Wednesday, March 30, 2011

How To Reduce Your Expenses to (Almost) Nil

Over the past couple of months of traveling I have been able to enjoy something I haven't been able to enjoy for literally decades, namely being able to count my monthly bills on one hand (ie: cell phone bill, car insurance bill, health insurance bill, storage unit bill, and tithe) . Even better, those bills are each under a hundred dollars per month. Add to that the cost of some food and sundry items and we are currently able to live quite well on very little money. While I realize that this lifestyle isn't for most people--and I'm sure we will get tired of it at some point in the future and settle down again--the idea of reducing your bills to the bare minimum will appeal to just about everyone. Here's some ideas for reducing your monthly bills to the smallest amount possible.

  • House. When we settle down again, we will buy a small house and pay cash for it. A large house, unless you have a dozen kids running around your place, is not necessary and is a large waste of money. If you aren't at the point where you can pay off your house with cash, get on the Dave Ramsey plan and make this your goal. If you don't have the money to do this, consider really ratcheting back you housing expenses by getting creative (ie: trading elder care for room and board, renting the apartment over someone's garage for cheap, etc).

  • Utilities. The best way to not pay utilities is to live in an area where you have a well, septic tank, and have a woodlot where you can cut your own wood for home heating. Having solar panels for electricity would also be nice. (Note that you will trade the cash you would pay for these items in the city for the physical activity and skill necessary to do the labor to keep these utilities working.) If this doesn't sound appealing, you may want to look for housing where utilities are included or live in a place where you can control your utility usage and thus the price you pay for these items.

  • Cell phones. If you don't like monthly cell phone bills you can always get a prepaid plan. For something like $100 you can get 1000+ pre-paid minutes on a cell phone plan which, if you don't use your phone much, can cover several months of service. Other than that, it pays to do your research and get the plan that best meets your needs.

  • Internet. Most of us can't fathom living without internet. It is possible, of course, because so many places now offer free internet, however, if you must have internet in your home, like I said above, check around and see what all of your options are before you make a decision on what plan to get.

  • Car. You should ALWAYS pay cash for your cars. It makes no sense to make monthly payments on an item that depreciates like a lead balloon. If you can't afford to pay $20,000 for a car then pay $2,000 and save what you would be paying in car payments until you have money saved to purchase an upgrade.

  • Insurance is one place where I don't scrimp. Things like car insurance, health insurance, and homeowners insurance can save you tons of money in the event that a catastrophe happens. Life insurance is also good unless you have the funds to self insure for the death of the family breadwinner.

  • Food. Food will cost you, but the amount depends on you. I know a couple of dumpster divers in Portland, OR who rarely ever spend money on food, but if eating out of a dumpster is a bit off-putting, there are many thousands of pages on the internet that will teach you how to save money on this item.

  • Clothing is another area where you can basically spend as much, or as little, as you want. There are plenty of places to get free hand-me-downs (just letting friends know that you like hand-me-downs could probably get you a good haul of newish clothes as people hardly ever tend to wear their clothes out) or you can step up to garage sales, thrift stores, and the Goodwill as well as clearance sales at Walmart and even department stores. If there is one thing I have learned over the past few months, when you aren't working in a professional setting you can pretty much get by with only a few changes of clothes.

  • Other sundries. Gas for your car may be at the top of this list, along with Starbucks each morning and other things that seem to take your hard earned cash on a daily basis. Fortunately most sundries that you buy are totally unnecessary and therefore you can work around these expenses (like making your coffee at home and taking it to work, reading the newspaper online instead of buying it, etc). Gasoline is a bit more tricky. If you really need to cut back on this expense and you have the means to take public transit, ride your bike, or carpool to work, these may be viable options to save some cash.

  • An emergency fund. No matter how low you can get your bills, an emergency is nearly guaranteed to happen. For homeowners, it may be the furnace conking out, for people who are traveling like I am, it may be an unanticipated layover for several days in the event of a disaster that closes the airport. Bottom line--no matter how low you can reduce your monthly expenditures, you absolutely NEED an emergency fund!

It's been an interesting type of freedom these past few months. Fortunately, as an aid to saving money, the friends and relative we have been visiting have kept us in grand style at virtually no cost besides a few meals out and the spouse cooking up some wonderful food at their homes. What I do know for sure is that the next time we settle down, I will pay much more attention to the overall cost of our monthly expenses (and I already have some solar home plans on my computer that I have been mulling over...).

1 comment:

  1. Great list of ways to be financially responsible. Prepping for an uncertain future begins with getting your financial house in order. You don't want the bank to come knocking in the midst of a disaster saying they need the money you owe them....Now!