The following is a staff writer post from MikeS. He is a married father of 2. So, with the cat, he ranks number 5 in the house. He loves numbers and helping people. Please leave any questions or comments below for either Mike or Crystal.
One of my financial goals is to always try and reduce my expenses. I always want to be efficient with how I am spending my money and to control the leakage that seems to occur when I am not diligent. That leakage is what got me into financial trouble years ago. I simply was not paying attention to where my money was being spent and ended up spending more than I was making.
Now, whenever I can, I reduce expenses. Since I have been doing this for a few years, there are often no big changes, but this year, I managed to reduce my expenses by about $150 a month. There was another change that began when 2015 started and another change that is currently in the works. Those two additional changes will reduce my expenses by another $300-$400 a month.
It was probably May or June, when I began to think about cutting out my dry cleaning expense. I wear a shirt and tie every day to work and I would have the shirts and pants cleaned at the dry cleaners. I would clean the shirts after wearing them just once and the pants I would wear twice before cleaning them. My average cost per month was about $115-$120. The more I thought about this, the more I felt this was a want, rather than a need. There were other areas of my budget that could benefit from this money. I in turn, could simply clean and iron the shirts and pants myself. I can say I haven’t exactly been thrilled each time I have to iron my clothes, but at least I was able to chop a significant expense from my budget.
The other area that saw a reduction was my cable/phone/internet bill. I was able to take advantage of a 2-year promotional rate that locks in my price while also reducing my cost. I generally view most cable providers as interchangeable, so I do not have a problem switching from one to the other. The switch I did over the summer allowed me to reduce my bill by $25 a month. The cable bill is one bill most people would probably cut entirely, but it’s a luxury that my wife and I indulge in. My job is to simply keep the bill as small as possible.
The item that changed starting in 2015 was my benefit costs. This expense was one expense that was brought to me, rather than me seeking it out. My company changed our medical plan to be mainly a high deductible plan and you had three choices for deductibles. After some analysis, I opted for the highest deductible, $7,000. This election reduced my medical expenses by $140 a month. The reduction has allowed me to completely max out a HSA, with money left over. My fingers are crossed that the money can stay in the HSA and will not be needed for medical expenses.
I am in the process of trying to reduce my greatest expense, my mortgage. I am looking into a refinance option where I would no longer have to pay for mortgage insurance. Since I have a pretty good credit score, banks are willing to overlook the fact that I do not have the necessary 20% equity in the home. The interest rate would be slightly higher than I currently pay now, but I would be able to eliminate the nearly $325 a month for the mortgage insurance. If this happens, my plan is to plow $225 of the savings into paying the mortgage off that much faster. The remaining $100 would go to some of the other spending buckets, so that we can enjoy a little of the savings.
By staying on top of my expenses, I am able to spend my money in the areas that I most want. This allows me to save for things like vacations and retirement, while still enjoying daily pleasures such as cable.
How have your expenses changed over the last year?