Frugality

One of the most popular posts on this site is the “Sample $1000 Monthly Budget.” That post is over five years old now so I’ve decided to do a new $1000 budget for 2013. There has been some inflation in the last five years but I’m still easily able to live on a $1000 monthly budget.

A common criticism of the budget is that it isn’t realistic. This budget is based on my actual expenses and I’m real (I’m not the Easter Bunny) so the budget is realistic. Not everyone can live on this budget but many people can. If you’re single, in good health, live in a low cost of living area, and don’t have any debt payments this should be an achievable budget. I currently live in Kansas City, MO but have also lived on a similar budget in Reno, Las Vegas, Dallas, Austin and rural Virginia.

The rent, health insurance, car insurance, and phone are all my actual, fixed monthly totals.

My rent, utilities, phone, and health insurance are lower than they were five years ago.  The rent is cheaper because I found a really good deal in a small apartment complex. The utilities are cheaper because I have an all electric apartment and no longer have to pay a gas bill.  My actual electric bills have always been smaller than $20 so far since I live in a third floor apartment with south facing windows that rarely requires me to use heat.  I probably will have to use the A/C this summer but based on my past electric bills a $20 average monthly electric bill is realistic.  My health insurance is slightly cheaper than it was five years ago but only because I raised my deductible from $5000 to $10,000.  I purchase my health insurance through eHealthInsurance which has lots of relatively low cost plans available. My phone is with Virgin Mobile and I get 300 anytime minutes, unlimited texts, and unlimited data. That is plenty for me.

The food, car insurance, gasoline, and miscellaneous expenses all went up. Although I think I should still be able to eat for $100 a month I usually spend about $120 a month so I’m using the higher amount.  Food prices have definitely been affected by inflation over the past five years.  My car insurance is quite a bit higher.  Most of that is probably because I had an at-fault accident a couple of years ago. Otherwise, I think there would have only been a modest increase in my insurance premium.  Gasoline costs about the same now as it did in  May 2008 but I drive a little more and increased the expense amount to reflect that.  I also increased the miscellaneous expense a little to account for other small items that may have been affected by inflation.

I’ve kept the budget amount for irregular expense savings and entertainment the same. The savings for irregular expenses covers car registration, maintenance, and any other predictable but irregular expenses.  I’ve yet to spend $100 on entertainment this year and generally spend much less than that. I’m keeping the entertainment amount at $100 since I’ll probably take a couple of trips this year that will be covered by the entertainment budget.

My monthly expenses so far this year have ranged from a low of $822.34 to a high of $1075.78. That shows that a $1000 monthly budget is realistic for me.  I think it is an easily achievable budget for people in similar circumstances as me.

Below is my daily menu for the Live Below the Line Challenge.  I’ll be having the same thing every day except Friday. That day I will have my breakfast meal twice and a burrito for dinner.

It looks like I didn’t do a very good job with my shopping.  My daily calorie count is too low. In order to get enough calories I needed to buy food that was higher in fat and/or sugar. I will have a little bit of cereal and milk left over so I could add in a couple bowls of cereal somewhere.

Since I’m about 40-50 pounds overweight and the challenge is only for 5 days it wouldn’t be impossible to get by on this level of calories.  That being said,  I have full day continuing legal education classes on Wednesday and Friday.  There will be free food provided there and I most likely will eat some of that free food.  Doing so will mean I fail the challenge but I’m ok with that. If I can go Monday through Friday without spending anything on food I’ll feel like I accomplished something. For me the challenge is more about exerting a little self control over what I eat more than it is about seeing how little I can spend on food each day.

This menu may seem unhealthy to many of you, but it is actually healthier than what I usually eat.  Compared to my usual diet of fast food, soda, chips and other junk food this menu isn’t that bad.  Also, I will be having at least a little bit of fruit and vegetable each day which is not usually the case. This challenge does show that it is very difficult to eat healthy on such a low budget.  Healthy foods such as vegetables just don’t have enough calories per dollar to make up much of a super low budget diet. I might use the knowledge gained from this challenge to do the challenge again next month and see if I can come up with a healthier menu that provides a higher number of calories.

I’m going to be doing my version of the Live Below the Line Challenge for the next 5 days. After reading about the Live Below the Line Challenge in a post at My Money Blog, I decided to to do the challenge myself.  The basic idea of the challenge is that you eat for $1.50 a day for five days.  The $1.50 a day represents the U.S. equivalent of the extreme poverty line.  The purpose of the challenge is to raise money to fight poverty.  I’ll be making a donation when I complete the challenge and if you want you can visit the challenge site and donate as well.

The official challenge is April 29-May 3, but I’m starting my challenge today.  This works out better for me since I’m impatient and want to start now.  Also I have CLEs next Wednesday and Friday with free food and since I these CLEs are expensive I want to get my full value out of them. My April Food Challenge was a failure but I think I can do this challenge since it is only 5 days.  According to the rules of the challenge the full cost of all items consumed must be included in the budget. This means I can’t buy a jumbo bag of rice and only count the cost of what I eat. That would make the challenge too easy.  The challenge does allow spices to be prorated or sharing food costs between people.  Too keep things simple though I just did one $7.50 shopping trip and that will be the only food I eat for the next five days.  I’ve listed the food I bought and the cost below.  I’m going to post every day of the challenge sharing what I ate for the day.

The total came out to less than $7.50 but I’m not including sales tax.  I’ll probably add a little salsa to my burrito and that prorated cost would use up the remaining money.  It isn’t the healthiest menu although it is probably better than what I normally eat. I’ll be having cereal with a banana for breakfast and a hot dog and beans with carrots on the side for lunch and dinner four days. The last day I’ll be eating cereal twice and have the burrito for dinner. I have ten bananas so I can also have a banana as a snack sometime during the day.  I got chocolate milk because it was on sale for less than skim milk and I needed to stretch my money as much as possible.  I could have done this even cheaper by buying dry beans instead of pork and beans or just buying oatmeal instead of cereal and milk.  I’m lazy though and wanted stuff that was easy to make and I know I’d get tired of oatmeal after a couple of days.  I haven’t figured out the calories and nutrition yet.  I’ll share that information when I post my daily meals.

This might be a strange thing for the writer of a frugality blog to say but I believe it is true. If you want to get ahead financially increasing your income is more important then reducing your spending. I have been able to keep my spending at a very low level for years but I haven’t been able to save much money. This year since I started working my better paying full-time job in addition to my part-time job I’ve managed to save well over 50% of my income. I’ve long thought that if I could just get a decent paying job it would be easy to save money. Now that I have a decent job I’ve found out that I was right. It is easy to save money now. I’m not really making that much money either. At my current rate I’d make a little over $40,000 for the year which is about the average annual salary in the United States.

My views on this subject might be somewhat skewed by the fact that I have always found it easy to keep my spending at a low level. When I read articles on how to save thousands a year by cutting cable and skipping lattes they weren’t any help to me because I never developed wasteful spending habits in the first place. I suppose if you are a spendthrift then it would probably be better to learn how to control your spending rather than increase your income since a spendthrift will likely just increase their spending to match any increase in income. For most people though, increasing income is better than reducing spending. There is a limit to how much you can reduce your spending. There is no limit on how much you can increase your income. I think the big advantage that cutting spending has over increasing income is that it is much easier to cut spending. My job will be ending next month and I doubt I’ll be able to get my income back to its current level any time soon. It is easy for me to find ways to make a little extra money but I’ve had a hard time finding ways to make decent money. That is something I will work on for the rest of the year.

In the movie “This is 40” the main characters are financial disasters. When Paul Rudd’s character is disappointed in the sales of Graham Parker’s new album, Parker states that he has learned to not worry about the sales and to just keep his monthly nut small. That advice is too late for Rudd but it is good advice.

Your monthly nut is the amount of money you have going out for expenses every month. You should know how much that is and you should make enough money to easily cover those expenses every month. It would also be wise to keep the monthly nut small by avoiding debt and unnecessary expenses that can’t

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