Cutting Expenses When There’s No Place to Cut

by Kara on April 3, 2010

I suppose you could accuse Stephen and me of being cheap, but with our dream of early retirement, I’m going to just call us forward-thinking. We have been saving diligently, both in our 401K plans and in other non-retirement investments. We try pretty hard to keep our expenses low. We don’t have cable, we’ve cut our dinners out to almost nil, we do our own gardening (which puts us in a minority in our community), I use BookMooch to get used books instead of buying them new, etc. The other benefit of a frugal lifestyle is that it makes us feel more prepared for the unexpected, like a layoff or a medical problem. We don’t want an unforeseen complication to derail our plans – we can delay them, but we don’t want to give up our dreams.

Other than depriving ourselves of any life enjoyment whatsoever, it started to feel like there was no place left to cut expenses. So Stephen has started diligently tracking our expenses, which is of course what every money expert tells you to do anyway. He has just started, so it may be a little soon to see patterns. However just being forced to save every receipt and track every penny has already encouraged us to get more creative and see some new ways to save money.

Just this morning, I cut our garbage bill in half. We kept the same 64-gallon garbage can the previous owners of our house owned. They had two children and produced far more garbage than we do. Some weeks, we don’t even bother putting our cans in the street because there is so little garbage in them. So I called the city and asked to exchange our 64-gallon can for a 32-gallon can. Now we’ll pay $27.50 a month instead of $55 a month. That’s a savings of $330 a year – money that can go toward our retirement instead. And I just don’t feel deprived by having a smaller trash can.

I also just canceled the long distance on our landline. That’s only about $8 saved per month, but it won’t be long before the landline goes altogether. Because we have DSL through our phone company, we just have to talk to them about how we repackage our services without the landline. We could potentially save another $30 a month or so.

I am starting to see more places we can cut as well. I subscribe to five magazines, which just isn’t necessary. Three of them, I could easily browse through in a bookstore. A fourth, which I recently allowed to expire, usually isn’t that interesting. As I write this, I’ve decided I am going to either cancel or allow three more to expire. This will also cut down on paper we need to recycle. The fifth magazine is Consumer Reports, which we refer to frequently. But you can access everything online, so maybe I’ll see about an online only subscription. I do enjoy reading magazines, and I am only slightly embarrassed to admit that I occasionally look in the recycling bin next to the mail bins at work to see if there are any interesting magazines the doctors didn’t want. You can’t really beat free.

I know it’s a good idea to see if there are any benefits your employers offer that can save you some money. My employer gives me a free train pass, so if I take the train to work, there is absolutely no cost to me, other than a little extra time. Well, it’s $30 a month to park at the Caltrain station, but I couldn’t possibly drive for that little. I have been driving to work far too often lately, which started when I hurt my back last summer and didn’t want to chance getting stuck at the office with a limited shuttle schedule to the train station if I really needed to go home. It is ridiculous not to be taking advantage of the free transportation every day, so from now on, I am resolved to take the train unless I have a doctor’s appointment or need to go to our main campus. With my improved back situation, there isn’t any reason not to do this.

Another great benefit my employer offers is up to $800 a year for classes. If I take the classes from Stanford Continuing Studies, they don’t even have to relate to my job. For some time, I have been considering applying to grad school in creative writing at San Jose State, because it offers evening classes and wouldn’t interfere with work. However, Stanford Continuing Studies has an excellent writing program and I don’t need a degree – I just want the training. So I’ve decided to just make sure that I use up my tuition grant every year because if I don’t use it, I lose it. This will only allow for one class a year, but that is certainly better than no classes a year. I am signed up for a novel writing class that starts on Monday.

One really important thing is to be aware of where you really don’t want to cut expenses. The two non-essential areas where we tend to focus our disposable income are technology and travel. We have a Netflix subscription for a little under $20 a month. When they started charging a premium for people that rent Blu-ray movies, I changed our subscription from three discs at a time to two at a time, but we’ll keep the service. We rarely go to a movie in the theater and as I said earlier, we don’t have cable (or any network reception for that matter). When I hurt my back last year, being able to lie in bed and watch Netflix streaming content on my laptop was wonderful. Now we can even stream to our tv through our PS3, so we are hoping that Netflix continues to add to the movies and television available for streaming, even though the quality isn’t as good. We also watch the tv shows Bones and Flash Forward on Hulu, which has been great, and the advertising is extremely minimal.

We also debated a lot about whether to order an iPad, but finally decided to do it (as a birthday present for me). Because we use Macs and iPhones, the iPad is well-integrated with our other technologies. Stephen really wants me to cut down on the huge number of actual books in the house, which means an e-reader will be useful for me. I already have lots of other content for the iPad, in terms of music and video. The iPad is not cheap, but I have to admit that the amount of enjoyment I am going to get out of it probably far outstrips the price. I do know what I like! I am however trying to decide on a reasonable monthly iTunes budget, because my current unlimited budget concept isn’t working! But I do want to be able to download a new album from one of my favorite artists when I feel like it.

Cutting costs also won’t have much of an effect on Stephen’s photography related purchases. He makes enough money from his photography to pay for equipment, so coupled with the huge amount of satisfaction he gets from it, there really isn’t any reason to make cuts here. Again, the amount of enjoyment he gets far exceeds the cost.

The other area of importance to us is travel. We try to take at least one two-week vacation every year. We’ve gone to some pretty amazing places, and we have so many more that we want to see. However, because one of the reasons we want to retire early is so we can travel more, we still try to be as frugal as possible when we travel. We are not the fancy hotel types. Often we go overseas, but this year we will probably take a driving trip somewhere in the U.S. Our driving trip in the American southwest a couple years ago was amazing. We haven’t yet narrowed down our choices for this year, but we know we’ll remain west of the Mississippi.

I am sure that as Stephen continues to track expenses, other areas to cut will become obvious. It’s just important to strike a balance between keeping expenses low to reach our goals and allowing ourselves to indulge in some of the things we enjoy now. I’d love to find out what other people are doing to cut expenses. If you have any creative (or mundane for that matter) ideas, please comment below and share them.

{ 9 comments… read them below or add one }

Marinda Sherman April 1, 2010 at 12:32 pm

We are retired and in our fifties. It can be done. I do BookMooch and we love NetFlix. Cable is basic and eating out is for special occasions. Besides, with all the time at home, we can cook and bake whatever pleases us. Now that we aren’t working, clothing bills are minimal. We have a camper on the back of the truck and we camp out of it an average of 8 days a month.

Keep putting the max in the your 401s and get the matching funds. Utilize everything work offers in regards to education and other benefits.

The IPad isn’t a splurge if it’s for a birthday, enjoy it and don’t sweat that expense.

Janelle April 1, 2010 at 1:22 pm

Don’t forget you can also look at (or check out) magazines from the library….

Good ideas! We do many of the things you mention, though it’s out of necessity, and we don’t really get to SAVE the extra $ ~ it goes to pay bills.

Mary Ellen April 1, 2010 at 3:37 pm

It sounds like you’ve read ‘Your Money or Your Life’ by Dominguez and Robin? And ‘The Tightwad Gazette’? And ‘All Your Worth’ by Warren & Tyagi? For a while I was really interested in reducing grocery costs, but I’ve let that go. I enjoy groceries too much. But in the process of working on grocery expenses, we did develop some better shopping habits.

We won’t get rid of our landline any time soon, but our cell phones cost about $4/mo ea to operate, so I don’t mind that. We do track our expenses pretty closely, mostly because Eric likes to. I don’t think it’s really lead to us cutting any other expenses. In fact maybe it’s done the opposite, because all I can see is how much we spend on taxes and mortgage interest, and the next 3 categories are education, groceries, and fixing up the house, and that seems like it should be that way. It’s made us more aware of our investments and how they go up and down.

I would say that managing our investments probably has a bigger impact on our net worth than our spending. We move very slowly, which has it’s advantages and disadvantages. We do put the maximum into retirement accounts. Eric’s employer does not match, but they do put an amount into a retirement account. We probably could be saving more, but I’m not sure that the trade off would be worth it, in fact in some cases I would like to ‘spend out’ more than I’m sometimes willing too.

Kara April 1, 2010 at 4:03 pm

I actually haven’t read those. I’ve had Your Money or Your Life on my bookshelf for a zillion years, but I don’t think I’ve ever gotten around to reading it. Someday… I should really check out the Tightwad Gazette website though, Surely they have one.

I didn’t really consider cutting grocery expenses just because I don’t think we are terribly extravagant in that area. One of the biggest ways to save money is to not have kids : ) That’s not why we chose not to have kids, but it has to be so much harder to build savings when you have children.

We max out our retirement accounts and get matching. The number of people who don’t do this always amazes me. Sometimes it’s hard to do, but if people can manage it, they should!

Fixing up the house is a big category for us to, but with the age of our houses, it’s unavoidable. We just take it project by project. I’m afraid we may be buying a new washer and/or dryer soon. The spin cycle on the washer works only with a strategically placed butterfly clip right now. But we are holding out as long as we can.

Jon Maloney April 2, 2010 at 8:52 am

Hi Kara. My cost cutting has been pretty extreme. I had to keep redefining what I could live without in order to preserve my freedom. I got laid off in 1999 at age 45 and loved my freedom so much I refused to rejoin the work force. It’s hard to retire at 45. :-) I make some money selling stuff and from advertising on my web sites, but outflow exceeds income.

Here are some of the ways I save money: cancelled cable TV, reduced my Internet speed to the slowest DSL, cancelled my long distance telephone service, let all my magazine subscriptions expire, have no cell phone, stopped travelling except to visit family on special occasions, stopped buying books, only ship BookMooch books domestically, stopped hiking (saving driving costs), stopped car check-ups, stopped eating out, switched from drinking beverages that cost to tap water, cancelled health insurance (which saved $458 a month!), stopped regular medical check-ups, stopped going to the dentist, stopped going to movies except on gift cards, cancelled most non-essential car insurance coverages, stopped using air conditioning (saving over $100 a month in warm weather), stopped bothering my landlady for repairs that might inspire rent increases, buy cheap groceries (18 eggs at Walmart this week was only $1.50!, the cheapest meat I’ve found), buy minimum clothing about once a year, repair things that break when possible rather than replacing them, and more.

In spite of all those cutbacks I’m doing great. I live in a two-story condo in a nice neighborhood, have a car, take care of my health, cook my own meals, have an annual 3-disc gift subscription to Netflix, read a lot of BookMooch books, and by managing my 401k my net worth is now the highest it has ever been. If I can make it to the age of 401k availability and if there’s any Social Security left for me, I’ll be okay.

Margot April 2, 2010 at 10:23 am

As an American, who also hates housework, I felt that if God had wanted us to hang out laundry, he wouldn’t have invented clothes driers. The year that I gave in to our new-found chuck-it-all-and-move-to-France poverty and stopped using our drier (except for towels; they have to be soft), the accountant told us we’d reduced our electricity bill by 25%.

We invested in energy saving light bulbs, something I’m told that not many Americans do.
Wet your toothbrush and turn the water off while you’re brushing. Even if you don’t pay for water, it’s a nice thing to do. Turn lights off; don’t let the water run; close the doors quickly in winter; keep them closed in summer.

When you need new appliances, go for top-rated energy efficiency. Save the planet and save electricity.

Plan your meals for the week. Whatever day the newspapers print the weekend specials, go through them and see what’s on sale; then plan regular meals and leftovers. Get creative. We *never* have leftovers and the dogs don’t get our table food, either. We eat it and use anything left to create another meal. Don’t deviate from your list. You will save a *lot* of money.


Margot April 2, 2010 at 11:11 am

The biggie — how could I forget? Learn to sew. You’ll save a fortune on clothes, especially as you keep changing sizes with the weight loss. Take a course; your clothes won’t look home made, just smart. I did an 8 week Singer course years ago; best investment I’ve ever made. Then I followed it up with their tailoring course. They probably don’t exist now, but somewhere does and you can use your tuition rebate.

Kara April 2, 2010 at 11:54 am

That’s an excellent one, Margot! I even have a sewing machine, but I’d probably have to take a class because it’s been nearly 30 years since I have made anything resembling clothes! My big problem is time, but I think making some of my own clothes would be really satisfying. With my weight in transition right now, I probably won’t be buying OR making any clothes for awhile. I probably wear things LONG after I should, which is good for saving money, if nothing else.

sarah fishburn April 23, 2010 at 12:36 pm

We have been successful couch surfers – as both hosts and people who needed hosts. Have you tried that for travel at all? We usually combine it with “who do we know who has a floor or yard we can lay our sleeping bags” – sometimes we just find ourselves places where we know no one, and that’s when CS has come to our rescue!

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