to save money. I haven't had it in 7 plus years and I don't miss it one bit!

    -Nico

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  35. Just out of curiousity, which category does alcohol purchased at a grocery store fall under? Booze and cheese are our biggest downfalls as well!

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    1. We can never quite decide! We put routine alcohol purchases on our grocery tab (wine + beer + liquor for weeknight drinks at home together) and then we usually put alcohol we pick up to take to a friend's house on entertainment. And if we're throwing a big dinner party, we'll sometimes put that alcohol under our entertainment budget as well. It's not hard and fast, so if I notice that we have more wiggle room in entertainment I might move some of our more splurge-y grocery purchases there as well.

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  36. Hi Rachel, long time reader here but now just catching up on your posts after my laptop died on me :(
    For monitoring my expenses, I have been using this app on my android phone called Expense Manager. I find it simple and easy to use. I basically just use it to track my spendings - the variable ones like groceries, gas, entertainment, clothing, etc. I didn't have to share any banking info, i also dont feel secure in those kind of apps. I just create accounts for each category - groceries, clothing etc... I schedule repeating income which is my budget for each month basically. Then when I go to the store, soon as i get the receipt or when i get to the car i enter the amount i spent from that account on my phone. That's how I keep track - i can see how much I am spending weekly, month, yearly etc. .. and I know how much i have left on my budget down to the penny. It works well for me since I always have my phone and it's rare that i forget to log what i spend.
    Good luck to all of us who are trying to save! :)

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  37. Love talking about personal finances and I share all of ours on my blog. Our set up is similar to yours. I also am intrigued/freaked out by Mint but might do it, As for cable: cancel and get a digital antenna so you have basic cable and get Apple TV and streaming only Netflix. You can buy season passes via iTunes on Apple TV to shows like GOT and its way cheaper than a monthly cable bill.

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