Sweating the Big Stuff: Improving Your Finances by Making Big Changes

In the not too distant past we heard about the “Latte Factor.” There are plenty of web sites out there that talk about penny pinching and little things you can do to save money each month. It is true that these things can make a difference in your finances. However, sometimes we get so focused on the coupon clipping and the brown bagging it each day that we forget about the big stuff — and we fail to consider what the big stuff could be doing to our finances.

Focus on Big Financial Change

Instead of focusing on the little things all the time take a step back and look at the big things in your financial life.

What Are Some of the Big Changes You Could Make?

There are people in my neighborhood who have three cars, all of them with payments of $300 a month or more. By the time you add up the car payments, maintenance, and insurance, those three cars add up to a big monthly expense. Three cars might be a bit unnecessary if you only have two or three drivers in the family.

For two car families the question remains: is it financially worthwhile to have two payments, two maintenance costs, and a larger car insurance bill? Is there a way for someone to take public transportation? Does a 16 year old really need his/her own car all the time?

Photo by Jetportal is Jeffrey Montes via Flickr

Another issue can be your home. I know several people who are house poor. It’s true: we could have purchased a bigger house if we decided to go for a mortgage payment that amounted to 30% of our income. This amount is seen as normal by mortgage industry standards.┬áInstead we went for a smaller house with a payment that amounts to about 20% of our income.

We don’t have to worry about making the mortgage each month, and have a lot more discretionary income. I admire a family in our neighborhood that fits seven children (that’s nine people!) in five bedrooms. There is sharing going on, but the family has large common areas in the home and they spend a lot of time together. They are happy — and living within their means.

Your big changes don’t even have to be as big as a car or a home. Think about whether you need that big TV or that $1,700 gaming computer. Are you so focused on saving $20 at the store each week with your coupons that you don’t pay attention to the fact that you just bought a 60″ TV for $1,800? Paying attention to where you are spending the most money, and acknowledging the big purchases that you make, can force you to refocus your efforts on the big things you can do to improve your finances.

Finding Contentment

One of the great things about focusing on the big things is you don’t have to sweat the small stuff. Because we have two modestly priced cars, a “small” 32-inch TV, and live in a modest home, we don’t have to worry about the fact that we like to eat out a few times a month (usually for lunch — it’s cheaper than dinner, and we can go while our son is at school). I can buy a new book when I like and my husband can purchase a new video game when he wants to try out a new one.

By making sure that we are careful with the big stuff, we have enough discretionary income so that we don’t always have to be pinching pennies. We still try to be frugal most of the time, and look for good value and good deals, but we don’t have to worry about it if we forget to bring the coupons to the store. And, for us, that’s what works.

What about you? Would you rather sweat the big stuff or the small stuff?

About the Author

By , on Feb 17, 2011
Miranda Marquit
Miranda is a professional personal finance journalist. She is a contributor for several personal finance web sites. Her work has been mentioned in and linked to from, USA Today, The Huffington Post, The San Francisco Chronicle, The New York Times, The Wall Street Journal, and other publications. She also has her own personal finance blog: Planting Money Seeds.

Leave Your Comment (6 Comments)

  1. Pinyo says:

    @Shawanda and Maggie — I agree…do both. I am actually planning to discuss this in my future Moolanomy Insider Newsletter.

  2. Maggie says:

    I think I sweat both. There are now 3 cars in my driveway. but 2 are paid off. (02, 06 and ’10). My soon-to-be 16 year old will have a car to drive for Mom’s sanity, No busing to school, loads of extracirriculars. We’ve made it a habit to drive our cars for 10 years and we have been buying a new car every 5. We will just keep the 02 running for the teen. I would totally freak out to have 2 car payments. I could possibly take public transportation to work, but it is currently not practical since sports/activities for both boys are high on the priority list.

  3. Bret says:

    I think the Latte Factor is important for people who have no idea where their money is going.

    For everyone else, the big bills are the killer. They put people at risk if their income drops and they reduce their ability to save for the future.

    Whether you buy cars or coffee, unless you are saving and investing, you aren’t getting ahead

    BTW, I also still have my 32″ TV.

  4. I agree on Pat. When I was just starting my business I could hardly earn from my business because of expenses I’ve been paying for my house and car.

  5. Shawanda says:

    I actually sweat ’em both. Money is a finite resource, and those little things add up. But I’m an even huger proponent of lean living, so I try to keep my fixed expenses as low as possible. That way, I’m free to change my mind rather easily on what I spend my money on.

  6. Pat S. says:

    I think for most of us, the latte factor is overstated. Its the car payment, the mortgage, and the big expenses that usually cost us the most money.

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