Small Purchases Can Add Up to Big Numbers

When I resigned from my day job six months ago my income dropped by over 90%. I had no severance package and no unemployment. I resigned voluntarily. I was not fired, let-go or downsized. All I had was some savings, my creativity, a notebook full of ideas and a belief that I could make it on my own.

So far, so good.

But, there were still some adjustments to be made.

When I resigned I knew we had to cut back on spending and I thought we were, but the dollars in the bank were disappearing fast.

I had to do something to slow the outflow of cash, but before I could slow it down I had to know where it was going.

So, I embarked on an eight week journey and recorded every expenditure. I wrote everything down. Every single penny spent was recorded in a little notebook I carried in my pocket. At the end of the day (or every few days) I transferred the numbers to a spreadsheet where I categorized it all.

The analysis was interesting.

First, I was surprised to see that my book purchases were significantly less than I had expected. (My book diet is working.) This fact made me very happy.

Next, I looked at our standard, normal, monthly bills, what was budgeted and expected versus what we were paying. Happily all these numbers were all in alignment.

So, then, where was all the money going?

The surprising thing was, the money was trickling out, but it was a steady flow and adding up to some big numbers.

Spending small amounts here and there, several times per day, adds up quickly.

Several trips per week to the bagel shop, ordering in once a week, dining out with family and friends once and sometimes twice per week. Starbucks was still making an appearance several times per week. Magazines and newspapers picked up on a whim. Trips to Lowe’s and Home Depot for odds and ends. Art and craft stores and office supply stores were frequent trips of whimsy.

Except for meals, purchases here and there, several times per day, averaged about $7 per transaction. At the end of the week this was a significant amount of money.

Over the next several weeks we made some changes and I am happy to report, that although there are still things we can do, we’ve made some significant adjustments and have decreased these expenditures by over half.

Here are a few things we did to cut our expenses:

• Instead of going to the bagel shop we now buy bagels fresh at the grocery store and toast and eat them at home.
• Ordering in or buying takeout is a rare occurrence now. Besides, my cooking taste better and is healthier anyway. (And, I like to cook.)
• We’ve cut back on dining out with family and friends by about 50% and choose to just hang out together and eat at home, or choose less expensive venues. (I’ve also stopped offering to pick up the whole tab.)
• Starbucks is out. We buy a variety of fresh, organic coffee beans and enjoy a good cup of freshly brewed coffee at home.
• I ordered four, yearly magazine subscriptions at a cost of less than $70 versus spending $5 to $7 per issue, per magazine, each month at the newsstand.
• And, trips to home improvement stores, department stores, arts and crafts stores and office supply stores are made with a list and only for specific, needed purchases. No more wondering around and making whim purchases.

Learning to live on less isn’t easy, but it’s really not that hard. If I look at it as a problem to be solved my creativity kicks in and ideas begin to flow. Then it can become fun.

How about you? Have you ever tracked your expenses? What discoveries did you make? Did you make any changes to your spending habits?

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