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What’s The Actual Point Of Budgeting?

in Money Basics, Videos

My reflections on our struggles with the ‘Grocery’ category of our budget.  I contemplate the possibility that we are squeezing some of our budget categories too hard and actually receiving a negative result.  I also am well aware that we might just be making excuses in order to avoid adapting new habits into our lives.  It’s been a question that has been on my mind for a couple days.  Watch and let me know your opinion on it.

For those of you’d that don’t like videos, here’s a short story:

Last night after finishing up the video, I was moving a portion of our dresser.  Upon scooting it a little, I looked down and to my surprise found a $20 bill.  This might not be out of the ordinary for you guys, but it’s certainly rare for us!  This sucker has been hiding out for what has to have been months.

Sweet! I love finding money.  Of course, the first thing I thought about is what I should spend it on.  I thought about it for a second, but then took the next logical step any human would do…

I tweeted about it and asked for some suggestions:

@jonathanmeadCandy.  I mean, something important.  A sweater.

@aboutcreditA Mother’s Day Gift.

@joshoremMay I reccomend a 30 pack of PBR, and you can save the other 5 bucks.

@suburbandollarBEER!!!

@fcnTequila. It’s Cinco de Mayo, after all. #cincodemayo

@tivajoy…you should save it.

Nice group of people I have following me, huh? That’s what I thought.

In the end, I decided to ignore them all.  You know where this puppy is heading?

Right into the ‘Grocery‘ envelope. You guys know me better than that!

Note:  Don’t forget to comment to below.  Feedback is greatly appreciated!

{ 27 comments… read them below or add one }

Chrissy May 6, 2009 at 8:24 AM

We also only go to one store and don’t comparison shop. By the time you go through all of the store flyers, drive around town to the different stores, wait in line at all the stores, etc. it doesn’t seem like that much of savings to me.

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Baker May 6, 2009 at 8:29 AM

Yeah, that’s always been the philosophy we have had too. However, I do know that some people are able to do this very efficiently. It’s a learned skill just like anything, but I know we are leaving at least a little money on the table here.

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john August 18, 2011 at 11:19 AM

Let me suggest a compromise strategy. Because I hate all the driving around etc. too. Pick 3 stores only to grocery shop. First pick a cheap staples or stock up store. Key word here is cheap and staples. Aldi, and WalMart are great for these. They have limited brands of cheap staples, but not so great for fresh veggies or meat. Then pick a good store for meat sales. Varies by market but these large chains like Kroger, Food Lion etc. have good weekly specials on meats, buy on sale and freeze for later. Then finally pick a green grocer for fresh veggies, sometimes a good farmer’s market or seasonal stand can be a great find. Three trips only, once a week, forget the coupons except for big savings on things you already buy. Just my strategy, hope it works for you.

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Kyle May 6, 2009 at 8:48 AM

They sell beer at the grocery store, so technically you could still buy beer with it even though you have chosen to put it in the grocery envelope.

Kyle’s last blog post..What is a Mortgage Broker

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Baker May 6, 2009 at 8:57 AM

Where there is a will there is a way! Haha.

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kosmo @ The Casual Observer May 6, 2009 at 8:48 AM

My parents (and some of my siblings) are notorious comparison shoppers.

This carries over into the whole “lowest gas price” habit. During a trip to visit my brother in California in the early 80s, they ran out of gas while shopping around for the best price.

Twice.

kosmo @ The Casual Observer’s last blog post..How to make your business baby friendly

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Baker May 6, 2009 at 8:58 AM

Wow, that’s certainly one extreme! In all honesty, we could be doing some things better, though. I consider that a little like washing toilet paper. For us there does exist a middle ground, we just haven’t found it! :-)

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MLR May 6, 2009 at 8:50 AM

I have to agree with the case of PBR! A case of beer and some leftover cash!

When I find money I usually just spend it as “fun” money. Nice little surprise, why not? :)

MLR’s last blog post..Types of Dental Insurance Plans Explained

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Baker May 6, 2009 at 8:59 AM

Since we are over budget, it’s really all the same anyway. I mean if we had to pull extra money out of somewhere it would be the “fun” money type of places. :-)

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Josh May 6, 2009 at 4:18 PM

Amen

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Sudeep May 6, 2009 at 9:33 AM

Hey ,
You made the right choice , that’s all i have say …

Sudeep’s last blog post..9 Marriage tips From our Parents Regarding Successful Married Life

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Garry - thisimprovedlife May 6, 2009 at 9:46 AM

If you are trying to get rid of debt, then you do right in putting it in to your Grocery envelope. There will hopefully be a day when you have got rid of your debt and you could blow it on a pack of beer. Until then, be strong my friend and don’t give in to the dark side.
Also you never know, you may really need it next month for something you never budgeted for.

Garry – thisimprovedlife’s last blog post..Finally Getting GTD

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Baker May 6, 2009 at 10:01 AM

Thanks for swinging by and providing the encouragement. We will certainly have many opportunities to blow some money in Australia!

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SaveBuyLive May 6, 2009 at 9:49 AM

To address your questions in a random order:

Grocery tips

Outside of the obvious ones like couponing and bargain hunting you could start by building up and maintaining a well stocked pantry. Unfortunately this might not be usable for you since you’re leaving in a few weeks. But it has worked for me. I’ve got a collection of recipes that I make sure that I always have all the necessary long-shelf life ingredients for. Combine this with using a price-book and your grocery bill will drop. It also gives you greater command of your grocery bill. If I want to be a super adventurous gourmet cook this month, that’s fine. If I want to tone it down, that’s doable as well.

You will always find tomato sauce, tomato paste, various kinds of pastas, etc in my cupboard. And my herb and spice assortment is killer. This gives me a lot of versatility regarding what I want to cook in a week.

Another thing you could try is making easily partitionable meals. For example I have a pizza recipe that gives me 4 one-serving pizzas. I have a meat-sauce that I can scale up to make as much as I want and then freeze it out in portions. Stews are also good for this. The limiter here is the size of your freezer.

As I mentioned above I’d recommend starting a price book. Again not so useful if you are leaving in a few weeks. I’ve been using mine for about 3 months and I only shop at 2 stores. It’s already making me significantly more aware of prices and it’s beginning to develop predictive power regarding when sales occur. And when they do, I stock up.

Squeezing too tight

Yeah, you did squeeze too tight. I had similar problems when I started budgeting. If possible, the best thing that you can do is shrug it off and move forward having learned from your mistakes. Behavioral changes take a long time to make.

Categories I struggle with

I struggle with different categories during different times of the year. In winter it’s food. In summer it’s travel. I try to cope with this by spending less in other categories and by having a nice pool of buffer money.

As for the point of a budget. I like to think of I grew to use a budget in stages. From what you said in the video, I think you’re on stage 2.

Stage 1: A spending plan. Where is my money going? What can I easily cut back on to make sure that I’m spending less than I earn?

Stage 2: Learning new ways to cut back expenses. This is great and all, but kind of pointless without a purpose beyond seeing how much you can save.

Stage 3: Identifying those things that you want to increase spending on because they provide you with meaning and value. In this stage, your budget (and all associated money saving techniques) become a tool to help you live a more fulfilling life, not just save money.

That was really long. My apologies, but I think I addressed all your points.

SaveBuyLive’s last blog post..How to make and use a budget in 6 easy steps: Step 1

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Baker May 6, 2009 at 9:58 AM

Wow, this is most likely the best comment I’ve had on any post! Thanks so much for your genuine contribution.

First, the steps you outlined at the beginning are very desirable. Even though they won’t work for the next 4 weeks, they will be super important in Australia. We won’t have too much wiggle room once we get there, so these are really helpful.

Second, your comment about the three stages is really insightful. I think we are in stage 3 in a lot of our categories, but are being pulled down by a few still. We were able to really sacrifice some categories in order to save for Australia, for instance. We just haven’t been able to apply that concept universally, yet.

Whatever you do, don’t apologize for the long comment. It’s awesome! I appreciate you taking the time to not only listen, but to really offer up your experience on this issue. It helps a lot!

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The Almost Millionaire May 6, 2009 at 10:32 AM

Baker,
I probably would have done the same thing. We are always light in our grocery envelop for the month. It could have fit nicely in my gas envelop too.
Congrats on the find! Hope the next one is a $50!

The Almost Millionaire’s last blog post..Free Advice (Always worth what you paid for it)

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Baker May 6, 2009 at 10:59 AM

Brandon, good to hear we aren’t alone with this grocery thing. By the way, the silver lining in all of this is we way OVER budgeted our gas. We are gonna be so short, it’ll really help!

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a91030Mom May 6, 2009 at 12:48 PM

Regarding groceries. I’ve “felt your pain.” I made a price book as recommended on various other sites. Took A LOT of time and energy (I can email it to you if you want to take a look), but the long and short of it is that I basically learned what type of stuff is cheaper where (Vons, Food for Less, Smart and Final, Costco). That was three years (or so) ago.

I learned that I cannot shop at my local Vons/Pavilions, with the exception of buying stuff that is on sale, or only if it’s a total emergency. That was three years ago, and at this point we are weaned completely off of them. It would be smart to shop the leaders, but I just don’t.

Now I buy all my paper goods and pharmacy items and milk and eggs at Costco. I buy enough milk for the month, take a bit out of each gallon and freeze them. This saves me trips to the store, which used to wind up costing me $20 because of other items being picked up. (I take a bit of the milk out of each gallon and freeze, I have a small freezer in the garage. When we start to run low, I just defrost in the sink full of water).

The next step was to travel out of my zip code to a nearby Food for Less in Los Angeles. The produce is 1/2 the price, the pantry items are substantially less too. You DO have to be good at picking out your produce because I have found some stuff on the shelves that should have been pulled a few days before.

Now, I know that some people play the grocery game with coupons, save them, double them, etc, but I just can’t. I know my limitations, so I’ve found other ways to save despite them.

The point here is that there are MANY ways to save on groceries, there are multiple web sites devoted just to this one subject. But as with anything else, budgeting is personal. If I cut my groceries from $800 to $500/month that might be good enough for me, especially since it was mostly painless. I don’t feel the need to bring that $500 down to $250, because the amount of work involved is just not worth the $250. However, if my husband lost his job, maybe it would be.

Having said all that, I have recently started going down to the wholesale produce market downtown. You have to buy in bulk (40 lb of apples) (40 lb of oranges), but I have found friends who are willing to share. So I used to pay $1.99 for Fuji apples at Vons, then $0.99 at Food for Less, now I pay $0.38 at the wholesale produce market. It is work, but it’s work that I actually ENJOY! Being a foodie I love to be around all that fresh produce waiting to be snatched up. This also has limitations, as I can’t buy all my produce there, but I now always have apples, oranges, tomatoes, and at least one seasonal berry, last time it was strawberries ($1/pint). On my last trip, I paid $0.67/lb for organic, vine-ripened tomatoes. When I got home the sales flyer for Vons had just arrived, they had the same tomatoes on SALE for $1.99/lb, I don’t know what their regular price is.

You don’t have to go die-hard here, you can simply go “light” by shopping only the outside of your current market, i.e., not buying any convenience foods at all, stick to only fresh produce and make your meals from scratch.

As far as budgeting, I keep a budget in quicken, but I basically only monitor our spending. The one thing we have to play with is eating out. I download our credit card transactions every other day and so I’m on top of our spending that way. When the total starts to get too high, we cut down on the dining out. That’s our system.

We started with 70K debt (home improvements) in Jan of 06 and we’re down now to 23K.

Best of luck!

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Baker May 6, 2009 at 1:25 PM

Wow, thanks for sharing your personal experience and system. I truly admire the amount of knowledge you have on this topic. Just goes to prove my point about everything that we could be doing.

It’s really interesting that you’ve been able to save so much money even without coupons. That’s sort of inspiring, because I can see myself being picky about where I shop, way before I see myself playing the coupon game.

Once we settle down a little bit (maybe in Australia?), we are going to be more serious about buying in bulk. I know this is an easy way for us to gain some ground.

It’s also amazing that you’ve been able to find a system that works well enough to knock out 50k in a little over 3 years. That’s some serious damage you are doing. It would be awesome if we could maintain that pace on our remaining student loans.

Thanks again for adding such genuine value!

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Kevin @ This is Broken Blog May 6, 2009 at 1:51 PM

Can you put a real shirt on for your next video post? Thanks.

Kevin @ This is Broken Blog’s last blog post..Playing the Lottery

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Baker May 6, 2009 at 1:57 PM

That’s as real as they come, buddy!

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Phil May 6, 2009 at 4:03 PM

I have two money-saving grocery tips that have done me well:
1) Don’t use coupons for items you wouldn’t normally purchase (saving $2 on a $5 item is still $3 you wouldn’t have spent otherwise).
2) Plan/write out your weekly menu (and even your route through the store?) before you go shopping. Try not to purchase items not on your list (your menu). Anticipate/re-purpose leftovers, and plan a left-over night. Example: Last night’s left over chicken provides today’s chicken sandwich for lunch, or, last night’s left over chili combines with today’s hot dogs.

Phil’s last blog post..Top 5 Favorite TV Series

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Baker May 6, 2009 at 5:26 PM

You make a great point about coupons. I think we could handle that pretty well, however it is something we will need to be careful of when starting.

We are pretty good about making a list. Like everyone, we occasionally slip up and buy something not on it, but for the most part this is a strength. Creating a meal plan ahead of time, isn’t though. That would be a pretty big step for us, but something that’ll be much needed once we expand our family even more.

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Cathy May 6, 2009 at 5:33 PM

To do comparison shopping efficiently, you have to prepare in advance. If you hop around to all of the stores on the same day, you’re wasting time and gas. When I buy things from one store, I keep the receipts in a folder. It takes a while to collect all the data, but after a while you start to know where the best deals are. Whole Foods is usually the most expensive – but not for everything. I’ve found their 365 orange juice to be cheaper and better tasting than many of the other name brands. I happen to live in walking distance of a WF, so it’s no hassle if the only thing I want is oj.

We buy things we need in bulk at Costco. For things we rotate out weekly, like fruits and veggies, we find it more economical to buy it at a local produce stand rather than buy in bulk from Costco. We only make two stops to Costco and the produce stand by car. We don’t buy the cheapest tomato paste at Safeway, then stop at WF for oj, then buy toilet paper from Costco, then buy an apple from the farmer’s market. That would be ridiculous.

Cathy’s last blog post..First Quarter 2009 Rainy Day Funds Assessment

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Vicki@collegeparentcentral May 6, 2009 at 7:34 PM

You’ve got a lot of great suggestions in the comments here. I commend you for the organized effort you are making to save. I’ll add my two cents here – based on a lot of years feeding a family on a relatively tight budget (actually more of a spending plan).

Comparison shopping doesn’t have to mean going to a lot of different places. It can mean shopping for different things at different times. Earlier commenters mentioned a pricebook. It is an invaluable tool. (This won’t help you in the next few weeks, but after you settle down.) Watch the ads and look for low prices on items. When you see a good price – and especially if you can coordinate with a coupon – stock up. Try to buy enough (assuming that it isn’t perishable) to last until that item goes on sale again. Only buy things when they are at a low price. When I make my list each week, I never shop for what I need for the week, I shop for what is on sale. Then I make my menus based on what I have. It takes a while to get started with this, but can really pay off in the end.

One other observation – don’t wait until the envelope is almost empty to institute the saving measures. Start saving when the envelope is full and it won’t empty as quickly. You used the comparison of entertainment. The difference is that when the entertainment envelope is empty you can stop going out, but when the food envelope is empty, you still need to eat! Too often we wait until we feel the pinch and then try to save. If we start saving earlier, we won’t feel the pinch as soon. Common sense, but we all forget it too often.

Good luck.

Vicki@collegeparentcentral’s last blog post..Sending Your College Student a Care Package

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MAB May 6, 2009 at 10:49 PM

Tip, the strongest one is as people mentioned above. Creating a menu before hand, keeping with recipes where you can crossover ingredients so you aren’t wasting them Eg. Grilled cheese to quesadillas, both require cheese but other ingredients as well.

My challenge, I like to eat products that aren’t as processed. I don’t like foods that come in cans, frozen, or in boxes. When it comes to produce that can be cheap, but for other things like buying organic hand pressed sicilian pasta instead of 99 cents barilla, that is expensive and in my head there is always that tiny voice that says, “You can over budget because it’s food that is good for you.”

Great job Baker at trying out a video post. it was engaging and nice to see the man behind the blog.

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Kelly May 7, 2009 at 9:52 PM

Great video Baker.
I may have to give it a try, it seems like fun!

I posted this awhile ago but it may help you when you settle down. http://www.thecentsiblelife.com/2009/02/04/grocery-price-book/

If you have a lot of time on your hands from now until the move setting up a menu would make things really easy for you guys. You could just do a weekly menu and then rinse and repeat.

I will say I am notorious for slashing the budget too far, but in your case it seems like a little more thought might net a hefty savings. I saw something recently that said that by just purchasing off the shelf like you are the same items cost nearly twice as much!

I’m not a fan of coupons since most of the items that have coupons are packaged foods, and we eat a fairly healthy diet. I use my price book, and shop approx monthly at each of 4 stores in our area. I combine 2 of the stores that are further away, but it only takes me 2 hours total shopping/travel time. I save time in the long run since I don’t have to go to the local (more expensive for most things) store as often.

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