The Incredible Shrinking Budget

post-budgetshrinkIf you want to spend less money, there are many avenues to success.  Four that have worked well for us are awareness, curiosity, enjoyment, and discipline.  Hey!  That even makes a nice acronym – ACED! (as in, “We aced our budget reduction challenges this month Whoop Whoop!”)



You’ll only know how to reduce your expenses if you know where your money is going and if you can observe patterns over time.  I know there are fancier and more efficient tools out there, but for us this has meant downloading monthly bank and credit card statements into a spreadsheet, putting each item into budget categories, and using pivot tables to summarize our monthly and annual expense by category.  After just a few months of collecting and summarizing data, we had a treasure-trove of information that allowed us to analyze our spending habits and make observations such as:

  • We spend how much on pet expense??!!
  • Why did we spend $78 more on groceries in February than we did in March? (I mean – it’s a shorter month … Weird.)
  • I hope we get the $9,000 kitchen face-lift money back when we sell the house!
  • Wow – I sure do spend a lot of $ on haircuts.



Mr. Grumby and I enjoy discussing our observations about our spending habits, asking ourselves questions, and challenging ourselves to spending habit changes that will lower our expenses.


Some Real Life Examples:

Can we spend less than $85/month on cat food? (If we spent the same amount to feed ourselves per pound of body weight, we’d be spending over $2000/month on groceries !! )  Our answer – yes!  Let’s consult with a holistic vet to see if there’s a less expensive food that Princess Kitty’s sensitive belly will tolerate.

  • Cost of consultation – $100 (um, ouch!)
  • Vet recommendation – cook ground turkey with a bunch of vitamins, blend into disgusting-looking (but tasty for kitty!) sludge
  • Cost of new home made food – ~$24/month for turkey + ~$5/month for vitamin mix
  • Monthly Savings = $56
  • Annual Savings: $672 minus $100 vet consult = $572

  Let’s save $ on haircuts!

  • Mr. Grumby spends $16/month on haircuts and he barely has any hair. I’ll just cut his hair myself with the clippers we already have!  Annual Savings = $192
  • I spend $50/month on haircuts (Gasp!). I’ll grow my hair out and reduce my haircuts to every other month.  Annual Saving = $300
  • Total Annual Savings = $492 (Cumulative = $1,064)

Mrs. G. asks, “Can I spend less on medical expense if I invest a little $ in ways to improve my health?” 

  • My 2015 Jan-Jul medical expense = $1,280.

Expenses from the same 7-month period in 2016

  • Tai Chi classes = $280 (handy that this is also a 401c3 organization)
  • Contribution to meditation group = $140
  • Medical expense = $220
  • YTD Savings 2016 vs. 2015 = $640 (Cumulative = $1704)


This is the big, transformative one, the one you’ve been waiting for

What if we got rid of our one and only car? Eleanor was a healthy 15-year-old Subaru Outback with relatively low annual expenses (fuel, insurance, maintenance, repairs etc.) of ~$3,500, but with the increasing frustration of traffic congestion in our city and $1800/year car parking fee at our new apartment building, the answer was obvious.  It was time for Eleanor to go live with our friends Tim and Pat and their growing brood of driving-age children.

  • Sale of car to friends +$2000
  • 2 Annual Transit Passes $0 (fully subsidized by our companies)
  • Car Share Expense to get around City when we can’t walk, ride or bikes, or use transit = ~$200/year
  • Car Rental Expense for out-of-town trips = $600
  • First Year Savings, including car sale = $4,700 (Cumulative Savings = $6,404)
  • Future annual savings = ~$2,700 (Cumulative Renewable Savings = $4,404)



It’s important that budget-reduction challenges are also enjoyable.  That way they become habit changes that stick, lifestyle improvements so-to-speak.
You may ask yourselves, “But how can you enjoy life without a car??!!”

First and foremost, we travel much more often at the pace of life itself, either on our bikes or on foot.  We intentionally moved to a location that is 1-2 miles from most of our shopping, entertainment, and other activities.  We have time and space to enjoy what is happening around us (trees blowing in the wind, birds flying around, clouds moving across the sky, kids laughing, etc.) as we go from Point A to Point B.  And because we’re walking and riding our bikes more often, we are healthier and happier.  (Sounds like enjoyment to me!)

We also enjoy using public transportation.  Yes, this means that we are frequently exposed to homelessness, drug addiction, and mental illness, but that is part of urban life.  As Lieutenant-General Romeo Dallaire said in his 2013 commencement speech at Lewis & Clark College, “All humans are human.”  Even though we’re sharing our transportation with “the public” on mass transit, it is quite safe and peaceful and has been a great time to read, stare out the window, or just enjoy watching an entertaining variety of people.



Once you figure out which budget reduction challenges are enjoyable, it’s easy to have the discipline to stick with them.  After a short while, it doesn’t even feel like discipline anymore.  It’s just what you do.

And then what? 

The less you spend, the more you save.  The more you save, the earlier you retire.

The less you spend habitually, the lower your future spending requirements … and the earlier you retire.


So what?

No matter how close you are to retirement (30 years or 3 years, or even if you’re already there), please give yourself the gift of visualizing the impact of compound interest.  One tool we’ve used is the Vertex Retirement Savings Calculator.  Using the numbers outlined in the “Curiosity” section, here’s how much we would earn @ a 7% return on just those savings if we put them into an investment account, and then invested the renewable savings each year for the next 10 years (because we have the discipline to make these savings a renewable event!):

(Click to see full size)

(Click to see full size)



Our curious awareness could lead to an enjoyable discipline that would result in an easy-peasy $73,445 extra money for our future selves in just 10 years!

Shrinking Budget?  ACED!

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  2 Replies to “The Incredible Shrinking Budget”

  1. Miya
    October 31, 2016 at 9:02 pm

    Love it! Very well said! I’ll send you my budget sheet and maybe you can look over it and pick out some things that I havent caught yet

    Oh and does this mean I shouldn’t buy starbucks everyday? Hahah just joking

    • Mrs. Grumby
      November 1, 2016 at 3:55 am

      Sounds great! Send it on over. Starbucks every day?! Oh, my! That could be more than $1,000/year. Mr. Grumby just had to use the smelling salts to revive me after I fainted.

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