Where Does Your Money Go?
So, I downloaded a few months worth of bank and credit card data into MS Money and looked at my "Spending by Category" data. I was surprised to see how much money we were spending on things like groceries (our second largest expense!) and gifts.
Trying to reduce expenses, I started with the largest expense and worked my way down:
- The mortgage had already been addressed via refinance to a lower rate.
- Our grocery spending was a complete shock to me. Groceries were our second largest expense! As the grocery shopper, I simply bought whatever I wanted with little regard for prices. I spent a good amount of time learning how to become a better grocery shopper and ultimately reduced our grocery bill by about 30%. A detailed post on my grocery shopping strategy will follow in the near future.
- The amount of money we were spending on gifts was also surprising. I have a large family, and finding an appropriate gift for everyone is a stressful (and expensive!) proposition. We proposed starting a Christmas gift lottery for all of the adults in the family. That meant choosing one name from a hat for each side of the family and buying that person a really nice gift instead of buying gifts for everyone. We did agree that the adults would continue to buy gifts for all of the children though. My family has been doing this for three years now and it has been a great way to reduce holiday stress and spending.
Our household-related expenses were a bit high in 2005 because we had the house painted and finally broke down and bought a new stove and microwave (the old one had packing tape holding the trim together). The good news is that as long as nothing unexpected happens, household-related spending will be much lower for 2006.