Webster’s dictionary defines the word audit as “a complete and careful examination of the financial records of a business or person.” An Expense Audit is a careful examination of your day-to-day expenses and previous records. To free up more money for your emergency fund or debt repayments, an Expense Audit is necessary.

In this chapter, we are going to do an Expense Audit of your day-to-day expenses and talk about how to reduce those expenses or possibly cut them out completely.

This is my favorite part of the Recovering Spender program, because it is so much fun to see how much money you can save if you look hard enough. I know you may shudder at the thought of losing HGTV or Monday Night Football, but keep in mind that we need to focus on our values, not our wants. If you are $40,000 in debt, but are not willing to cancel your cable, I want to love you enough to tell you that you have a problem. That problem is that you are unwilling to give up a luxury item for something that will mean so much more to you down the road. Trust me, I hung on to that cable box until the very last second. What in the world would I do if I couldn’t shop or watch HGTV? But when I realized what $70 per month could mean to me, I was shocked.

Let’s say you are currently paying $70 per month for your cable service. When your first child is born, you have the option to save for college, but decide you can’t afford it. You continue to pay for cable and not save for college, and stay that way for the next eighteen years, refusing to make any changes.

Had you taken that $70 per month and invested it in a stock index fund instead, by the time your child was eighteen years old you would have saved $44,400 for his college education, making a big difference in your child’s future!

Let’s take a look at another scenario. You grab a Starbucks coffee on the way to work every day. You spend an extra $120 per month on coffee, not a big deal because you can afford it. If you had instead put that money in an index fund, in eighteen years you would be $76,000 richer!

Each and every purchase you make has long-term consequences, and until we as Spenders realize this, we will continue to think only about the here and now and end up breaking our budgets. So how do we go about changing the way we think about these types of things? Practice, purpose, and learning from others.

As a newly married twenty-one-year-old, I once headed out to do some grocery shopping with my mother-in-law. In the crowded aisles of our local grocery store, she went through her list and made sure to match every coupon with the sale item. To be honest, it drove me crazy! First, it took us forever to shop. I was used to getting in and out quickly, but for her it was an art. Being the mother of four kids, with a self-employed husband, she was always conscious of her budget. She taught me a lot in those early years of marriage, but the one thing that stuck with me was how careful she was about spending money. When I decided to learn how to lower our grocery bill, I thought back to that shopping trip and remembered how little she paid for her groceries. I thought that maybe learning how to coupon could help me cut my budget even more.

I picked up my old Dell laptop computer, the same one that had earned me my free car years before, and Googled how to use coupons. I was shocked to see that there were so many bloggers eager to share this kind of information. One glance at their blogs had me convinced, coupons weren’t just for grandmas anymore. There was a new generation of young moms who were proud of how much they saved with coupons, so much so that they would show their coupon trip pictures on their websites. Suddenly, couponing was cool, and I couldn’t wait to get started.

As a compulsive person, I didn’t just gradually learn how to coupon. I jumped in headfirst. The first thing I needed to do was get coupons, and get them fast! Thankfully, there are many websites out there where I could print coupons immediately, Coupons.com being a favorite. Take one look at a website for your favorite companies and you’ll see that they are practically begging you to print their coupons. I created a new e-mail account for couponing and would sign up for companies’ websites to get more coupons. I would also e-mail them from their website using their “Contact Us” form and ask them for coupons in the mail. Coupons starting flowing into my house either by e-mail or snail mail, but now I was onto the next step, which was learning the art of matching those coupons with sale items. By doing this, I was promised the best deals.

I had heard about coupon shopping at drugstores. It was a complicated process, because you have to match store sales with coupons, and then use the rebates that you get from buying those items to purchase more items that give you more rebates. Here is an example of how I would make this work:

I could go on and on with this, getting a lot of free deals every week. It took hours of planning and searching for the deals featured in the weekly circulars, but doing deals like this offered amazing savings, which I badly needed. I wanted to become a master at this strategy.

I took a few hours to plan my first trip, and plotted my transactions out perfectly. If all went as planned I would spend $10 on around $80 worth of items (including three packs of diapers)! I went to CVS before church started that Sunday, filled my shopping cart up to the brim with all of my good deals, and went to the cashier. I had to do this in four different transactions, and to be honest I was very nervous. My hands were sweating. I didn’t have money to mess it up. I won’t get into the boring details, but I walked out of that store, hopped into my car, and was in tears because that $10 I was supposed to spend had turned into $40. I had no idea where I went wrong, but I had to dip into my grocery money in order to pay because I was too embarrassed to try to figure it out in the store. Truth was, I had no idea what I was doing. I just wanted to save money.

That wasn’t the last time I would leave a store in tears. There were a dozen or more other times that I would go over budget and have to tap into some other cash accounts for that month. Many times it would be our Miscellaneous fund that I would use for groceries instead. After a few weeks I finally got the hang of it, and started seeing a huge savings of around 50 percent off my grocery budget—sometimes even as much as 80 percent off!

As successful as I was at saving on groceries, it isn’t the only place where you can save big money. Let’s talk more about how you can save on practically everything in your life. Below are three important steps to increasing your monthly spending even more.

1. FIND OUT WHAT CLASSIFIES AS A WANT VERSUS A NEED

What separates a want from a need can be a very fine line. You need to make a list of everything you spend money on in your Miscellaneous category and mark it as a need or a want. It is really important to know this for yourself. When you pick up an item at the store, you should ask yourself, “Do I need this, or do I want this?” This will help you identify every item as a need or want.

In the case of clothing, that can fall in both your want and your need category. You need clothing, of course, but you can want clothing because you like to shop and have the latest fashions. Necessary clothing is what you can buy, but clothing you want for no practical purpose is what you should remove from your life for now. There is a fine line there, and if you don’t set your budget accordingly, it can get blurred very quickly.

It was a luxury when I had any money to buy clothing, so I started shopping for much of my clothing at thrift stores. Instead of going to a retail store first, I would head into a Salvation Army store to find the $2 pair of jeans that fit into my budget. I learned when the sales were, and realized that if I shopped on Wednesdays, all clothing was 50 percent off.

Old Lauren would have been embarrassed. New Lauren loved the fact that she could actually purchase jeans that fit into her budget.

2. LEARN HOW TO SAVE ON GROCERIES

The number one place where you can see an immediate savings in your budget is on your food purchases. Eating out may be killing your budget, but it is only a symptom of a life that is unplanned. With simple meal planning and strategic grocery shopping, you can easily save hundreds of dollars per month.

Remember, in this category, one hour of planning can save you four hours of execution. Knowing that, I really started to focus on planning my meals ahead of time. Some weeks it took me four or five hours to plan out our groceries for the week, because I had to figure out a way to fit everything into our budget.

We knew we were throwing money away every week, and I knew there was so much more I could do to get that bill down. We could only afford $200 per month on groceries, so our goal was to cut our grocery bill from $1,000 down to $200 per month. I like a challenge, but this seemed impossible. I started taking that $50 per week out of my checking account in cash, and would walk into the grocery store immediately feeling defeated. I was embarrassed to use coupons because I felt everyone was looking at me thinking to themselves, “Poor girl.” My pride was running the show, but I knew that if I continued to be prideful I would continue to be broke and in debt.

There were many days when I would leave the grocery store in tears because I had to put items back, or I went over budget and knew I would bounce a check because of it. It was a process, but a process that was totally worth it! Teaching myself something new was hard, but the benefits of it far outweighed the occasional failures.

I would flip through all the store circulars, matching up my coupons with the store sales. My goal was to get as much for free or as cheaply as possible every week, and planning mega-trips during the quarterly triple-coupon sales at the local grocery store definitely helped us stay within our budget. I learned to swallow my pride and was dedicated to making budgeting work despite the embarrassment of many mistakes.

It isn’t easy feeding a family on only $50 per week, but I had to do it. I had to make sure that I was able to stay within budget because, frankly, it was the only money we had for groceries.

Another helpful thing I learned from my mother-in-law was meal planning, which means making a menu for the coming week. What a novel concept! The thought of planning my dinners in advance was new to me, so I had to figure out how to make it work for us.

The idea is that you plan what you are going to eat based on the sale items that week. One look at the front page of the grocery flyer tells you the best deals for the week. In fact, I learned that the items on the front of the grocery store flyer are called “loss leaders.” Your store may be taking a huge loss by putting them on sale at such a deep discount, but they hope that those loss leaders will lure you into the store and make you do all your shopping there. Not me. I decided to just shop the loss leaders every week. I would make my normal weekly rounds to five different grocery stores and stock up on those loss leader sales, planning my meals around those crazy low prices.

You don’t have to do this to be successful and save on your groceries. Heck, you can make just one stop at your favorite supermarket and you are good to go!

Planning meals for the entire month meant that I could stock up and save during a meat sale and prepare about a month’s worth of dinners from that one trip to the store. We also ate a lot of meatless dinners, fewer fresh veggies (that was a sacrifice), and really stuck to basic meals such as beans and rice. Mark is a foodie, so this kind of diet was especially hard on him at first. He didn’t like giving up extravagant dinners, but because we decided to get out of debt together we knew it would be a short-term sacrifice.

When I started my blog in 2010, I knew that one of the things I wanted to do was to help others learn the ropes of meal planning. I started creating plans other people could use and offered them to my website readers at shop.laurengreutman.com. I learned how to cook from my mom and mother-in-law, but Mark really loves to cook and come up with new recipes on a budget. He and I came up with recipes and created a system and chart that helps people make delicious recipes on a budget. These aren’t just recipes, but a complete system for making twenty meals for under $150. These plans have successfully helped thousands of families lower their grocery bills, stick to their budgets, and eat delicious meals. I am very proud that I was able to take the skills I learned shopping for my family and share them with others.

3. SAVE ON YOUR HOUSEHOLD EXPENSES

The next thing you want to do when cutting back on expenses is to take a look at the section of your budget where you listed bills you can negotiate and bills you don’t need to be paying.

Here are some of the bills that need negotiation:

Below are some strategies we used for negotiating down those bills.

Insurance

One way that we got our insurance bills down was to call around to compare rates. It’s common for car insurance companies to slowly increase your rate, and before you know it your $300 annual policy has crept up to $700 per year and you have no idea how. Call around and get quotes from other companies every three years or so. You can also work with a local insurance broker, who will help you get the best price and the best deal using smaller insurance companies that you may not know about.

Another way to save is to bundle your insurance products together for an even lower rate. I am a huge proponent of having life insurance, no matter how broke you are! For only $20 per month, you can go to bed at night knowing that your family will be taken care of financially, at least in part, if something were to happen to you.

Phones

When it comes to home phones, do you really even need one? Maybe you did back in 1990, but in 2016 most people do not have home phones. That was one of the first things we canceled when we began to be serious about getting out of debt. We chose to use only cell phones. If you’re nervous about not having a phone at home with your babysitter or kids, consider purchasing a TracFone from Walmart, get a prepaid card loaded on it, and use it only when needed. A concern I had about just using a cell phone with a long-distance area code is my kids having to memorize a ten-digit phone number. To combat this, we easily set up a Google Voice phone number with a local area code. Now when people call that number it forwards to my cell phone. That way the phone number will be a local area code and stay the same all the time. If I were to change my cell phone number, I could continue to have my kids call the Google Voice number (which you can get for free through google.com/voice) and they wouldn’t have to memorize a new number.

If you already have a smartphone, you don’t have to get rid of it. But do your research. There are other options out there, like Republic Wireless, where you can get 2 GB of data for only $40 per month, or 1 GB of data for only $25. Plus, if you don’t use all the data, they give you a refund each month. Consider calling your provider and seeing if your employer offers a corporate discount for your cell phone plan, or if there are any other discounts available to you. When Mark was working as an actuary, his profession got us a discount on our cell phone bill.

Currently, we have six people on our cell phone plan for our iPhones. My brothers-in-law and their wives are on our plan, and we split the bill evenly among our three families. This saves us around $30 each month—a nice chunk of change!

Cable and Internet

Last, when it comes to Internet service, there are so many ways to save. You can ask for a new rate using a competitor’s lower rate in the area, or you can call your cable company and see if you can bundle products together for a lower rate. A friend of mine called and was able to get upgraded from basic cable and lower-speed Internet to full digital cable and high-speed internet for $20 less per month. You just have to ask.

Next, let’s look at those expenses you don’t have to be paying for. Here is what we did with these bills. If you are willing to do the hard work to get out of debt, you should consider doing the same.

Home phone—Canceled. Savings of $30 per month.

Cable—Canceled. Savings of $70 per month.

Netflix/Amazon Prime—Split the price with two brothers-in-law. Savings of $6 per month.

Restaurants—Didn’t eat out.

Dates—We would put our son down at a friend’s house and take a walk or go sightseeing. Anything that required little to no money.

Magazines—Didn’t buy them.

Family activities—A lot of free activities, including playgrounds and hanging out with friends.

Hobbies—We didn’t do them because we would rather pay off debt.

Shopping trips—Trips to the mall were painful for me, so I cut them out.

Going out with friends—I would only go if there was enough money in our Miscellaneous cash envelope.

Cutting expenses for things you love may leave you with a bit of a hole in your life. To make up for what you miss, try to develop new interests that don’t cost much, and these activities may actually help you make extra money or save more down the road.

One way I would get motivated to cut back and cancel things was to think of the savings as an hourly wage. For example, if I spent two hours planning meals and grocery shopping for the week and saved $70 using coupons, that equaled a paycheck of about $35 per hour. That is much more than I could make anywhere else! I started to see other things in this way as well; when we canceled cable, phone, and Netflix, we saved $106 per month! Multiply that by twelve and I had earned an extra $1,272 that year for my family by spending about twenty minutes making phone calls. I would say that is a great hourly wage!

By doing this Expense Audit, you can usually free up a couple of hundred dollars per month to either put in your emergency fund or pay down debt. Start thinking about the possibilities and you’ll find money in your own budget that you never knew was there.

1. Do an Expense Audit.

2. Make a list of wants versus needs.

3. Learn how to save on groceries.

4. Negotiate down your monthly rates.

5. Cut expenses you don’t need from your budget (OUCH!).

Chapter 23

Recovering Spender Step 10:

Do an Expense Audit