Monday, January 05, 2009

Budgeting Tool #4: Year by Year Budget Summary

This is a continuation to my original Budgeting Series Posts. I probably should switch to a more sophisticated software, but my excel spreadsheets continue to work for our purposes. See
Budgeting Tool #1: Monthly Budget Tracking and Summary
Budgeting Tool #2: Cash Flow Analysis
Budgeting Tool #3: Asset and Liability Tracker

My fourth, and newest budgeting tool is a spreadsheet where I line up every year's budget by category. I have inserted a column in between each year with a formula that calculates the percentage difference in incomes from year to year.

Often, when a person lays out a budget, he/she looks at the previous year's incomes and expenses to predict the coming year. This year I decided to lay out all of our budgets from 2005 to 2008 (I'd have budgets going back further, but we lost a hard drive in 2004) side by side.

When I lined up our budgets a month ago so I could start to get a handle on 2008, I noticed some patterns to help plan the coming budget. One pattern I noticed is that every other year we seem to have a number of car expenses. In a good car year, such as 2008, our maintenance expenses have basically been limited to oil changes, wipers, and perhaps a flat tire. But in 2007 and 2005 we had some major cash outlays.

No sooner than I placed funds into the budget for major car repairs for 2009, as per the emerging pattern, did my mechanic tell me following our December oil change, that I need to bring the car back in January for a brake job. Glad I was prepared.

In good news: I was very worried about increasing food and gas prices and was convinced that despite my efforts in cost effective grocery shopping, that we would be hit by high food prices. We were hit by high gas prices, even though we didn't make our normal summer driving trip. However, we spent LESS (2.7% less to be exact) on groceries and household products (hygiene products, diapers, cleaning products) in 2008 than in 2007. We made all yom tovs (in the past we went away for Pesach), we hosted my parents for about 3 weeks during the year, and my ate "real" food all year long.

My favorite coupon, as must have, are those offered by drug and grocery stores offering a cash gift card ranging from $10-$30 for a new and/or transferred prescription. This is the "must have" coupon. CVS Extra Bucks and Rite Aid rebates have made a huge difference in our budget also (I count the check rebates against the food/household product budget). See CVS 101 and Rite Aid 101. I have yet to pay for mouthwash, toothpaste, toothbrushes, shampoo, conditioner, or even lotion this year after coupons and rebates. I often leave with more money/extra bucks than I started with.

Bonus Food Costs Post: When Brisket Runs over $16 a pound deals with controlling yom tov expenses.

Many people, including financial planners, are convinced coupons don't make a difference. But those of us who "specialize" in coupons and read our receipts know this is not the case. I regularly save between 25-60% on groceries between circulars and coupons. At CVS I do even better. My Fall spending was listed at just over $60 for around $550 in merchandise, which includes diapers. Now granted, if I wasn't getting muh of this stuff for free, I would choose a different brand, but coupons do make a difference.

Happy new calendar and tax year.


Anonymous said...

Automotively, I don't think of brake jobs as an unexpected repair. It's part of normal wear and tear, and it can be anticipated.

Dave said...

For most people, coupons don't make a difference.

As a general rule (loss-leaders aside), the companies make money at the coupon prices. So, presumably, they could just drop the price and compete on that basis.

They don't, because they know that enough people will pay list price to make it very profitable. What coupons do is let them also capture the part of the market that is extremely price sensitive.

Likewise, companies prefer "mail-in rebates" to price cuts or instant rebates because a non-trivial number of people will use the "after-rebate" price when justifying the purchase, but then fail to send in the form.

Anonymous said...


It's true that for _most_ people coupons don't make a difference. But there are definitely people who get products for free or better using coupons. Keep in mind that depending where you live and the time of year, some stores double or triple coupons. The trick is to exploit the optimal combination of sale price, coupons, and store cash back/ rebates. This week I got Pampers jumbo pack diapers for less than $2 a bag and was paid to bring home cereal and other products.

Walgreens is another store chain that sometimes offers great deals. Unfortunately none of the prescription gift card deals are good in NJ or NY.

Dave said...

Sure, that was my point.

Most people aren't disciplined enough for it to make a difference. But by creating the coupons, the manufacturer gets to capture both the high profit market sector that is less price sensitive, and the low profit price sensitive sector (which is considerably smaller).

Anonymous said...

I don't think we have the discipline to use coupons. We're pretty typical Gen-X brand loyal buyers and just stock up during sales. I've tried online coupons, but have had a hard time getting them to print.

Anonymous said...

Thanks for this.

ProfK said...

Coupons don't have to be an all or nothing proposition. Even if you only use them sometimes you are reducing the amount of money you spend. And with doubling or tripling that can add up to real money off. Shoprite routinely doubles any coupon 99 cents or less. Pathmark now does the same plus allows you three coupons to be tripled per shopping trip. The coupons are particularly nice if they allow you to buy a more expensive brand that you prefer because they knock the price down to what a cheaper substitute would cost or an item you don't usually buy because of the cost.

Anonymous said...

Keep track of how often you rotate the tires. The place where we bought tires rotates them for free but does not continue the warranty if the tires are not rotated on schedule. This causes the tires to wear out faster and lose miles of wear. I have also visited a junk yard for minor replacement parts on my '97 jeep.
Also keep track of flex account spending. At the end of this year we had several hundred dollars in flex left and had to hurry up to use it up.
There are lots of places liquidating now. A place that I went to yesterday had 90% off of children's books and cookbooks and I stocked up to use as gifts. I am waiting for their other household supplies to become cheaper. I once stocked up on sidewalk salt (for melting ice) at a liquidation sale. Always wait until the liquidation sale is almost at the end because in the beginning, they jack up the prices.
If an airline bumps you, fight for a voucher. Drive within the speed limit. Use the library, health department, and dental school. Women who wear wigs can often find quality synthetics at beauty supply stores and the cost for styling is far less than that of a sheitel macher. Women who wear long sleeves year round should shop in late January and early Feb for end of season for women and girls.
In high end perfume and make-up counters, ask for whatever samples the store will give you. You can often take home a bagfull, even without making a purchase. Some stores will do a complete cosmetic makeover for a small purchase. This is worthwhile before a simcha.
Learn to sew and save on repairs and alterations. Use dryer do-it-yourself dry cleaning. Clean your own house and do whatever yard work you are capable of. (I don't do anything outside involving a ladder). Paint your own walls, and nails (finger) if you are into that.
Join forces with other frugal families to eliminate birthday party craziness, or jealousy at snack time. Some schools have snack requirements due to parental pressure.
Unplug any unnecessary appliances as some of these burn electricity even when only plugged in. Switch to energy efficient bulbs. buy blankets and sweaters, turn down the heat. I put plastic on my windows and seal them very well for the winter.
Cut down on wasteful side dishes for Shabbos and yomtov. Most of them end up in the garbage because most people cannot eat as much as we prepare.
Speaking of stores, I find that family dollar and dollar general stores have the best deals on both food and hygiene staples. They also have great prices on underwear, art supplies, picture frames and toys.

Esther said...

I try to keep on top of reward items to make sure they don't expire. For example, CVS will give a coupon for several dollars off your next purchase (if you use the CVS card), but they expire quickly, so need to remember to use them right away.

Anonymous - We just found out about putting plastic on the windows for winter, and it works so well! I only heard about it in someone else's comment on a blog about saving money, so thanks for posting it here since maybe someone else will try it.

Ariella's blog said...

I also am not usually organized about grocery coupons. Usually, I have to get to use the coupon within a week of getting it if I am to remember to use it while shopping. But I do calculate if the comparable item that does not offer a coupon may still prove to be the better buy. BTW the newest kosher store in the 5 Towns does not accept manufacturer's coupons. I know for a fact that Brach's and Gourmet Glatt do, though I'm not certain about SuperSol.

The coupons I do use are ones I for specific stores that I either get in the mail or online - like the Bed Bath & Beyond coupons that do not expires and Children's Place coupons. This week I also used the Office Max coupon, which comes in the guise of a brown bag that entitles you to 15% off anything that fit in it, to buy the school supplies my daughter requested and my tax return software.

Ariella's blog said...

Oh, and I do try to make a point of using my CVS bucks, though I don't always find use for the product specific coupons that also print out on the register receipt.

Lion of Zion said...

"cash gift card ranging from $10-$30 for a new and/or transferred prescription. This is the "must have" coupon."

i'm 99.9 percent sure that this is illegal in new york.

"The place where we bought tires rotates them for free"

costco offers free rotation, patches, nitrogen, etc.

unfortunately i bought a new set of tires a few months ago but not i have to junk my car. anyone want to buy almost new tires?

"Cut down on wasteful side dishes for Shabbos and yomtov. Most of them end up in the garbage because most people cannot eat as much as we prepare."


"I find that family dollar and dollar general stores have the best deals on both food and hygiene staples."

i find that the merchandise in dollar stores in generally crap or smaller-than-normal sizes. sometimes it doesn't matter, but often it does.

btw, kay bee toy store is going out business and there are big sales (not sure if all locations)

Anonymous said...

I keep hearing about how much people claim to cut their grocery bills by using coupons. I've never been able to do much with coupons because at least 50% of my bill is for fruits and vegetables, for which there never are coupons, and most of the remaining items are unprocessed foods like milk, eggs - again usually no coupons. Sure, I buy pasta, cereal, bread and a few other processed foods like cheeze and yogurt, but generally get the store brand and with the exception of name brand yogurt these items dont have coupons. So how do people who don't buy much processed food manage to save?

Anonymous said...

Try hispanic groceries for fruits and vegetables. I do always buy my milk from ShopRite since it lasts really well and I wouldn't try to save by buying gas station milk. For cheese I bought a hand grater (not expensive) and now buy big five pound blocks of mozzarella. It lasts longer than the pre-grated cheese, and it's much cheaper.

Orthonomics said...

We also don't buy a lot of processed foods. For produce, I find ethnic stores (Asian, Hispanic) or small grocery stores have the best prices generally. I tend to buy most produce in these small stores, but I also watch grocery store ads. And when I'm in the store I check if there is any dated produce marked down. This produce is great for soups.

Produce type stand shops also can have good prices or almost expired stuff that is good for soups.

I plan our menu around produce that is on sale and the kids eat plenty of fruit that is on sale. Lately, it seems clementines have been on sale everywhere. Fortunately, they don't get tired of these.

Staples also go on sale. We also eat little processed food. Flour goes on sale. Eggs go on sale (and brand name eggs go on sale and can be paired with double coupons or even triple coupons on occassion). There are price differences between different stores and sometimes a once a week markdown on staples. When the big cans of diced tomatoes go on sale, I've been known to buy 40 cans at a time because I don't like to run around anymore than anyone else.

Hope that is helpful.

rosie said...

While I also don't find coupons too useful for food, I do find useful coupons for cleaning products, baby stuff, paper products, and cosmetics. There are also % off coupons for department stores such as Kohls and Macy's. Of course, it saves even more if a person cleans with baking soda, vinegar, etc or shops at the thrift store. Many of my friends shop at thrift stores.
I have read lately how nearly any purchase can be haggled, even food. If a food is near it's expiration date (not use by date) the grocer might agree to reduce the price. Telling a salesman that you are looking around before deciding might get him to lower the price on appliances or electronics. Anyone tried it?

Anonymous said...

Yes, Sears once gave me a discount on a Kenmore vacuum to match the price of a Eureka I was looking at. This was 7 years ago. I have been through about 3 vacuums since then, then I finally bought the super expensive Dyson (at Costco) and I have been overjoyed with it! Worth the money!

Orthonomics said...

It took me a while to haggle on prices, but I finally did recently when we had to make a matress purchase. I started at one store and told him I was going to shop around. The salesman agreed to match a price, but the next store wouldn't haggle and was priced above the first store. I couldn't find a lower price at the next store, but I decided to go back to store #1 and haggle some more and was successful.

I'm hoping the first time was the hardest and that asking will get easier.

Anonymous said...

I once got a great Kenmore vacuum on sale also, tesyaa. Probably would've been annoying for area rugs, but it would pull me across the room- and I way well upwards of 200lbs.

Ariella's blog said...

BTW I found some helpful templates for tracking expenses and budgeting on Google docs.