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Paycheck Chronicles

Don't Skip These Budget Items

If you're resolving to get your financial house in order, you might be looking at your budget and figuring out what could be cut.  Cutting can be good, but there are some things that seem expensive, but are too important to give up.

Maintenance, both car and house.

And clothes, lawnmowers, garden tools, cast iron skillets, refrigerators...pretty much anything can benefit from periodic care.  Have you ever heard the phrase, "a stitch in time saves nine?"  It means that if you mend a small hole in clothing now, you'll save the time of mending a larger hole later.  This philosophy can be applied to so many things.  Keeping the proper air pressure in your tires will help your tires last longer.  (And improve your gas mileage.)  Cleaning the filter on your heating and air conditioning system will help it last longer.  (And improve it's efficiency, lowering your utility bills.)  Are you seeing a theme here?

Insurance.

This one can be controversial, because there are arguments that it is cheaper to self-insure against some risks.  I think that a balanced approach is appropriate when it comes to insurance.

Take the simple example of the deductible on your auto insurance.  The lower the deductible, the more expensive the premiums.  If you don't have 2 cents in your savings account, it is probably appropriate to have a lower deductible.  However, as soon as you are able, you should increase the deductible to the maximum amount available to you.  Then, if you reach the point at which you have enough emergency savings to pay the value of the car, consider giving up your collision coverage.  Now, state laws require that you maintain a certain level of coverage and I would never recommend that you violate the law.  However, think about the financial pros and cons of the deductible and types of coverage that you carry.  Keep the insurance that you need and give up the extras that you don't need.

A similar thought process can be applied to other types of insurance, as well.  Life insurance is only needed to cover identifiable costs and you certainly don't want to be worth more if you die!  Homeowner's insurance should cover perils that you would claim and not cover things that you wouldn't consider claiming.  For example, I have a pretty high threshold for "things I won't claim."  As a result, it does not make sense for my family to carry coverage on jewelry, computers, or other specialty items.  I'm not going to make a $700 claim if my computer gets stolen, so why would I carry the coverage?  If you aren't covered by Tricare, look at your family situation and think carefully about your health coverage.  A bunch of small kids?  Yeah, the whole shebang might be the right insurance for you.  Two super-healthy 20-somethings?  Just major medical might be right for you.  I absolutely do not advocate going without any health insurance at all...I was involved in a bad accident in college and had it not been for my relatively cheap health insurance, I would still be paying the bills.

Decent Food

See, here's the thing about food.  Yeah, ramen is cheap.  It's just not that good for you, and not good for you is a recipe for expensive health issues in the long term.  There are plenty of ways to cut your budget without giving up nutrition, including using less or no meat, eating with the seasons, planning menus, etc.  The dollar menu and really cheap junk food might be good for your wallet today, but they are definitely not good for your body.  Use your brains to make appropriately priced, well-balanced meals and you'll have a happy wallet and body.

Fun

No, fun doesn't have to cost money, but sometimes a little money can help.  Make sure you keep fun money in your budget, even if it is just a RedBox movie for Friday night.  Living life in a financial straightjacket is a recipe for disaster.  Budget fun and help keep yourself motivated.

I'm sure y'all can think of things I've missed.  Please add them in the comments.  I love hearing about your budgets, the things that work and the things that don't.  We're all in this together!

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