The Today Show #8 – Getting Back on Budget

Christmas on The Today Show #1

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Steve, Annette, Becky and Abbey Economides appeared on NBC’s Today Show to share how their budgeting system has enabled us to accomplish some remarkable financial accomplishments in the past 28 years. They also shared loads of money saving tips for reducing expenses in your entire house.

As usual, we had so much material to cover that we didn’t quite get to it all. Below is a list of the questions we were supposed to cover and some more detailed answers on how you can make your money go further than ever before.

Questions from Today Show Producers

YOU INSIST THAT MAKING A BUDGET IS SOMETHING EVERY FAMILY MUST DO.
BY FOLLOWING A BUDGET AND SOME SIMPLE TECHNIQUE, YOU CAN SAVE THOUSANDS OF DOLLARS A YEAR. WHY IS IT SO IMPORTANT?

Steve & Annette Economides with Meredith Viera on the Today Show Set.

Every successful business manages their income and expenses so they can turn a profit. Every household should do the same thing. It’s not too hard and the benefits are huge. When you have a spending plan or a budget, you’ll have much better control over your spending. We’re not talking about living a life of deprivation, but rather a life of purpose. Our system controls our discretionary spending and protects money we want to spend on family and financial goals. For us that meant, paying off our first house in 9 years, paying cash for cars, helping our kids get through college without debt and remodeling our kitchen with cash. For our family, having a budget has produced great freedom, whether we earn much or little.

Every two weeks we set aside 1/2 of each months amount into 20 budget categories. When it’s time to pay for auto insurance every six months or go grocery shopping each month, the money is there, waiting to be spent; it’s totally stress-free!

If you’re more into computer budgeting, try Mvelopes or Mint.com they are the best systems out there. 

We want to encourage every family out there. If you’re struggling, if you’re not reaching your financial goals, if money is a constant source of discouragement—you can make it. It will take some time (about 4 hours every two weeks), and some discipline, but the changes you’ll see, that we outline in our book(America’s Cheapest Family Gets You Right On The Money) will revolutionize your life. Most people who have done what we suggest say that they will never go back to living the way they were before. They feel empowered and in control— you can too.

BECKY AND ABBEY, YOU EACH MANAGE YOUR OWN MONEY EVEN THOUGH YOU LIVE AT HOME. DO YOU FOLLOW YOUR PARENT’S ADVICE AND ACTUALLY MAKE MONTHLY BUDGET?

ABBEY: In the beginning, we had no choice. But now we see the value of breaking our money into categories and saving up before we spend it.

BECKY. I saved for five years and paid cash for my Toyota Tacoma. It was awesome to see the money steadily growing month after month. And when I wrote the check for $11,500 I felt really good (and a little sad at the smaller balance in the bank).

ABBEY: Sure I’d love for my parents to pay for everything, but on the other hand, I know that when I set a goal to buy a trampoline or iPod or American Eagle jeans, I’m going to reach it. There’s nothing that I want (that my parents’ approve of), that I can’t save up and buy.

LET ME ASK ABOUT DEBT. IT’S A HUGE ISSUE FOR A LOT OF FAMILIES. YOU’RE TOTALLY OPPOSED TO ANY LOANS OR DEBT CONSOLIDATION PROGRAMS. WHY?

Loans. Paying interest is just not smart. Loans are expensive—the interest on our first house was supposed to be about $100,000 over 30 years, we only paid about $40,000 in interest.

Loans are too convenient—they short circuit good research and finding better deals.

We’ve never borrowed except to buy our houses and we’ve always paid them off quickly.

DEBT CONSOLIDATION without a way to manage your money (a budget) is only a temporary fix. Most people can lower their monthly payments, but then feel a sense of relief with the lower payments and start spending even more. Get your spending plan in place for 6 months then consider a consolidation plan.

But a better idea is to go to each lender and see if you can renegotiate to a lower interest rate or negotiate a lump sum payoff of a reduced amount.  

YOU HAVE 5 UNIQUE AND EASY WAYS FOR EFFECTIVE-BUDGETING. LET’S GO THROUGH THESE. STEVE, YOU CAN TAKE THE FIRST ONE… THIS IS TO KEEP ENVELOPES FOR THE 3 MOST COMMONLY OVERSPENT AREAS AND START TO ADD CASH. HOW WILL THIS HELP GET A BUDGET ON TRACK?

Envelopes: Withdrawing a predetermined amount of money each paycheck for groceries, recreation and clothes will eliminate about 80 percent of your overspending and protect the rest of your paycheck for your other obligations. It’s really simple, cash doesn’t lie—if you look in your recreation envelope and you only have $8 left—you’ll have to find a way to recreate for that amount. You’ll be more careful, plan better and be more creative. It really works.

YOUR SECOND STRATEGY TO JUMP-START A BUDGET IS TO SELL ANYTHING YOU DON’T CURRENTLY USE OR NEED. WE’RE TALKING EVERYTHING FROM MUSICAL INSTRUMENTS TO FURNITURE TO JEWELRY. ISN’T THAT A LITTLE EXTREME??

Most people have excess or unused clothes, exercise equipment, musical instruments, electronics, music, books and movies or jewelry that can be sold and the cash used to fund your budget categories or pay off debt.

Sell What You’re Not Using:
~ Exercise Equipment
~ Musical Instruments
~ Electronics
~ Old Jewelry
~ DVD’s, CD’s and Books

SO YOU CAN SELL IT ON CRAIGSLIST OR EBAY OR HOLD A GARAGE SALE?

We love garage sales and usually hold one once every year. It cleans out things we don’t need. Helps the kids to earn some money and funds special projects that we have. We have lots of tips on how to host a great garage sale on our website

Garage Sale Gal Tips

Here’s an article we wrote about how we host our mega garage sales and make a boodle.

YOUR 3RD BUDGET STRATEGY IS TO LEARN A SKILL TO CUT OUT AN EXPENSE. FOR EXAMPLE — LEARN TO CUT HAIR, AND CUT YOUR ENTIRE FAMILY’S HAIR. OR BRUSH-UP ON SOME BASIC PLUMBING SKILLS, SO YOU DON’T HAVE TO CALL A PLUMBER…?

Do-It-Yourself:
~ Cut Hair
~ Grow Fruits & Vegetables
~ Basic Plumbing
~ Cleaning & Yardwork

It’s faster to cut your kids’ hair than to go to a barber or beauty school.
If you save $10 every six weeks for two kids (8 haircuts per year x 2 kids= $160 taking 20 minutes each time or 5 hours per year) is it worth your time? That’s about $30 per hour.

What is your time worth? If you learn to fix a leaky toilet and it takes you two hours‚ but you save $100 is it worth your time? $50 per hour is a pretty good wage.

Yard work is a great physical and mental activity, especially if you have a desk job. Growing your own food – especially if you do it organically is awesome and delicious.  You can’t calculate the value of good health.

INVESTING IN COST-CUTTING TOOLS AND TECHNOLOGY IS ANOTHER WAY TO TRIM YOUR BUDGET. WHAT ARE SOME ITEMS YOU CONSIDER WORTH BUYING TO SAVE CASH DOWN THE LINE?

Cost-Cutting Tools & Technology:
~ Programmable Thermostats
~ Large Used Freezer
~ Crock Pot
~ Window Covers & Caulking

We bought a couple of Lux Thermostats on eBay for $60 and calculated that they’ll save us about $400 this year. By controlling the temperature when you’re not home you can save a boodle.

A freezer is one of the best investments you can make, but we aren’t talking about spending more than $100 to $400. Buy them used through CraigsList or classified ads. We share how we research and buy smart in our grocery book.

A freezer lets you stock up on discounted meats, cheese, bread and milk and enjoy the savings for months rather than just one week. We just bought 34 pounds of top sirloin for $1.50 per pound—cut it into steaks and roasts and put it in the freezer. That will last about 3 months.

Crock pots will save you from the end of the day dinner panic—and running out to a restaurant. Put a chicken in the crockpot in the morning, slather it with bbq sauce and a delicious dinner will be waiting when you get home. Zap some baked potatoes and make a salad and dinner is ready for a few bucks rather than spending $20 to $60.

Weatherproofing is critical with the weather we’re experiencing right now. Caulk is only $2 per tube and there are plenty of YouTube videos to teach you how to do it. Cracks around window and door frames can really chill your home.
Making your own window coverings can insulate your home in winter and summer. They don’t need to be expensive.

YOU ALSO SAY THAT EVERY FAMILY CAN CUT THEIR GROCERY BILL IN HALF… IN FACT, YOU WROTE A WHOLE BOOK ABOUT IT. SO WHAT ARE A FEW SIMPLE WAYS TO DO THAT?

Slash Your Grocery Bill in Half:
~ Shop Once A Week or Less
~ Stock Up When Deals Are 30% Or Better
~ Overcook and Freeze Meals
~ Get a Used Meat Slicer  for cutting your own lunch meat (save 50%)

BECKY AND ABBEY… I KNOW YOU’RE ON BOARD WITH THE CHEAP WAY OF LIFE AT HOME. FOR OTHER PARENTS WHO WANT THEIR KIDS TO ADOPT A MORE THRIFTY LIFESTYLE, HOW CAN THEY DO WHAT YOURS DID TO TEACH THE VALUE OF SAVING MONEY?

 Helping your kids to be self-sufficient is a great goal for every parent. 

 

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