More on budgeting

Let me start out with a sidenote. Yesterday I posted a little bit about how we started having monthly budget meetings in my household. I want to stress the importance of doing this on a monthly (or more frequently!) basis. One of the reasons a budget never really worked for us before is that we couldn't account for the usual variations in spending needs using just a general budget outline. By spending every dollar on paper, on purpose, before the month begins, we've done a much better job of sticking to the plan. Now on to the main event...

I recently read a "Moneywise" article in Real Simple magazine, which I normally enjoy and has some wonderful tips, offering advice to a lady on how to trim her monthly budget. This woman's household is very similar to mine: two adults and one young child. They bring home approximately $4000/month. The financial adviser recommended that 1) they get rid of their storage unit ($88), Tivo ($12), and Netflix ($15), 2) swap babysitting duties to lower child-care costs ($610, Mom works part-time), and 3) apply for a credit card so they can build a solid credit history to get a mortgage (they just finished paying off all of their credit card debt). 

Here's why I freaked out over the article. Cutting back unnecessary expenses is clearly a good idea if you're running a tight budget, so #1 should be acceptable to me. However...the adviser did not even mention the $600 monthly budget for groceries (for 2 adults!), or the $220 for "self care and incidentals" or the $150 for "Gifts". Maybe I've adopted a miserly mindset, but that seems over the top. I feed our family for $250 a month, and that includes cooking once a week for a needy family at church and trying to make sure we have a lot of fresh veggies and fruit. And if I had student loans to pay off and childcare expenses, I would slash that gift category back a bit until we were totally debt-free with a full emergency fund. 

To be fair, I have no complaints with the second bit of advice. I'm fortunate to have "Grandma care" for our little one while I'm at work. I have no idea how anyone affords childcare.

#3 makes my blood boil and constitutes a challenge to my communication makeover. Let me take a deep breath so I can try to explain my position with grace and thoughtfulness. This couple just recently dug themselves out of credit card debt, and apparently closed all of their accounts and cut up the cards. This was wise. Aside from student loan debt ($350/month), they are financially free. Why would they give that up? Or even tempt themselves by having another card around? On top of that, did you know that studies have shown that people spend 20% more on average when they use "plastic" instead of cash? The financial adviser, as well intentioned as she seems to be, simply could not be more wrong on this account. If a person has zero debt and a steady income with a solid history of work, he/she does not need a good credit score to get a good mortgage. All they need to do is ask for "manual underwriting" when they go to the bank or credit union. There is absolutely no reason to have a credit card, and a multitude of reasons to refuse to touch one even if with a ten foot pole. 

Okay, my freak out is now over. Here's a humorous "plasectomy" for your enjoyment: