How I cut my expenses may provide some insight how to save money. Some people would call me cheap! Others may say I am frugal! I think of myself as value conscious! I hate to spend more money for something than I need to. My approach may cause you to rethink how you spend your money!
Million dollar skills
Whether you are earning minimum wage or a million dollars a year, you spend money. How you spend your money will either earn you more or cost you a great deal. I have always been around rich successful people including my own parents. My neighbors were rich, my friends were rich and even a few relatives were rich. I think I learned from the best how to get more from my money and become successful. I wrote an article called “Successful vs. Unsuccessful People” which illustrates some of the traits I learned.
Housing
About fourteen (14) years ago, we downsized from a five (5) bedroom, three (3) bath home to a two bedroom and den townhouse. We rented out our home for three (3) years so we could test out townhouse living. During that time, we decided to buy a townhouse, but waited a year to sell the house. We bought during a buyer’s market and sold during a seller’s market. We went from a large home on a view lot with a swimming pool on a country club to a very nice townhouse with tennis courts, pool and Jacuzzi in a gated community. I cut my expenses in half!
Utilities
My goal is always to pay less for things. How can I lower my utility bills? The first thing I did was change to a cold water wash. We use gas for hot water, heating and cooking. Just using a cold water wash saved nearly 33%! To save money on heating/cooling, I use a setback thermostat. In the winter, I set the thermostat at 68 degrees when we are home. I lower it to 65 degrees during the day and while we sleep. In the summer, I set it at 78 degrees during the day and 75 degrees when we are home. Generally we can turn off the air conditioning in the evening. During the summer, we barbecue which keeps the house cooler. To lower the electricity, I replaced all the light bulbs with CFLs. My utilities costs are between $75-85 per month summer and winter which includes $25 of sanitation costs.
Groceries
Groceries can be a big part of many people’s budget. First, my wife creates weekly menus and a list when she goes shopping. We buy all our household and personal items at Target and use their credit card so we receive an additional 5% off. Avoiding buying these products at the supermarket saves a lot of money. My wife buys her produce at a produce market which offers the lowest prices. I buy chicken, flank steak and some other items at Costco. Our monthly groceries range $250-275 per month. This includes all our lunches too.
Mortgages/homes
Since many people are refinancing their mortgage or may buy a new home, I will talk about my experience with mortgages. I refinanced my mortgage about eight (8) years ago. I changed from a 30 year fixed rate mortgage to a 15 year fixed rate mortgage. A lot of people are doing this now! What I did is negotiate with my bank to reduce the closing costs. Since I have good credit and could go anywhere, I negotiated with my bank to drop many of the fees. The result was a 5%, 15 year mortgage without most of the fees. That was quite an accomplishment eight years ago.
Insurance
Many of us spend a good portion of their budget on insurance. I am no different. I am very fortunate to have good medical, dental and vision care insurance for my wife and myself through work at no cost to me. Don’t get envious, I am a teacher that has not had an increase in many years. I used the internet to shop term life insurance about eight (8) years ago. About three (3) years ago, I found the least expensive automobile insurance company on the internet. When I shopped them, no one could match the rates. When I shopped homeowners insurance, I looked for a company that provides earthquake coverage. I live in earthquake country and survived the Northridge earthquake! I think the California Plan is expensive and inadequate. It is a national rated AAA company, I found through a large insurance agency in Los Angeles. I saved several hundred dollars on my automobile policy, but used some of the savings to increase my coverage. I was able to increase my coverage for my homeowners policy for the same cost.
Miscellaneous
Before you think that all I do is stay home and do nothing. We go to the movies once or twice a month using group discount tickets ($6 each) with friends, go out for dinner twice a week ($40 for 2, weekend total) and travel to far away places. Almost all the restaurants, we frequent have loyalty programs and/or on my dining network for frequent flier miles. We use our credit card for everything to accumulate frequent flier miles (first or business class) for overseas trips. Vacations are exotic, but cost less thanks to those miles. Last spring, we went to New Orleans for Spring break. Last year, we went to Vancouver to visit relatives.
Final thoughts
Simply, slashing expenses is painful and difficult to maintain! My approach is to maintain the same product, service or lifestyle for less! I remember seeing my mother negotiate with a builder; she kept telling him what she wanted. He kept saying no, guess who won? She always got what she wanted and I do too. Lowering your expenses require good problem solving skills, persistence and determination. These are some of the ways to have more with less. What are doing to cut your expenses? This is how I cut my expenses.
Photo by: Herederos de Rowan
Blog Carnivals
- Free Money Finance hosted Star Money Articles and Carnival included 20 Interview Questions to Ask Employers
- My Personal Finance Journey hosted the Yakezie Carnival and included Am I Training for a Race?
This is how I cut my expenses.
I assume that downsizing in housing was a result of children moving out. I look forward to my expenses decreasing significantly once that happens.
This is my task for Oct, after setting up categories and tracking expenses past two months is to start looking at where I can cut. Looking hard at cable and cell phone bills first. Changing bulbs and getting into new habits with electric/gas usage as well as water as well.
BBQ in the summer. Love this simple idea to keeping the house cool in summer. We do the same, and try and bake more in the winter.
During the winter, we put on sweaters! Baking may lead to gaining weight. 🙂
I think you are successful at cutting expenses because you seem to see it as a game (I do too)…trying to get that monthly nut as low as possible!
Thanks so much for sharing your story and tips. We can all learn so much from your example.
We have done some of the same things and they definitely help save the cash.
Thanks, many of changes are easy to implement and reap the savings.
Very good tips, KC! May I ask which credit card you use for the air fare points? And which restaurants do you favor? I like your Target shopping for basics with 5% back! We shop at Walmart, but we get just 1% back on our Discover Card there. Might have to get that Target card!
Wow. Thanks for sharing how you save money. You sound like a pro but I’m sure it’s taken work to get there. 🙂
Very prudent steps KC. Hats off on downsizing at the right time and not getting caught up in the housing mess people are facing now!
I don’t know if i am lucky or brilliant, but I did have timing on my side. I had timing on my side when I sold my mother’s condo in the Fall of 2005.
I bet the biggest saving is to move to the smaller place. Your bills are lower too by moving right? We go to a lot of free events in the summer. Concert in the park, Opera, and other free cultural events are great fun.
Certainly, moving cut some expenses, but my approach still worked before and just works better now.
It is my Dutch roots and getting more for the money! I call myself value conscious.
I have a United Mileage Plus card. In fact I am already planning a trip to Europe next year.
Thanks! We’re saving for a trip there in 2 years.
You nailed me! I think of myself as value conscious and I am trying to squeeze more value out of my expenses.
Changing to a cold water wash saved roughly $10 a month and no discernible change in the quality of the wash. This is true of almost all my changes or savings.
You are right! My children graduated college and went off on their own. There was no reason to keep a large 5 bedroom home, pool and landscaping to maintain. Although I moved from a large house to a townhouse, the square footage is only 30% smaller. i
Thanks for the mention of the Yakezie Carnival! Thanks also for participating!
You’re welcome, supporting each other is important!
I definitely agree! Thanks again!
That’s awesome your mom is good at getting what she wanted and taught you how to do the same! Nice job keeping your expenses down and you’re lucky your wife plans out a weekly menu. Wow. I love to plan except when it comes to meals and cooking lol. -Sydney
Terrific tips. I consider myself “spend challenged”. To save on gas, I lump errands together. I also take the bus to save on gas and parking. Since time is money and I am not driving, I can catch up on posts or reply to comments!
Just out of curiosity, do you ever miss the large house on the golf course? Obviously it was well worth the additional savings, and capital gains you made, but I was wondering what value you would place on living in a fairly ideal location.
You have done a great job of managing expenses and still living well. It obviously can be done. Just becasue people watch their money doesn’t mean they have to sit around and eat cabbage soup all day.
I am still envious over your good insurance! Ours is awful, and we haven’t had pay increases in years either. 🙂
All I do is review my expenses every month when I pay the bills and make sure it is inline with the prior period. I place some priority on enjoying myself because you can not maintain an extreme budget.
All I do is review my expenses every month when I pay the bills and make sure it is inline with the prior period. I place some priority on enjoying myself because you can not maintain an extreme budget.
I don’t think I realized how good a business woman she was at the time. I review the expenses every month to see if anything changes or trends change. It goes back to my CFO days. My wife started planning meals because it was easier on her for shopping. The savings came from that.
I wish I had that choice, but my commute is down to roughly 15 minutes.
I miss the privacy, but not the expenses. It is too large for 2 people. That house and location will always be special in my memory because of the feelings associated with it. We brought up our family there and the location was great!
Great job cutting back expenses. I like the term value conscious. It’s way more accurate than frugal or cheap.
I am cheap and frugal, but I identify more with value conscious. 🙂 I like to wring out more from my expenses and stretch my money. It is almost a game!
I’m impressed KC! I would live to be able to lower my expenses like you did. We are looking into downsizing as well in the next few years and with rates and home prices as low as they are in Phoenix, we could save quite a tidy sum!
Great job in many aspects. I love anything real estate and liked how you bough and sold at the right time. Sometimes that seems unavoidable, but that is because people fail to bother renting it out. Great work! I never thought about using my good credit to barter with my bank. I will use that when I go to get a mortgage in a few years. Thanks.
Use whatever you have to negotiate! You have to recognize your power particularly in this market.
Timing is everything! I downsized because my children graduated and moved out. We rented out our home for a few years and bought in a buyers market.
I was thinking about getting that Target credit card, you’ve motivated me to get it. I love Target and 5% is nothing to sneeze at.
The cool thing is you get it instantly! No waiting or applying it to future purchases. You apply through the cashier at check out. They give a teporar card and send the regular one within a couple of weeks.Target prices for household items and some food items compete with Costco.
I love this game (and that’s what my husband and I turned it into). I budget for a reasonable amount and then do everything I can to actually spend less. I usually have a budget category I want to funnel “found” money into – this fall it happens to be home improvement. I’m carefully monitoring utilities (for example not watering the yard if it just rained). Even $50 worth of savings could mean a significant upgrade in a bathroom faucet (can you tell we’re remodeling?) It’s fun to be frugal when you actually get to do something with the found money!
Your next step is bring down your fixed expenses, but I like the idea of putting aside your savings on spending.
Great tips KC. We don’t have a mortgage but would love to have as little of it as possible. Which auto insurance company do you use? Ours increased the premium and I ahve been shopping around. Not found anything cheaper so far.
Great strategy buying a house in a buyer’s market and selling during a seller’s market. It really can be that simple (in a normal market). And during the summer, when you barbecue more it actually saves water on washing dishes too! No pots and pans if you cook everything on the grill.
As far as buying and selling homes, I wish I could take credit for good planning. My only planning is to avoid selling in a buyer’s market or buying in a seller’s market.
I am working my way to zero purely because I will retire in less than 6 years. My auto insurance company is a Canadian company that only sells in Oregon and California. It is called Wawanesa Insurance.
Wow, I’m impressed by the savings you found by simply switching to cold water washes. I would have never thought that change would provide such savings unless you do laundry often. The refinancing is a big deal; you save on interest and chop off a significant amount of time from the mortgage.
I review my expenses as I pay them each month to wring out as much as I can. I will research any changes and adjust when I can.
Yes, we changed to a cold water wash too and that has helped cut our bills.
Our hot water heater is fueled by gas and I saw a drop of a third in my usage.
Thank you for the tips. I belive that life is collection of experiences. Some people just like to live in a big home and have plenty of space.
Regardless you are saving your money to spend them on something. Most of the people are. I do enjoy waking up in a warm room : -)
I kept a close track of our family budget and published it in my blog.
Gas, food and bills are relatively small in percentage of total.
Honestly. It is all available. But I am agree with you – whatever works and if you visualise your goal, there is
so many opprrtunities to realise it.
Is your budget/results available somewhere?
My approach comes from years of business (CFO) experience analyzing expenses. I do not publish my budget.
It’s always a good idea to cut down on your utilities bill, and I have always prided myself on running a pretty “low tab” with the City of Austin. I recently moved into a new home, though, and am roommate-less for the first time in several years. I got my bill yesterday for electricity, water, waste, etc. and I was SHOCKED! I’d actually done really well with keeping my electric and water down to the bare minimum, but I was surprised at the amount they charged for waste, trash, street services, and “miscellaneous.” The unfortunate thing about that is, it seems to be just the “standard” rate for my area of town, and I can’t think of anything I can do to lower the cost! Can you think of anything? Thanks for the great post, KrantCents!
This is the new strategy by cities to raise funds for services. I have the same problem in Los Angeles.
Excellent post KC! Thanks for sharing.
You’re welcome. I hope my experience will help others achieve their goals.
Awesome info! I cut out the non working broadband offered by TWC and I saver over a $100 a month.
Small changes can yield big results. Shift that to yur savings!
One thing I did was to get rid of cable and telephone service. Since I have a high-speed Internet connection, I was able to get Netflix streamed to my television set. The phone company was charging a small fortune for a land line. But for $15 a month, I have an IP phone that the plain old telephones connect to and work just like before. The total for high speed Internet, Netflix, and IP phone comes to $78/month.
Good move! Thinking outside the box (no pun intended) yields better results.
I am so sorry but I could not make mind up, how somebody who has been in CFO position and downsized from 5 bedrooms to 3 still has a mortgage, being frugal as you are? Do apologise if the question is too personal.
I chose to invest the proceeds of my house versus having no mortgage.