Spring is a time of year when folks feel inspired to tidy up, this can mean cleaning up the garden, window washing, or cleaning baseboards. I like to add finances into the mix so I have at least a yearly reminder to thoroughly check where things stand financially in our household. Since this coincides with tax time, it's rather convenient.
To conduct our spring money clean I take on four things:
1) A review of last year's budget. I check to see where our money went? Where it didn't go? And where I would like it to go?
2) A review of our financial goals. This year we added the financial goal to be completely mortgage free by age 40. To reach our goal we've been using the great LOAN CALCULATOR on Dave Ramsey's site. It allows you to calculate different accelerated loan payment scenarios. It's a life saver for anyone who wants to get an accurate picture of what it'll take to get debt free in a certain timeframe.
3) Identification of new ways to save. So far I've identified a few ways we can save more money moving forward:
1. Switch our cell phone plan. Our current plan is super expensive and I'm sure we can save money by switching. I'll post later on what new plan we decide to go with.
2. Reduce our food bill. Currently, the amount we spend on food is crazy. I'm working on learning more tasty recipes so I can feel less tempted to eat out, eating more vegetarian meals, and starting to grow a few foods in our backyard. Ultimately, I want to get our grocery bill down to $400 a month, or lower if possible, without sacrificing quality. If you have any great recipes you recommend, please leave them in the comments section.
3. Simplify our wardrobes. I'm working on simplifying our wardrobes and buying more of our clothing used. I've noticed there are a ton of clothes in our closet that we never wear, and I want to cut down on this. I think a part of the problem is that when you have a ton of clothes to choose from, you end up not wearing a lot of them.
4. Reduce our utility costs. Unfortunately, Baltimore has some of the highest utility costs in the nation, so it's pretty easy to rack up astronomical bills. We haven't been as vigilant as we can about keeping our bills down. To work on this we plan to swap out our inefficient light bulbs, stop washing the majority of clothes in warm/hot water, take shorter showers, use a rain barrel, and air dry our clothes as much as possible.
4) Identification of new ways to make money. In addition, to saving more money we'd also like to make more money. I've done some research and decided it makes sense for us to start investing in a few Vanguard index funds. We are also looking at saving towards buying a rental property.
Are you doing any spring financial cleaning?
"Your financial life is like a garden. If you tend a garden carefully, nourishing the flowers, pruning, and weeding, it's going to be a lot more beautiful than if you just water it half-heartedly now and then." ~Suze Orman