Modified Spending Freeze

Congratulations! You made it through the first week of our boot camp! Hopefully you had a good experience with the spending freeze and have some victories to celebrate.

If you carry consumer debt, the only way to get out and to get out quickly is to continue on with the Spending Freeze. If you don’t continue on, the chances you’ll revert back to bad habits are pretty likely. Make it your goal to make it to the remainder of the FTJ Boot Camp on a total spending freeze (only spending money on what’s absolutely necessary).

If you are a Boot Camp “recruit” that doesn’t carry consumer debt, you are hereby granted permission to go on a Modified Spending Freeze, with the following things in mind:

Impulse purchases are what get the majority of Americans in trouble with their finances. We are going to be working in a few more of the “wants” into your spending this month, but none of them are allowed to be impulse purchases. For the next two weeks, you will need to think about something for 24 hours before you purchase it. This phase is called the Modified Spending Freeze.

Make a List, Check it Twice
Create a second approved spending list for week two of the Boot Camp. Go ahead and include some of the wants you’ve been avoiding purchasing since starting the Spending Freeze. However, the items must be on the list for 24 hours before you purchase them. This will help you avoid buying things you really don’t need (or could get by without) and haven’t completely thought through. Include things like clothing items your family may need, one lunch out per week (if your financial situation allows), gifts, and so forth.

Set Budgets for Planned Purchases
Make sure that you and your spouse are in agreement about what’s on the second approved spending list. If you write something on the list such as “new shoes for Emma” make sure you also budget a dollar amount so you’re not tempted to go over it. If you’re going to be making a stop at the grocery store this week, limit yourself to a dollar amount that really challenges you to shop for the best deals ($50-$75 is a good number for a family of four) and use up more of what you have. The important thing is to choose purchases and to allocate the appropriate amount of money to them that’s right for your own financial situation. If you have considerable consumer debt, no amount of thinking or pre-planning makes certain purchases OK. Keep that in mind.

Track Your Spending
Knowing exactly how and where you spend your money will provide you with key information about where your money goes. It will also give you valuable insight into what your spending weaknesses are and provide information about what you can improve upon.

For the remainder of the Forget the Joneses Boot Camp, account for every penny you spend. There are many ways to track your spending. It’s important for you to pick the method that is easiest for you, fits your lifestyle, and one that you can stick to.

• Keep a Spending Journal You can use your small spiral-bound notebook to do this, one that fits in your purse works well. For every item you buy, track the amount spent and to which category it belongs, such as: groceries, gas, entertainment, restaurants, clothing, and so on.
• Save Receipts in an Envelope This is a really simple way to track spending because it doesn’t require much time. Simply grab an envelope and make sure that both you and your spouse account for all of your purchases – whether cash or credit – by placing the receipt in an envelope. If you make any purchases where a receipt isn’t available (vending machines, for example) write the amount spent and the item on the envelope itself. This works well for spouses who may be less than cooperative. It isn’t too much to ask them to simply hold onto their receipts.
• Use a Program Like Quicken This can be done in conjunction with keeping a spending journal or a receipt envelope and works well for those who plan on using a computer program as a part of their budgeting system. Don’t worry about categorizing the purchases right now. Simply gathering the information will be sufficient. In one of the future steps we will begin to categorize your purchases so that you can create a budget that you’ll use long-term.
• Use Online Sites Like Mint.com If you want to take electronic budgeting one step further, consider an online tracking site like Mint.com. Not only does Mint.com use features like Quicken and Money, it connects to your banking/credit card information nightly to automate the process even further. Best of all, it’s completely free.

Assignment: Come up with a Second "Approved" Spending List for Week Two and Budget for Each Approved Expense. Track Spending.

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Not a problem I have been tracking for years.

Here is what I plan to spend this week
$75 for groceries
Coffee on Tueday
DH needs gas for truck
Medical bills are in the mail
Bday gift for party on Saturday
Discover card payment

Hopefully not as expensive as last week. I had $800 in out of pocket trying to buy a house expences.

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Kimberly Proud Mommy to Bethany Rose April 2006 &

Organizer of the Coupon Clippers of Tacoma

This is harder than the spending freeze for me so it's definitely something to work toward.

OK, I posted in one of the other posts what I spent today. Still haven't gone over our budget for the month. That's the best part of a cash only plan.

Week Two Check-In

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My husband and I have an "allowance." It used to be $20/week for each of us. We could spend it however we wanted, on whatever we wanted. But if it was something that wasn't part of the household, then we had to use our cash. In an effort to put more on our credit cards, we agreed to decrease that amount to $20 every two weeks for each of us. This means that if we want to buy something for ourselves that costs more than that, we have to save.

I just saved $60 and was able to buy a computer program, user's guide and a book with it. I don't think any of this is impulse as I thought about the book purchase for 3 weeks (I checked it out from the library to make sure I really wanted it). Then I bought it used for a third of the regular price on amazon.com.

The computer program is for my genealogy records and I purchased it only after downloading free trials of all the competition and comparing and contrasting all the features of each to see which one would work best for me. I feel as though I made an informed decision instead of purchasing because I wanted one so bad. This is a huge accomplishment for me! The $40 I paid for it also included the printed user's guide and a training video.

We aren't necessarily planning on doing a spending freeze this week, but we probably won't spend any additional money anyway. I just went to Walmart and bought groceries and stocked up on some items ($104.99 - still have $9 left in my grocery budget until next paycheck, perfect if we need milk). So we should be set anyway for the next week and a half until my husband gets paid again.

Our biggest weakness is the weekends. We get lax on the spending and want to go do something. I just need to preplan some free activities so that doesn't happen this weekend. Other than that, all of our money in our checking account is pretty much gone because I put most of it on the credit cards. We also don't use our credit cards anymore, so that doesn't leave any extra money floating around for us to want to spend.

I honestly think our $20 "allowance" is saving us a ton of money! Especially for me. I haven't had to save for things since I was a kid and it's a good refresher on how to do it. It's also a good example for the kids. My son has already been saving his $2/week allowance for a trip to Legoland with his grandma. By the time he goes, he will have $57 (he found a dollar on the ground the other day and put that in his savings too)! That's way more than I would have given him for spending money!

So to make a long story even longer, I will probably only be buying gas this week. Luckily there are no birthdays or anniversaries or holidays until July 4th so we don't have to budget for any of that! We have plenty of food (this was the best lesson I learned from the spending freeze) so we don't need to get anything else besides milk if we run out.

List until July 3rd:
Gas
Milk
Margarine

I'm looking forward to it! (I'm surprised by that)

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Monica ~ Mommy to Matheu, 7 and Liliana, 2