We found out this week that our health insurance premiums will rise by almost $120 a month next year. I know that for a lot of people it’s not that much, and we have been blessed to have very low premiums so far, but there is very little wiggle room in our budget, and most of the extra income goes to debt repayment. So what did we do?
First, we didn’t panic. Like our French drain episode, this was not our fault. We had some areas of our budget that could probably be trimmed even if it would mean making more sacrifices. We also resolved not to cut any more into our debt repayment amount if possible. As tight as things felt, it seemed that we needed to cut back even more in regular areas of our budget.
Groceries are often the first area to go when things get tight. Our issue is that we have four children and we have to pay sales tax on food in a time where meat and eggs are at an all-time high. I also feel like it’s much harder to stay motivated if your food is so bland/basic that it demoralizes you. So I felt like we couldn’t cut too much here – we went down to $375 from $410 (remember, this also has to include sales tax of 9.1%). This line item includes toiletries and diapers for our one-year-old as well. I found it uncanny that I just switched to cloth diapers for the daytime with our daughter to save some money (we already had them on hand from previous children, so there was no extra expense). So there was a little extra to work with that would be easy to cut.
Next, we looked at our spending money. My husband and I have been allowing ourselves $20 each to spend or save as we please. He meets with others for coffee and likes to spend it on the occasional bottle of wine that our grocery budget can’t afford, while I like to use mine to either save up or spend at Joann’s when I need something. But we both agreed that this was not a necessary line item, so we slashed it to $5 for my husband to get coffee twice a month with his friend.
We also have a line item for household expenditures that’s $20 a month. As homeowners, we know that expenses are a part of life and wanted to set some aside for paint, repairs, etc. but in this case, we felt it would be okay to move this expense to an annual expense we would budget for when we had our two extra paychecks come in. The annual amount would only be $240, and we were planning on not flying next year to loosen up some extra money anyway, so it seemed fine to take it from there.
And finally, we decided to reduce our contribution to our HSA. We had been contributing $200/month, and dropped it to $150 since our balance is reasonably healthy and we can always contribute more if we need to during the year.
Here is how our savings stacked up:
· $35 – food and grocery
· $35 – spending money
· $20 – household expenditures
· $50 – lower HSA contribution
Do I feel frustrated that things are getting ever tighter? Yes. The fact that health insurance premiums are going up despite the promise of “more affordable healthcare” is another blog post in itself, but that’s life in the modern US right now.
What I am grateful for is that we do have health insurance, and that we are able to make changes to accommodate the increasing expense of that. I don’t consider it a coincidence that we just so happened to be able to lower our utilities over the last year, or cut out most of our disposable diaper usage, because these changes make a difference. In a way I feel like God was already preparing us for a slightly lower income.
I am grateful that even though meat and eggs are expensive, dairy is relatively cheap and we have Aldi. I’m grateful that I know how to cook and can improve my skills by baking my own bread and finding new ways to create frugal and healthy meals for our family. To me, this is a challenge in a good way.
I am also grateful that we have time to prepare for this. The new premiums don’t kick in until 2016, so I will still try to live below our current food budget, but allow myself the full amount ($410) and use the savings for a “stock-up fund.” It’s a good time of the year to begin stocking up as stores put many pantry items on sale for the holidays. I will also do the same with my spending money, knowing that whatever I can save will be useful for the days when I don’t have more coming in.
As we were talking about the impact of this on our budget, my husband and I were realizing that we need to seriously look into alternative streams of income. We are grateful for his job, but it doesn’t pay much, and because it’s dependent upon the state government whose budget is also tightening, things could get tougher in the future. You can only cut so much, and then you need to honestly look at other ways to increase your income.
The other thing I realized is that if we were not in any debt, we would have much more of a cushion to absorb this expense. This motivates us even more to pay off our debt as much as we can so that we can handle unexpected future expenses.
If you haven’t ready Brandy Simper’s posts at The PrudentHomemaker, you really should. She has constantly been an encouragement to me to look for ways to cut expenses when you feel like there is nothing left to cut.
Have you ever faced an unexpected blow to your budget? How did you handle it?