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Life on a Budget - 5 Things That Can Make or Break It

Authored By: Madeline Anderson-Balmer on 9/1/2021


Whether you're just starting out, just starting over, or just feeling the need to gain some control and order with your finances, budgeting is something most of us must do at some point. I know, I know. You hear the word budget and think restrictive, limiting. At least, that's what those unfamiliar with the process may believe.

  • What if budgeting simply meant getting what you want and a way to achieve that?
  • What if budgeting were something you could customize to your needs, your income, and your style?

"Style?" you ask. How can a budget have style? Well, the good news is, budgeting styles that work come in as many varieties as there are varieties of people! And there is most certainly a budget style that will suit you… and bonus! As you grow and gain knowledge and new wants and needs, you may even discover it's time to try on a new budget style.

This blog post series addresses several things - expenses that most people forget when putting together their budget and the many ways you can "wear your budget" thus, Budget Styles. I've also included ways to reduce expenses and budget improvements you can make to help you achieve your short and long-term goals. These considerations can make a huge difference in your existence when they're taken into account. The other good news? You'll be prepared in advance if something unexpected comes along. Following is an overview, but watch for individual posts with more in-depth information!

Car Expenses – It's more than an auto loan payment

Most of us need an auto loan if we want to buy a car. We all get that, and we factor auto loan payments into our budget when we're planning (if we have a car loan). But there are other costs associated with car ownership.

  • Did your dealer try to convince you to buy GAP insurance? An extended warranty? A service contract? Are these a good deal or a trap? Can you get them elsewhere or later if you change your mind?
  • When you're setting up a budget, car maintenance costs can be significant. The random roadside assistance need (and alternative insurance coverages for that) and even gas expenses are hefty costs that are easy to forget when you're putting together a budget.

MIT FCU offers GAP insurance, an upfront expense that can pay off in the end. And one that may be pricier at the dealer. But do you know whether GAP coverage is the right thing for you? A quick visit to includes the following questions you should ask yourself include:

  • Will be financing a new car for more than 60 months?
  • Is your down payment smaller than 20%
  • Are you offering a trade-in that is worth less than you owe?
  • Do you usually put a lot of mileage on your newly financed leased car?

If you answered "yes" to any of these questions, you're at an increased risk of losing money if your car is totaled or stolen. Why? Because the value of your car drops as soon as you drive it off the lot (or accept delivery via one of the online car dealers), or put excess mileage on it, or take longer than 60 months to pay your loan back (since you'll be paying very little towards what you owe in those early years). These are the types of purchases GAP coverage was made for. They can protect you from having to pay on a loan when you, through no fault of your own, suddenly don't have the car and the insurance money isn't enough to pay off the loan. Don't think it won't happen. I know someone who wrapped her new car around a tree on the drive home from the dealership on a snowy day! And she HAD purchased GAP, so it wasn't such a bad day (and no one was injured), plus she got a bit of money to put towards her next car. She was thrilled. Lesson? Better to be prepared.

Tips for Saving on Auto Expenses

Pet Expenses – Because being a pet parent isn't free

Yes, furry kids can run up the bills. Even a routine visit to the vet can result in hundreds of dollars spent. According to WellnessPet, routine annual pet care can run between $200 and $400 for dogs and $90 to $200 for cats.  Let an emergency arise, and you could be out thousands. Have you considered any of the following?

  • Pet insurance
  • Veterinary expense plan
  • Setting up your own fund to cover the standard costs plus a cushion for emergencies

Then there's food, toys, bedding… even a pet lizard has needs! Sure, you can tell yourself you won't go crazy with extra stuff for that new pet. But don't forget, you need to provide a healthy environment, training, and exercise. That can mean a need for toys, heating/lighting requirements, crates, harnesses, prescription food, etc. What if your pet has an accident or gets a serious illness? It adds up and should be something you consider when you're building your overall budget. Pets can be a luxury, but they can also be family or support, and a responsible pet owner plans for them. Do your research. Whether you subscribe to a plan or pay for insurance, or set up a special "self-funded" savings account, these are added expenses that can save you money in the long run. Being prepared to provide a lifetime of care for your pet is the right way to plan for and manage pet-related expenses in your budget.

Utility Expenses – Lights, heat, water - living is more than a roof over your head

Budgeting for utilities is a must. OK, if you live in a yurt and heat by burning wood (which you source from the forest) and only use the internet when you're in town doing laundry and the library is open, maybe not. But for the rest of us, we need to consider utilities. Depending on where in the country you live, heat, air conditioning, internet access, water, and sometimes even trash removal are services we may need to pay for. If they're part of your living expenses, they should also be considered part of your budget.

You'll need to work with utility estimates as you build your budget (assuming you don't already have a history of this expense on hand). Not sure how to get estimates for utility costs in your area? If you're buying a home or condo, you can ask the seller what they've been spending. Get at least six months, if not a full year of billing history. You can undoubtedly reduce usage, but estimating on the high side and finding out you didn't need the cash is better than not having enough. If you rent an apartment, check to see what's included and then either ask the landlord for standard charges on the rest, or you can use the rule of thumb provided by Zillow. Consider 20% of your monthly rent for utilities when you live alone, or 10% if you've got others sharing the rental and utility cost.

Tips for Saving on Heat Expenses

Tips for Saving on Electricity Expenses

Tips for Saving on Air Conditioning

Internet/Phone – Staying connected is important

While many of us don't have a landline at home these days, most of us need our mobile and internet service. Phone services and internet, streaming, cable, and dish services are all expenses that can run your budget numbers up. And we know that bundle pricing can result in a break, but do you also purchase extra services? movies? concerts? sports events?  If you're working from home or running your own business, or just trying to stay in touch with family, it's tough to live without most of these services. But when you're trying to budget things like internet service and phone service, it's best to consider all your options and make sure to include the extras if you use them. Or at least be conscious of not having them in that budget and see them for what they are, splurges.

Should you just ditch cable?

Maybe subscribing to numerous services seems easy, but it's not so easy on your wallet. Should you get a Fire Stick? Roku? Smart TV with built-in access? It may pay to do a bit of research, crowdsource some information from friends, and talk to your current providers to see if they'll offer discounts. Pennyhoarder has some interesting perspectives on whether to go with Roku or Fire Stick but there are so many other sources. Just do your research before jumping. 

How do you compare phone services?

Are there phone services out there that may be cheaper and provide the coverage you want/need without paying for a lot of extras you don't use? Be honest, what are you really using? Other things to consider:

  • Do you WFH?
  • Are kids remote learning?
  • Do you run a business out of your house and need more internet power than the average household?

As you build that phone service line item covering phone AND internet in your budget, these are all things to consider. There are ways to save, but there are also things you require to function both at work and at home. Don't make choices to save money that will costs you more in the long run.

Now You're Ready – Create Your Budget!

OK, so it's not that easy, because as we mentioned before, there are styles. AND you want to make sure you're building a budget that's going to work for the near and far future. A budget that has to be adjusted every week reflects poor planning. In fact, it isn't a budget at all, just a guess at what you'll need and then shifting things around to cover it all. Maybe you did that as a kid but now things are different (or they should be). There are tools and systems you can use to build your budget sensible, in a way that will keep you moving forward. Why not take advantage of them? From apps to online banking tools to spreadsheets, goal-setting tools, and so much more. Let's start looking at what you've already got available. If you're a member of MIT FCU, the credit union offers its own Money Management tool in online banking. It's free and lets you set up goals, monitor spending trends, and pay down debt. It uses bubble charts and easy-to-understand graphics to help you monitor progress.

Creating a Budget Around Needs and Wants

Because yes, what you want and what you need are BOTH essential. What? Wants are essential? Well, if you want this thing to work they should be. As a matter of fact, if you provide for needs and plan for wants, you're more likely to stick to that budget. Consider it similar to a diet but with money instead of food. If you have to eat the same thing every day, day in, day out, with no allowance for a splurge or a treat or a simple change, you will quickly get tired of that diet. You'll sneak a snack, binge when no one is looking, or give it all up because you're miserable.

OK, OK, there may be a few out there who can do it. I had a roommate once who ate cereal for breakfast, lunch, and dinner so he could afford to attend college. We were each responsible for our own food choices but took turns bringing home the milk (since we all used milk). This was especially important for Mr. Cereal Eater. Believe me, if it was your turn to bring home the milk and you waited till the end of "your day" to do so, there was hell to pay! (I experienced that personally. Talk about Hangry!) But in any case, if you're Mr. Cereal and don't need flexibility, there's a budget style for you, too. But that's not what this post is about. Instead, let's consider budgets that plan for cheat and splurge days and provide a way for you to manage both while eating more than breakfast cereal all day long. That's the idea, right? Because if you plan for a splurge or a binge occasionally, you won't end up unable to pay the rent at the end of the month or find yourself huddled under a blanket reading by candlelight when the winter winds are howling outside. Been there, done that! Regardless of what items are IN your budget, you can create a budget that allows for variation, emergencies, and future goals. That's the sign of a successful budget.

Paying Down Debt – It's not an unusual goal and can help build your credit

Many people have excessive debt and are looking to pay it off. Interestingly, the COVID-19 pandemic did result in revolving debt declining per person in the US overall. Yay for us that we did something positive during a difficult time. But while average credit card balances dropped by 11% in 2020, the average person still has $5,897 in credit card balances. Are you far below or above that number? Well, that's an average. According to, there are differences in average debt carried by age group:

  • Silent Generation - $3,177
  • Boomers - $6,043
  • Gen X - $7,155
  • Millennials - $4,322
  • Gen Z $1,963 (many aren't old enough for a card yet)

Look at Gen X using those cards! Or perhaps it's just that they're not focusing on paying them down yet. It looks like Boomers in that sandwich generation are making ends meet with their cards. But if you're reading this, you're getting set to make a change, regardless of what group you're in. Good for you!

What are your options for paying down debt?

You have several options, from applying for a personal loan to consolidate debt to bouncing funds between cards via balance transfers to getting a second job or selling things you no longer need. But while the promotional ads from many lenders can make all of them seem like a great idea, some options can cost you money without your even being aware of it.:

  • Personal Loans are the answer for some people to consolidate debt. They usually offer rates lower than the average credit or store card, and you'll be combining the cards so you'll only have one payment. But there's usually a short-term payoff (12 -18 months) with a fixed payment. Is that payment higher than what you've been paying between all your cards? If you get your debt paid off, that's a good thing, but does it fit into your budget? Or maybe you should just consolidate the highest interest cards first. Make sure to do your homework to pick the right credit card paydown option for you. Don't set yourself up with payments you can't make. MIT FCU offers personal loans for debt consolidation at reasonable rates and a variety of terms.

  • Balance Transfers can save you interest but check the fees involved. Is it saving you money? They usually take a percentage of the transfer amount. How high is that percentage? Are they offering an interest-free period? How high will the interest go if you haven't paid off the balance in that time?

  • Get a second job or sell stuff to pay off debt. This may be something to consider as a last resort, but it's serious and can make a huge difference. Do you rent a storage unit filled with stuff you never use? You're losing money twice! Have you got a collection of cat statues, or superheroes, or your grandmother's antique china, and you don't want it anymore? Consider purging things you don't need. You may make some money and save some if it means you no longer need to rent that storage unit!

  • Credit counseling. This step is a serious one and should be considered only if you cannot make payments and have exhausted all other angles. With credit counseling, you usually have to close out-negotiated cards. Your credit score is usually negatively impacted because of those closed accounts, any late payments you've had, and the change to credit utilization with the closed account. If you're at this stage, you may be interested in our blog article about credit cards, What Even Is a Credit Score? As part of the process, the credit counseling company will view your income, set up a budget for you, and they'll be making the payments to your credit card companies, with you sending the credit counseling company your money to manage. Basically, you give up control of your funds until your debt is paid off/down. It's usually a step that is part of a bankruptcy. That being said, credit counseling company websites are a great resource if you're looking to figure your way out of debt. They offer educational videos, articles, and tips that can help, especially if you're looking to avoid getting into trouble. The National Foundation for Credit Counseling is a not-for-profit agency with lots of great resources. They also offer free credit and debt counseling, small business coaching, and more. None of which is related to actually having them negotiate your credit card balances. Are you a small business looking to separate personal and business finances? NFCC might be the perfect site to learn more about how to set up your small business finances.


Apps can help! And they're so easy (and even fun) to use.

Yes, there are numerous apps that can help you build your budget, create projections, and show you scenarios and options as time goes on. There are also plenty to support you as you work towards learning more about finances and getting your finances in order.

  • Looking to pay down debt? Consolidate?
  • Save for retirement?
  • Save for emergencies?
  • Planning to expand your family or buy a house?

Everything you can think of financially can be built into your budget. And budgeting apps can make things a lot easier to manage when it comes to the details. Many of us (not me) are comfortable with a self-created spreadsheet. If so, that's your style today, but don't assume you can't consider other ways. For many, an app helps you to get on and stay on track, set goals, and monitor your progress (with maybe some fun along the way). If a spreadsheet worked for you ten years ago and is still working for you, great! But maybe seeing what's new, what's next, and how it might help you manage your budget and get ahead is a step worth considering.

Watch for future posts related to this overview, including:



Photo by Mikhail Nilov from Pexels

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