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