In 2006, Lauren Greutman, then a stay-at-home mom, and her husband Mark were living the American dream—complete with a custom-built home and luxury cars in the driveway.
Or so it seemed. In reality, they were living well beyond their means and running a deficit every month. (Greutman admits she even racked up $12,000 of debt after buying enough Mary Kay makeup inventory to qualify for a pink Cadillac and hid shopping purchases from Mark.) But it was all about to come crashing down: In 2007, the Cadillac was towed, and in 2009, they almost lost their home. Between credit cards, student loans and a car loan, the couple was $40,000 in the hole.
Within two years, however, the Greutmans had transformed their finances: Thanks to strategies like meal planning, buying in bulk and selling furniture and clothes online, they were debt-free.
Today, she’s using their experience to help others, recently publishing a book, “The Recovering Spender,” which offers 12 steps for controlling spending. We spoke with her about how they paid off their debt so quickly, her advice for first-time budgeters—and the one shopping rule she never breaks.
What was the final straw that made you want to change your financial life?
[While] Mark was the breadwinner, he was not involved in the bills. I handled [them, and] was going to bed stressed out. Eventually, the pain of staying in debt became greater than the pain of changing my spending.
So I laid out our credit card bills and came clean to Mark [who contributed to our overspending problem, but didn’t know the extent of our debt]. I said, ‘We’re in $40,000 of debt, and I can’t get us out alone. I’m spending too much money.’ That’s when we decided to work together and got really radical with changing our lifestyle.
We remained a one-car family for several years—though we’ve since gone back to two—and I started couponing like a maniac. When the local grocery store had a ‘triple coupon’ week, I’d go with two friends at 5am to get all the good deals as soon as they started. We also downsized our home, moving into a townhome, which saved us $1,200 a month.
What’s the best way to curb an overspending problem?
Overspenders are typically impulsive people. We don’t think things through. So you have to start thinking about spending as a reflection of your value system. If you value family, financial freedom and going on vacations, why are you spending all your money on clothes and eating out? If I stop and think, `If I buy this bag, I won’t be able to pay for my kids’ school [activities] this month,’ it makes it harder to buy the bag.
Also, learn how to set boundaries for the things you overspend on. (Find out by looking at your past three months of spending.) Those are your triggers. For example, I like Target, so I have a rule: Don’t go into Target alone. If I do, my self-control goes out the window, so I won’t go without a friend or my husband. When I do go in to buy something, I have the cash for it. So if I go to buy toilet paper, I only bring $10.
Finally, look at your food budget. When you are trying to save money, the grocery store is one of the best places to start. You can cut your grocery budget down considerably through coupons and by avoiding budget-busting traps. The grocery store is full of items that cost more [like spice mixes, lunch kits and pre-cut produce], usually due to convenience. But with a few extra minutes in the kitchen, you’ll find that the savings is worth the time.
What advice do you have for first-time budgeters?
Budgeting took us a while to master: We were so used to overspending that training ourselves to actually do what we planned with our money wasn’t easy. Sometimes, we blew our budget by overspending in certain categories. Other times, we blew it because we didn’t budget enough in a certain category.
My advice is to look at budgeting as a six-month process: It can take [that long] to figure out where you’re most likely to overspend and where you can save more. [Plus], your budget will change drastically from month one to month six as you learn where to cut back and rearrange your money.
I also think it’s really important to give yourself a little wiggle room every single week. When Mark and I first started, we had a very tight budget. But we still allowed ourselves some wiggle room. It started with $10 per week for each of us. I could get Starbucks a couple times a week, and Mark could go grab a lunch while at work. We made sure to use cash, so we didn’t go over budget. You can start by giving yourself as little as $5. It’ll make you a lot more successful.
This interview has been edited for clarity and brevity.