These 15 ways to save $17,000 on a tight budget not only helped us “succeed” but also allowed us to pay cash for college and pay off our car.
Guest post by Elizabeth from The Reluctant Landlord originally posted in August of 2015
My husband and I met in High School and were married months after I graduated from college. Getting married young and relatively poor at 22 and 23, we quickly learned how to budget.
My husband’s job as a Navy Ensign in the pilot program meant that I moved directly from college to South Texas. We got married in 2010, in the middle of the recession. Unfortunately, I was unable to find work, so I entered into a graduate program. Since the program was less than $10,000, our goal was to pay cash for the program after we used the rest of the money we set aside to pay for college.
This meant things were tight. We brought home less than $44,000 a year. Luckily, my undergraduate degree was in finance. So while painful and a VERY tight budget, I learned very quickly how to budget off of one income.
Here are 15 lessons that helped us not only “succeed” on a tight budget but save $17,000, pay cash for college, and pay off our car.
15 Ways to Save $17,000 on a Tight Budget
1. Budget off of One Income
From the very beginning, we always budgeted off one income, putting the second income away. While in the beginning, this was the occasional odd job, slowly I was able to get more steady jobs. Eventually, I got my first full-time professional job. To this day we still live off of one income, investing the second income into our 6 and counting rentals.
2. Shop around for Insurance
Shortly after we got married, our insurance tripled. Even after we were told we weren’t going to get a “better” deal, we compared our cost with other insurance agencies. Sure enough, sticking to our guns saved us almost $2,000. ALWAYS shop around!
3. Limit Your Grocery Trips
We found that running into the store for “one” item, meant that six other things “jumped” into the cart. Limiting our shopping to as few as trips as possible, and going without if an item was forgotten, helped us squeeze our pennies even further. You would be surprised the number of things you don’t need. You also quickly learn not to forget the important items, like laundry detergent.
Also, consider curbside pickup if it’s available in your area.
4. Use Cash Envelopes or Keep Your Credit Limit Very Low
We are huge believers of using credit cards. While this isn’t the case for everyone, our credit card points helped pay for fun when we were on a budget. To this day we still use credit cards for the points. My loft credit card allows me to buy my wardrobe for free. It is very important to emphasize that keeping the credit card spending within the limits of what we budgeted, helped us make sure we didn’t overspend. While this isn’t a great idea for everyone, it is great in the short term.
5. Automatically Set up Retirement Levels
From our early days, we set our retirement at 5%, and then over time, we upped it to 10%. This past year, we maxed out the year amount at $17,500. The key to today’s success was starting at 5%. Even though it was almost nothing in the beginning.
6. Be okay with saying NO to Events that will Exceed your Budget
We said no to a lot of things that weren’t in our budget. While it was hard in the beginning, it has reaped many rewards.
7. Use Coupons
I religiously looked for any coupons that were for products we were already eating. This helped us significantly reduce our food budget.
8. Think Outside the Box for a Part-Time Job
When we first moved to South Texas there was no job available in my field. I took a weekend job working 16 hours as the cleric at the local beach. While it didn’t last forever it, it allowed us to pay for our 6-month car insurance bill.
9. Think Cheap for Housing
Shortly after we were married the Navy transferred us. Instead of renting an overpriced 3 bedroom apartment, we found a cheaper 3 bedroom house and rented it with one of my husband coworkers. It was one of the best things we did as we shared not only the rent but also the utilities. We even cooked together.
10. Set up Automatic Savings
In the beginning years, we always signed up for Navy Fed 3% savings account and put $450 a month into the account. It wasn’t much but it was a great starting point.
11. Put “Something” Into Retirement
Although we were very “broke” in the beginning we always put “something” into my husband TSP 401k account even if it was only $100-$200 a month. While in the long wrong it was nothing it helped us get used to budgeting.
12. Don’t Be Afraid Of Credit Cards
Although we were VERY careful about our spending when using our credit cards, we still used it religiously. This ended up being a GREAT asset because it helped us improve our credit score. This was very important when we bought our first house.
13. Good Habits are Important Even if they Feel “futile”
I remember in the first days of our marriage many of these “good habitats” seemed pointless. The $200 going into savings, the $30 we would save from our grocery trip, etc was pointless. Luckily, I stuck with it. While at the end of our two years it was “only” 17k, it was the money we used as our emergency fund when we bought our first house. Later it became the investment money for our first rental. Don’t give up!
14. Don’t Feel Bad About Accepting Money
Our families and extended families were amazing in the beginning. They would fill up our refrigerator, feed us, and even buy us clothes when we were too “raggedy”. Honestly, it came down to them just taking care of us while we were getting on our feet. While it took me a while to “accept” this generosity, it taught me the importance of accepting but also paying it forward.
15. Shop Around for Car Rates/Refinance if It Makes Sense
The biggest mistake we made when we bought our car, was going with the first bank we were approved with. Once we realized our mistake we shopped around, got a great loan and refinanced.
Did I miss any tips? What do you do to stretch your budget a little further?