Budget Busters, Part 2

Keep monthly expenses like housing, food and transportation from breaking the bank each month.

In Part 1 of "Budget Busters," we identified sections in our budget that keep us living in the red. Now that we know why we run a deficit each month, one question remains.

How can we keep our costs from breaking the bank each month? Here are some ideas.

Housing

1. Purchase a home only if total housing payments (mortgage, taxes, insurance, utilities, phone, and maintenance) do not exceed 38 percent of Net Spendable Income.
2. Do not finance a second mortgage for a down payment and do not finance closing costs.
3. If trading, make sure it is a need and not simply a desire.

Food

1. Plan a weekly family menu and stick to it.
2. When shopping always use a written grocery list and do not deviate from it, if possible.
3. Avoid shopping when hungry or in a hurry.
4. Avoid expensive prepared and frozen foods.
5. Purchase sundry items, household cleaning products, and paper products at discount retail stores or retail warehouses.
6. Shop advertised specials and use manufacturer's coupons.
7. Try generic or store brand products.
8. If at all possible, avoid shopping with small children.

Transportation

1. Automobile expenses (monthly payment, repairs and maintenance, gas and oil, tags and taxes, and insurance) should not exceed 15 percent of Net Spendable Income.
2. Evaluate the reason for trading. Is it a need or simply a desire?
3. Can a present car be repaired for less than six monthly payments on a new car?
4. Pay cash for a new car if possible. If not, make sure the current car is paid off before purchasing a new one.
5. Buy a quality used car rather than a new one.
6. Avoid car leases.
7. Perform routine maintenance and minor repairs yourself.
8. Purchase supplies at wholesale distributors.
9. Use the cheapest gasoline recommended by the owner' manual.
10. Consider dropping collision insurance if the car is four years old or older.

Debts

1. Destroy any credit card that you cannot pay in full each month.
2. Establish a payment schedule that pays all creditors regularly.
3. Buy with cash and sacrifice wants and desires until debts are current.

Medical and dental

1. Teach children to eat the right foods and clean their teeth properly.
2. Take care of the physical body through diet, rest, and exercise, and it will most likely respond with better health.
3. Question doctors and dentists in advance regarding costs.
4. Shop around for prescriptions and ask for generic drugs.

Savings

1. Use payroll deduction, if possible, for savings. This removes the money for savings before it is received as salary.
2. If payroll deduction is not available, use automatic bank withdrawal from the checking account.
3. Write a check to the savings account as if it were another creditor.
4. When an existing debt is paid off, reallocate that money to savings.