For the past year or so, our financial life has been humming along without a budget. We’ve been automatically saving for retirement, emergencies, and big ticket expenses. We pay our fixed expenses and then treat ourselves now and then to dinner out, a movie, or a trip to a pool.

But I started noticing in recent weeks that the $1,000 or so reserve in our checking account I try to keep to avoid any chance of an overdraft was shrinking. By the time we paid our credit card bill and our money was whisked into savings, we’d have $500 or $600 in reserve.

This pay period, we’ll have just $195 left over after fixed expenses and savings. The culprits? Well, food and gas, of course. Our gas bill is up, even though we don’t drive much or very far. Our food bill is up about $100.

But it’s not just rising prices. I admit that we’ve been having a little too much pricey fun lately. Our day care bill also just increased by about $90 per month. Our salaries, on the other hand, have not.

In a situation like this there are only two things to do: Cut savings or cut expenses. We could try to earn more income, but that would require working more. That for our young family would be an option of last resort.

Naturally, cutting expenses will be the first avenue I explore. I could spend time with Mint.com or Quicken or another software program, tracking my spending the 21st century way.

But instead, I’ve opted for a folded up piece of paper in my purse that I’ll use to document how much I spend on gum, fizzy water, shoes, or roast beef sandwiches.

I’ll be honest though. I don’t want to cut expenses. We’ve just agreed to cancel cable now that Top Chef is over. But I’m comfortable with how much we spend and don’t think we are extravagant.

So in the next couple of months I’m also going to take a look at savings. Is it possible that we are saving too much? Or with an uncertain job market and the economy, am I totally nuts to even consider putting less away?

This entry was posted on Monday, June 16th, 2008 at 4:59 pm and is filed under budgeting. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.