How to Lower Your Monthly Expenses - (W2:D3) Debt-Free Millionaire Podcast

Debt-Free Millionaire

Real Life: Sadly, there is no way of escaping your monthly expenses, or escaping having to use your money to pay for things each month. Whether you are buying food or using the lights in your home, this increases your monthly expenses (and you need food and electricity). Since we talked about Expenses in (W1:D3), let’s talk about how to save money and lower your expenses. Here are some ways to lower your monthly expenses:

1. Food – You need to buy groceries to survive, right? But do you have to buy so many groceries, or such expensive groceries? Try this: when you go to the grocery store, bring a list of only the things you need. Make this list during the week, since your last visit to the store, while you are planning out the next week in advance. If you stick to the list, it will be much harder to overspend on your budget.
2. Food – Every trip you take to the grocery store costs time and money. Try only shopping once a week, or every other week. To survive during this time, try doubling your purchases. If you are there to buy one jar of peanut butter, buy two. Buy in bulk: if you need a dozen eggs, buy the 18, 24, or 48 pack, since they are normally priced lower when you buy in bulk. Instead of buying one gallon of milk, buy two, even if you must freeze it (whole milk freezes best). Buy everything in one trip, so you don’t have to waste your time, money, and especially gas. Or, you can buy online and have it delivered (although, watch out for higher prices and hidden fees).
3. Gas – Plan out all your trips on a list. If you don’t have to go on Monday, then don’t. Go on Tuesday, when you already need to go out to go to the post office and pick up the kids from school. Make your trips meaningful, and try to go in a loop, so you aren’t going back and forth - spending more time and money. Try to make it one line, to do everything on your way, while looping home.
4. Toiletries and other Household Items – This is hard to conserve on, but remember that you don’t need the most expensive brands, just because of their names. Most of the time, you are only paying for their marketing. Many of the generic brands do just as well as branded products. And be careful of buying them for the extra things they do. Like toothpaste, for example. You don’t always have to buy the one with the most claims, like teeth whitening, hydrogen peroxide, etc.
5. Mortgage/Rent – This is a fixed rate expense, so there isn’t much you can do after you have already found your home, except to take care of your home. Houses that are not maintained cost more in expenses. Keep your house clean and maintained, and less damage will occur on the home itself. Less damage, means less maintenance, and less money spent.
6. Mortgage/Rent – If you haven’t found your home yet, search harder. Don’t just take the first deal that falls in your lap. Most times, if you give it more time to find the right place, you’re more likely to find a better deal, in cost. At the same time, don’t wait forever because a place you really want could be purchased by someone else and you could miss out on an opportunity.
7. Mortgage - When you buy, consider your ability to repair the house. To save money when you are initially buying, find a place that may not be aesthetically pleasing. If the house looks good structurally (you will need an inspection to make sure), then you can always paint and tear up the carpet. Even if there are a lot of pet messes, you can use Kilz to seal the floor and then carpet, and the evidence that they were ever there disappears, (and you purchased a house for $10,000-$20,000 under its value). A house is not always a good investment, so buy low - sell high. As the dollar loses value, the price of things increase, such as in 2021-2022. You may be able to buy a house and as the value of the dollar shrinks, the value of the house increases. So, also keep in mind that if you are on the edge with a house, thinking of being able to sell it, you may make more money as things get more expensive over time.
8. Mortgage - When you buy a house without putting 20% down (paying cash for 20%), your mortgage is based on nearly 100% of the house’s value. The lender, then, will add a fee, called PMI (Principle Mortgage Insurance), which could cost a few hundred dollars. It’s an insurance policy that guarantees them that you will pay your mortgage. If you owe less than 80% of the value of the house, that PMI can be dropped from your mortgage payment, saving hundreds, or even thousands, every year from your payments.
9. Utilities: Electric– Most of these are very simple, and your parents have probably been telling you to do them for a long time. Turn off the lights when you leave a room, use LED bulbs, and as much natural light as possible (sunlight) throughout your house. Turn off appliances when not in use. Install power strips, and when you aren’t using the appliances, turn off the entire power strip. You may also want to consider portable devices, such as laptops instead of desktops, because they use less power to run.
10. Utilities: Gas/Water – Take shorter showers, with less hot water. Turn down your hot water heater, to a temperature that is more like what you would shower in. Use a smart thermostat for your heat, and schedule times you need your house to be heated. For energy efficiency, you may even want to replace your hot water heater and furnace, with a high efficiency furnace and tankless water heater.
11. Utilities: Water – Turn off water when you are not using it, such as while shaving, washing dishes, and brushing your teeth. Take shorter showers. Only run the dishwasher and laundry when it's a full load, and fix any dripping faucets or running toilets. For energy efficiency, you may want to buy a new washer, and toilets that need less water.
12. Utilities: Phone – Surprising as it may be, you don’t need the most expensive phone plan. Take a look at how much data you normally use, and buy a plan that provides for that. You may want to consider pre-paid plans; sometimes, they’re even more cost efficient, they give you incentives for automatic pay, and when you don’t need a line, you can shut it off. Not everyone needs a cell phone. It is not as convenient, but you may want to buy a landline for those who don’t need a cell phone.
13. Insurance: Auto, Health, Home, Life – Each cost the same every month, so the best thing you can do is shop around, before you buy your plan. Get quotes from 10 providers (if possible), and look at what they give you. You don’t need all the bells and whistles (Platinum plan) but you also don’t want to be under covered. Note: if you use your auto or home insurance for any reason, the price of the plan usually goes up, so don’t call on the small repairs.
14. Property Tax – There is not much you can do about this, either. The city or county will charge you, based on the value of the house. What you can do is look to see how much they have it valued for. If it is too much, visit the assessor’s office and discuss what it takes to drop the value.
15. Out-of-pocket medical costs – Medical debt is the most used reasoning for going bankrupt. You had no idea you would be sent to the hospital, and then one day you had to have major surgery. First off, make sure you never go without health insurance, if you are high risk. If you are very healthy, look into high deductible plans, meaning you pay little month to month, but pay more if you do go to the hospital. Also, make sure you exercise and eat healthy; you are less likely to be sent to the hospital if you are keeping yourself healthy and fit. Start today!
16. Gasoline – Only drive to places you need to go. With the increasing gas prices, you need to conserve energy wherever you can. Gas is getting expensive! Plan trips with multiple errands. Do not go to places that aren’t a necessity, and maintain your vehicle.
17. Public transportation – If you can’t afford a car, take public transportation. The subway or bus is the most affordable (way more than Uber!), and Taxis are much higher priced these days.
18. Child Support or Alimony payments – If you are ever considering divorce, think about it carefully. Financially, divorce will hurt most people. One party will often pay Child Support, Alimony, or both (and it can be the husband or the wife). Except for times of a toxic relationship, If you can work it out with your spouse, do all you can to keep your marriage.
19. Childcare – Children are expensive, but even more expensive if you have kids and both parents work.