Author Topic: Cutting expenses plateau?  (Read 7214 times)

doneby35

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Cutting expenses plateau?
« on: November 27, 2016, 04:52:35 PM »
I pretty much eliminated all un-necessary expenses and debts in 2-3 months since I started thinking the mustachian way but i seem to have hit a plateau... is there even such a thing? I was on a roll and now I have no other expenses that I can reduce/eliminate.

1. Mortgage: $875 + $1000 additional principal every month (45k equity, 110k left)
2. Groceries: $500 (for a family of 2)
3. Utilities (electric, gas, water): $200
4. Spotify (love music = worth it): $10
5. Amazon Prime (free shipping + movies = worth it): $10
6. Internet (can't seem to find a solution for this): $80
7. Cell phone plan (for a family of 2 on republic wireless): $30
8. Auto insurance (1 car): $80
9. Car and Gas: $0 (car is paid off in full, mostly work from home and when i'm not, gas is paid for by my employer)
10. Restaurants: $0 (a lot of cooking at home)

Anyone ever felt like they could do more but they just can't figure it out?

Zikoris

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Re: Cutting expenses plateau?
« Reply #1 on: November 27, 2016, 05:10:59 PM »
I'd cut the grocery budget in half. Maybe the internet too, but for suggestions on that you'd need to tell us where you live, since that's so region-specific. Maybe the utilities as well, also depending where you live - $200 seems really high. The rest looks good to me.

doneby35

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Re: Cutting expenses plateau?
« Reply #2 on: November 27, 2016, 05:20:44 PM »
I live in AZ, and we have Cox for internet, cheapest acceptable option for me (15mbps speed) starting at $62.99 for 12months and i think it's $70 after that. Only other provider is CenturyLink and I keep hearing that it is the worst, and since my work requires fast and reliable internet connection all the time, I haven't thought about it.

Groceries, I tried, but it's always at 400 or 500 a month. Lot of fruits, vegetables, no meat except for fish.

bryan995

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Re: Cutting expenses plateau?
« Reply #3 on: November 27, 2016, 06:13:58 PM »
Yeap - at some point there is very little fat left to trim.
All you can do now is to re-focus on increasing earning/income.

I pay about the same for quality food (costco) for 2, so I won't criticize you there :)

Re. internet
1. I hope you are not renting a modem for an extra $10/mo, if you are then buy one and save the $

I pay $34.99 for 50/5 internet in CA through TWC.
Just call in, transfer to the retention department (or navigate to cancel service option).

Say you want to cancel service.
They will ask why you are cancelling, just say it is too expensive.
There are two ways this can go:

They will offer nothing and start the cancellation process -  simply say you've changed your mind, hang up, call back and try a new rep.
OR
They will offer to reduce your cost to $NN.NN to keep you as a customer, reluctantly agree and rejoice in your new, lower rate.

Then just keep doing this ever few months to keep your monthly cost low :)
Or ideally - do this while a competitor is running a promo/sale, the reps we will primed with a retention offer!
« Last Edit: November 27, 2016, 06:22:26 PM by bryan995 »

Gunga Galunga

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Re: Cutting expenses plateau?
« Reply #4 on: November 27, 2016, 06:28:42 PM »
Just a couple of ideas on where to cut costs:

1. Spotify $10/month - not questioning that this isn't worth it to you, as everyone has different values, there are plenty of free alternatives available that wouldn't require you to shell out $10/month. Both Pandora and Spotify free options give you plenty of music, with the inconvenience of ads, and I'm sure there's others as I always seem to be behind the times in free music streaming services. However, I personally just use Pandora/Spotify in the background while driving/working, so not as integral to my life.
2. The extra $1,000 principle each month on the mortgage - not to open Pandora's box (music pun not intended), but I think this extra principle would be better served in a brokerage account. While there is no end in sight to the "pay off mortgage early" vs "invest extra principle" debate, I do feel strongly against paying down extra principle as you go. Those payments provide little benefit, in that they get you limited returns (vs the market) and also provide no flexibility in case of emergency (since you still owe full amount each month or risk entering default). My preference would be to invest that extra principle, and when you get to a point that your brokerage account exceeds your outstanding mortgage, then you can venture into that debate of whether to pay off the mortgage early or keep the investment account rolling.
3. Jealous of your restaurant spending, great job! :)
« Last Edit: November 27, 2016, 06:32:18 PM by Gunga Galunga »

alpenglow

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Re: Cutting expenses plateau?
« Reply #5 on: November 27, 2016, 06:47:30 PM »
I think $500 on grocery seems high for two people too. We're vegetarian and spend maybe $250, but often less than $200. We also get a lot of fruits and veggies. It might because you're in AZ, though (we're in CA). I would think about joining a CSA and/or starting your own garden. There are a couple of choices for CSAs here, but I can do a share that will do 2 people for $35/month. Kind of a pain in the neck since you can only pick up on certain days between certain hours but it's cheap, local, and in my case organic (although one of the other CSAs in town is not organic). Hard to beat that price too. Farmer's markets will work if you can't do a CSA. At the farmer's market here, you can get $2 for a huge bag of salad greens that would cost you ~$6-7 in the store. Also have you looked into bulk foods? Dry beans, grind-your-own-nut-butters, spices, lentils, baking ingredients, dried fruit, nuts, seeds, etc., can all be had at much lower prices, and with less packaging waste. Also check out the frozen section for bags of frozen fruit & veggies. Depending on the season and the product, they're cheaper than fresh produce and will last longer, and some of them are quite convenient (like the peppers & onions mix, I just toss that in a hot pan with eggs, rice, and beans, spice to my liking, very inexpensive and also delicious and nutritious).

Utilities also seem high to me but you might have a big house and also, I know how hot AZ gets and how inhospitable hot places without A/C can be, so it seems reasonable.

FIexec

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Re: Cutting expenses plateau?
« Reply #6 on: November 27, 2016, 07:00:12 PM »
What have you done about utility costs so far?

doneby35

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Re: Cutting expenses plateau?
« Reply #7 on: November 27, 2016, 07:02:55 PM »

Re. internet
1. I hope you are not renting a modem for an extra $10/mo, if you are then buy one and save the $

I pay $34.99 for 50/5 internet in CA through TWC.
Just call in, transfer to the retention department (or navigate to cancel service option).

Say you want to cancel service.
They will ask why you are cancelling, just say it is too expensive.
There are two ways this can go:

They will offer nothing and start the cancellation process -  simply say you've changed your mind, hang up, call back and try a new rep.
OR
They will offer to reduce your cost to $NN.NN to keep you as a customer, reluctantly agree and rejoice in your new, lower rate.

Then just keep doing this ever few months to keep your monthly cost low :)
Or ideally - do this while a competitor is running a promo/sale, the reps we will primed with a retention offer!

No, i have my own modem, not renting. I have a friend who tried to call and pretend to want to cancel just so he can get a better deal, he told me the second he got transferred to the retention dept and they asked him why and he said it's too expensive, next thing he heard is ok it is cancelled now... probably because Cox knows there is no competition.[quote


2. The extra $1,000 principle each month on the mortgage - not to open Pandora's box (music pun not intended), but I think this extra principle would be better served in a brokerage account. While there is no end in sight to the "pay off mortgage early" vs "invest extra principle" debate, I do feel strongly against paying down extra principle as you go. Those payments provide little benefit, in that they get you limited returns (vs the market) and also provide no flexibility in case of emergency (since you still owe full amount each month or risk entering default). My preference would be to invest that extra principle, and when you get to a point that your brokerage account exceeds your outstanding mortgage, then you can venture into that debate of whether to pay off the mortgage early or keep the investment account rolling.


I thought about this long and hard I promise, I just think I will feel much better with a guaranteed 3% return and not having a mortgage for 15 years or worry about the market.

I think $500 on grocery seems high for two people too. We're vegetarian and spend maybe $250, but often less than $200. We also get a lot of fruits and veggies. It might because you're in AZ, though (we're in CA). I would think about joining a CSA and/or starting your own garden. There are a couple of choices for CSAs here, but I can do a share that will do 2 people for $35/month. Kind of a pain in the neck since you can only pick up on certain days between certain hours but it's cheap, local, and in my case organic (although one of the other CSAs in town is not organic). Hard to beat that price too. Farmer's markets will work if you can't do a CSA. At the farmer's market here, you can get $2 for a huge bag of salad greens that would cost you ~$6-7 in the store. Also have you looked into bulk foods? Dry beans, grind-your-own-nut-butters, spices, lentils, baking ingredients, dried fruit, nuts, seeds, etc., can all be had at much lower prices, and with less packaging waste. Also check out the frozen section for bags of frozen fruit & veggies. Depending on the season and the product, they're cheaper than fresh produce and will last longer, and some of them are quite convenient (like the peppers & onions mix, I just toss that in a hot pan with eggs, rice, and beans, spice to my liking, very inexpensive and also delicious and nutritious).


I'm amazed at how some of you are able to keep the grocery bill down to $250-300. I'm always looking for the best deals and coupons, but we eat 5 healthy meals/day, maybe that's why?
« Last Edit: November 27, 2016, 07:29:10 PM by doneby35 »

meh123

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Re: Cutting expenses plateau?
« Reply #8 on: November 27, 2016, 07:05:54 PM »
Have you thought about asking your employer to pay for your internet?  I 100% work from home, and expense my internet each month.

doneby35

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Re: Cutting expenses plateau?
« Reply #9 on: November 27, 2016, 07:13:11 PM »
What have you done about utility costs so far?

Hmm, well in the winter, i don't use heat unless it's freezing which doesn't happen often in AZ, but in the summer, the AC is pretty much on the whole time because it's brutal here, i try to keep it on 78, other than that it's just laundry twice a week.

JLee

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Re: Cutting expenses plateau?
« Reply #10 on: November 27, 2016, 07:16:24 PM »
I live in AZ, and we have Cox for internet, cheapest acceptable option for me (15mbps speed) starting at $62.99 for 12months and i think it's $70 after that. Only other provider is CenturyLink and I keep hearing that it is the worst, and since my work requires fast and reliable internet connection all the time, I haven't thought about it.

Groceries, I tried, but it's always at 400 or 500 a month. Lot of fruits, vegetables, no meat except for fish.

Call and ask for Retentions and see what deals they have.  I left AZ in September 2015 and I was paying $59.99/mo for 100Mbps service.

Choices

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Re: Cutting expenses plateau?
« Reply #11 on: November 27, 2016, 07:22:47 PM »
I live in AZ, and we have Cox for internet, cheapest acceptable option for me (15mbps speed) starting at $62.99 for 12months and i think it's $70 after that. Only other provider is CenturyLink and I keep hearing that it is the worst, and since my work requires fast and reliable internet connection all the time, I haven't thought about it.

Groceries, I tried, but it's always at 400 or 500 a month. Lot of fruits, vegetables, no meat except for fish.

Argh. Sympathizing with you here. Cox is the only provider in our neighborhood (North Phoenix) and this is the "starter" package that they tell me is the lowest option. I do call every 6 months and they give me a few dollars off, so you might want to give it a try. Instead of saying you want to cancel, you might try asking if there's anything they can do to lower the rate because your budget is tight and you don't want to have to cancel entirely. If the first person isn't helpful, hang up and call back.

doneby35

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Re: Cutting expenses plateau?
« Reply #12 on: November 27, 2016, 07:27:04 PM »
Exactly, I get the $5 discount that I have to call about and ask for every 6 months, oh well!
I might just have to practice for a while before I call them and ask them to cancel, but i'm thinking I should try it.

JLee

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Re: Cutting expenses plateau?
« Reply #13 on: November 27, 2016, 08:00:40 PM »
Exactly, I get the $5 discount that I have to call about and ask for every 6 months, oh well!
I might just have to practice for a while before I call them and ask them to cancel, but i'm thinking I should try it.

I never had to threaten to cancel - I just called their service desk and asked for the retentions department.  I have no complaints about Cox - I was happy with the service/speed for what I was paying.

csprof

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Re: Cutting expenses plateau?
« Reply #14 on: November 27, 2016, 08:12:50 PM »
What have you done about utility costs so far?

Hmm, well in the winter, i don't use heat unless it's freezing which doesn't happen often in AZ, but in the summer, the AC is pretty much on the whole time because it's brutal here, i try to keep it on 78, other than that it's just laundry twice a week.

You've said you want the 3% for your mortgage paydown.  That's your call.  But 3% is really, lovely, low.  If you haven't already, I'd pay maximum attention to your inflow + tax situation.  Are you doing all the expected things to reduce your tax burden?  Maxing 401k, making a Roth or Backdoor Roth contribution as well, looked to see if you can use an HSA?  If you're making extra mortgage payments without making a backdoor roth, for example, you should immediately switch $5500 over to that, for example.

I'd also argue that there is a set of energy efficiency upgrades that - if you haven't done them - should come before the $1k/month on the mortgage:  What about the interior heat load + energy draw from appliances?  - efficient lighting, turned-off lighting, vampire loads, the usual?  Have you gone around the house to audit what's drawing power on an ongoing basis?  Switched everything to LEDs or CFLs?  Nice way of using a capital investment to produce a > 3% rate of return.

(One answer to this would be what your electricity bill is in November.  If it's tiny, then you're done already.)

Since you're in AZ, you've got some more expensive options, but moving from an AC to a swamp cooler is probably not a popular option, or one that's good for your house value.

But what about things like improving your insulation and air sealing, shading for southern-exposed windows, be it in the form of actual exterior shades, trees, etc.?  Going to a white roof?  Those, obviously, you'd need to evaluate on a case-by-case basis;  there's no one-size fits all...

doneby35

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Re: Cutting expenses plateau?
« Reply #15 on: November 27, 2016, 08:21:45 PM »
Maxing out 401k and HSA, and going to open a tIRA before end of year and contribute max to that also.

My November electricity bill is going to be ~$55. Everything is LED. The only thing that might be contributing (even though I don't consider $200 to be expensive for electric + gas + water) is that the cooling unit is 10-12 years old and probably less energy efficient than newer units.

RedwoodDreams

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Re: Cutting expenses plateau?
« Reply #16 on: November 27, 2016, 11:58:35 PM »
Looks like a very reasonable budget to me.

I wouldn't compromise on the food if you've tried to cut it down already without success and aren't shopping at places like Whole Paycheck. Eating healthy just costs more, IMHO, and is worth every cent for your health. We spend <cringe> $1000 month for 3 people, one of whom is a ravenous teenager with a chronic health condition that we're able to keep in remission through an expensive, fresh, healthy diet. WORTH IT!

Playing with Fire UK

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Re: Cutting expenses plateau?
« Reply #17 on: November 28, 2016, 01:48:36 AM »
How much are you spending at Amazon to make free shipping worth it?

After I hit a plateau on my regular monthly outgoings, I started hitting irregular costs that added up over the month/year.

I'd then look at options for extra income.

csprof

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Re: Cutting expenses plateau?
« Reply #18 on: November 28, 2016, 07:04:27 AM »
(a)  Sounds like you're rocking it pretty well - 401k + HSA + tIRA = $26850, additional mortgage of $12k/year, vs your annual expenses of about $22k (plus one-offs and factoring in car and house-related depreciation, which probably bring it up to somewhere close to the amount you're saving in tax-advantaged accounts).  So you're at a 60%+ savings rate.  And that's not counting if there's spousal income+savings.

You're probably starting to enter the long slog of doing a great job. :)

(b)  If you're a tech-geeky sort, you might consider an internet sharing arrangement with a neighbor, worst case.  It can be flaky and take a lot of fidgeting, though.

(c)  House upkeep - preventing future high expense items - would be a final thing to look at.  That gets into what Playing with Fire UK suggested of those irregular costs.

NoStacheOhio

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Re: Cutting expenses plateau?
« Reply #19 on: November 28, 2016, 09:56:28 AM »
Have you tried Amazon's music service that's included with Prime?

doneby35

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Re: Cutting expenses plateau?
« Reply #20 on: November 28, 2016, 10:00:07 AM »
How much are you spending at Amazon to make free shipping worth it?


I get pet food and just general merchandise off of there, it's cheaper than the stores.

Have you tried Amazon's music service that's included with Prime?

Yes I actually did, but it didn't have any of the artists that I like listening to.

BlueMR2

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Re: Cutting expenses plateau?
« Reply #21 on: November 28, 2016, 10:10:15 AM »
I agree with others that groceries seem really high.  The 2 of us spend $300/mo total for food (combined groceries, eating out, snacks, all of it) on average, and that's with spendypants going out to eat once a week.

Jmoody10

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Re: Cutting expenses plateau?
« Reply #22 on: November 28, 2016, 10:17:21 AM »
Have you tried Amazon's music service that's included with Prime?

+1 to this.

Also, do you have access to a .edu email account by chance? If so, you can get Amazon prime for half off for 4 years. If you attended college in the past, those accounts are often left open even if you graduate.

Playing with Fire UK

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Re: Cutting expenses plateau?
« Reply #23 on: November 29, 2016, 11:16:14 AM »
How much are you spending at Amazon to make free shipping worth it?
I get pet food and just general merchandise off of there, it's cheaper than the stores.

So in your list of expenses, I didn't see a line for pet food and general merchandise (unless it's all in groceries?). There might be optimisation opportunities if you look at ALL your spending. For me the difference between a good month and a great month for expenses can be how much I spend on Amazon.

ender

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Re: Cutting expenses plateau?
« Reply #24 on: November 29, 2016, 11:40:33 AM »
I'm amazed at how some of you are able to keep the grocery bill down to $250-300. I'm always looking for the best deals and coupons, but we eat 5 healthy meals/day, maybe that's why?

This is a copout (and a lame one at that).

We eat almost all healthy food cooked from scratch, most often with fresh produce/etc and still spend in that price range.

Almost all the meat we get is 30-40% off "retail" at least (anything that freezes well almost all meat is perfect for freezing). Our freezer has 20 pounds of fresh green beans, about 25 of tomatoes, 25 of green chilis, probably 50 pounds of meat or more, and 5 dozen ears of corn worth of corn. All that was purchased at bargain prices.

Do you meal plan? Do you fill a deep freeze when there are good deals?

I'm making soup tonight from a pork roast ($1.69/pound) and carrots/celery/onion. That whole meal is going to be less than $1/serving. The homemade chili I'm eating now? Everything in it was on sale - the bacon was on sale, the ground beef was on sale, the tomatoes were on sale (frozen), the beans were on sale and the chilis were on sale (well in bulk/on sale).

We have brats and a variety of pork in our freezer at $1/pound. Ground beef/pork never over $2/pound. Bacon occasionally hits $2/pound.

Unless you are doing all this, don't act like those of us eating for much less are somehow not eating healthy and luxuriously. I've not had any sugary or nearly any gluteny things for the entire month.




doneby35

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Re: Cutting expenses plateau?
« Reply #25 on: November 29, 2016, 11:46:02 AM »
I didn't act like you are eating less healthy, what are you talking about, relax... i just said i'm amazed at how some people are able to keep the cost down, meaning some people are obviously better at doing that than I am.

ender

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Re: Cutting expenses plateau?
« Reply #26 on: November 29, 2016, 11:48:01 AM »
I didn't act like you are eating less healthy, what are you talking about, relax... i just said i'm amazed at how some people are able to keep the cost down, meaning some people are obviously better at doing that than I am.

Are you doing any of those things I list?

Eating healthy is not the only reason your food budget is $500/month. It's a cop-out reason that gets made often here, such as how you made it in what I quoted before.

doneby35

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Re: Cutting expenses plateau?
« Reply #27 on: November 29, 2016, 11:56:39 AM »
Ok well to answer your question, no I am not doing what you're doing, some of us (including me) don't store 50 pounds of meat and 25 pounds of green beans in the freezer at bargain prices.
Problem solved and case closed, thank you for giving me the insight needed on how I can keep the cost down when it comes to food.

KayakMom

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Re: Cutting expenses plateau?
« Reply #28 on: November 29, 2016, 01:34:18 PM »
I'm amazed at how some of you are able to keep the grocery bill down to $250-300. I'm always looking for the best deals and coupons, but we eat 5 healthy meals/day, maybe that's why?

This is a copout (and a lame one at that).
...

Unless you are doing all this, don't act like those of us eating for much less are somehow not eating healthy and luxuriously. I've not had any sugary or nearly any gluteny things for the entire month.

no reason to be a jerk about it.  Doneby35 isn't "acting" like anything. He's just postulating why his bill is higher than some and asking for advice on how to lower costs. I'm sure your giving good advise but there's no reason to be rude.

FIexec

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Re: Cutting expenses plateau?
« Reply #29 on: December 04, 2016, 08:37:57 PM »
Do you use electric to heat anywhere?  This will cost you something on the electric bill and includes appliances an electric clothes dryer and dishwasher.  Air drying clothes and turning off the heat dry option will save some money if those options apply.

gliderpilot567

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Re: Cutting expenses plateau?
« Reply #30 on: December 05, 2016, 08:37:46 AM »
Do you use electric to heat anywhere?  This will cost you something on the electric bill and includes appliances an electric clothes dryer and dishwasher.  Air drying clothes and turning off the heat dry option will save some money if those options apply.

I was thinking the same thing when you mentioned laundry during your electric bill discussion.

Do you have natural gas plumbed in where you live? Any natural gas appliances? Replacing electric stove, oven, water heater, furnace, and dryer with gas versions can save money. Electricity is great for some purposes but pretty dismal for heat-producing appliances when compared with gas. We too live in southern AZ, and have all gas appliances, in a family of six, and our gas bill is usually no more than $35 in the summer, about $50 in the winter (house has soaring ceilings and is poorly insulated). Unfortunately AZ is one of the more expensive states for natural gas, but it still works out pretty well for us.

I haven't ever heard of a gas heated dishwasher, but if such a thing existed I would consider buying it...

Good luck! You're on a good roll already, as others have said.

lifeanon269

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Re: Cutting expenses plateau?
« Reply #31 on: December 05, 2016, 10:22:27 AM »
Yes I actually did, but it didn't have any of the artists that I like listening to.

Are there really that many artists that you enjoy listening to that Amazon doesn't have? I say that because if the answer really is only a handful of artists that you enjoy that Amazon doesn't carry, then ultimately you'd be better served just purchasing the albums you like from those artists and cancelling the subscription and going with Amazon's music service. It doesn't make sense to pay an ongoing fee to listen to some of the same artists you like just because Amazon doesn't play their music, when in reality you can just pay a one-time cost and buy their music out right.

Groceries seem a little high, but are probably within a reasonable margin. I pay about $320 a month and eat an all whole foods plant based diet. Buying more cheap staples definitely helps if you aren't doing that already, such as beans, rice, pasta, etc. Are you buying a lot of fish? Fish is expensive and even more so when you're inland.

As far as internet goes, I have TWC and have been their customer for quite a long time. I noticed my bill for standard internet was $60/mo while their website stated that the same package was $40/mo. So I called up and told them that I wanted the price listed on their website and they gave it to me. One phone call saved me $20/mo. I didn't state that I wanted to leave them at all, in fact, I stated the opposite to the representative. I stated that I was a loyal customer for many years. Sometimes that goes much further than telling them you are threatening to leave them. I checked Cox's website and it shows that the 15Mbps/download package is $40/mo. You might be able to do the same thing I did with TWC.

$80/mo for car insurance seems awfully high as well. I just recently called up my insurance provider and go a price reduction after I asked for one. I've never been in an accident and I have two cars on my policy (my wife's and mine) and we pay $412 every six months. So that is a little under $70/mo for two cars. So you're paying more to insure one car than I am paying for two. Give a call to your insurance provider to see if they can quote you a better deal. Also, be sure to pay for the full policy term up front, usually you get a discount for paying in full as opposed to monthly.

Sometimes you certainly reach a plateau when it comes to cutting expenses and it looks like your expenses are pretty lean. The only other thing I'd say is that now that your regular expenses are pretty lean, I'd take a look as some of your non-regular expenses as someone else mentioned. There is clearly a reason why you justify an Amazon Prime account for free shipping, so maybe take a look at whether your Amazon purchases are necessary or not. Amazon Prime is definitely an awesome service, so I am not suggesting to cancel it, but merely suggesting that you ensure all your Amazon purchases are things that provide value in your life.

Other than that I'd say you're doing great!

Dicey

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Re: Cutting expenses plateau?
« Reply #32 on: December 05, 2016, 12:05:17 PM »
I'll concede the Spotify if you'll reconsider the early mortgage payoff. When interest rates rise, you're making money on that 3%. Well, that plus inflation. That 3% money may be long gone for the rest of your life. Personally, I'd hang onto it with all my might. Consider investing the extra money in yourself instead. Put it in your own investment account and watch it grow. When you've accumulated the pay off amount, and you will, then you can decide if you want to pay it off in a lump sum. My money is that you won't. But having the choice is the best feeling in the world. Much better than paying off a super-cheap mortgage. #askmehowiknow.

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Re: Cutting expenses plateau?
« Reply #33 on: December 05, 2016, 01:00:29 PM »
This option isn't for everyone, but do you have a spare room in your house that you can rent out? Perhaps a roommate that you charge $500-600 a month or Airbnb for $50 a night or so since you already work from home?

Edit: Also, if you only use Amazon occasionally definitely consider getting rid of Prime. I have found that most things are cheaper on Ebay anyway. Some stuff is 30-40% cheaper and still has free shipping! And, you can still get free shipping on Amazon if you stock up and buy $49 worth of stuff at a time.
« Last Edit: December 05, 2016, 01:07:56 PM by marielle »

doneby35

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Re: Cutting expenses plateau?
« Reply #34 on: December 05, 2016, 01:48:44 PM »
I'll concede the Spotify if you'll reconsider the early mortgage payoff. When interest rates rise, you're making money on that 3%. Well, that plus inflation. That 3% money may be long gone for the rest of your life. Personally, I'd hang onto it with all my might. Consider investing the extra money in yourself instead. Put it in your own investment account and watch it grow. When you've accumulated the pay off amount, and you will, then you can decide if you want to pay it off in a lump sum. My money is that you won't. But having the choice is the best feeling in the world. Much better than paying off a super-cheap mortgage. #askmehowiknow.

What if I invested the money in a total stock market index like VTSAX and the market was bad? the mortgage is a guaranteed 3%.

Playing with Fire UK

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Re: Cutting expenses plateau?
« Reply #35 on: December 05, 2016, 02:14:39 PM »
I'll concede the Spotify if you'll reconsider the early mortgage payoff. When interest rates rise, you're making money on that 3%. Well, that plus inflation. That 3% money may be long gone for the rest of your life. Personally, I'd hang onto it with all my might. Consider investing the extra money in yourself instead. Put it in your own investment account and watch it grow. When you've accumulated the pay off amount, and you will, then you can decide if you want to pay it off in a lump sum. My money is that you won't. But having the choice is the best feeling in the world. Much better than paying off a super-cheap mortgage. #askmehowiknow.

What if I invested the money in a total stock market index like VTSAX and the market was bad? the mortgage is a guaranteed 3%.

VTSAX has never been down over the lifetime of a mortgage.

Dicey

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Re: Cutting expenses plateau?
« Reply #36 on: December 05, 2016, 02:28:33 PM »
I'll concede the Spotify if you'll reconsider the early mortgage payoff. When interest rates rise, you're making money on that 3%. Well, that plus inflation. That 3% money may be long gone for the rest of your life. Personally, I'd hang onto it with all my might. Consider investing the extra money in yourself instead. Put it in your own investment account and watch it grow. When you've accumulated the pay off amount, and you will, then you can decide if you want to pay it off in a lump sum. My money is that you won't. But having the choice is the best feeling in the world. Much better than paying off a super-cheap mortgage. #askmehowiknow.

What if I invested the money in a total stock market index like VTSAX and the market was bad? the mortgage is a guaranteed 3%.

VTSAX has never been down over the lifetime of a mortgage.
^This^ Plus its historical return is more than double the interest you're paying on your mortgage.

Plus plus, in a decade or so anyone with a 3% loan will look like a complete genius.

Stash Engineer

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Re: Cutting expenses plateau?
« Reply #37 on: December 05, 2016, 03:12:34 PM »
For what its worth, I live in AZ too and don't have access to anything at my house besides Centurylink.  I'm paying $45/mo for 15mb service (intro rate that goes up to $60ish after 12 mo) and have only had it stop working once, which was easily corrected by rebooting the modem.  I did call their customer service not long after joining and the rep, without me asking, offered to have the installation charge removed from my bill because "most people just do it <the installation> themselves".  I was nervous about them at first too because of all the bad reviews, but so far so good.

You need to shop around on your auto insurance.  I'm paying $83/month for two cars with full coverage through Geico. 

edited to add:  I think you are doing awesome on utilities.  We haven't been using AC either but aren't even close to $200 combined.
« Last Edit: December 05, 2016, 03:15:00 PM by Stash Engineer »

doneby35

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Re: Cutting expenses plateau?
« Reply #38 on: December 05, 2016, 04:54:16 PM »

You need to shop around on your auto insurance.  I'm paying $83/month for two cars with full coverage through Geico. 


I did at one point, i have both my car insurance (full coverage) and home insurance (currently $550/year) through statefarm. Geico was going to be cheaper, but home insurance with every insurance company other than statefarm was going to be more expensive ($900/year for the cheapest). And if i was to cancel only my auto insurance with statefarm, they told me that would increase my home insurance to $800 so i'm not sure what game that is they are playing, but i let it go back then.

I'll concede the Spotify if you'll reconsider the early mortgage payoff. When interest rates rise, you're making money on that 3%. Well, that plus inflation. That 3% money may be long gone for the rest of your life. Personally, I'd hang onto it with all my might. Consider investing the extra money in yourself instead. Put it in your own investment account and watch it grow. When you've accumulated the pay off amount, and you will, then you can decide if you want to pay it off in a lump sum. My money is that you won't. But having the choice is the best feeling in the world. Much better than paying off a super-cheap mortgage. #askmehowiknow.

What if I invested the money in a total stock market index like VTSAX and the market was bad? the mortgage is a guaranteed 3%.

VTSAX has never been down over the lifetime of a mortgage.
^This^ Plus its historical return is more than double the interest you're paying on your mortgage.

Plus plus, in a decade or so anyone with a 3% loan will look like a complete genius.

With the additional payments, i'll be mortgage free in 5 years. I don't know, but I was following the "Investment Order" from the MMM excel sheet where #7 is to pay off debt with interest rate 3% and above and #8 is to invest in a taxable account with any extra. If it's better to change that to taxable account first and then mortgage payoff, then I will definitely consider it.

csprof

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Re: Cutting expenses plateau?
« Reply #39 on: December 05, 2016, 08:06:47 PM »

With the additional payments, i'll be mortgage free in 5 years. I don't know, but I was following the "Investment Order" from the MMM excel sheet where #7 is to pay off debt with interest rate 3% and above and #8 is to invest in a taxable account with any extra. If it's better to change that to taxable account first and then mortgage payoff, then I will definitely consider it.

Do you itemize deductions?

If so, absolutely do taxable ahead of mortgage payoff.  By that rule of thumb, your effective interest rate is something under 3% -- perhaps as low as 2%, depending on your top marginal rate.

Even if you don't, it's probably statistically better to not pay it off.  First, there's the difference between average market returns and the interest rate.  Second, there's the value of having your money in a more liquid investment -- you get a lot more flexibility.  Getting value out of a paid-off mortgage requires getting a home equity loan or equivalent, which takes work and exposes you to interest rate risk.  Having more cash in a taxable account means you've got it when you want it.

(FWIW, I'm putting my money where my mouth is on this one -- ours is at 3.75%, we itemize and have fairly high income, which brings it to roughly an effective 2.5% interest rate.  I'm hoping to hold on to it as long as possible.)

A case in which it might make more sense to pay it off early is if you had other expensive conditions required by the mortgage, such as a low deductible on your homeowners insurance where you'd rather take a higher one.

If you *do* decide to pay it off early, you might consider doing so by recasting it instead of just paying more each month.  The drawback of a recast is that there's usually a fee associated with it, so you lose a little.  But the advantage is that if you, e.g., put in $40k and recast it, you get to hold on to the same *duration* of the mortgage even if you decide not to pay any more of it early, and you get an immediate cashflow benefit via a reduced monthly mortgage rate.

Ynari

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Re: Cutting expenses plateau?
« Reply #40 on: December 05, 2016, 09:35:02 PM »
So, there's always extra fat to trim, but you're at the point where it's a lot of work for very little gain. If the above suggestions appeal to you, go ahead and try to save the money. But it really sounds like you're in a situation where extra income is going to do a lot more for you than more budget cuts. How are your jobs going? Would petitioning for a raise make sense? Changing jobs for a pay bump? Picking up a side gig? The ROI is probably going to be a lot better with regards to your time in those areas than in budget cuts.

FactorsOf2

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Re: Cutting expenses plateau?
« Reply #41 on: December 06, 2016, 06:48:43 AM »
Food costs can vary a lot with location, so it's not clear how good or bad $250 / mo. / person is, but I have two suggestions:

1) If you eat a LOT of nuts, dry beans or dry fruit then consider looking into buying in bulk online. Even if you have to pay shipping this can be the best deal around. My last IFS bulk order I did a calculation that averaged the shipping cost over the items by weight and wound up with sunflower seeds @ $1.18 per pound and raw almonds at $4.92 per pound.

2) Maybe some of the fruits and veg you are eating could be purchased frozen with almost no loss of nutritional value. Certainly if you eat a lot of fruit and veg overall you are probably past the point where eating e.g. frozen broccoli instead of raw broccoli will make a measurable difference in health outcomes. Full disclosure, I'm not sure if purchasing frozen is *actually* cheaper, but it's worth looking into.

robartsd

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Re: Cutting expenses plateau?
« Reply #42 on: December 06, 2016, 09:10:44 AM »
(b)  If you're a tech-geeky sort, you might consider an internet sharing arrangement with a neighbor, worst case.  It can be flaky and take a lot of fidgeting, though.
Since you work from home, you need the reliable internet so you'd be looking for a neighbor willing to pay you for internet. If I were your neighbor I'd be happy to pay up to $20/month for 1/3 of your bandwidth. If I were setting this up, I'd set up the neighbor on a separate subnet from my home network with QoS to ensure that we each get our minimum bandwidth. Neighbor's subnet would be wired from router to a directional extender pointed at the neighbor's house. A directional extender in adapter mode at neighbor's house would provide a wired port that they could connect a router to. Be sure all equipment on your side is on a UPS.

JLee

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Re: Cutting expenses plateau?
« Reply #43 on: December 06, 2016, 10:36:50 AM »
(b)  If you're a tech-geeky sort, you might consider an internet sharing arrangement with a neighbor, worst case.  It can be flaky and take a lot of fidgeting, though.
Since you work from home, you need the reliable internet so you'd be looking for a neighbor willing to pay you for internet. If I were your neighbor I'd be happy to pay up to $20/month for 1/3 of your bandwidth. If I were setting this up, I'd set up the neighbor on a separate subnet from my home network with QoS to ensure that we each get our minimum bandwidth. Neighbor's subnet would be wired from router to a directional extender pointed at the neighbor's house. A directional extender in adapter mode at neighbor's house would provide a wired port that they could connect a router to. Be sure all equipment on your side is on a UPS.

I would also isolate that network entirely - you don't want to allow the opportunity for someone to sniff traffic if you're using your connection for anything important.

meandmyfamily

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Re: Cutting expenses plateau?
« Reply #44 on: December 06, 2016, 10:40:36 AM »
You are definitely doing great on utilities in AZ.  We are working on it too but not where you are.  We are at $372 a month for electric, gas and water with 4 kids and 2 adults plus a pool and a little grass.
« Last Edit: December 06, 2016, 10:42:46 AM by meandmyfamily »