American Family Budget: Closing the Budget Gap

Financial Goals

Getting our family’s budget just right took multiple summit meetings over several days and nights.

After the worst of our disagreements, my husband and I each came back to the task of reducing our monthly spending by $2,500 with a new perspective.

I worried about slashing our spending because of what we’d lose, but embraced having a partner who would help keep us accountable.

Stewart gained a new working knowledge and a sense of control about where our family’s money goes.

[Read: American Family Budget: The Wake Up Call]

And that’s when we started to make progress. We made significant cuts in the few budget categories we can control.

Groceries went from $834 per month to a budgeted $700, and with creative shopping (coupons, meal-planning around what’s on sale, etc.) so far it’s working.

Dining out: we (mostly me) were spending $270 every month on lunches, dinners, drinks, trips to coffee shops or the ice cream parlor.

We cut it to $50 per month. The social butterfly in me winced, but committed to it.

Our budget went into effect on November 1, a terrible time to reduce the gift category!

But we had been spending an average of $150 per month on presents for birthdays, Mother’s and Father’s Days, hostess gifts, business gifts, and even Christmas presents, the tree, cards, and all the trimmings.

Stewart suggested we try to stick to $50 per month including Christmas. I’ll confess – – I’m struggling to stick to it without pulling unspent dollars from other categories.

[Read: American Family Budget: I’ve Created a Budgeting Monster

I’ve been shopping around, using coupons and gift cards, and I even agreed not to exchange Christmas presents with several friends.

As difficult as it was to make these cuts, we did it together, and we forged ahead. But after our first round of reductions, we had only slashed our overspending by $800.

Being a little more ruthless got us down $1,000, but after that we got stuck.

That number seemed impossibly huge. We don’t live an extravagant lifestyle. We have two 10-year old cars and our kids attend public school.

I feed my book addiction at the library, and Stewart spends his free time working in the yard or playing sports with our sons.

Clearly, what we have is an income shortfall. But with me at home caring for the kids, we needed a creative solution, at least for now. We came up with two.

Sinking Funds

Empowered by the progress we were making, I suggested something radical.

What if we take certain things that are important to us, but not necessary for survival, and put any extra money towards them?

Create a “sinking fund” so that when the time comes, we can buy those things without sacrificing something we truly need?

For me, it’s a yearly trip back east. My extended family lives in New England and I take my children to visit them once a year.

That’s three round-trip plane tickets from Los Angeles to New York – I can shop around and purchase early, but it’s still a pricey trip.

When Stewart and I started this process, I kept that east coast vacation in the budget, marking it “non-negotiable.” But at this point, I took a deep breath and crossed it out.

I would fund the trip with my irregular freelance income.

A sinking fund is basically a special savings account used for major expenses, but it’s easy enough to just scrawl a label on an envelope and save up cash.

In fact, I’ve already started putting cash in one marked “Vacation.” Every penny that goes in takes me closer to my goal.

We moved some other categories out of the budget to fund this way, too, closing the gap even more.

A side effect of this choice is that it has motivated me to work harder at bringing in extra money.

That motivation will come in handy down the road, because our other gap measure is only temporary…

Paying mom a salary

Before each of my sons was born, Stewart and I saved more than half of my salary so that I could stay home with the baby for a year without worrying about how to make ends meet.

We have the option of doing that again. As a college professor, Stewart taught summer classes and earned extra money.

At first we thought of it as surplus savings and we wondered what we should do with it – pay down the mortgage or save for the kids’ college tuition?

Oh, how we chuckle at ourselves now. We’re not there…not yet.

With that “extra” money, we’ll use some every month to close our budget gap.

Essentially, that’s paying me a monthly fee for staying at home with the kids – something I’d do for “free” of course, but it’s nice to look at it this way!

If we stick to our budget, we can make the surplus last through December 2014.

After that, Stewart can continue to teach summer classes, but since that option isn’t guaranteed by his employer, that leaves – you guessed it – me.

By then I will need to have lined up enough work or a job that provides steady income, working around my children’s school schedule, since being home with them will still be job #1.

A year goes by fast, but hopefully this will buy us time to get used to living within our means.

Next time on American Family Budget: Congratulations, you’ve made a budget! But what is it really like to live with it? Short answer: it’s great and it sucks.

Kim Tracy Prince is a Los Angeles-based writer who has a husband, two little boys, and a slightly unhealthy obsession with spreadsheets. Her work appears at Notre Dame Magazine, Girl Body Pride, CBS Los Angeles, and her blog,


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