How I Make Tough Money Decisions
March 3, 2008
As a single mother of two growing children, I have a tight budget, even with child support payments. Just when I think I am getting ahead, somebody needs a new pair of glasses or a dental visit. Forget that my youngest is having growing spurts and needs a new wardrobe two or three times a year. With my oldest going to college soon, and still paying off my own student loans, I have tough money decisions to make.
Just like everyone else, I have to prioritize how I spend any income. First of all, the house payment, car payment, and student loan are automatically deducted from my account, so nothing is paid until that money is subtracted from the budget.
Next, I pay the utilities. Since my first full-time job was working with the electric company for 10 years, and the fact that the family lives in cold country, I know letting those bills slide will only cost me more in the long run.
Then, I am trying to pay off credit card debt, one teaspoon at a time. As you all know, paying the minimum is not an option, if a person ever hopes to get out of debt. So, I try to pay extra. I have a computer program to help me budget the payments. So, I have a set goal for being credit card free.
Finally, I can go to the grocery store. Now, I know many will say to go to the store first, feed the kids, and then worry about the bills. Some have even criticized me for doing the opposite. However, it works for us. Since I have a fluctuating income, some months we have a Mac and cheese budget, a hamburger budget, or a steak budget. My family has never gone hungry. We may not always get to eat our favorite foods, but most of the time my kids can afford to be picky.
I know I said “finally” and some of you may be wondering about the entertainment piece of the pie. Well, going to the movies is a once or twice a year treat. We have a library of movies we can watch on the television. We play games on the computer or get out a deck of cards. Between school, work, and extracurricular activities, we are not really concerned about an entertainment allowance.
So, how do you prioritize or make tough money decisions?
Tina
Having a spending plan like yours is key. There is a lot of controversy about how it should be created, but the bottom line is any plan is better than no plan. I also use Quicken which is the best investment I ever made. Their also coming out with Quicken Online. Sounds interesting…
We are lucky enough to not have to choose whether to pay the mortgage first or buy groceries. Our problem comes down to what to do with the extra at the end of the month. Do we continue building up a healthy emergency fund? Do we invest in the shaky markets? Or do we pay down our mortgage… in the end, doing something is better than nothing so we’re doing a little bit of both.
I would hope that clipping coupons is a part of your routine. You can really cut you food expense that way.
I’d say I’ve got the same lineup as you do, with the exception that I’m going to put food before debts. Now with a family of 8, that’s a pretty big chunk of money. (about $800/mo) If we really had to squeeze we could get by with about $400-500 for a month or so, but that’s only if we absolutely have to.
So I guess we kinda do it like this:
1. Mortgage/utilities
2. Gas/cars
3. Food ($500 worth)
4. Debts
5. Food part 2 ($300)
6. Extras/important wants
7. Debts (whatever’s left)