YES!!!!!

We did do a yard sale (couple hundred from that). Also, we cleaned up some excess expenses like canceling a life insurance policy no longer needed and cut out a couple of expenses. For example, I started working from home during the middle of this so there was no need for a security alarm anymore. Working from home also obviously cut down on our gas expenses.

Mostly though, it was doing a budget and just deciding to be different. I haven't received a Christmas/Birthday present from my wife in a couple of years now. We did the envelope system so once eating out or groceries money was gone, we were sitting at home eating whatever we could make (the Uncle Ben's microwavable packs of Brown grain rice are really good and a pretty cheap lunch meal). We had to tell friends/family several times that we couldn't go out to eat because we didn't have the money.

My wife was able to pick up some extra hours. She works part-time to begin with so there were some weeks when she would go in for an extra day or work Saturday morning. We do have a pretty decent household income which obviously helped but honestly, how large your income is doesn't matter if you aren't telling it what to do. Someone making 100K and spending 100K is no better off than someone making 50K and spending 50K. They have more stuff but they are just as broke at the end.

 

Curious, why cancel the life insurance?

 

It was a whole life policy. I now have a Million on me and a half-million on the wife. All term. Basic details of the whole life policy: It was a 50K policy (which is basically nothing), I paid over $3600 in premiums over 6 years and it had a cash value of $1600. That is also known as getting my lunch handed to me. Ironically, I would have come out ahead by paying the premium on a 500K term policy for six years and then putting the extra left over in a jar earning nothing. I would have gotten 10 times the insurance and had more sitting in the jar earning nothing than the cash value I got back.

So, I am much more heavily insured now (I'm actually about to add another half-million on me since I have a second kid now) for much cheaper and I am using the extra to build up my Emergency Fund right now and will start investing the difference myself. Every study has shown that is the much better plan.

 

Sounds like a smart move. I purchased a term policy last year and my wife has something through work. I didn't go the full million though.

 

At 1.5 Million and no consumer debt, I will probably be way over-insured but I do like the security and with my wife only working part-time, I don't want her to have to change her lifestyle if something happens to me. In fact, I want to leave it to where she doesn't have to work unless she just wants to.

 

As long as the premiums don't hurt too much that sounds good.

 

That's the amazing thing, you can buy a whole lot of insurance for not much money at all (I can get 1.5 Million for less than 1K per year by being in pretty good health and paying annually rather than monthly which saves money). An even better deal is an umbrella policy which is always wise to have and costs almost nothing for a million in liability coverage.

 

I have not broken down and done the envelope system yet. It seems like it would be a big hassle. How important do you think that step is?

 

Thelt, we didn't do it at first either. Then I noticed we were cheating especially around eating out. So, we switched to the envelopes and it made a huge difference for us. We are continuing to do the envelope system even after paying off the car. It forces us to be disciplined and it helps us to budget better. If we start coming up short in our groceries envelope, we need to put more money there (which we did not too long ago). It is a hassle but I think the discipline it forces is worth it.

 

It's whatever works for you. I don't do the envelope thing either. I just keep mental tabs on our spending and use Quicken. That seems to work pretty good for us.