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March Madness Budget Challenge

envelope-system

We are doing a March madness budget challenge this month as a test to see how much we actually need to live on with our current living expenses.

You may have read my post, which asked if you could live on $1,000 per month.  In that post we talked about how little we could live on if it became necessary or if we simply chose to live that way.

This month we wanted to go a little further and test how little we could live on considering our current expenses.  This only meant reducing the extra non-essential spending we typically do.  What are we limiting?

  • No eating out
  • No alcohol purchases
  • No extra movie rentals or theater trips
  • No coffee at Dunkin Doughnuts, Tim Hortons or Starbucks, etc…
  • No non-essential home or clothing purchases
  • Limiting non-essential travel for gas expenses

What this did not include:

  • I won’t list all the necessities, but you can imagine we are not turning off our electricity, heat, gas for the car to commute to work, etc…
  • We do have a budget for food, which we are going to try to stay within.  No extra snacks, eating out or anything food related.
  • We are keeping our Netflix and Xbox Live accounts on.
  • We are still saving for retirement, but we won’t count those as necessities when we do our final calculations.

The great thing about this is we will have a real baseline for how we currently live if we just cut out the small stuff, which can add up in a sneaky way.  We will see how much more we could be saving or investing by making these small changes.

We will also feel where the pain points are of giving up certain luxuries, such as eating out once and a while.  We are a week in and usually we have food delivered on Fridays to celebrate the weekend’s arrival.  This weekend we made our own diner.  I admit, we missed that.  🙂

What makes the March madness budget challenge easier is our experience with tools such as the envelope system pictured above and we already keep a written budget.

envelope-systemWhen money is set aside in your budget for one specific category, it helps to prevent over spending in other categories.  We have used two different systems over the years to manage our budgets.

  1. You can create an electronic envelope system by having a spread sheet of your expenses with a limit on what you can spend.
  2. You may also chose to have an actual envelope with your budget for the month inside it.  A lot of people find this the most effective way.  Spending real money vs. using your debit card influences our habits.

We are just seven days in, but I will share our insights at the beginning of next month.  Even in our budget conscious home, I expect to see some good results.

Have a great day!

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