The Talk #2 – Getting on Budget

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Video IconThis was our second appearance on The Talk. In the first appearance, we shared about saving money on groceries. In this two-segment appearance, Steve & Annette talk about their household budgeting system and how to save money in almost every room of your home.

Topics we Covered in the Interview

We talked about saving money by using a freezer to stock up on sale items. Then we “walked around the house” and shared money-saving tips for saving money in the bathroom by reducing water usage; saving on prescription drugs; reducing heating and cooling costs and improving gas mileage on your car.

We’ll also talk about the simplest and fastest way to start controlling out of control spending by using the budget system we described in our book, “America’s Cheapest Family Gets You Right on the Money.”

The Crew

Super Producer, Lauren Danza, came up with the idea of saving money in several rooms of the house. The set designers did a fantastic job building movable rooms. Lauren did a pre-interview story that outlines most of our tips that we share in the segments – it’s at the bottom of this page.

Julie Chen and Holly Robinson Peete on the set of the Talk with Steve, Annette and Abbey Economides.

Left to Right: Holly Robinson Peete, Abbey Economides, Annette Economides, Steve Economides and Julie Chen on the set of The Talk.

Segment 1: Simple Budgeting and Saving with a Freezer. 

Video to come

Segment 2: Savings in the Bathroom, Prescription Drugs, Water, Home Heating and Cooling, Improving Gas Mileage – get a copy of our free Gas Mileage Tracker here

Video to come

Q& A with Steve & Annette Economides

1) For people who don’t know… tell us a little about yourself and your frugal lifestyle:

  • Family of 7.
  • Spend only $350 / month on groceries.
  • No debt.
  • Paid off first home in 9 years.
  • Paid off second home in 15 years (went slower due to starting our own business).
  • Buy only used cars.  Pay for them with cash.  

2) For people who have never been good at budgeting, what’s the FIRST THING THEY SHOULD DO?

Annette:  When you’re first starting out, I want you to write down for 30 days, every time you spend money.  Write it down.  Then think in terms of categories of household spending.  People are just not even aware of where their money is going.

Steve:  The simplest budget in the world is to go get 3 envelopes.  And I want you to write on them “RECREATION,” “CLOTHING,” and “FOOD.”  Then, when you go to the bank every month, I want you to put a predetermined amount of cash in each one.  And over the course of the month, you can only use cash in those envelopes for those items.

Here’s why.  Those are the categories that most people overspend on.  You won’t overspend on your car payment, or your rent or mortgage, or your cell phone.  But if you use cash for those categories, I bet you’ll cut your wasteful spending down by about 50%.

Steve:  We’ve researched a lot of budgeting systems and the categories that we used have worked so well.  We essentially use the “envelope system” but we don’t do it with envelopes, we do it on paper and within our bank accounts. Learn more about our Budgeting System here.

3) What’s your advice on credit cards?

Steve: We don’t use them.  There is nothing wrong with them, per se.  The problem is when people spend more than they have.  You can use them all you want as long as you pay them off in full every month.  We personally choose not to use them.  (And in fact, with the budget we use, credit cards would make it more complicated.)

Annette: And you CAN live without credit cards.  We use debit cards.  We rent cars, hotel rooms, we buy airline tickets; we get mileage and we get points!  You can do all of that with a debit card.

Steve:  I promise that once you start doing it this way, you’ll never go back to your old way of living.  It’s revolutionary.

4) Tell us how you were able to pay off your mortgage in 9 years.

Annette:  When we paid off our first house, we had been married 12 years.  At the time, we were earning an AVERAGE of $35,000 per year.  What that means was some years — when we were first married — we were making $12K.  We could have qualified for food stamps.
Steve: Other years, we were earning $70K.  But in those years when we earned more, we didn’t spend more.  Instead, we took the excess and paid it on our house.

A: Also, we didn’t buy the biggest, most expensive house.

S: We bought a re-po.  Our financing was 11% interest at a time when interest rates were 13%.  And we were able to put an extra $400 – $500 per month extra towards the mortgage because we had no other debt.  So paying extra each month and not buying the biggest house were the two biggest things we did.

A:  And we also tell people to buy less than what the bank says you should.  All that creative financing in the past few years with second mortgages is what’s gotten people into this mess.

S:  The most powerful tool, though, was having a budget.  You need to know where your money is going so you know how much extra you have to pay down your debts, like a mortgage.

Read more about how we paid our mortage off quickly here.

5) You have money-advice for every room in the house. Let’s talk about the BATHROOM.

Steve:  One way to save on water — take a 32 oz plastic water bottle, fill it with water, and place it in the tank of your toilet.  What you’re doing is displacing the water.  You’ll still get the same flush power, but with less water.  So you save 32 oz every time you flush.  Flush it 4 times, that saves you a gallon of water.  Over the course of a year, we figure we save 20,000 gallons of water.  That’s enough to fill up our swimming pool.

Annette: When it comes to medical coverage and prescription drugs, it’s so important to know your insurance policy.  Read all your booklets.  That can save you thousands of dollars a year  Maybe there is a service they do cover that you don’t know about, like medical equipment or counseling or therapy.

May there is something they don’t cover that you need to know about.
Steve:  Nearly half of Americans take prescription drugs.  One way to cut costs is to SPLIT pills.  So you double your prescription strength but cut the pills in half.  (Talk to your doctor first.)  Or, ask for a 3-month prescription.  That way, if your co-pay is normally $10… you’ve just cut it to $3.33.

Steve:  Another way to save on medicine is to get free samples.  Doctors have drug reps coming in every day to try to get them to prescribe new drugs.  Drug reps also give them samples.  So if a doctor says you need this antibiotic… or ear drops for your child… ask if they have samples.

Most doctors have a closet of them.  When our kids were little Annette was at the doctor all the time, and she had befriended the nurses, so she would bring a tote bag and fill up — chewable Tylenol, liquid decongestant.  Every mom should do that.
Annette:  It depends on your doctor’s policy… but it never hurts to ask!

6) Tips for the KITCHEN.

Annette:  I’ve got 3 favorite basic cookbooks, and the reason I have them is that anything you want to cook — you’ll find the recipe.  And when you’re starting out and trying to save money, this is so helpful!
Steve: For someone who is eating out regularly, the cookbooks make you feel more confident to cook a regular rotation of meals.  You can save 70, 80, 90%.
Annette: Try starting with just cooking 2 – 3 nights per week.

Steve:  We use a freezer — we started with a 9 cubic foot freezer and now we have a bigger one.  But people can also just better utilize the freezer in your fridge.  The fact is, the freezer will allow you to save 40-50% on the food that you can freeze.

So if London Broil drops to $2/pound, that’s 50% less — you stock up and buy five packages.  Any meat in thick plastic wrap, you can freeze that for up to one year.  We just grilled ribs that we bought back around 4th of July for 99 cents per pound.

Annette:  We freeze bread; milk (you just have to pour a little out to leave room for expansion); cheese.  (Shredded freezes better than a block.  A block will crumble after it’s been frozen.)  And we buy frozen vegetables.  We love fresh and we buy fresh, but since we only go grocery shopping once a month, sometimes we run out around the end of the month.  Frozen vegetables are flash frozen, they’re almost as nutritious as fresh.  They’re much better for you than canned vegetables.


Annette:  One of the fastest ways to save on heating costs right now is window coverings to cut down on drafts.  You can get on Craigslist or other websites, buys some fabric, and make them.  They’re probably the cheapest thing to make quickly.  They also help in the summer to keep out the heat.

Steve:  We also use a programmable thermostat, which is wonderful.  It’s winter now.  Let’s say you leave the house every day at 8 am, you program it to drop down to 62 degrees.  If you get home at 5 pm, then you set it to come back up to 70 degrees at 4:30.  And at night when you go to bed, let it drop down again.  So you’re using less energy, cutting your bill every month.

Annette:  Many people can’t afford to buy furniture brand now, and you don’t have to.  There are so many people selling wonderful furniture on Craigslist, eBay and consignment stores.
Steve:  I got a solid oak ball and claw foot table with 4 chairs for $80 at a consignment shop.

8) Tips for the GARAGE.

Steve:  Check your tire pressure.  And every other gas fill-up, check your oil.  Running out of oil could cause damages that will cost you upwards of $5000.
Remember that tire pressure changes in different seasons (expands when hot; contracts when cold.)
Every time I fill up my tank, I track my mileage.  I keep a piece of paper in my glove compartment and I write down my mileage after every fill-up to calculate my gas mileage.  Recently I noticed that my gas mileage was dropping and it was because my air pressure had dropped.

S: Another thing people need to do is quote their auto insurance.  Most people don’t check it very often.  We quote ours every 2 – 3 years and we end up saving $66 – $100 per month

S:  And a great way to save on gas is to plan your errands and your route before you get into the car.  And here’s a way to cut your mileage — when you’re bringing your kid to a music lesson or karate class or boy scout meeting, that’s when you should do your errands.

If you’re already going out, plan another errand.  Or, better yet, drop your child off and then bring something for you to do, and wait there (rather than going home and coming back.)  Bring a book, balance your checkbook, bring your laptop.  This cuts your mileage and driving time in half.

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