How did you lower your annual expenses?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Topic Author
Slinky
Posts: 12
Joined: Sun May 28, 2017 8:08 am

How did you lower your annual expenses?

Post by Slinky » Mon Jun 24, 2019 7:37 pm

After tracking spending for a year, I was blown away with what we spend.

Obviously this is a wide open subject, but without having a lavish lifestyle and only two children to care for, I am just amazed at our spend!

What did you do to dramatically reduce your bills? What areas got you spending? For us, clearly eating out is one of them. What areas “surprised” you? :shock:

drummerboy
Posts: 123
Joined: Wed Apr 20, 2016 1:08 pm

Re: How did you lower your annual expenses?

Post by drummerboy » Mon Jun 24, 2019 7:49 pm

First of all, good for you for "tracking" your expenses.
That is an eye-opener for everyone. If you don't raise your awareness of it, the money will just flow out to everything. Most of it unnecessary.

How did we lower ours?

Create some form of constraint (real or forced). For example, we moved to a smaller home (we've since moved again to a much smaller home).
How much "stuff" do you need to fill it?
Does that new car really make you happy? Why did you trade in the one that was 3 years old?
Do you always need take-out for dinner? Just cook-in as a family, it is actually much better.

Do you need that $20 bottle of wine? Only allow 1 bottle of wine every week or two.

These constraints allow you to force you to make trade-offs. This opens your eyes to what is truly worth spending money on.

Of course, I'm a big believer in "Pay Yourself first" and YNAB. Both of which reinforces this behavior.

MrBobcat
Posts: 136
Joined: Fri Jan 11, 2019 5:19 pm

Re: How did you lower your annual expenses?

Post by MrBobcat » Mon Jun 24, 2019 7:50 pm

Got the kids graduated from college and off the parental dole. :P

That being said my budgeting has never addressed line items other than groceries/food, ever.

Take home pay, less fixed/estimated monthly expenses, less reasonable budget for food, less savings/debt paydown = I can spend this amount on everything else, ie clothes, vacations, car payments, toys. Can spend more in the later category if I'm willing to eat beans and rice for the month.

My kids got used to hearing we can't afford that growing up... a lot.

livesoft
Posts: 66907
Joined: Thu Mar 01, 2007 8:00 pm

Re: How did you lower your annual expenses?

Post by livesoft » Mon Jun 24, 2019 7:58 pm

Slinky wrote:
Mon Jun 24, 2019 7:37 pm
... only two children to care for, I am just amazed at our spend!

What did you do to dramatically reduce your bills?
We stopped spending on our children and kicked them out of the house. Best move we ever made.

But kids got hand-me-down from cousins and friends. Also we made them eat at their friends' homes. Since their clothes were always shabby, their friends' moms were only too happy to help since they thought we were relatively poor compared to them.

BTW, it worked so well that our daughter now sends us money even though we don't ask her to.
Last edited by livesoft on Mon Jun 24, 2019 8:09 pm, edited 1 time in total.
Wiki This signature message sponsored by sscritic: Learn to fish.

Oakwood42
Posts: 165
Joined: Thu Dec 08, 2016 10:48 pm
Location: Philadelphia

Re: How did you lower your annual expenses?

Post by Oakwood42 » Mon Jun 24, 2019 8:02 pm

livesoft wrote:
Mon Jun 24, 2019 7:58 pm
Slinky wrote:
Mon Jun 24, 2019 7:37 pm
... only two children to care for, I am just amazed at our spend!

What did you do to dramatically reduce your bills?
We stopped spending on our children and kicked them out of the house. Best move we ever made.

But kids got hand-me-down from cousins and friends. Also we made them eat at their friends' homes. Since their clothes were always shabby, their friends' moms were only too happy to help since they thought we were relatively poor compared to them.
I don't have any kids however I see some parents have a difficult time with this practice.

stoptothink
Posts: 5710
Joined: Fri Dec 31, 2010 9:53 am

Re: How did you lower your annual expenses?

Post by stoptothink » Mon Jun 24, 2019 8:05 pm

Wife and I both grew up well below any poverty threshold, so lowering annual expenses has never been a thing, we've had more of a problem being comfortable with spending money on things that are wants. I'd love to see someone attempt to cut fat out of my personal budget. I'm one of those individuals who can tell you (to the penny) everything they've purchased in the last several months. The wife hasn't had nearly as much trouble accepting some lifestyle creep, but I can't complain, it could be much worse (and it was much worse with the ex).

RollTide31457
Posts: 208
Joined: Tue Nov 28, 2017 8:06 pm

Re: How did you lower your annual expenses?

Post by RollTide31457 » Mon Jun 24, 2019 8:11 pm

Our keys to success include the following:

1. No daycare expenses
2. No international travel expenses
3. No Whole Foods expenses
4. No unnecessarily expensive meals at non-chain restaurants
5. No wine expenses

Hamberders
Posts: 27
Joined: Tue Feb 05, 2019 9:42 pm

Re: How did you lower your annual expenses?

Post by Hamberders » Mon Jun 24, 2019 8:17 pm

Curtail vacations trips that entail airfare and hotel fees. Avoid expensive hobbies. Refrain from buying lots of fancy gadgets, furniture, artwork, etc. If you’re going to eat out, order items from the value menu at Taco Bell.

User avatar
HomerJ
Posts: 13019
Joined: Fri Jun 06, 2008 12:50 pm

Re: How did you lower your annual expenses?

Post by HomerJ » Mon Jun 24, 2019 8:23 pm

Slinky wrote:
Mon Jun 24, 2019 7:37 pm
What did you do to dramatically reduce your bills?
Stop spending.

The real trick to is keep your house and car expenses under control. You get those two right, and you're in a pretty good shape.

Don't spend too much on housing and cars.
The J stands for Jay

KlangFool
Posts: 12953
Joined: Sat Oct 11, 2008 12:35 pm

Re: How did you lower your annual expenses?

Post by KlangFool » Mon Jun 24, 2019 8:26 pm

HomerJ wrote:
Mon Jun 24, 2019 8:23 pm
Slinky wrote:
Mon Jun 24, 2019 7:37 pm
What did you do to dramatically reduce your bills?
Stop spending.

The real trick to is keep your house and car expenses under control. You get those two right, and you're in a pretty good shape.

Don't spend too much on housing and cars.
+1,000.

KlangFool

KlangFool
Posts: 12953
Joined: Sat Oct 11, 2008 12:35 pm

Re: How did you lower your annual expenses?

Post by KlangFool » Mon Jun 24, 2019 8:27 pm

OP,

1) I do the "Pay Yourself First" saving method. I auto deduct all my savings from my paycheck. Then, I spend the rest.

2) This works if you did not overspend on your house.

KlangFool

Starfish
Posts: 1175
Joined: Wed Aug 15, 2018 6:33 pm

Re: How did you lower your annual expenses?

Post by Starfish » Mon Jun 24, 2019 8:28 pm

RollTide31457 wrote:
Mon Jun 24, 2019 8:11 pm
Our keys to success include the following:

1. No daycare expenses
2. No international travel expenses
3. No Whole Foods expenses
4. No unnecessarily expensive meals at non-chain restaurants
5. No wine expenses
Success?

Grt2bOutdoors
Posts: 20726
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: How did you lower your annual expenses?

Post by Grt2bOutdoors » Mon Jun 24, 2019 8:30 pm

More cooking at home; much less at restaurants.
Do not buy wine/liquor with your meals purchased outside the home, for price of 1 glass you can buy the bottle for your house. Biggest profit margins are in the beverage portion of menu.

Pack your lunch from home. They talk about the latte factor but have you seen how much lunch purchased outside the home costs?
Clip coupons-no really, when shopping for food, buy what is on sale when you can. Every penny counts.

Limit Major League Baseball events attendance, in HCOL venues, can easily set you back $200 or more and that is with seats up near the clouds. Besides it’s not fun sitting in 2 hour traffic trying to get home from the stadium.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

Grt2bOutdoors
Posts: 20726
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: How did you lower your annual expenses?

Post by Grt2bOutdoors » Mon Jun 24, 2019 8:32 pm

KlangFool wrote:
Mon Jun 24, 2019 8:27 pm
OP,

1) I do the "Pay Yourself First" saving method. I auto deduct all my savings from my paycheck. Then, I spend the rest.

2) This works if you did not overspend on your house.

KlangFool
And you have no healthcare issues requiring you to dedicate more of your resources there.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

Dottie57
Posts: 6322
Joined: Thu May 19, 2016 5:43 pm

Re: How did you lower your annual expenses?

Post by Dottie57 » Mon Jun 24, 2019 8:36 pm

Don’t go shopping. Amazing how well not looking for things to buy actually works. :oops:

stoptothink
Posts: 5710
Joined: Fri Dec 31, 2010 9:53 am

Re: How did you lower your annual expenses?

Post by stoptothink » Mon Jun 24, 2019 8:37 pm

Grt2bOutdoors wrote:
Mon Jun 24, 2019 8:30 pm
More cooking at home; much less at restaurants.
Do not buy wine/liquor with your meals purchased outside the home, for price of 1 glass you can buy the bottle for your house. Biggest profit margins are in the beverage portion of menu.

Pack your lunch from home. They talk about the latte factor but have you seen how much lunch purchased outside the home costs?
Clip coupons-no really, when shopping for food, buy what is on sale when you can. Every penny counts.


Limit Major League Baseball events attendance, in HCOL venues, can easily set you back $200 or more and that is with seats up near the clouds. Besides it’s not fun sitting in 2 hour traffic trying to get home from the stadium.
+1. I literally never eat out, my wife does occasionally and her "occasionally" (maybe 3-6x a month) costs nearly as much as what we spend monthly on groceries for our entire family. She randomly went out twice last week with her friends and those two dinners ended up costing more than 2 weeks of food for the entire family. House and car are #1 and #2, but eating out isn't that far behind (or even more) for some people.

Starfish
Posts: 1175
Joined: Wed Aug 15, 2018 6:33 pm

Re: How did you lower your annual expenses?

Post by Starfish » Mon Jun 24, 2019 8:38 pm

My expenses only went up over my lifetime.
15 years ago I was spending ~1000$/month in one of the top 3 most expensive counties in the country. I was also flying to Europe for at least a moth a year. Life was good.
Now I spend many times more and I do nothing fancy.

Colorado13
Posts: 900
Joined: Thu Apr 07, 2011 4:58 pm
Location: Colorado

Re: How did you lower your annual expenses?

Post by Colorado13 » Mon Jun 24, 2019 8:56 pm

I spend a lot on the yard and garden; it's one of my hobbies. The book "The $64 Tomato" is not too far fetched... I am not ready for condo life and expect that I will get some return on my investment if/when I ever sell the house.

To lower expenses, this year I am scaling back on spending in this category relative to prior years, while being thankful that I do have a nice house/yard that I can enjoy...

runner3081
Posts: 2171
Joined: Mon Aug 22, 2016 3:22 pm

Re: How did you lower your annual expenses?

Post by runner3081 » Mon Jun 24, 2019 9:05 pm

-Don't eat out
-Shop grocery ads (don't buy name brand food -or anything)
-Dump Cable TV AND all subscription tv expenses (too many people dump cable TV at $1xx per month only to subscribe to 10 streaming services for $80+)
-Use the library for books and other media
-Reduce your cell phone bill drastically, plenty of plans for $30 or less (we have gone 3+ years with a zero cost cell plan for both of us)
-Change your thermostat settings
-Ditch cars with a loan payment and buy something in cash
-Find free entertainment, there is always plenty, just have to "find it"
-Dump Amazon prime (adding the hurdle of needing $25 has reduced our spending a bunch)
-No or very limited alcohol - definitely not from anywhere other than a grocery store
-Do your own yard/pool/house cleaning

BUT, this is easier said then done. It is more about lifestyle. My wife and I (with daughter) don't spend much at all, but buying crap has never appealed to us, so it does not feel like we are missing out.

runner3081
Posts: 2171
Joined: Mon Aug 22, 2016 3:22 pm

Re: How did you lower your annual expenses?

Post by runner3081 » Mon Jun 24, 2019 9:07 pm

Grt2bOutdoors wrote:
Mon Jun 24, 2019 8:30 pm
Pack your lunch from home. They talk about the latte factor but have you seen how much lunch purchased outside the home costs?
I know, crazy to see people in my company who make $15-18 per hour buying a $10-$12 lunch every single day!

User avatar
Watty
Posts: 16446
Joined: Wed Oct 10, 2007 3:55 pm

Re: How did you lower your annual expenses?

Post by Watty » Mon Jun 24, 2019 9:19 pm

How did you lower your annual expenses?
By not letting them get high in the first place.

For a long time when I was in my 30s I committed to myself to save half of any future raises. Since I never got used to the extra money I never increased my spending.

IMO
Posts: 448
Joined: Fri May 05, 2017 6:01 pm

Re: How did you lower your annual expenses?

Post by IMO » Mon Jun 24, 2019 9:34 pm

Slinky wrote:
Mon Jun 24, 2019 7:37 pm
After tracking spending for a year, I was blown away with what we spend.

Obviously this is a wide open subject, but without having a lavish lifestyle and only two children to care for, I am just amazed at our spend!

What did you do to dramatically reduce your bills? What areas got you spending? For us, clearly eating out is one of them. What areas “surprised” you? :shock:
Paid off the mortgage.

veindoc
Posts: 556
Joined: Sun Aug 14, 2016 9:04 pm

Re: How did you lower your annual expenses?

Post by veindoc » Mon Jun 24, 2019 10:02 pm

Dottie57 wrote:
Mon Jun 24, 2019 8:36 pm
Don’t go shopping. Amazing how well not looking for things to buy actually works. :oops:
This. Every time I went to the store I felt like I found these “gotta have ‘em” things. Items that without a doubt I was convinced I needed. I never considered myself to be much of a shopper but when I went through a period where we were looking to cut expenses, I cut out extraneous shopping. I threw out all catalogs without looking. I didn’t enter a single store for three months other than a grocery store. I skipped the middle section at Costco.

And I didn’t miss a thing. I didn’t buy anything or feel the need to. It made me realize that I could convince myself that I “needed an item” when in fact I would somehow make do. That was an eye opener.

delamer
Posts: 8060
Joined: Tue Feb 08, 2011 6:13 pm

Re: How did you lower your annual expenses?

Post by delamer » Mon Jun 24, 2019 10:03 pm

Seriously consider paying cash for all expenses like groceries, eating out, entertainment, and clothing.

My parents used envelopes containing the weekly (or monthly) budget for each of those items. Once the money was gone, no more spending in that category until the next week or month rolled around.

curmudgeon
Posts: 1817
Joined: Thu Jun 20, 2013 11:00 pm

Re: How did you lower your annual expenses?

Post by curmudgeon » Mon Jun 24, 2019 10:09 pm

We have always tried to be mindful of our spending. Anything that is an ongoing expense (cable, cell phones, gym, services) got looked at very closely. We also paid attention to the depreciation of big-ticket items, and the true cost (including insurance/maintenance/taxes) of things like houses and cars rather than just looking at payments. We chose housing where we would find the public schools acceptable, so we could avoid private school costs. We were selective about clubs/sports/music stuff for the kids; they all had things according to their interests, but we limited the big ticket ones.

We did a lot of camping as a young family, but included occasional bigger ticket vacations (but only if we had the funds in hand). We didn't go for the expensive overseas honeymoon, and we were on our second house purchase before we ever bought a new car.

I was pretty much always in the habit of buying an inexpensive lunch at work, rather than brown-bagging (many of my offices had subsidized cafeterias), but I recognized this as a luxury.

As income grew, we increased our savings, but also became willing to spend more. These days we pay attention to grocery costs, but don't chase too hard for bargains (though we avoid what I view as overpriced organics).

AerialWombat
Posts: 669
Joined: Tue May 29, 2018 1:07 pm

Re: How did you lower your annual expenses?

Post by AerialWombat » Mon Jun 24, 2019 10:36 pm

Easy peasy: Foreclosure, bankruptcy, live in your car. Boom, expenses reduced! That was the story of my life in 2007-08.

Now, I have the opposite problem: I refuse to enjoy the money I earn because I’m too stingy.

I’m trying to talk myself into buying something to sit on to put in my living room, like a chair, couch, or beanbag.

Now that you are tracking your spending, simply evaluate what you don’t really need or enjoy. Simplest place to start.
“Life doesn’t come with a warranty.” -Michael LeBoeuf

Grt2bOutdoors
Posts: 20726
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: How did you lower your annual expenses?

Post by Grt2bOutdoors » Mon Jun 24, 2019 10:50 pm

AerialWombat wrote:
Mon Jun 24, 2019 10:36 pm
Easy peasy: Foreclosure, bankruptcy, live in your car. Boom, expenses reduced! That was the story of my life in 2007-08.

Now, I have the opposite problem: I refuse to enjoy the money I earn because I’m too stingy.

I’m trying to talk myself into buying something to sit on to put in my living room, like a chair, couch, or beanbag.

Now that you are tracking your spending, simply evaluate what you don’t really need or enjoy. Simplest place to start.
It’s okay, you can buy a couch. If it’s utility you want, you can buy a pullout couch. Dual function. Do it, you have a right to enjoy some creature comforts.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

randomguy
Posts: 7811
Joined: Wed Sep 17, 2014 9:00 am

Re: How did you lower your annual expenses?

Post by randomguy » Mon Jun 24, 2019 11:04 pm

Slinky wrote:
Mon Jun 24, 2019 7:37 pm
After tracking spending for a year, I was blown away with what we spend.

Obviously this is a wide open subject, but without having a lavish lifestyle and only two children to care for, I am just amazed at our spend!

What did you do to dramatically reduce your bills? What areas got you spending? For us, clearly eating out is one of them. What areas “surprised” you? :shock:
Have you considered that you live a lavish lifestyle? Some peoples lavish lifestyles is driving BMWs. Other is taking international trips. Others is a Eating a 10 dollar lunch. Or taking the family out to chain restuarants weekly. Others are spending 200/month on child sports. And so on. All lavish luxuries that you don't need. You might want them though.

If you have your spending, it should be pretty trivial to see where all the optional spending happens. And for spenders, getting housing and cars right doesn't help. If they have 10k to spend and have 3k housing expenses, they spend 7k on crap. If they have 5k to spend, they spend 5k on crap. For savers it matters since they spend 3k on crap if their housing cost is 3k or 5k. Savings go up with lower housing costs, but spending on other items doesn't drop.

Lee_WSP
Posts: 391
Joined: Fri Apr 19, 2019 5:15 pm
Location: Arizona

Re: How did you lower your annual expenses?

Post by Lee_WSP » Mon Jun 24, 2019 11:22 pm

I just never increased my expenses with my income. That's the secret. Earn more, spend the same.

User avatar
HomerJ
Posts: 13019
Joined: Fri Jun 06, 2008 12:50 pm

Re: How did you lower your annual expenses?

Post by HomerJ » Mon Jun 24, 2019 11:27 pm

Grt2bOutdoors wrote:
Mon Jun 24, 2019 8:30 pm
Limit Major League Baseball events attendance, in HCOL venues, can easily set you back $200 or more and that is with seats up near the clouds. Besides it’s not fun sitting in 2 hour traffic trying to get home from the stadium.
Heh, another reason the Mid-west is better...

Even when the KC Royals were good a few years ago, we could still get tickets for $12 up in the cheap seats.

(Now that they stink, I can get them for $5)
The J stands for Jay

KandT
Posts: 101
Joined: Sun Mar 26, 2017 2:32 am

Re: How did you lower your annual expenses?

Post by KandT » Mon Jun 24, 2019 11:30 pm

First I had a REAL SENSE OF URGENCY. I mean this with 100% respect because I commend you for taking some steps to improve your financial situation.

You tracked your expenses for a year and are now asking how to reduce them? This should have taken at most 1 month but probably a week to figure this out. A couple hours to track down miscellaneous and yearly expenses like insurance and divide them into monthly expenses. Week 2 you are ready to go.

Again massive respect for taking a step but why not reduce them as you were tracking them? May I submit that the year allowed you to kick the can down the road one more year?

You need a massive sense of urgency starting last year. You could be a full year ahead of where you are now.

Listen, reading a book or a forum or making an appointment are all nice "pretend" steps. Want real action? Close out this forum, grab your wife by yourselves and use the data you collected to make your budget. Cut hard. Then set up an automatic reoccurring withdrawal into an account that you don't touch. (I am assuming you are debt free). If you aren't debt free get an emergency fund yesterday and then start throwing that auto-withdrawal right to the debt (dont ever give a credit card company access to your account of course).

Do you really need to come to a forum to tell you to cut your cable and don't eat out?

Now that took all of a couple hours - Pay off MASSIVE!!!

Walk around the house with your wife. See all the stuff you dont use? Sell it. It is depreciating whether you use it or not so you might as well sell it. Either invest the money or throw it at debt.

This forum is great and I love it. But it doesn't replace action. For me reading and responding here is my downtime.

Good Luck but you won't need it if you start moving.

StealthRabbit
Posts: 257
Joined: Sat Jun 13, 2009 1:25 am

Re: How did you lower your annual expenses?

Post by StealthRabbit » Tue Jun 25, 2019 12:36 am

1) Moved to an income tax free state that had high wages during earning years.
2) Drove 'beaters' when vehicle tax was based on value (Still drive a 43 yo car that gets 50mpg on free fuel (Home brew))
3) $100 / month into the "Food and Entertainment' envelope. When it runs dry... get creative (open the freezer) or go without food a couple days / week (Kids survived)
4) Booked airline tickets on Monday and Friday so we got bumped (travel credits).
5) Travel using "Guest homes" $20 / night worldwide for entire family (includes at least one meal / day, often more)
6) Travel budget carriers
7) Insure vehicles liability only (Beaters)
8) Saved 100% of my income from FT job for 15 yrs (lived on PT wages)
9) Company paid 100% for my college (several degrees)
10) Kids went to FREE college instead of High School and then paid their own way for remaining tuition.
11) Kids were GONE by age 18 and participated in budgeting since age 8, were on their own financially by age 16.
12) ALWAYS ran my tax obligations several times / yr to tweak effective rate to < 10% (single earner). Used DAF, LTCG, rental improvements, IRA deductions, credits, pre-pay taxes,gifting, 1031, Sect 179... in high earning yrs,
13) Barter (food, lumber, livestock, home and auto repair, professional services)
14) Income props / businesses allow for 'offset' earnings and many deductible expenses.
15) Farm classification on taxes and vehicles (saves ~50% from std rates)
16) Gave away more than I spent on myself (That keeps spending LOW).
17) Lived / worked overseas with family on company dime.
18) Bought very low priced but desirable properties 30+. (Never through a realtor)
19) Studied a lot of business law and investing procedures.
20) Listened !! to seasoned mentors.

Lately... reduced HC insurance costs by $2400/ month by going on ACA (capping income @$65,800 to qualify for credits,, MFJ)

Future:
1) Will be using 30 yrs accumulated airline mileage / hotel credits for travel and expenses.
2) Will build another Zero energy home
3) Volunteer for international service positions (free travel and housing)
4) Will more minimize transportation expenses. (reduce insured and licensed vehicle count and value) Bike more, walk more.

CoastalWinds
Posts: 179
Joined: Sat Apr 06, 2019 8:28 pm

Re: How did you lower your annual expenses?

Post by CoastalWinds » Tue Jun 25, 2019 1:15 am

Don’t forget that spending isn’t bad. Money is earned to spend to enjoy life. The goal is to figure out what you value your life’s energy that you traded the money for. People that are posting “don’t drink wine”, “don’t go on vacations that involve airfare”, “eat at Taco Bell” (which has a much larger hidden cost, BTW) are a bit over-the top, IMHO.

Ron Ronnerson
Posts: 1134
Joined: Sat Oct 26, 2013 6:53 pm
Location: Bay Area

Re: How did you lower your annual expenses?

Post by Ron Ronnerson » Tue Jun 25, 2019 1:27 am

Our approach is perhaps different to that of many others on this forum. Rather than trying to make a ton of money, our goal is to have a great deal of time together as a family by keeping the number of hours worked to a moderate level (even though that means not having as much in earnings). In order to achieve that, we’ve gone through our expenses carefully. Here are some specific things that we’ve done:

Housing: We live in a townhouse that is a little bit of a drive from major employment centers.

Home repairs: A friend helps me out.

Yard: We don’t have one.

Electric Bill: We don’t run the A/C and heat often. We’re in the Bay Area so the temperatures are mild most of the time.

Cell Phones: We have Mint Mobile (12-month prepaid plan) and the cost is fairly low.

Health Insurance: We get a subsidy on the health insurance exchange which pays for something like 85% of our premium.

Life Insurance: My wife and I both have super-preferred rates. Being in good shape helps with this cost.

Taxes: We’re in the 12% federal and 2% California income tax brackets. Our effective income tax rate is around 2% federal and 0% for California.

Transportation: I have half the days of the year off and my wife doesn’t work. I’ve been carpooling for the past two years as well. We drive His & Her Corollas and intend to keep our cars for at least 15 years (just like the last car I had). These things help with depreciation, gas, and maintenance costs. A good driving record and low miles on inexpensive cars keeps insurance and registration costs down as well.

Vacations: We are often working on earning credit card bonuses. The miles/points we have earned have paid for all our vacations for several years.

Groceries: We try to buy inexpensive items and use them fully. We buy things that are on sale and stock up if the sale is really good. We use coupons and don’t buy organic.

Restaurants: We go out to places like Subway, pick up a pizza for take-out, or go out for Chinese food. Meals for a family of three cost $10-$30. We don’t typically order drinks, appetizers, and dessert when going out. I bring a lunch to work every day.

Childcare: We have relatives nearby if we need someone to watch our daughter.

Clothing: We wear what we get for gifts and rarely buy new clothes. Kid's clothes are often bought used.

We save about half our income of $120k ($50k into retirement accounts and $10k toward mortgage principal). We live very comfortably - we have a house cleaner, cable TV, and pets. We go out to events that cost money sometimes (concerts, movies, plays, etc.). Those are small pleasures and help make life nice. However, as far as the big stuff is concerned, we have made sure to go through those items with a fine-tooth comb. It was definitely a worthwhile thing to do for us. I have a feeling it could be for you as well.

xavierr
Posts: 25
Joined: Sun May 05, 2019 11:24 am
Contact:

Re: How did you lower your annual expenses?

Post by xavierr » Tue Jun 25, 2019 4:30 am

Read this book,get inspired, and join the FIRE movement:

Playing with FIRE (Financial Independence Retire Early)
by Scott Rieckens
https://www.amazon.com/Playing-Financia ... 1608685802

CarpeDiem22
Posts: 205
Joined: Tue May 22, 2018 11:20 pm

Re: How did you lower your annual expenses?

Post by CarpeDiem22 » Tue Jun 25, 2019 4:31 am

1. Moved to a house with 26% lower rent but similar in nature/facilities. Original rent was almost 20%+ of my salary, so this was good saving.
2. Due to moving nearer to work, use my car quite rarely now. Travel cost is reduced.
3. Educated myself on income taxes and started using deductions I was not using earlier to reduce tax expenses.

basspond
Posts: 1196
Joined: Wed Nov 27, 2013 4:01 am

Re: How did you lower your annual expenses?

Post by basspond » Tue Jun 25, 2019 5:59 am

Back in the day we stopped subscriptions, cable, ate out less, DIY projects, refinanced house to 15 years, avoid toll rolls, we are not coffee drinkers, don’t order drinks when we eat out, have a beer fridge to stock up on things when they go on sale, volunteer for charities instead of spending on entertainment.

Dandy
Posts: 5827
Joined: Sun Apr 25, 2010 7:42 pm

Re: How did you lower your annual expenses?

Post by Dandy » Tue Jun 25, 2019 7:33 am

Trying to limit transactions that involve monthly payments. After awhile they become part of the base and aren't questioned. e.g. car leasing, magazine subscriptions, premium cable, health club memberships, appliance insurance, lawn mowing service, gutter cleaning service, etc.

When the older kids were still at home we had 4 cars - I often did my own oil changes, car washes, etc.

Eating out is a large expense but also a social and entertainment occasion. Don't always include an appetizer and dessert, if the restaurant isn't BYO then maybe an ice tea instead of a glass of wine or mixed drink once in awhile. Not every meal out has to be soup to nuts. Also, watch those "specials" (special for you or the restaurant??). Many times I used to struggle with finishing the whole meal -- now I eat until satisfied and often take some home.

jharkin
Posts: 2244
Joined: Mon Mar 28, 2016 7:14 am
Location: Boston suburbs

Re: How did you lower your annual expenses?

Post by jharkin » Tue Jun 25, 2019 7:34 am

HomerJ wrote:
Mon Jun 24, 2019 8:23 pm
Slinky wrote:
Mon Jun 24, 2019 7:37 pm
What did you do to dramatically reduce your bills?
Stop spending.

The real trick to is keep your house and car expenses under control. You get those two right, and you're in a pretty good shape.

Don't spend too much on housing and cars.
+1

For our first 10 years of married life we lived in a 1400sq ft house, DIY everything and drive nothing but Toyota/Honda products kept a minimum of 10 years. With a growing family we are moving to a slightly larger house but still DIY, save aggressively and drive modest cars.

I notice most of my highly paid colleges who constantly complain about bills:
- drive expensive (typically European) cars
- live in enormous houses
- outsource everything (even house cleaning and lawn mowing)
- and take frequent, extravagant vacations.

Gibby45
Posts: 19
Joined: Sun Nov 04, 2018 10:55 am

Re: How did you lower your annual expenses?

Post by Gibby45 » Tue Jun 25, 2019 7:57 am

1. Now that you've tracked your expenses for a year, analyze whether your spending is in line with your values/happiness. Eliminate the random spending that does bring you any added value.
2. Your big three areas of spending tend to be housing, transportation and food. Write down what your spending is in each of these three categories and decide to what extent you are willing to reduce your spending. Try to use these categories together to create synergy. If you are a renter, rent a place closer to work to reduce transportation/parking costs. I've found that living close to a grocery store helps me avoid eating out.
3. Set a percentage that you want to reduce each category. Make it as aggressive or as gradual as you will realistically sustain. For groceries, try to increase the groceries you buy in the bulk food section, stock up on food that you can freeze or store when it is on sale and cook in bulk on the weekends so that you are not as tempted to eat out when it is not a special occasion. You can make this low end/budget by stockpiling PB&J sandwiches that you have handy or you can make fancier more gourmet meals that you can freeze. You'll get a feel for your go-to meals and snacks as you proceed.
4. To cut housing costs, you can rent out a bedroom, AirBnB a room, move to a smaller place, move to a place that allows you to reduce other expenses (i.e a place that comes with cable or that allows you to walk/bike/or bus to work) or you can stay where you are and cut other expenses.
5. For transportation, focus on dependable older cars. If you have a newer car and don't drive often, you can look at services like Turo to rent out the car. If you already have a newer car, take care of it and drive it for as long as you can. Try to make sure your next car is bought with cash.
6. Figure out a way to lower the expenses on the items that you don't want to eliminate. Traveling to see family and friends is something that is important to me so I figured out how to do that for free* with credit card rewards. Find a way to reduce the costs associated with the things you spend on. If it's shopping for clothes, try to buy good quality clothes that will last and make sure to shop through cash back portals. Focus on good quality items for the things you do spend on. If you're going to purchase it, make it count and make sure you will use it often enough to justify the purchase.
7. For entertainment, try to start a "potluck" circuit among fiends instead of going out to bars and restaurants. You should still go out to celebrate special occasions, but focus on making going out to eat a special treat instead of a regular occurrence.
8. Try to make reducing spending automatic by increasing the amount you pay yourself in advance. Increase your 401k contributions and/or max out your (Roth) IRA and/or increase the amount for your taxable account by setting up automatic payments that are taken from your paycheck or bank account when your paycheck hits. Increase these amounts until you are maxing out your 401k and IRA and have increased your taxable account contributions by X percent. Make these payments automatic and at the beginning of each pay period.
9. Put yourself on a time delay for large purchases. if you still want the item 10/15/20/30 days later, then find a way to buy it for at least a 10% discount. Search craigslist and other online forums to see if you can get it "like new" at a discount. Use tool libraries if your city has them in lieu of buying specialized tools that you will only use a few times.
10. Go thorough your house and take a look at all the things you've purchased that you don't use. For any new item you acquire, get rid of one that you no longer use.

User avatar
Sandtrap
Posts: 7447
Joined: Sat Nov 26, 2016 6:32 pm

Re: How did you lower your annual expenses?

Post by Sandtrap » Tue Jun 25, 2019 8:05 am

livesoft wrote:
Mon Jun 24, 2019 7:58 pm
Slinky wrote:
Mon Jun 24, 2019 7:37 pm
... only two children to care for, I am just amazed at our spend!

What did you do to dramatically reduce your bills?
We stopped spending on our children and kicked them out of the house. Best move we ever made.

But kids got hand-me-down from cousins and friends. Also we made them eat at their friends' homes. Since their clothes were always shabby, their friends' moms were only too happy to help since they thought we were relatively poor compared to them.

BTW, it worked so well that our daughter now sends us money even though we don't ask her to.
+1
Terrific!!!

Savers and Salvation Army and hand-me-downs outfitted my children until their size stabilized. . . and they moved out.

Drove cars/trucks until they literally stopped working. Never bought new. I had a pickup truck with floorboards you could see the highway thru. At least the rain water drained out well.

Hamburger Helper without the hamburger. The kids remember these years . . . "fondly".. . .

A local tire dealer had this special. Buy 4 tires and they would fix them forever for free and if they couldn't fix them they'd replace with a new one. I never knew tires could be driven that long with the belts showing. I think we got at least 4 new sets over the years from those guys.

We didn't have to make an effort to lower our annual expenses because our income was so low.
How low was it?
Our income was so low . . . . . . .

j :happy
Wiki Bogleheads Wiki: Everything You Need to Know

TallBoy29er
Posts: 607
Joined: Thu Jul 18, 2013 9:06 pm

Re: How did you lower your annual expenses?

Post by TallBoy29er » Tue Jun 25, 2019 8:07 am

RollTide31457 wrote:
Mon Jun 24, 2019 8:11 pm
Our keys to success include the following:

2. No international travel expenses
5. No wine expenses
Perhaps if you combined these two you would see things differently. :beer

Ron
Posts: 6485
Joined: Fri Feb 23, 2007 7:46 pm

Re: How did you lower your annual expenses?

Post by Ron » Tue Jun 25, 2019 8:08 am

delamer wrote:
Mon Jun 24, 2019 10:03 pm
Seriously consider paying cash for all expenses like groceries, eating out, entertainment, and clothing.

My parents used envelopes containing the weekly (or monthly) budget for each of those items. Once the money was gone, no more spending in that category until the next week or month rolled around.
Wife/me have used this system since we were married 50 years ago. In today's world, it certainly is old fashioned (have to get that 2% discount for using a CC). However, that 2% gain can be lost quickly if you don't have a hard limit on what you will spend on the stated categorizes. If you run out of money? Delay the expenditure until next month - or when your envelopes have a bit of money in them.

I doubt that many people today are willing to make the sacrifice that all cash for certain expenses entail. It requires a bit of thought of what is actually wants vs. needs...

- Ron

AerialWombat
Posts: 669
Joined: Tue May 29, 2018 1:07 pm

Re: How did you lower your annual expenses?

Post by AerialWombat » Tue Jun 25, 2019 8:18 am

Ron wrote:
Tue Jun 25, 2019 8:08 am
It requires a bit of thought
What a concept, eh? :)
“Life doesn’t come with a warranty.” -Michael LeBoeuf

Shallowpockets
Posts: 1185
Joined: Fri Nov 20, 2015 10:26 am

Re: How did you lower your annual expenses?

Post by Shallowpockets » Tue Jun 25, 2019 8:19 am

OP. You,don't say what categories you found to be an elevated expense for you.
There are many suggestions here to cut costs. We don't know what you expect your costs to be either.
To be simple I would start with groceries and food expenses. Likely you are overspending on that. You may find you throw out a lot of food. Not uncommon for people to waste food. Are you beyond the basics and into name brands? Do bananas look good in e cart but then they go bad and are thrown away? Is this prevalent with other perishables? Leftovers?
Do you eat out a lot? Do you brown bag your lunch?
You can start on all the suggestions listed on this thread, but if you keep it to a simple category you may find it to be easier to start at all.
There are many threads on BHs that deal with grocery bills and the spend rate of some people is astounding, and in the extreme frugality some apply to their food that is unbelievable.
Strike a medium there.

7eight9
Posts: 124
Joined: Fri May 17, 2019 7:11 pm

Re: How did you lower your annual expenses?

Post by 7eight9 » Tue Jun 25, 2019 8:23 am

Per your previous post your house is paid off and you have no debt. viewtopic.php?f=1&t=219879&p=3385482#p3385482

You've killed the two biggest expenses right there (house and cars). And you know where your money is going since you have tracked it for the past year.

My wife and I are in a similar position (albeit without any children so I can't offer you any advice on that front). We spend app. $18K per year excluding vacations.

Lots of good advice so far. Shop your insurance each renewal. Make sure you aren't overinsured (or underinsured). Call cable/internet providers and ask for a better price - threaten to switch if that is a possibility and be prepared to do so if you can't get a better price. See if you can't get a better price on your cell phone plans (we are currently using Google Fi but there are cheaper plans out there that may work for you).

Regarding food. Buy on sale and stock up where feasible. Buy the day old bread, discounted dairy/meat/vegetables, and clearance items. Don't eat out too much.

Turn off the lights when you aren't in a room. Use LED light bulbs. If you really want to start pushing it - unplug things that are power vampires when not in use.

Change your own oil if you can. Avoid dealerships - use independent garages. Don't use a higher octane gasoline than what your manufacturer recommends.

Buy things when they are on sale. Comparison shop. If the price goes down after you buy something go back and ask for the difference (I've even had this work with Amazon). Don't be afraid to ask if a store can do better on the price.

Best of luck and I hope you follow up and let us know how much you manage to reduce your expenses.
I guess it all could be much worse. | They could be warming up my hearse.

caffeperfavore
Posts: 225
Joined: Thu Aug 06, 2015 11:45 am

Re: How did you lower your annual expenses?

Post by caffeperfavore » Tue Jun 25, 2019 8:27 am

+1 to getting home and car expenses right. Focus on the big stuff first.

Question every purchase. Do I really need it? Will it add value to my life? Can I get it or substitute something else for less?

For us, we didn't do it all at once. It's a continual, gradual process. At first, we looked at our expenses and were able to trim about $200, but felt that was as far as we could go. We couldn't even imagine going beyond that. But through the years, each time we looked at our expenses we would identify additional things that could be trimmed or replaced. We've easily trimmed a couple grand from our monthly budget since we started the process years ago. It's been amazing how the little things really do add up.

We found that trimming stuff hasn't affected our quality of life in the least. In fact, it's actually improved it by freeing up more cash for things that we really enjoy doing and relieving us from the stress of thinking about money.

Rus In Urbe
Posts: 419
Joined: Sat Dec 09, 2017 2:12 pm

Re: How did you lower your annual expenses?

Post by Rus In Urbe » Tue Jun 25, 2019 8:30 am

As others have mentioned: the two expense biggies for most are House & Car.

1. We moved to a LCOL area out of sheer luck (job offer) and negotiated hard to lower the price on an already cheap fixer-upper within walking distance of my office (add Commute to that list of expense biggies---commuting time/money are astonishing if you add them up). We paid off the mortgage ASAP; we fixed up the house gradually, doing some of the work ourselves. We lived without a dishwasher for five years because when we redid the kitchen we would need a different size of washer and I didn't want to waste the several hundred $ buying a stopgap. When we buy, we buy quality. We never took out a loan for anything (aside from mortgage).

2. Our first car together was a used Corolla purchased for $2500 which we drove for 7 years---we got great glee in calculating how much it cost us per mile. No AC in it, so we called it the pizza oven. Summer road trips included rolled-down windows, an ice chest on the back seat, and drinking ice water constantly. We have some great stories about that car. Our second car was a *new* Corolla, purchased in cash from a salesman who was a friend of a friend and got us a great deal; we kept that 150k miles and then gave it to a needy friend (it was still running perfectly); now we are in a Subaru Forrester AWD purchased on Amex to get the travel points, and will keep it five more years until we go electric. Oh, and we went down to one car some years ago---that also helps and it's easier than you think it will be, actually improves communications.

However, we do have two big spending categories that we have been unwilling to change: Books & Garden.

Books: We justify most books in our library by deducting them as a business expense (we are professors/writers). We are both voracious readers, and yes we do use the library too.

Garden:
Colorado13 »
I spend a lot on the yard and garden; it's one of my hobbies. The book "The $64 Tomato" is not too far fetched... I am not ready for condo life and expect that I will get some return on my investment if/when I ever sell the house.
To lower expenses, this year I am scaling back on spending in this category relative to prior years, while being thankful that I do have a nice house/yard that I can enjoy...
Ours is more the $640 Tomato! Oh, the garden. Well it's tremendous exercise. Recent studies have proven that spending at least a few hours a week "in nature" brings a host of health benefits. Health has incalculable value. We rake every leaf and save every grass clipping and kitchen scrap to make compost...the soil is gorgeous. We don't kid ourselves thinking that the food we raise is saving us any money (we can get it much cheaper at the local farmer's market, which we also patronize). We have spent oodles on fencing, bricks, shrubs, trees, mulch, seeds, plants, tools, a fountain, you name it.

As my DH says: The Garden is our Sailboat.
How do you lower your annual expenses?
Keep the basics cheap.
Decide on your sailboat(s) and enjoy them.
I'd like to live as a poor man with lots of money. ~Pablo Picasso

finfire
Posts: 107
Joined: Tue Aug 14, 2018 1:52 pm

Re: How did you lower your annual expenses?

Post by finfire » Tue Jun 25, 2019 8:42 am

Slinky wrote:
Mon Jun 24, 2019 7:37 pm

What did you do to dramatically reduce your bills?
:shock:
I'm the wrong person to ask...sigh...I just spent a couple thousand on patio furniture and car repairs :oops:

I'm ok with the occasional high expenses. Summer just seems to be expensive for us. Kid's camps and vacation. The kids need to be in camps so we can work and we do like a reasonable vacation.

We've kept expenses low (most of time) by driving older cars , maintain a reasonable size home, no debt, pay off credit cards etc.

Recently we've had to splash the cash too. We had a free couch for 10 years that we replaced with a nice, expensive new one, which I say is one of our best purchases. We've lived with hand-me-down patio furniture for several years, which just needed replacing. I think it's OK to not feel guilty about good purchases.

We tend to mostly eat at home. Maybe twice a month we eat out. Again, nothing to feel guilty about.

Most of our recent big expenses I am ok with because we went without for a long time. It is ok to spend sometimes, don't beat urself up to much. LIfe is for the living!

A440
Posts: 394
Joined: Mon Sep 02, 2013 7:46 am
Location: NJ

Re: How did you lower your annual expenses?

Post by A440 » Tue Jun 25, 2019 9:43 am

1- Live in a modest neighborhood with modest cars and lifestyles, avoid life creep like the stomach flu.
2- Get rid of cable and expensive cell phone plans if possible
3- Re-quote auto and home insurance every year or so.
4- Don't hang out with spendthrifts if you are expected to keep up with them :D
I don't know what the future holds, but I know who holds my future.

Post Reply