6 Ways I Could Further Cut My Expenses
I live a cheap lifestyle. Last year I spent just over $21,000 in total. Getting my expenses down that low didn’t happen overnight, but instead took 2 years in the making. That being said, I could lower my lifestyle further, if I wanted to. Why would I want to, you ask? Yeah, I asked myself that question too. My answer is, because I want to go faster. Faster toward having the money to buy a house with cash. Faster toward financial independence.
I ran the numbers this weekend on my trek toward saving cash for a house. It looks to be about 3.5 years away, if my income and expenses remain constant. Is this a long time or a short time? To me, it seems like a really long time. A lot can happen in 3 years. I could change jobs. I could be without a job. I could start my own business. I could make more money. I could make less money. I could get married. I could have kids. I could also just continue down the path I’ve been on for another 3 years and still be at my company and still be single. Who knows.
Assuming I continue down the path I’m on, I’m 3.5 years from being able to write a check for my first home. Here’s how I could further cut my lifestyle, if I wanted to, and the impact it would make on this timeline, if I did:
1. Rent: I pay $715 per month in rent. I chose to go on a month-to-month lease, which costs me $20 of that $715. That could be cut, as I don’t plan on moving in the next 6 months anyway. I also pay $25 of the $715 for my heated underground garage stall. I could cut that too, although it would be a slightly painful cut as I’ve grown used to this over the past 5 years of having it. Total amount I could cut from rent, without moving: $45 per month.
2. Car Insurance: My co-worker, Sara, recently cut her car insurance by $50 just by calling her agent and getting rid of coverages that weren’t necessary. My car insurance just went up for no reason and since I have a $250 deductible and towing coverage and all of that, I could probably cut this by $25 a least, if I called them and did the same. Possible savings on car insurance: $25 per month.
3. Netflix: I have a Netflix subscription that is $8 per month and I haven’t use it much this month. I think I’m going to cancel it and be done with TV all together. Savings from cutting Netflix: $8 per month.
4. Internet: This would be a painful cut. My Comcast cable internet service just hiked their price up for no reason at all. It went up from $65 to $71 per month, for only internet. What a rip off. What are my other options? I could downgrade my speed to something very slow (or so they say), I could switch to DSL, or I could just cancel internet all together. My downgrade options would probably save me $25 per month. If I cut internet all together, it would save me the full $71. Why would I cut internet when I’m a blogger? Well, here’s how I’m thinking about it:
- Price of high speed internet: $71 per month
- Price of going to Starbucks 3 times per week to write blog posts and have a tasty Mocha or a Chai Tea Latte: $4.25 x 12 = $51
- Net gain, $20
Basically, I could go to the local coffee shop anytime I wanted to use the internet, have my favorite coffee drink AND STILL come out ahead. Note: I have internet on my iPhone so I can do almost everything on my phone that I can do on my computer. I can read my blog RSS subscriptions. I can comment on blogs. I can read and respond to my comments. I can write new blog posts. I can check email, analytics, etc. Net increase if I cut my internet: $71 per month (or less if I convert that spending to the local coffee shop).
5. Drinking: I’m just a social drinker, but every month, it costs me between $75 and $100 to do it. Is it really worth it? Sometimes I think I need to put rules around when and where I will drink, if for no reason other than financially. It is a huge waste of money. If I allowed myself one or two nights out per month, that may allow me to still have a life when something exciting is planned or an event takes place. Total amount I could cut out from cutting back on my drinking: $50 per month.
6. My Car: Yes, I know, I just posted about this. It’s not over. I’m still contemplating selling that big money depreciating machine. The bottom line is: If I sell it, I can buy something cheap and unpretty (it will make people think I’m poor), and pocket $10,000. I can also buy dirt cheap insurance on a cheap car, which would cut my car insurance down by probably another $35 per month. The depreciation would stop as well. Right now, I figure I’m losing around $100 per month on the depreciation of my car. Ouch. Total gain of selling my car: $10,000 net transfer into my bank account and $35 per month lower than my cut above (plus not losing $100/month on the depreciation, which isn’t factored in here anywhere).
Total monthly spending that I could stop, if I really wanted to:
- Rent: $45
- Car insurance: $25
- Netflix: $8
- Internet: $71
- Cut drinking to once or twice per month: $50
- Total: $199/month
If I sold my car and bought a cheap beater, it would add an extra $10,000 to my bank account and cut an additional:
- Car insurance $35
- Grand total: $234/month
The difference it would make is $199 to $234 per month less than I’m currently spending. This is approximately 10-15% of my current spending. That’s a serious dent. How much quicker could I have the money for my house?
- With the $199/month in cuts, about 3.5 months sooner
- With the extra $10,000 in the bank and $234 in cuts, about 9 months sooner
All in all, it can make a difference, but is it worth it? That’s the big question that I keep pondering. Do I cut everything I can to speed it up or do I relax a little bit and buckle in for the long haul. I’m torn. I wish I was more decisive on this. Thoughts? Am I crazy to want to speed this darn thing up?
Category: Living Cheap
I say your not crazy, at least not for now. The goal of buying your house with cash is very good. The time frame of approx. 3 years is also very manageable. If you can do this it would be a great accomplishment for it would have been because of being vigilant and much sacrifice.
My advice after such a task would be to enjoy the fruits of your labor and to be aware of any negative character traits that may have been acquired during the 3 years. As you know it is the battle of discipline that is the tough part, not unlike a soldier trained for battle.
Good Luck Kraig!
Thanks for the feedback! It’s tough to figure out when to enjoy the fruits of your labor and when to put them away for the future. It’s a fine line, especially when you have goals to accomplish and when the clock is ticking.
I would enjoy yourself, wait the 3 years and continue the path you have already established for yourself. If you cut even more, I think you would be more stressed/unhappy then you would want to be. You only live once and 3 years is NOT a long time at all.
Thanks, Sara! That makes a lot of sense.
Hmm…for some reason, I think cutting out the internet would end up costing you more than simply cutting down on it. Sure, you could do your blog posts at a starbucks, and by your own math, you’d save about twenty bucks. You could easily downgrade your speed a bit assuming you’re not at the lowest speed and save a few bucks. In addition, do you own your modem or do you rent it? If you’re renting it, you’re chucking that $8-10 every month. You can buy a modem for anywhere between $50-80, and it will begin paying for itself within a year.
A $250 deductible seems crazy to me. Unless you’re accident prone, raise it to $500. Or better yet, shop around and use that as a bargaining tool if they truly raised your rate for no reason. Investigate every discount. I use USAA, and after I realized I could save even more by using them for all my financial needs, I just converted everything over to them.
Keep the drinks though, $50-100 on going out a few times a month isn’t that bad.
Good post Kraig. I see another opportunity for you because I recently just started saving myself some money each month. I switched from verizon cell phone service (I have had them for many years and have no complaints, other than price) to straight talk (www.straighttalk.com). I have had straight talk for 4 weeks now and as far as call quality and service, everything is exactly the same as with verizon. I already had a relatively cheap plan with verizon ($50/month with taxes/fees) but now I pay $32/month with taxes/fees for the same thing. You’d have to give up your cherished iphone though! The only reason I was able to get over the fear of a “different” company and take the plunge was because Clark Howard did a review of all the cell companies. Now I’m saving $216/year! Food for thought.
That’s an interesting view about using coffee shop internet. I’ve never looked at that before from a money saving view before, but it may be worth it, especially considering you’re internet bill is so high. Also, you may want to look at satellite if there are no other internet options where you live, that price seems way to high for internet.
I do live in an apartment, so I’m not sure if that’s an option, even if I wanted it to be. Thanks for the comment.
These are all fantastic ideas. Most people would look at these with horror, as if you were saying that you plan on giving up heat and water. It’s strange how here in America we consider certain things necessities, such as iPhones, which we didn’t even have a few years ago. I love the idea of cutting TV. It seems so silly to pay so much for just a few channels that you actually watch, especially with all you can get online nowadays. As for drinking, my girlfriend and I will buy a bottle of wine for $3 from Trader Joe’s or Whole Foods, then buy one maybe 2 drinks at the bar if we’re with friends (we’re both lightweights). Total cost of drinking for the night winds up being ~$12. As for internet, if iPhone isn’t enough, why not a cheap, used tablet with internet?
That’s exactly what I was thinking, that a cheap tablet with a data subscription may be an okay option.