Four Simple Ways to Cut Your Budget

Here are four simple ways to cut your monthly expenses:

As I indicated in my last post, in July of 2018 I started a new job. This job would mark the first time that our household income surpassed our expenses since my wife decided to be a stay at home mom back in 2015. We were determined to create and live by a budget that would support our dream of investing in real estate. It did not take long after we started tracking every expense before we realized that, even with a $120K household income, we still needed to shave off some expenses if we were to meet our savings goals. Below are four areas where we found opportunities that we are certain everyone else may also be able to find some additional savings within their budget:

Cable: 

This is perhaps the most useless way to spend money. My wife and I were spending $140 per month on internet and cable, plus an additional $12.99 for Netflix.  We originally thought we’d cancel cable and just keep the internet, but we decided that we enjoy sipping a glass of wine and watching a good TV show a few times a week. So, instead we decided to call around and trim down on the channel lineup that we had. We ended up with a basic cable and internet package for $68 per month through Comcast, and we continued with our Netflix subscription. Amazingly, we have never felt a shortage of options of TV shows to watch, even with the most basic of channel lineups.

Prior Monthly Cost = $140.00

Current Monthly Cost = $68.00

Annual savings = $864.00

Strategy: Call around, be willing to give up some channels, and save big on a cable!

Car Insurance:

When was the last time you shopped around for insurance? Sure, it is kind of a pain in the butt to request quotes and talk to salespeople, but the payoff is huge! I am 34 years old and have never had a traffic ticket or accident. I also drive a 3-year old low budget sedan. My insurance costs should be minimal, and my insurance broker is a great friend of mine. This past February I hit some black ice and ended up bumping into an SUV in front of me. My car had zero damage, and the car I bumped had $1,100 worth of damage - just enough to put me in surcharge territory. This lone incident raised my insurance premium from $900 to $1,450. The second I received that information, I hit the pavement by emailing my policy details to a few brokerages and asking if they could give me the same coverage for less money. It took less than three hours for me to settle on a quote from Geico for $950, even with my accident!

Prior Annual Cost = $1,450.00

Current Annual Cost = $950.00

Annual Savings = $500.00

Strategy: Send your insurance policy to different brokers and see if they can meet your coverage at a better rate. Odds are, they can!

Dry Cleaning:

This one was unexpected. I have been dry-cleaning my work shirts and pants for a long, long time. I was spending $75/month, or $900/year on dry cleaning, which is a freaking fortune. As I was looking for creative ways to cut my budget expenses, I googled washing my clothes at home, and was surprised to find out that many people do this. I now machine wash and dry my pants and work shirts, and immediately hang them once they’re done. I still look sharp for work, and I no longer have to shell out so much money for someone else to do my dirty laundry.

Prior Monthly Cost = $75.00

Current Monthly Cost = $0.00

Annual Savings = $900.00

Strategy: Entertain doing your own dirty laundry, and save a bundle on dry cleaning!

Student Loans:

Ah, student loans! Bernie might get these bad boys forgiven, but until then, we’re all on the hook for them. I had about $40K in loans between private and federal lenders, all at different amounts and interest rates. My cost was $550/month, and I tried exploring options to consolidate and lower this payment. After a little research, I ended up solidifying a consolidation agreement that lowered my payments by about $100/per month, or $1,200 per year. 

Prior Monthly Cost = $550.00

Current Monthly Cost = $438.82

Annual Savings = $1,334

Strategy: Consider consolidating your school loans for big savings!

As you can see, by digging just a little while looking for ways to free up some cash on the budget, we were able to realize savings of almost $3,600 per year, or $300 per month! This number represented more than half of the $500 per month that we were trying to save as part of our investment plan. Leave a comment outlining other simple ways you’ve found to save money.

Have you tried budgeting and failed? Consider this great guide by the great Dave Ramsey!