During the process of saving for, making an offer on and buying the new home, we have cut back category after category of our spending. And when we move in, especially if we haven’t sold our condo by then, we’ll be cutting even more drastically.
It’s funny — since I do use a budget and slice-and-dice our money up into planned categories, I rarely feel like we have “extra” money. If we do end up with a windfall or surplus beyond what I’ve planned, I always use that money for extra debt repayment or stash it into savings — it doesn’t just sit around.
So there have been many, many points in this home-buying process where an added expense has come up and I’ve put the brakes on, said “That’s it! We don’t have any room in the budget for that.” But then I’ve inevitably found something that can be cut, reduced or kicked down the road to be paid later.
I’ve come to fully realize how many spending categories are discretionary and can be stopped. There are only a few fixed bills; everything else is on the table when it comes to making cutbacks. It just depends on how much we want or need that money for something else. In our case, we want to be in our new home so badly that we’re ready to put just about everything on the table.
Over the course of the past few months, here’s what we’ve cut from our budget and/or savings and in what order:
- Extra debt repayment
- Travel/vacation fund
- New computer fund
- Charitable contributions
- Emergency fund (except for some money that’s now earmarked for something else, but could still be used for emergencies)
- House cleaning service
- Roth IRA contributions (though I’m budgeting for a big makeup contribution once we’re back on track)
- Diaper service (including compostable products, pickup and dropoff)
- DVR service for cable (we couldn’t cut cable entirely because it’s built into our association dues)
That’s what was needed just to purchase the new place and cover a loss on the condo when we sell it, and kick out our tenants and move in once we sell.
Now that we’re planning to move in whether or not we sell the condo, we’ve had to plan more budget cuts:
- We’re taking out a student loan for tuition on my husband’s last semester at college. We will try not to spend the money we’d saved up to pay for the semester, but that money will be available as a de facto emergency fund in case something comes up such as a medical emergency, large unavoidable expense with the new house, etc.
- We cut back the money I had planned for buying new winter gear. We’ll make do with what we have and seek out used or cheap replacements for what we can’t do without.
- We’re cutting personal spending money in half, and we also know the rest of the personal spending money is on the table as a potential future cut if needed.
- Moving into the new place will actually cut our internet bill in half or even by three-quarters, an unintentional but welcome budget reduction.
- We’re cutting the budget for birthday presents (early next year) in half.
- We’re cutting our barbershop budget; some of us will be skipping the barber entirely or going less frequently.
If there are small expenses that crop up, we have a few more places that we can still cut:
- More of our spending money.
- Reducing the Xmas gift fund.
- Netflix (not much of a savings but it’s something).
- Carshare (we set aside money each month to use Hourcar and Car2Go).
- CSA (farm share; we get a good amount of bang for our buck so it wouldn’t be a huge savings to buy at the store instead, but it would help some).
- Reduce the grocery budget (we’re going to try not to spend all of it anyway so that we have more wiggle room).
- Continue to cut out Roth IRA contributions (right now I have them scheduled to restart in December).
If we have large-scale unavoidable expenses, or don’t bring in our projected income for any reason, these are the ways we’ll have to cover them:
- Use the money planned for a big Roth IRA catch-up contribution.
- Use the money planned to pay off the last semester’s tuition, and carry the student loan for awhile instead.
- Use the money we have earmarked for renovations on our UK property; if used, we’ll have to find money to replace it, or else take out a home equity loan in the UK to fund the renos.
- Get a 0% interest, no-payments credit card (last last last resort).
- Loan from family member (very very very last last last resort; would do anything to avoid but know that the option is there).
Now all of the above is just preparing for worst-case scenarios. We also have several positive money possibilities on the horizon:
- Promotions and/or new job prospects that could bring in more money.
- Year-end bonus probability.
- A potential windfall that’s up in the air but not yet out of the picture.
- Selling the condo sooner than expected or for a smaller loss than we’re predicting.
If any of these happens, we need to be strategic about the money. Smaller amounts of money should be used to make improvements on the new home according to highest priority. A larger windfall would be used to reduce our principal debt so our monthly payments would be smaller and our journey to debt-free shorter.
In the next post, I’ll share ideas I’ve been gathering for ways to save money by buying cheap or doing without. I’ve also been brainstorming lots of free activities to keep me occupied and keep any desire to shop or spend money at bay without feeling bored or deprived.