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Tuesday, July 13, 2010

Little Pennies Add Up

I've gotten comments from readers and friends alike saying "Come on, Penny. Why do you bother? How much cheaper is it really to make everything, like mayonnaise, from scratch? After paying for electricity and water, how much do you think you're really saving by cloth diapering? How much are you saving by doing all that you're doing? Seriously, Penny, wouldn't you rather have a life than have only 3 or 4 extra dollars at the end of the month?"

Face it. You've probably wondered why I spend time doing all these extreme frugal things when the savings don't really add up.
Because obviously they can't. Right?

Wrong. Those pennies certainly do add up.
Watch as I show you how.

Little Pennies Add Up

How much is your electricity bill? Your water bill? Your grocery bill? After all is said and done, how much money do you spend each month, relative to how much you bring in?
My husband and I recently sat down and compiled a more up to date budget, reflective of prices in our new apartment, and were happily surprised at what we discovered.

Conserving Electricity Proven Worthwhile
Speaking to my friends, family and neighbors, these people are all resigned that their electric bill will hover anywhere in between 100 and 300 dollars per month over the course of the summer. Sure, these people aren't thrilled with their high electric bill, but what can they expect? It's summer after all, and for them, AC units are a given.
Even my friends who use no air conditioners regularly expect a higher summer bill, around 70 dollars or more, because they use fans to keep cool.
During the summer months, we find that not only is our electric bill not outrageous, it is actually the lowest it is all year as sunny days make solar water heating, solar cooking, and 'solar' line drying a breeze. Our last electric bill (note it's been summer here already since late April) was a mere 24 dollars, the lowest electric bill of anyone that I know.

How do we get our electric bill so low? Well, in addition to not using AC and limiting use of fans, we also try to minimize using other electric appliances, do as many things by hand as possible, line dry, and cook either on the gas range or solar cook instead of using the oven.
Can I tell you which of my methods of conserving electricity cuts the most money? No, but as my electric bill is 50-275 dollars lower than everyone else's electric bill, even with being home all day and washing quite a few extra loads of hot laundry per week because I cloth diaper, I see that those pennies I save each time I do something to conserve electricity certainly do add up.
An extra 50 to 275 dollars extra per month is certainly nothing to laugh about. Why, 50 dollars can buy me more than a week's worth of groceries for my family.
Which brings me to the next point...

Shopping Penny's Way Proven Worthwhile
Friends usually shake their heads in disbelief when they hear that our monthly grocery bills usually average at around 120 dollars per month, and on a tighter month can be as low as 80 dollars. (Keep in mind that there is no such thing as couponing where I live, so these prices reflect that.)
Most people I know, even the ones without money, usually spend more than our monthly grocery budget on one week's shop alone. Less frugal people we know even spend upward of 250 dollars each week on groceries.

When people ask me how I get my grocery bill to be so low, I usually chuckle and say "Read my blog." (Ok, I don't really say that, but I sometimes wish I would.)
Sure, people laugh at the "few pennies saved" by making everything from scratch and by eating a largely vegetarian diet and by my going shopping bi weekly and all my other methods of saving money in the kitchen, but the facts remain.
I am able to spend as little as 28 dollars on a weekly grocery shop for my family of four by following my grocery shopping rules and making things from scratch. (On an exceptionally tight month, I spent only 5 dollars on groceries for a whole month.)
By shopping my way, I am able to save between 75 and 120 dollars per week, letting me end the month with between 320 and 520 extra dollars in my bank account. Certainly no laughing matter. (Savings are being calculated in comparison to friends that are struggling financially, with families my size or smaller.)

Following the mantra of "every little bit adds up", by conserving and cutting back and doing the "little things", we've managed to cut back our expenses drastically in every single area.

Why Small Savings Matter
Some of you reading this might think "So, you manage to save 600 or 700 dollars per month. So what?"
I'll tell you what.
My husband works at a near minimum wage job and gets paid an hourly wage. There aren't always available hours for him to work, like those months where the company forces every single employee to take certain amounts of unpaid vacation. Or if my husband needs to take off work for a family emergency.
Then there are the regular months where my husband works a regular, full time job, which doesn't amount to much pay.
My husband can always opt to work extra long days- 6 am to 8 or 9 pm (no overtime pay here, simply more hours of work compensated at the regular rate) and hope that his boss actually has extra hours available for him to work. On months like that, he can make a decent amount of money.

Basically, my husband's salary can range anywhere between 540 and 1300 dollars per month, with a regular month's of full time pay being only 945 dollars a month.
(I bring in a really small amount in addition to that, but it's so negligible and inconsistent that I'm not factoring it  into these calculations.)

Our rent in the cheapest, smallest place we could find that is accessible without a car costs 513 dollars per month.
On those "vacation" months, that leaves only 30 dollars left for groceries, electricity, and every other bill imaginable.
On regular months, that leaves 432 dollars left for every other expense.
On a good month, we have a whopping 1000 dollars to cover every single thing aside for rent.

So yes, saving 600 or 700 dollars a month is a big deal. 600 dollars is more than we have left after paying rent on a normal month, and is 60% of what is left over after paying rent on a good month.
Even saving 50 dollars is a big deal when there are only 30 dollars left for groceries on a tight month.

Do those little pennies add up?

They most certainly do.

With your current income, does saving 50 dollars here and there really make such a difference? How much savings would you need to have to make extra work be worthwhile?


You might also like:
Why Making Money Doesn't Always Pay- also known as "Why don't I get a full time job"
When Being Frugal Costs- where I share my experience of taking another job to increase our income, and why it wasn't worthwhile.
Electrical Appliances You Can Do Without- a sampling of how our electricity bill got so low.

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