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Question of the Day – Budgeting
By JLP | April 24, 2008
Here’s today’s Question of the Day:
Has the current economic environment (inflation and what not) forced you to cut back in your spending or to change your lifestyle in any way?
As things stand right now, I would have to say no. I am more aware of the prices I pay for groceries as it seems every week I go to the store, I have to pay more. It’s pretty bad when price changes are noticeable from week to week. I suppose inflation will cause us to forgo certain things like a really nice family vacation or something like that but for right now, we haven’t changed our spending too much. I suppose that’s the benefit of not having a lot of debt.
What about you? Are you making any budgetary changes?
Topics: Budgeting, Question of the Day | 15 Comments »
April 24th, 2008 at 2:04 pm
I have to make changes. Since I’m spending more on groceries and gas, I have to cut back elsewhere. For me, that means less “fun wants” since savings is a priority. Even if you don’t think you’re making changes, that extra money you’re spending is coming from somewhere.
April 24th, 2008 at 2:20 pm
“I suppose inflation will cause us to forgo certain things like a really nice family vacation or something like that but for right now, we haven’t changed our spending too much. I suppose that’s the benefit of not having a lot of debt.”
Actually, inflation is one of the DISADVANTAGES of not carrying a lot of debt. Enough inflation will take the pinch out of any fixed-rate obligations and therefore you’ll feel richer than expected.
Suppose I have a $500K mortgage w/ a payment of $3000 per month. Inflation would reduce the real value of my mortgage payment, however over time, my salary would actually increase to reflect “cost of living adjustment”. So for someone with a lot of debt, unanticipated inflation is actually great news!
This assume you don’t have variable rate debt, or option ARM crap (you probably don’t). One more reason that someone as frugal as you should be holding more inflation protection in their portfolio than, say, the average resident of San Mateo county.
April 24th, 2008 at 2:49 pm
I haven’t really changed my spending too much, but I am definitely more price-aware. I’ve also started selling some things on Ebay that I just don’t use anymore and that has brought a little relief.
I’m planning on riding my bike to work more this summer, but since I only live 10 miles from my office it will benefit my health more than my wallet (that’s still not a bad thing!).
Still, who knows what the future will bring? I’m sure we’ll have to make more changes before too long.
April 24th, 2008 at 2:58 pm
Being debt free and saving up for a downpayment, I think we’re just not saving as much as we could be. We don’t budget very strictly, so if we started hacking away we could find lots of places in our everyday spending (groceries, eating out, and entertainment) to cut before we went after the vacations and the like.
April 24th, 2008 at 3:03 pm
Yes and no. I haven’t changed my budget, but I have started playing The Drugstore Game. It takes some time but is actually kind of fun (if you like crunching numbers, shopping, and saving money) – I’m now getting all of my shampoo, conditioner, toothpaste and toothbrushes for free, and by staying on top of the deals, I have gotten toiletries for about half the cost of what I would have paid at Target.
I haven’t adjusted my grocery budget but am making a conscious effort to cook at home more so we spend less money on take out and eating out. If anything, I am having to spend more money on groceries not because prices have gone up but because my youngest has started eating more!
April 24th, 2008 at 3:14 pm
Alex,
I know what you’re saying is true. My point was not having a lot of debt allows us more flexibility.
April 24th, 2008 at 4:35 pm
I would have to say that I have not change lifestyle very much. I still shop around just as much as I used to and have always compare items in the grocery store for the best value.
April 24th, 2008 at 6:24 pm
I’ve made some minimal changes. Most involve delayed gratification. I only drive to work twice each week because the bus is free due to the transhare program I joined. I drive when I work out at the gym just because of convenience. I’ve also changed my plans about a cell phone upgrade and delayed a nused car purchase.
April 24th, 2008 at 6:34 pm
Well, in an odd way the overall financial mess is benefitting us. Stable/bulletproof job; low, fixed mortgage; locked in low interest rates on some consumer debt AND a HELOC set at prime. Needless to say interest on the HELOC has plummeted recently. We are much more focused on paying off debt right now, since there are no “high interest” savings anymore and its so much more obvious what we should be doing. I’m also purchasing a bit of stocks/mutual funds cheaply that I’m pretty sure (!) will do well when things bounce back. Fuel costs: hubby uses his scooter, I use the Prius, so not a huge deal.
Ultimately, I think the biggest impact, though, is that all the bad news has scared me into taking control of every penny!
April 24th, 2008 at 9:00 pm
My wife and I are still holding the line on our monthly savings goal despite the fact that things are more expensive. To achieve the goal we have made two changes. I ride my bike to and from work, which save 40 miles a day on gas. Yes, my legs are tired, but I’ve lost 10 pounds and am getting in great shape for the summer racing season. We also buy groceries on-line to prevent any impulse buying. My wife is really good at finding on-line coupons, which are easy to apply to the bill. The savings more than offset the $6.00 delivery fee.
April 24th, 2008 at 10:35 pm
I tell you, I just returned from being overseas for two years. The food prices where I was living had increased about 50% within the past 9 months, so I noticed it there.
When I returned to the US, I don’t see people hurting. Just about every car I saw had only one person in the car during rush hour. I’m saw lots of people shopping in shopping malls and lots of people eating in restaurants. So, I’m asking myself where is all this jibber jabber about high prices, recession, etc affecting people’s bottom line. I remember growing up in the 80s, and everyone was car pooling, etc. I have yet to see a big move towards even something as simple as carpooling at the present time.
for us, we’ve allotted more disposable income in our budget reducing our savings from 94% to 85% of pay, but i’m not sure if we are going to actually spend the extra 9%. we are doing some crazy spending now, because we are overwhelmed by all the stuff you can buy in the u.s. which we haven’t had access to in two years. i ate my first donuts today. nummy.
April 24th, 2008 at 11:40 pm
In a word – no. Our lifestyle has not really changed as a result of recent inflation. Fortunately, the last couple of years have treated us well in terms of income, much of which we have aggressively invested. Which brings me to the topic of watching my portfolio lose value with each monthly statement as of late. That, plus the prospect of getting laid off – however remote the chance, has caused me to realize that we’re really not as liquid as we need to be and so I’ve shifted more funds into cash. But, only enough to create an emergency cushion.
I’d say that this cautiousness about the future and desire to prepare for the worst is the biggest change. And that caution has probably caused us to delay some of the really big slurges we might be tempted to make like a new car, flat screen TV, etc., but these aren’t things that we would really miss (since we’ve done without them just fine so far).
April 25th, 2008 at 8:54 am
buying less coffe, less movies, drive slower, raised deductables, etc. came up with 400/mo and am using all 400 to buy stocks
April 25th, 2008 at 12:32 pm
Yes, I am making changes. I’m continuing to pay myself first, but in order to do that I’ve had to be cautious in other areas. No shopping for anything other than food and gas even though I wasn’t spending that much on “other stuff” to begin with. Travel plans for the summer will be changed. Normally, we go on a a few weekend trips over the summer to various cities. The gas prices will make those trips too expensive this year.
Luckily, these are all luxuries! I plan to continue to save in case of a REAL emergency – like not being able to afford food.
April 27th, 2008 at 11:36 am
my lifestyle has changed a little but the effect and amount of change has been negligable. Since i’ve been on my own I’ve always been a tight wad. Actually the irony of this all.. Even tho we are in the worst financial shape in this nation, since 2001 or so (according to the news), and even tho my Income hasnt changed much, (a small 50 cent/hr raise last year), Because I started paying attention to my finances and actually started planning things out about a year and a half ago, Im sitting in the best financial position I have ever been in, Im debt free while renting a small apt, Have 6 months of living expenses in an emergency fund, and have actually begun to invest heavily in Growth Stock mutual funds over the last 2 months. Yea I worry sometimes that life is gonna crash, but until I have a reason to alter my main plan, Im just gonna keep on the plan i’ve been running. so far its working pretty well. It is interesting tho, the people at work are all chicken littling, fearful, scared.. always asking other people at work if they can borrow money till payday and whining they don’t make enough money. I tell them how I’m doing and they look at me like i have 3 heads and say I dont know how you do it. The scary part is my plan isnt all that hard to understand.. but it does take discipline.