I used to think it was crazy to live on 50% or less income! Here are just some of my cost cutting strategies. Some people would call me cheap or frugal! I think of myself as value conscious! I hate to spend money unless I see the value. If you maximize your expenses, you will have more money to spend on what you want! 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.
About seventeen (17) 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 our house. We bought during a buyer’s market and sold during a seller’s market. We went from a large home with a swimming pool on a country club to a very nice townhouse with tennis courts, pool and Jacuzzi in a gated community. My mortgage, taxes and utilities were cut in half!
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. Recently, I noticed my utility bills include community comparisons with my neighbors’ usage. I use at least 25% lower utilities on average.
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 immediate 5% rebate. We have become more aware of unit pricing and changed our shopping to get the best value. 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 (family of two). This includes all our lunches too because we take our lunch every day.
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 eleven (11)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 eleven (11)years ago. Interest rates were considerably lower in the last few years. If you were able to take advantage of a low fixed rate mortgage, it was a win/win. I am just two and half years away from retirement and chose not to refinance. a new mortgage is front loaded with interest and it did not make sense for me.
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 (approximately 8 ) 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.
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. A few years ago, we went to New Orleans for Spring break. Two years ago, we went to Vancouver to visit relatives. This summer, we are going to New York and next year we will go on another cruise in Europe.
Simply slashing expenses are painful and difficult to maintain! Many financial experts suggest to just cut your expenses to reach your goal. 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 you doing to cut your expenses? If I deduct my 35% savings, taxes withheld or paid, I live on 50% or less income.
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If I deduct my 35% savings, taxes withheld or paid, I live on 50% or less income.