Take Back Your Finances #39: How To Cut Spending and Increase Earnings This Month

Happy Monthly Review Time! Yes, another month has passed and it sure seemed like a quick month to us. But the good news is that we reap extra benefits each and every time we do the monthly check-in, evaluation and 2×2 plan.

Remember, this is one of the hearts and souls of this process and it can be applied every month for the rest of your life for financial due diligence and overall financial health.

Well, for those that either do not know what we are talking about or need a refresher on the monthly 2×2 plan….here it is!

What is the 2×2 Plan?

In a nutshell, the goal is to find ways to decrease spending by 2% and increase income by 2% each month. This gives you a 4% surplus in your budget each month to pay off debts, put into savings or reach other financial goals.

Now for further explanation:

The goals of this monthly task is to, yes, drop spending by 2% and yes, increase income by 2% but also to really keep good track of your spending and earnings and always helping you set the next small goal to get to the next step. We know and have experienced that you cannot always drop 2% less and earn 2% more every.single.month. We know that the first few months are the easiest and then you get to your rock bottom budget at some point…which is AWESOME! Stay there and keep evaluating your budget.

But, there’s also no limit on how much you can earn and a 2% goal is very achievable. We are not just talking about asking for a raise at work, in fact that’s not what it is. But little things you can do to bring in more. We’ve shared dozens of ways that we earn and we will continue to share with you.

For more details on our 2×2 plan, read the original post here:

• It’s Here! Our Secret 2×2 Formula We Used To Pay Off $1ooK of Consumer Debt (there are additional links within the article about why other approaches did not work for us for those lifelong financial changes)

For us, we like the challenge of finding new and creative ways to both spend less, but bring in more! It’s a fun little game and a fun way to really get the creative juices flowing. When you are determined enough, you will make it happen.

And just as we have shared in the past, we are not in the game of quick fixes for finances (remember how we shared our crash-diet mentality crashed our budget or the financial controversy over a crash-diet approach vs a healthy diet for long-lasting change) but instead, we work towards lifelong changes and create new lifestyles step-by-step.  Making changes for life and making changes slowly helps to ensure that you will stick with it!

What are we doing this month decrease spending by 2% and to increase income by 2%?

Well, we are going to call this limbo month. You see, we’ve created this system and as a result, we’ve been doing this personally for over 7 years now. We reached our rock bottom budget many years ago. But as life changes, families grow and kids get older…changes in budget happen. So we still alway evaluate each month. Many times we can’t do much, but sometimes we can find something we can cut big time. Well, the past few months, we’ve had a several budget dropping discoveries and when we looked this month, we couldn’t find a cut. Instead, a new school year has started here and so along with that, new costs for music, tutoring, programs and more. But it’s completely fine because it is easy to adjust since we have been making cuts and changes that when these extras arise, they are not earth-shattering.

And as far as our income increase this month, well, that’s kinda in limbo too. We just finished a season of selling in Farmer’s Markets selling handmade goods and I had also picked up extra writing gigs over those same months. Well, now we are looking to set up on online store for our handmade goods and increase our inventory. So we’ve been spending our time gearing up for the next stage of earning money.

How do I do this too? 

So, now it’s your turn to closely examine your budget and see what you can do with both your spending decrease and income increase.

As a tip: We do keep mentioning this because it is a BIG category: continue to work through the long list of ways to save on the grocery and eating out budget. There are several items on a list that you can utilize to drop each month for many months.  That list is found HERE.

And remember, once you feel like you have exhausted your grocery budget and eating out budget, it’s time to move to other areas! Services, fees, other payments on things you are not using, etc. Are there areas in which you could cut back and make a sacrifice?  Other things you are spending money on. Conveniences, clubs, groups memberships, etc. Have you looked through all of your expenses and bills to see if there is any part of these that can be cut out or cut back? Perhaps switching cell phones to a no-contract version. We did this in one of the earlier 2×2 monthly challenges and have saved a huge amount. Be sure to visit the categories at the top and the left side of our site for ideas on saving and earning everyday.

Step #2 this week is to also find ways to bring in extra income.  These are generally in the form of extra jobs, side jobs, etc. Again, we have shared the articles on this and instead of restating the steps and ideas here, just see the previous articles as well as the Money Making Ideas section of our site and the Over 130 Ways To Earn Extra Income Ideas list.

Here’s the previous articles on the 2% increase:

• Brainstorming extra income ideas
• Turn your ideas into real money
• How to increase income by 2% each month

For those that are just now reading this and don’t know what we are talking about…

We recommend that you read up on a few articles regarding the 2×2 plan. This is a life-changing, incremental financial plan and one that helped us get out of $100k of consumer debt and one that has helped countless others to get to a better financial place. Start with this article talking about the 2% decrease that also contains additional links for even more details on the plan.

We also recommend that you start our financial challenge from the beginning if you want to really see some big changes with small weekly steps for the next 52-weeks! You can read about how to join us in the 52-Week Take Back Your Finances Challenge from the beginning.

Resources Needed for This Week’s Challenge (Reviewed from Previously)

You will need to find and gather the following resources to help you complete part of the challenge this week:

• Budget Sheets from Week #3
• 12-Month Monthly Summary Budget Planner from Week #7
• Calculator
• Pen
• Thinking Cap

How to Figure 2% Decrease and 2% Increase

Just revisit and recalculate for this month, just like previous months.

As review, we are going to use our sample calculations based on the sample budget sheets from Week #3. Referring back to these sheets – there were 3 kinds: Bills, living expenses and debts. Exclude the debts form at this point. Add up your Bills and Living Expenses Monthly total. 

In our samples, we have $1265 in living expenses and $1825 in bills. This is a total of $3,090. Then you will calculate what 2% of this is by taking 3,090 x .02 = $61.80. This is showing the same example as last month, but theoretically, there may be less living expenses or bills this month after last month’s 2% cut.

But in any regard, $61.80 is our target spending decrease goal for this month using these examples! Write this on this month’s Budget Summary Printables from week #7 (again only on the current month as you are going to recalculate this goal number each month).

Then follow the same steps by evaluating your income by referring to page #1 of the 12-Month Monthly Summary Budget Planner from Week #7. Then fill-in your 2% increase.

So now that you know your target goal, evaluate where you can make these changes this month.

BTW – we haven’t made it a continual challenge, but be sure that you are filling-out your 12-Month Monthly Summary Budget Planner from Week #7 each month. Just coordinate with the week you prepare to make your 2% decrease and 2% increase. Just start the habit. 🙂

Stay motivated, stay focused and stay encouraged! Big things are happening! You will be so thankful for these small steps that you are taking!

Have fun this week! 

Need to catch up?  Come join us on this challenge from the very beginning by clicking on the 52-Week Take Back Your Finances Challenge and sign up to start receiving your automated challenge from the very beginning!

One final thing…we also have a Facebook Group where you can engage in discussions, receive encouragement and talk to others that are participating in the challenges too for more ideas! Head to the Be Intentional with The Thrifty Couple Facebook Page HERE and ask to join us there! You can also invite friends and spouses too!

Disclaimer: We are not licensed financial planners. We are only a couple that have been just a hair-breadth away from bankruptcy and found our way out of debt with a goal to now help others. Please make sure to consider any advice given on our site and in this challenge as tips we have used ourselves; they may not work for everyone. If you have questions please make sure to contact a licensed professional.