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Years ago, when my dad died, my mom set up a trust fund for me and my brother with money dad wanted us to have. My mom and a financial advisor manage the fund. I just found out from mom that it's running out of money and to keep it alive, the monthly benefits are dropping from $1200 per month to $500.
I find myself trying to think of how to cut $700 from my monthly budget. The easiest answer is to stop saving as much as I do (I currently save about $1400 a month in my IRA, my daughter's 529, and just "general savings." This $1400 does not including what I put in my 401k which is also maxed out). But I really want to cut expenses first, before savings. As you can tell, I like saving.
I came up with a plan and I am about $100 short of cutting $700 from the monthly budget and could use some ideas. Here is what I did:
1) I cut out giving to my mom's church. That saves $40 per month.
2) I stopped putting money into the 529. After 17 years of putting money into it, I've come to realize just now that it probably would have been more financially savvy to save the money elsewhere anyway because of how FAFSA works. There is $30K now and anything I add from now until college will just be a drop in the bucket anyway. That saves me $100 a month.
3) Stop eating out so much. Ugh. I ran a report in Quicken and was shocked by how much I spend on dining. I think it increased slowly over time as work and school activities became busier. I decided a firm rule of just one "take out" treat a week/no more than $25 for the two of us (me and my teen daughter). For those busy days and such where we are running around and can't make it back home due to school commitments, I need to bring a cooler. That will save about $160 a month.
4) Pay off the car and stop making car payments. I have plenty of cash to pay off the car twice over and my car loan interest is a about 1% higher than what the money market account makes so that's a no brainier. That's is another $300 a month freed up.
So there you have it. That's how I got to freeing up $600 a month and now I am struggling to figure out how to shave off another $100 without touching other savings.
My biggest bill (after mortgage and the car loan) seems to be groceries. Of course, if I stop eating out, that might not go down. But I wonder if there are any strategies to grocery shopping aside from buying generic, having a list, and buying on sale that might help. Currently, I plan recipes and then shop for ingredients.
Things I don't have that people are often told to cut are a cable bill (I have internet and cell bundled for $70 a month) and monthly subscriptions or memberships like a gym membership. I don't have any credit card bills (I put stuff on the card, but I pay it off every month).
So I am open to suggestions. Things to cut, ways to save money on food bills while eating out less, etc. I am prepared to maybe just cut back on savings if i have to, but many brains are better than one so I am hoping for an "ah ha" from some of you frugal posters. Thanks!
One last thing. I live in a very high cost of living area. Half my take home income goes to housing (mortgage, HOA fees, home maintenance, etc). After my daughter graduates from high school/turns 18 and I no longer need to live where I do to be close to her father, I plan to sell my house and move to a lower cost of living area (I telecommute). So these cuts really only have to last a year since costs will drop substantially after I move.
It looks like you've come-up with a pretty comprehensive list that others might use in their own cost-cutting goals. The question I have is, 'are you spending everything that comes-in' to the point where any significant change can pose a real problem?? (of course, $700 may not be a trivial reduction to your monthly income).
You said you are putting significant money into savings, but, if a too large percentage of your monthly income comes from a trust or similar income vehicle, you may be leaving yourself more exposed than you need to be. Beyond looking at where you can cut expenses, you might also look for opportunities to cut risk and build more cushion into your income and lifestyle. Are you, for example, planning for inflation, emergencies or other contingencies?
You've limited the scope of suggestions to groceries, by some very effective strategies (although the car thing is just a slight-of-hand).
Save your grocery receipts. Review them. If you are so inclined, make a spreadsheet to see where the big costs are.
I'll say something now that is bound to get a lot of pushback - Explore different grocery stores, even in the sketchy parts of town. Explore the ethnic markets. Explore the dollar stores. Do what you need to remember the pricing. I happen to have a mind that easily remembers such things and can stop in a store and go "Whoa, this is twice the price I'm used to paying!" and walk away. I don't think that is common, but by buying at different places, comparing receipts, and knowing what is available you do yourself a great favor.
It continues to surprise me how people here flock to Publix and Kroger to shop, when those stores are premium priced. The Aldi's gets some customers, and I can tell that the local Sav-a-lot is about to go out of business - even though it has the best pricing on most products. WTF are people thinking? The convenience of one stop shopping easily adds 50% to their grocery bills. Shop cheap stores first, then if you can't fill your list, hit the more expensive stores.
Use your freezer as a time machine. Another surprise to me in the food forum was how people only use their freezers for short term storage. I still have a rib primal in mine, properly wrapped, from years ago when I was able to get it for $4/lb. Thawed, I'll cut it into ribeye steaks every bit as good as the ones now selling for over $10/lb.
Set and maintain a "par stock" of regularly used items so that you stay out of stores except for the major shopping days.
It looks like you've come-up with a pretty comprehensive list that others might use in their own cost-cutting goals. The question I have is, 'are you spending everything that comes-in' to the point where any significant change can pose a real problem?? (of course, $700 may not be a trivial reduction to your monthly income).
You said you are putting significant money into savings, but, if a too large percentage of your monthly income comes from a trust or similar income vehicle, you may be leaving yourself more exposed than you need to be. Beyond looking at where you can cut expenses, you might also look for opportunities to cut risk and build more cushion into your income and lifestyle. Are you, for example, planning for inflation, emergencies or other contingencies?
Thanks for the questions. They are good ones. I suppose if you count savings as an expense, yes, I am spending everything that comes in. I set things up that way. I first set aside a minimum amount of savings, then set a budget, whatever was left was added to mandatory savings (if that makes sense). The easiest answer to less income is to just save less since that's where all my excess income goes, but I want to see if I could cut expenses first. That's all.
I thought about a new job, but now is not a good time with my daughter as a high school senior and me needing flexibility regarding events, college tours, etc. My main problem with my job is that they pay isn't keeping pace with the cost of living here. I will be moving to a LCOL area in a year, that will go a long way to helping. Housing is the main thing killing me. I've seen my fixed rate mortgage payment go up from $1700 per month to $2050 per month in ten years (it's all due to increasing taxes with increased property value). And my HOA fees doubled in the same time. After I sell my house, if I want to, I can easily buy a similar sized house for cash where I am moving to if I want to. That will go a long way to cutting expenses.
I do have an emergency savings of sorts (I have a year of expenses saved up).
Quote:
Originally Posted by harry chickpea
You've limited the scope of suggestions to groceries, by some very effective strategies (although the car thing is just a slight-of-hand).
Save your grocery receipts. Review them. If you are so inclined, make a spreadsheet to see where the big costs are.
I'll say something now that is bound to get a lot of pushback - Explore different grocery stores, even in the sketchy parts of town. Explore the ethnic markets. Explore the dollar stores. Do what you need to remember the pricing. I happen to have a mind that easily remembers such things and can stop in a store and go "Whoa, this is twice the price I'm used to paying!" and walk away. I don't think that is common, but by buying at different places, comparing receipts, and knowing what is available you do yourself a great favor.
It continues to surprise me how people here flock to Publix and Kroger to shop, when those stores are premium priced. The Aldi's gets some customers, and I can tell that the local Sav-a-lot is about to go out of business - even though it has the best pricing on most products. WTF are people thinking? The convenience of one stop shopping easily adds 50% to their grocery bills. Shop cheap stores first, then if you can't fill your list, hit the more expensive stores.
Use your freezer as a time machine. Another surprise to me in the food forum was how people only use their freezers for short term storage. I still have a rib primal in mine, properly wrapped, from years ago when I was able to get it for $4/lb. Thawed, I'll cut it into ribeye steaks every bit as good as the ones now selling for over $10/lb.
Set and maintain a "par stock" of regularly used items so that you stay out of stores except for the major shopping days.
Well, I wasn't trying to limit it to groceries, but it's a big expense and the only thing I could think of to cut. Looking at quicken, over the past year my grocery bill has steadily gone up. I was hoping someone would have other ideas aside from groceries that I didn't think of.
I will admit, I've gotten lazy with shopping. Pretty much the stores in a 45 minute drive of me are Whole Foods, Giant (a lot of Giants), Safeway, Aldi, Trader Joes, Wegman's, and Costco. Two years ago, I went on a field trip and did price comparisons. The end result was I buy a few things at Aldi (mostly spices and baking goods) and most at Giant and I haven't changed from that routine. I found Safeway and Whole Foods to definitely higher priced. Wegman's was about the same as Giant but always over crowded. Costco was cheaper on some things, but not the main things I buy (plus the membership fee). Trader Joes hardly had anything I needed and seemed to be mainly prepared foods whereas I mainly do that "around the outside of the store" shopping except for things like dried beans, grains, pasta, etc.
But, having said all that, things change. Maybe it's time for another field trip. Thanks for the reminder and the tip on the spreadsheet. I need to see why my grocery bill has gone up.
And yeah, the car thing is a slight of hand. To be honest, it's kind of an emotional thing. It "bugs" me to have the debt. The reality is, the interest rate on the car loan is so low that it only costs me $274 over four years to carry the loan. I think the big advantage will be related to FAFSA. Draining down my savings before I do that paperwork will mean more student aid, but I think FAFSA just takes into account something like 5% of the parent's savings. So maybe it's not really worth it.
My biggest bill (after mortgage and the car loan) seems to be groceries. Of course, if I stop eating out, that might not go down. But I wonder if there are any strategies to grocery shopping aside from buying generic, having a list, and buying on sale that might help. Currently, I plan recipes and then shop for ingredients.
Things I don't have that people are often told to cut are a cable bill (I have internet and cell bundled for $70 a month) and monthly subscriptions or memberships like a gym membership. I don't have any credit card bills (I put stuff on the card, but I pay it off every month).
Does your credit card have cash rewards? If not, I would look into getting one that does. On average we get back cash rewards of $50 monthly (we're not big spenders.) We use our credit cards for everything including utilities and insurance and pay them off in full monthly.
Grocery prices are easy to cut back. It boils down to proper planning. I would change your statement of "I plan recipes and then shop for ingredients" to "I buy ingredients on sale and then plan my recipes around those sale items." Never ever waste food, because there is always a freezer or soup waiting for leftovers that you don't want to eat right now. Know all of the normal prices of the items you buy so you know when you are overpaying. I agree with Harry chickpea that shopping around gets you the best prices. Before shopping, check out the flyers online of each store where you could shop. I use digital coupons at the places that have them. Some people use the "ibotta" app for savings. I haven't tried it so cannot personally recommend it.
Small amounts really do add up. I make a game of grocery shopping so that we can get the items we like for the best prices. Find out how much you spend on groceries monthly and challenge yourself to cut your grocery bill by something like $100. By shopping mindfully, you will find it's easier than you think.
When was the last time you compared insurance costs for your home and car? My state has a program where insurance companies are required to drop car insurance rates 10% for 3 years if I take and pass an on line 6 hour driver safety course (cost $13). After 3 years if I take the 3 hour refresher course (also $13) they give a 15% discount for an additional 3 years.
Since you telecommute how much driving do you actually do a year? With State Farm I averaged 8500 miles a year. When I retired and my mileage went below 5000 miles I had my policy reviewed and it dropped by 40%! It varies by insurer, but, ask if your low mileage gets you a price break. They will not tell you if you qualify for a better rate unless you ask.
Several states participate in this car safety defensive driving program. Check and see if your state participates. Bundling car and homeowners policies with one company can sometimes help cut insurance costs as well.
Does your credit card have cash rewards? If not, I would look into getting one that does. On average we get back cash rewards of $50 monthly (we're not big spenders.) We use our credit cards for everything including utilities and insurance and pay them off in full monthly.
Grocery prices are easy to cut back. It boils down to proper planning. I would change your statement of "I plan recipes and then shop for ingredients" to "I buy ingredients on sale and then plan my recipes around those sale items." Never ever waste food, because there is always a freezer or soup waiting for leftovers that you don't want to eat right now. Know all of the normal prices of the items you buy so you know when you are overpaying. I agree with Harry chickpea that shopping around gets you the best prices. Before shopping, check out the flyers online of each store where you could shop. I use digital coupons at the places that have them. Some people use the "ibotta" app for savings. I haven't tried it so cannot personally recommend it.
Small amounts really do add up. I make a game of grocery shopping so that we can get the items we like for the best prices. Find out how much you spend on groceries monthly and challenge yourself to cut your grocery bill by something like $100. By shopping mindfully, you will find it's easier than you think.
My credit card does have rewards and I try to use it for everything I can and pay it all off each month (I think of it as a light discount on everything I buy).
I am spending $570 a month (on average) on groceries. This is for two people: me and my teenage daughter. That's for food as well as household cleaners, toiletries, and that sort of thing. I think I can shave some off of that. I ran a report and in 2019 and 2020 used to spend $250 a month. And even though my daughter is a teen, she's not really eating a lot more. So that's been a significant increase. The only real "added" cost is because of the pandemic, my daughter has been eating lunch at home, not school. I categorized school lunch differently in Quicken/it wasn't part of my grocery budget.
I am going to try the I buy ingredients on sale tactic. Thank you.
Quote:
Originally Posted by Mary2014
OP,
When was the last time you compared insurance costs for your home and car? My state has a program where insurance companies are required to drop car insurance rates 10% for 3 years if I take and pass an on line 6 hour driver safety course (cost $13). After 3 years if I take the 3 hour refresher course (also $13) they give a 15% discount for an additional 3 years.
Since you telecommute how much driving do you actually do a year? With State Farm I averaged 8500 miles a year. When I retired and my mileage went below 5000 miles I had my policy reviewed and it dropped by 40%! It varies by insurer, but, ask if your low mileage gets you a price break. They will not tell you if you qualify for a better rate unless you ask.
Several states participate in this car safety defensive driving program. Check and see if your state participates. Bundling car and homeowners policies with one company can sometimes help cut insurance costs as well.
Funny thing, I literally just did this last month. That's because my daughter got her driver's license and I had to add her. When I did, I asked the agent for all kinds of advice to lower my insurance. He didn't mention a driver safety course, but he did tell me I could add a box to my car that monitor's my driving. He said I get 5% off just for having it and could get more depending on how I drive. My total auto insurance for the year is $900 (with a teenager on the policy). So 5% is just $45. Every little bit counts but I have to be honest, I don't like the idea of Big Brother watching me drive. But I should think about it.
But your suggestion is a great idea. I completely forgot about insurance since I pay it yearly, not monthly. I will double check to see if my state has anything like that. And it your suggestion reminded me I could shop around for new insurance. I currently have State Farm for home and auto. I've shopped around before and always ended up staying with State Farm but things change and it doesn't hurt to look!
You're thinking of ways to pinch pennies so you can make up the 'gifted' money you were getting?
That ... is frugal.
Theoretically if you had money in the markets, you did pretty well over the past year.
I'd just call it a wash. Or take a risk and put it in a riskier fund.
Shaving $8,000 when you're already frugal is hard.
Yes, pretty much. The gifted money (along with any pay raises or bonues) always gets saved because I didn't want to "count on it" so to speak. But now that some of it is going away, I find that I don't want to reduce my current savings rate. My grandmother, who lived though the Great Depression, used to tease me that I could make the buffalo scream (meaning I was pinching coins, like buffalo nickles, really tightly). haha
I have a lot in the market mostly my 401k and my two IRAs. I've been maxing out the IRAs since I was 23 years old and the 401k for just two years now (that 401k limit is high). I have one taxable fund in a total stock market fund, but it's only $18K. I pretty much stick to total stock market funds or index funds (as well as some in bond funds). Most of my non-retirement savings is in a money market account and not doing much but making me feel better by having a nice, easy to access nest egg. I am pretty unexciting when it comes to my investments.
I am going to try to better my shopping and keep looking for ways to save money, but I am also aware that the easiest way to deal with this is just not save as much. But it won't hurt to do a "frugal makeover" of my current spending.
Yes, pretty much. The gifted money (along with any pay raises or bonues) always gets saved because I didn't want to "count on it" so to speak. But now that some of it is going away, I find that I don't want to reduce my current savings rate. My grandmother, who lived though the Great Depression, used to tease me that I could make the buffalo scream (meaning I was pinching coins, like buffalo nickles, really tightly). haha
I have a lot in the market mostly my 401k and my two IRAs. I've been maxing out the IRAs since I was 23 years old and the 401k for just two years now (that 401k limit is high). I have one taxable fund in a total stock market fund, but it's only $18K. I pretty much stick to total stock market funds or index funds (as well as some in bond funds). Most of my non-retirement savings is in a money market account and not doing much but making me feel better by having a nice, easy to access nest egg. I am pretty unexciting when it comes to my investments.
I am going to try to better my shopping and keep looking for ways to save money, but I am also aware that the easiest way to deal with this is just not save as much. But it won't hurt to do a "frugal makeover" of my current spending.
It's hard to save money on groceries unless you eat badly (bad food is cheaper), or are able to cook in bulk all the time, which takes up time. And even then, you don't really save THAT much.
Last year was the cheapest year of my life. There was no going out, and no alcohol. Minimal commuting.
Like I lived in a calendar year for around 25K in a pretty expensive part of NYC metro. Doesn't count any kind of savings or contributions.
Since I had a thought to quit my job this year, the only additional ways I thought of were.
1) Cutting cable
2) Cutting coffee at Dunkin Donuts
3) Not using AC or heat unless we're absolutely dying.
The first two I would do if I quit my job. The latter can probably save you maybe $1000 a year, but really ... is it worth it?
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