The Power of Spot Budgeting

Okay, I’ve posted a similar post about this before, but there is power in this process!

What is Spot Budgeting?

Spot Budgeting is the lazy man/woman’s way of doing a limited form of budgeting. The beauty of this technique is that instead of running your life like a bookkeeper or accountant, you just track 1 or 2 areas of concern to keep the spending in that area under control.

I use it to track my breakfast and lunches, presently I have a weekly spending budget of $20.

So what could you use it for?

Latte

That $4.00 latte
Don’t cut it out entirely, but have a weekly budget of $8.00, track it on a scrap piece of paper… piece of cake!! Don’t cut it out entirely, but have a weekly budget of $8.00, track it on a scrap piece of paper…
Breakfast and Lunch meals (like me) set a max spending amount and stick to it… (so out of the $60 I use to spend, now I only spend a max of $20). $40 dollars a week now goes towards investments.
Dinners out per month. Maybe budget a max of 2 dinners out a month
Fast food dinners out per month. Maybe budget a max of 8 to 10 dinners?

Entertainment. This is a prime area that you can cut out some of the fat, without living like a hermit. There are many free activities that are still very entertaining. Examples (walking or hiking, cycling, video games – “online or game consoles”. and movie night with friends).
Common sense thing. You should know what you’re spending to much money on, and be able to create a spot budget for that weakness.

I’ve heard that it take 21 times of doing something to make it a habit. With spot budgeting, I think it’s possible to change your behavior and make it a habit. Then move to the next area you want to have spot budget.

Personally, I’ve been using this technique for the last 25 weeks, and I have to say… it works great!!!

What do you think?

My Christmas Tradition

by Money Reasons

Christmas was always a special time for me as a kid!

Christmas Tree

It was my grandmother use to make it a very special time of the year. She went all out, she had a large Santa that stood in a sleigh decoration with individual reindeer that she would put on the top of her organ. Beneath the Santa decoration, she had a sheet of white foamy material that looked like snow.

The Christmas tree was put up with silver garland, special fancy homemade ornaments, silver tinsel hanging perfectly straight, and about 3 strings of lights (my grandfather hated to get them working every year). She also put decoration throughout the house, it was magical when I was a small boy. On one special gift for each person that she bought a gift for, she would wrap it so that it would create a wintry or Christmas scene (this was a lot of work).

Most years, my grandfather would go and buy a real fir-tree when I was younger, so the room that the tree was in would have a faint pine tree smell. My grandmother use to play Christmas songs (O Christmas Tree, Here comes Santa Clause, Silent Night, Rudolph, Frosty the snowman, etc) on her organ and we would sing some of the songs together. I was a great time! So, now that I have kids, this is a hard act to follow, but I wanted to do something.

So I decided to start a new family tradition.

On a whim, when my son was 1 and 1/2, we decided to buy a real Christmas tree instead of using an artificial one like I’ve had since I became an adult. Close to where we live is a large family owned tree farm. So I decided to give it a try…, and to my surprise, I was very impressed!

While we could buy a cut Christmas tree there, they also gave you the option of taking a saw and sled and cutting down your own Christmas tree. And this is exactly what I did that first year. Then when we went in to pay for it, we encountered another great surprise. They had Christmas music playing, and had a bunch of chair around an open hearth stove. They then sell popcorn, cookies and hot chocolate. So that is what we did! And to top off everything, they usually have 2 real reindeer in a fenced in area just to add a bit of extra Christmas flavor. It’s truly a great experience!

Since that first year, we have been doing it that way ever since. Now, my son and daughter alternate picking the tree every year making it that much more fun. This year, we are going to take our dog too. We usually wait for it to snow before going to pick out the tree (this is tough sometimes, because we don’t always get snow in December).

Now, you are probably wondering how much my newly created “family tradition” cost… Well since we usually go with the more expense fir trees, so in total, it costs me about $60.00. It’s one of the few times during the year that I’m a spendthrift 🙂

It’s worth it though… Oh, I forgot to mention that on the way to the tree farm, we play Christmas music in the car with the kids singing the songs… It’s a very Norman Rockwell-like experience. Using this activity, I’ve been able to recapture some of the Christmas spirit I encountered as a small child, and hopefully made it magically the same way for my kids.

Happy Holidays!

Don

My Upromise Experience and was It Worth It?

by Money Reasons

I always try to plan for future expenses. That why I opened a Upromise account right before my son was born. Back then I had more expenses and any amount I could save counted!

For that time in my life, Upromise was a perfect vehicle for me to save for my son’s college without it hitting me hard in the wallet. I’m always thinking about money and ways to make the pennies scream… After a while those pennies add up!

a million pennies

I’ve had the Upromise account for the last 9 years, how has it treated me? Overall, I’ve earned $951.48 (not too shabby). If I was more aggressive with it, I could have made much more. I use to buy the McDonald’s gift certificate booklets (with a credit card I had linked in Upromise so I got an extra 1%), then use them for my lunch. Then once a week, I would enter the codes on the back of the booklets into the Upromise site. Perhaps, I’ll buy a $5.00 booklet this Christmas for nostalgic reasons. Note, It’s not worth doing the McDonald’s booklets now because they lowered the benefit they gave back to 1%, when I was doing it, it was 5%.

When my son was three, I had been promoted at work and was receiving more money, so I started putting my own money in a 529 plan. Now, the 529 plan is where the bulk most of his money for college resides.

Back to the Upromise, do I think it was worth it?

Yes, not so much from the incredible amount of money we were able to save (blatant sarcasm). The benefit came from keeping my son’s college education in the forefront of my mind.

If you participant in the Upromise program, you naturally think about saving for college more. The more you think about it, the more clever you become in looking for ways to saving for it. I hate to say it creates a “heightened awareness”, but that’s what it did for me.

With the 529 plan that I’m now in, it automatically take money from my savings account every month and buys the into fund that I signed him (and daughter) up for.

The key is to always think about the big cost in life that will hit farther down the road. If you take actions now, the hit might not be a like a Mike Tyson hit… if you perhaps properly, it’ll be more like a Hannah Montana hit, it will still sting but at least you’ll still be standing up. 😀

If you are thinking of going the Upromise route, please leave comment and I’ll provide additional information about my experience!

Don

Lemons to Lemonade Series #1 – Long Commute Drives

by Money Reasons

I hate driving in the car on long trips! I use to dread going on the annual vacation just because I would have to drive hours and hours to get to our vacation destination (usually Hilton Head or North Myrtle Beach). But now, do I still hate it? No!

I hate driving

What has changed for me?

Now I listen to audio books on long vacation trips. I can often find a good novel to listen to during the long drive down to Hilton Head Island. Sometimes, I even wish the drive was longer so I could finish the audio book that I’m listening to.

Does this work for commutes to work?

Yes, I believe that it would work for long commutes to work! My commute to work is only half and hour, so I don’t get the long novel for trips to work. I do like to listen to short comedian CD, short autobiographies (like Benjamin Franklin) and other shorter audio materials. Long stories like Stephen King’s “The gunslinger” is too much for short commutes, but for long commutes, this series might be perfect.

How is buying audio books a frugal way to drive to work?

It isn’t, I don’t buy the audiobooks, I borrow them from the Library. I think if you try this technique out, you’ll find that your commute is more bearable, and you’ll be increasing your wisedom, or be entertained (or at least laugh at some good jokes) in the process.

You might be wondering, What have I listened to? I like to listen to comedians, and classics that I normally wouldn’t listen to otherwise…

Bill Crosby: Bill’s comedy is great for the car, nice and slow so you don’t miss the joke
Robin Williams: Robin was a tough listening to during the commute, his humor is quick and in a noisy car, you might not be able to hear him.
Farhrenheit 451: A classic but still a good listen!
Animal Farm: A classic and another good listen. A bit dry though.
Oliver Twist: Good story, but tough to hear sometimes if your commute is noisy.
1984: Interesting, but I wouldn’t listen to it again.
I am Legend: Good story, a bit different from the 2007 movie remake.

Welcome to Money Reasons

Smart Reasons to Save, Use and Invest Money

Yearly Archives: 2009

The Power of Spot Budgeting

My Christmas Tradition

So I decided to start a new family tradition.

My Upromise Experience and was It Worth It?

Lemons to Lemonade Series #1 – Long Commute Drives