Author Topic: Reader Case Study: Cost Cutting, Reduce by $1000  (Read 17777 times)

colganc

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Reader Case Study: Cost Cutting, Reduce by $1000
« on: January 11, 2015, 07:21:38 PM »
I'm relatively new to the forum, having started lurking in September.  After a bit of reading I went and picked up YNAB.  Since October I have diligently tracked all of my expenses.  I've been looking for ways to cut costs and I'm short on ideas.  I know I used to live on much less as less than 8 years ago I wasn't even making as much as I am spending now.  Not against moving and open to hearing any and all ideas.  I want face punches.

I am cash positive each month (I don't think I have a hair on fire situation) and really my main reason for cost cutting is to reach FIRE sooner.  I'd like to reduce my monthly expenditures by ~$1000 to reduce my FIRE amount by $300,000.  That will significantly move up my FIRE date.

Notes
Where possible my budget reflects actual costs and where not, my best estimate from past expenses.  I believe the estimates to be fairly accurate as from my first budget 4 months ago, I have only made ~$80 in changes.  The reason as to why some potential expenditure categories do not exist (a place for paper towels for example), my GF pays for those items.  My cell phone is paid for by work.

Straight from YNAB
Mortgage, Insurance, and Tax - $1360.58 - Can dump cash savings and refinance to remove MI, reduce losses from interest, and shorten the forced pay off period.  Estimated savings $450.
Internet - $34.99
Amazon Prime - $8.25
Water and Sewer - $65
Electricity - $11.14
Natural Gas - $55
Garbage - $12.00
Improvements and Maintenance - $300.00
Car Payment - $248.26
Car Insurance - $215.00 - Have a quote that cuts this to a bit under $100 per month.
Car Repairs and Maintenance - $10.00 - Increasing based on new longer expected ownership of the car.
Car Replacement - $200.00 - Removing this due to the plan that I keep my car until FIRE.
Restaurants - $450.00 - Drop to $100?
Groceries - $50.00 - Increase to $100?
Hygiene - $20.00
Medical - $5.00
Clothing - $30.00
Entertainment - $15.00
Travel - $50.00

Total - $3135.22
Advisement savings so far - $1060
« Last Edit: February 03, 2015, 10:25:35 PM by colganc »

justajane

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #1 on: January 11, 2015, 07:38:30 PM »
What falls under improvements and maintenance? I presume you mean on your home? That's a pretty high number. I understand houses are expensive, but at some point can you reduce this number?

Other than that, obviously if you ate out less and increased your grocery budget to $150-$200, you could save a couple hundred dollars there.

Water/sewer seems slightly high to me, but I know this number can vary greatly depending on where you live.

Obviously the elephant in the room is your car payment. I think it's great you have a replacement fund, but in many respects, shouldn't you be using that money to pay down the existing car? What's your interest rate on the car you currently have a loan on? Also, I don't see your gas budget listed for said car.

For you to find $1,000 more dollars for FIRE, you would have to really work on the car and food. Small tweaking of everything else will bring you small returns, but it won't get you to your desired number.

One more thing. Is your girlfriend contributing to housing expenses?

ltt

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #2 on: January 11, 2015, 07:45:24 PM »
I agree with shifting the restaurant expenses to groceries and cooking more at home.  Eventually, you will like your cooking much better!!  Also, your auto insurance seems high--over $2,400 a year?

Future Lazy

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #3 on: January 11, 2015, 08:25:38 PM »
I agree with shifting the restaurant expenses to groceries and cooking more at home.  Eventually, you will like your cooking much better!!  Also, your auto insurance seems high--over $2,400 a year?

+1 again to this. Groceries for two people should probably be around $250-300/mo, or about $100-150/mo for one person. Save $200-350/mo, or up to  $24,000 to $42,000 over 10 years.   

Also work on your car expenditures. If you can, sell your current car and replace it with a car you own outright, to eliminate the $250/mo car payment. Then, drive less and walk more. A lot harder to outline the savings on this one without more information...

Curious: Is the $30/mo clothing for one person, or two people? Most mustachian budgets put clothing at $0-20/mo per person... Wear what you have!


What size of house do you own? Do you have spare bedrooms? If so, rent them out!

Lmoot

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #4 on: January 11, 2015, 08:52:22 PM »
1) Get rid of the car payment ASAP - $250 savings
2) Car insurance is insane (drive more carefully and/or shop insurance) - $50-100 savings
3) Restaurant costs (is this just for you, or is this you and the GF?) - I'm not a violent person but I would do a double-punch with a round-house kick for that one.  Of course if you can afford it and enjoy then go for it. Since you're trying to save though I say knock that down $250
4) Is GF helping with mortgage?
   4a -If not can you get a roomie who will? - $250 - $350
   4b - Rent the place out and rent a place with GF for much cheaper*
                                    * this option is full of risks: breakup, tenant issues, renting issues
5) Can you refinance the house for a lower interest rate, extend another 30 years?
   * before I get reamed, the reason I suggest this (besides the savings in interest) is it frees up more income to pay off the car ASAP. Then you can get yourself on an intense plan to focus the rest of savings on getting rid of the mortgage
6) Get a part time job for at least long enough to pay off the car loan. Get something enjoyable that you're likely to stick with, and which can help you out with some other expenses on your list due to discounts. I work part time in tourism hospitality and get access to every major attraction in my state for free for myself (and free or discounts for additional guests), as well as over 150 attractions nationwide.

Disclosure: I don't know much about YNAB despite hearing a lot about it, however I don't like averaging yearly or occasional expenses into monthly ones. I pursposely shift as many espenses as I can to annual/ biannual (I de-escrowed my mortgage so that I only pay the mortgage month to month. I save the 3k for taxes/insurance in 1.05% high yields savings account). I pay my car insurance twice per year, etc. I find that this allows me to save 50% of my monthly income and therefore I am likely to save more since it's an easy calculation. Also things change during the year so that's another reason I don't like averaging monthly expenses.

colganc

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #5 on: January 11, 2015, 08:53:39 PM »
I agree with shifting the restaurant expenses to groceries and cooking more at home.  Eventually, you will like your cooking much better!!  Also, your auto insurance seems high--over $2,400 a year?

Speeding ticket and at fault accident.

colganc

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #6 on: January 11, 2015, 09:03:47 PM »
What falls under improvements and maintenance? I presume you mean on your home? That's a pretty high number. I understand houses are expensive, but at some point can you reduce this number?

Other than that, obviously if you ate out less and increased your grocery budget to $150-$200, you could save a couple hundred dollars there.

Water/sewer seems slightly high to me, but I know this number can vary greatly depending on where you live.

Obviously the elephant in the room is your car payment. I think it's great you have a replacement fund, but in many respects, shouldn't you be using that money to pay down the existing car? What's your interest rate on the car you currently have a loan on? Also, I don't see your gas budget listed for said car.

For you to find $1,000 more dollars for FIRE, you would have to really work on the car and food. Small tweaking of everything else will bring you small returns, but it won't get you to your desired number.

One more thing. Is your girlfriend contributing to housing expenses?

Improvements and maintenance at $300 would cover a new refrigerator, furniture, dish washer, a vacuum, in addition to other types of things like a new roof, etc.  I've only owned a home for 3 years and not sure what my exact long term costs are.  I put the $300 as a guess.  How can I better my estimate of these costs?  What I've read about rental homes and how much owners should budget for repairs based on home value etc doesn't usually seem very accurate.

Water and sewer does feel very high.  Sometime last year I calculated it at $53 on average per month.  There was some kind of bump in the rates and now I estimate I'm at $65 per month.  Just on the water use (not sewage aspect) it comes to ~$7 per month.  I know that sounds crazy.  I can't seem to find my last water and my last sewer bill to reference.  The next time one of them shows up I'll post here.

Car payment is on a 0% interest loan.  It is an electric car and I have solar panels.  That is also why my electric bill is only ~$11.  The system is sized to cover my entire electricity usage including the car over a 12 month period (net metering with credits).  Expected pay back is 5 years.

Food cost reduction makes sense.  Dropping it by $200 gets 20% of my goal.  From a want/need perspective I hope that is achievable.  My cooking skills are terrible.  This last month I've experimented with a few basic things and that is where my grocery budget is at it's $50.  At work I eat out a lot, virtually every day.  I should be able to save there.
« Last Edit: January 11, 2015, 09:08:11 PM by colganc »

Bob W

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #7 on: January 11, 2015, 09:11:02 PM »
Yeah,  sell the damn house already.   It is the dragging anchor on you boat.   You need like a 500 sq ft apt.   Your travel expenses are pathetically low. Put another 200 into that at least.  And yeah what the others said.

colganc

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #8 on: January 11, 2015, 09:19:49 PM »
I agree with shifting the restaurant expenses to groceries and cooking more at home.  Eventually, you will like your cooking much better!!  Also, your auto insurance seems high--over $2,400 a year?

+1 again to this. Groceries for two people should probably be around $250-300/mo, or about $100-150/mo for one person. Save $200-350/mo, or up to  $24,000 to $42,000 over 10 years.   

Also work on your car expenditures. If you can, sell your current car and replace it with a car you own outright, to eliminate the $250/mo car payment. Then, drive less and walk more. A lot harder to outline the savings on this one without more information...

Curious: Is the $30/mo clothing for one person, or two people? Most mustachian budgets put clothing at $0-20/mo per person... Wear what you have!


What size of house do you own? Do you have spare bedrooms? If so, rent them out!

The grocery cost is just mine.  My GF also purchases groceries that she does her own cooking with.

Car was purchased new in mid-2014.  At the time I did a cost analysis versus a used/new Corolla, Civic, Prius, etc and it was either ahead or behind no more than $2000 over 5 years.  I also own a bike that when the weather and sunlight allow (I don't have lights or reflectors on it) that I ride.  I am only 3.5 miles from work.  I am currently putting ~500 miles on my car per month, not factoring sunnier months that I will hardly drive it.  In the past I have gone a month without starting my car.

I'm not actually spending $30 per month and I haven't tracked my expenses long enough to know for sure, it is purely a guess.  Since I started tracking expenses in YNAB I have not spend $.01 on clothes.  The clothes are for just one person, me.  My estimate is based on 2 "outfits" being purchased per year in addition to a pair of shoes.  I haven't tried to value shop for clothes in years, no clue how low I can go.  Would it be reasonable to drop this to $10 or less with a change in where I shop?

My house is ~1550 sq ft.  3 bedroom, 2 bath.  One room is an "office" that we spend most of our time in while at home and the other room is indeed a "spare" room that is setup for guests when they visit.  Admittedly we only have guests a few times a year.

colganc

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #9 on: January 11, 2015, 09:32:09 PM »
1) Get rid of the car payment ASAP - $250 savings
2) Car insurance is insane (drive more carefully and/or shop insurance) - $50-100 savings
3) Restaurant costs (is this just for you, or is this you and the GF?) - I'm not a violent person but I would do a double-punch with a round-house kick for that one.  Of course if you can afford it and enjoy then go for it. Since you're trying to save though I say knock that down $250
4) Is GF helping with mortgage?
   4a -If not can you get a roomie who will? - $250 - $350
   4b - Rent the place out and rent a place with GF for much cheaper*
                                    * this option is full of risks: breakup, tenant issues, renting issues
5) Can you refinance the house for a lower interest rate, extend another 30 years?
   * before I get reamed, the reason I suggest this (besides the savings in interest) is it frees up more income to pay off the car ASAP. Then you can get yourself on an intense plan to focus the rest of savings on getting rid of the mortgage
6) Get a part time job for at least long enough to pay off the car loan. Get something enjoyable that you're likely to stick with, and which can help you out with some other expenses on your list due to discounts. I work part time in tourism hospitality and get access to every major attraction in my state for free for myself (and free or discounts for additional guests), as well as over 150 attractions nationwide.

Disclosure: I don't know much about YNAB despite hearing a lot about it, however I don't like averaging yearly or occasional expenses into monthly ones. I pursposely shift as many espenses as I can to annual/ biannual (I de-escrowed my mortgage so that I only pay the mortgage month to month. I save the 3k for taxes/insurance in 1.05% high yields savings account). I pay my car insurance twice per year, etc. I find that this allows me to save 50% of my monthly income and therefore I am likely to save more since it's an easy calculation. Also things change during the year so that's another reason I don't like averaging monthly expenses.

Even though I break some of my expenses to monthly, I am not paying them all month to month, an example is my car insurance.  My taxes/insurance on my house is currently paid into an escrow each month and then the mortgage company ends up paying them out of the escrow.  I haven't thought that there might be some savings there by keeping the money and paying it directly once a year in some way.

I could refinance my house, although it is at 4% right now.  I hate to admit this, but I've got about two years of mortgage insurance.  Last year after I had for sure crossed the 20% threshold I looked into refinancing to kill the MI, but the refinance costs at the rates I could get at the time kept it from making sense.  Last weekend I took out my old spreadsheets and was re-running everything.  While it is almost break even at this point I also ran scenarios on paying down my principal significantly along with a refinance to a 20 year loan (I've got a 30 year with 27 left to go).  That latter scenario makes sense and can cut a $300 or so off my housing costs.  I'm not yet sure it makes sense though as it is probably smarter to take the same money and drop it into some kind of index funds instead.

GF is not helping with mortgage and not materially able to.  Renting out a room would be interesting, but risky.  Place of last resort is my thoughts on it at this time.

I can afford the restaurant amount, but don't want to.  Seems unanimous so far that I should drop my total food costs to something like $200 to $300.

Part time job?  I've thought about it a bit.  Not sure that it would fit in well with my current job.  It would have to be weekends only.  Are there that many places that will allow for 16 hours a week like that?

colganc

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #10 on: January 11, 2015, 09:43:13 PM »
Yeah,  sell the damn house already.   It is the dragging anchor on you boat.   You need like a 500 sq ft apt.   Your travel expenses are pathetically low. Put another 200 into that at least.  And yeah what the others said.

Yep the house is a dragging anchor for cutting my costs by $1000.  Given my actual material possessions I should easily be able to fit everything into a 1 bedroom apartment.  It may be a penny wise, pound foolish situation.  I do have MI at the moment (yes, dumb).  In two years it will be gone removing ~$150 or so (I forget the exact number at the moment) from my housing.  At the same time rents for a 1 bedroom apartment in the area are currently around $900.  Factoring MID, MI, and rent appreciation over 2 years, at that point it may be an equal proposition or even in favor of staying in my current home.  I'd hate to save a few hundred now when it won't matter in a couple of years and beyond that it would have been cheaper to stay.  Given that, I'm not sure that I am factoring/estimating costs entirely correctly.

Take a look at a reply I made just before this about potentially paying down my mortgage and refinancing, maybe that makes more sense?

Lmoot

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #11 on: January 11, 2015, 11:17:45 PM »
1) Get rid of the car payment ASAP - $250 savings
2) Car insurance is insane (drive more carefully and/or shop insurance) - $50-100 savings
3) Restaurant costs (is this just for you, or is this you and the GF?) - I'm not a violent person but I would do a double-punch with a round-house kick for that one.  Of course if you can afford it and enjoy then go for it. Since you're trying to save though I say knock that down $250
4) Is GF helping with mortgage?
   4a -If not can you get a roomie who will? - $250 - $350
   4b - Rent the place out and rent a place with GF for much cheaper*
                                    * this option is full of risks: breakup, tenant issues, renting issues
5) Can you refinance the house for a lower interest rate, extend another 30 years?
   * before I get reamed, the reason I suggest this (besides the savings in interest) is it frees up more income to pay off the car ASAP. Then you can get yourself on an intense plan to focus the rest of savings on getting rid of the mortgage
6) Get a part time job for at least long enough to pay off the car loan. Get something enjoyable that you're likely to stick with, and which can help you out with some other expenses on your list due to discounts. I work part time in tourism hospitality and get access to every major attraction in my state for free for myself (and free or discounts for additional guests), as well as over 150 attractions nationwide.

Disclosure: I don't know much about YNAB despite hearing a lot about it, however I don't like averaging yearly or occasional expenses into monthly ones. I pursposely shift as many espenses as I can to annual/ biannual (I de-escrowed my mortgage so that I only pay the mortgage month to month. I save the 3k for taxes/insurance in 1.05% high yields savings account). I pay my car insurance twice per year, etc. I find that this allows me to save 50% of my monthly income and therefore I am likely to save more since it's an easy calculation. Also things change during the year so that's another reason I don't like averaging monthly expenses.

Even though I break some of my expenses to monthly, I am not paying them all month to month, an example is my car insurance.  My taxes/insurance on my house is currently paid into an escrow each month and then the mortgage company ends up paying them out of the escrow.  I haven't thought that there might be some savings there by keeping the money and paying it directly once a year in some way.

I could refinance my house, although it is at 4% right now.  I hate to admit this, but I've got about two years of mortgage insurance.  Last year after I had for sure crossed the 20% threshold I looked into refinancing to kill the MI, but the refinance costs at the rates I could get at the time kept it from making sense.  Last weekend I took out my old spreadsheets and was re-running everything.  While it is almost break even at this point I also ran scenarios on paying down my principal significantly along with a refinance to a 20 year loan (I've got a 30 year with 27 left to go).  That latter scenario makes sense and can cut a $300 or so off my housing costs.  I'm not yet sure it makes sense though as it is probably smarter to take the same money and drop it into some kind of index funds instead.

GF is not helping with mortgage and not materially able to.  Renting out a room would be interesting, but risky.  Place of last resort is my thoughts on it at this time.

I can afford the restaurant amount, but don't want to.  Seems unanimous so far that I should drop my total food costs to something like $200 to $300.

Part time job?  I've thought about it a bit.  Not sure that it would fit in well with my current job.  It would have to be weekends only.  Are there that many places that will allow for 16 hours a week like that?

I read that your car loan is 0% interest so I amend my statement. Keep the loan and of course pay it in full before the offer expires.

Although I can understand and respect the view of many smart people to keep a mortgage and invest the money, I am a low-risk type person and simplifying my finances is my modus operandi. I'm on track to pay my mortgage off in 2 years (year 8 of a 30 year mortgage) and stand to save 45k on interest. Without needing to go into calculating how much I could earn with the difference, over 22 years investing in indexes, I'm happy with a guaranteed 45k. A lot of people have higher risk tolerance than me though.

Rental property is another thing to consider; it's passive income no matter what other people say. For some reason even though I'm risk-adverse (and at the fairly young age of 30, I don't see this changing as I get older) rental properties are something I feel comfortable adding to my FIRE plan. I turned my first primary residence into a rental property (moved home to pay off mortgage), and hope to buy a second house in the city I plan on going back to school in as soon as my mortgage is off my books (58k to go!). Maybe it's something you might benefit from. You can try it out with your own home first.

I work part time at a nonprofit and it pays peanuts, but provides extra income, flexible hours, and experience for my desired second career when I officially pull the plug on the rat race and slow down. I've done evening tour guide gigs and earned 3k in less than 2 months from pay and tips. Even if it's hard to find weekends only jobs, consider seasonal positions that require you to come in after your day job; you only have to do it for a short while, have the option of returning each season, and might even be able to use PTO to get more hours. When I was in super super saver mode I would use PTO from one job to take on more hours at the other one, so I was getting paid while earning money. Having limited availability is definitely a challenge but with a little creativity I'm sure something in your area is available. Try applying at places that hire college students as they will be more equipped to handle a limited schedule.

1967mama

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #12 on: January 12, 2015, 12:15:38 AM »
No one has mentioned Amazon Prime. We dropped our Prime membership last month when we realized that the 10 year opportunity cost on this monthly expense was $1427.25 (monthly cost x 173) ::facepalm::

justajane

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #13 on: January 12, 2015, 05:56:53 AM »
Could your girlfriend contribute $100 to the mortgage? It's a minimal amount but 10% of your goal. It's not worth causing long term friction between the two of you, especially since you don't have a hair on fire situation here, just higher savings goals. But I do wonder long term about a person that doesn't contribute her fair share to the finances. Are there extenuating circumstances? Health problems, etc.? Could her employment situation change in the future?

looking for FI

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #14 on: January 12, 2015, 06:20:25 AM »
I don't understand why you have both a car payment and a car replacement fund. If you bought a new reluable car don't you plan on driving it for many years to come. Once the car is paid off I would start funneling the payment into a replacement fund.

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #15 on: January 12, 2015, 06:23:52 AM »
Tutoring can be a flexible side hustle to boost earnings too.  Check kijiji or CL to find the going rate (in my area it's about $20/hr).  Depending on your subject and time of year it could bolster your target a fair bit.  I earned over $400 the last month I did this, at the cost of a few hours a week, and it also got me into our local libraries more.

kathrynd

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #16 on: January 12, 2015, 06:43:10 AM »
Here are my suggestions.

Put the car replacement money on the mortgage.
Put the home maintenance savings on the mortgage.

Pack a lunch for work. Even buying deli meats and making sandwiches would be cheaper.
Cut way back on restaurants and throw extra on mortgage.

Pay off mortgage asap.
Clothing.... you probably have lots...if not, ask for them for birthday and xmas

Consider renting out your spare rooms, if only to students, so your summers are free of students.
Some people only want a room, during the week days.

Remember,paying  mortgage principle is considered savings

Good luck



NICE!

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #17 on: January 12, 2015, 09:18:54 AM »
Are you sure that shopping your car insurance can't bring that number down? I've had a couple at-fault accidents of my own (all minor) and I've never paid anywhere near that amount, even when I was 23 years old. Now my 6 month bill is less than your monthly bill.

colganc

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #18 on: January 12, 2015, 10:50:39 AM »
Are you sure that shopping your car insurance can't bring that number down? I've had a couple at-fault accidents of my own (all minor) and I've never paid anywhere near that amount, even when I was 23 years old. Now my 6 month bill is less than your monthly bill.

I haven't shopped for cheaper insurance, but it does make sense to investigate.

colganc

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #19 on: January 12, 2015, 11:01:53 AM »
Here are my suggestions.

Put the car replacement money on the mortgage.
Put the home maintenance savings on the mortgage.

Pack a lunch for work. Even buying deli meats and making sandwiches would be cheaper.
Cut way back on restaurants and throw extra on mortgage.

Pay off mortgage asap.
Clothing.... you probably have lots...if not, ask for them for birthday and xmas

Consider renting out your spare rooms, if only to students, so your summers are free of students.
Some people only want a room, during the week days.

Remember,paying  mortgage principle is considered savings

Good luck

Clothing, I don't really have lots.  I've asked for gift cards lately for "gifts" to prevent unwanted and unneeded items accumulating.

Packing a lunch to work makes a lot of sense.

My idea on the "car replacement" is to build enough savings in that line item to pay for a new car cash when it comes time to replace.  My $200 per month is figuring a 5 year replacement time frame and the value of my current vehicle at that time.  Not sure how smart or dumb that is, but it is my current plan.

Seņora Savings

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #20 on: January 12, 2015, 11:57:47 AM »
Clothing, I don't really have lots.

But you do presumably have enough.  If you have 8 outfits each for summer and winter, including 5 for work you should be fine.  Don't buy any more clothes unless you end up having to get rid of something. Savings: $15

Drop Amazon prime.  Unless you would otherwise be spending $100 a year in shipping this is not a good deal, and in the first case you have bigger fish to fry.  If you use it to watch movies and you would otherwise spend more than $8.5 a month, keep it.  Savings: $8.5

Hygiene: Do you go through 8 sticks of deodorant a month?  This seems high, make it $10 unless you've got a reason behind this (anti dandruff medication, etc. you're paying for laundry) Savings: $10

Get a roommate: Charge $350, save $50 a month to put friends up in hotels.  I don't think that this is really high risk given that you don't need a roommate.  Interview people carefully, and consider doing monthly trial leases before you sign a full year long lease. Savings: $300

Don't count both the car payment and saving up for a new car.  Your car sounds awesome.  Keep it for 10 years.  Savings: $200

Fix the food stuff.  I spend $70 a month on food, so cutting back on restaurants doesn't have to shoot your spending through the roof: Savings $200

Total Savings: $933.50

It's pretty easy to see what is big savings and what is small.  If Amazon Prime makes your life better, keep it.

Things sound a bit strange with your girlfriend.  What do you mean she can't help with housing?  What would she do if you weren't dating?  I would advice that she pay at least the minimum that she would have to for outside housing, maybe $250.  This will keep her from building a lifestyle where she is financially dependent on being in a relationship with you.  Obviously each relationship is different, so my advice may not apply in your situation.

NICE!

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #21 on: January 12, 2015, 12:08:45 PM »
Things sound a bit strange with your girlfriend.  What do you mean she can't help with housing?  What would she do if you weren't dating?  I would advice that she pay at least the minimum that she would have to for outside housing, maybe $250.  This will keep her from building a lifestyle where she is financially dependent on being in a relationship with you.  Obviously each relationship is different, so my advice may not apply in your situation.

+1. When my girlfriend (now DW) lived with me she paid rent despite the fact her salary was just a bit over half of mine. She paid 40% of the rent but was not required to pay for anything else. On the other hand, my friend made a good bit more than his girlfriend but he never made her pay a dime. I never quite understood it but it worked for them. I'd say their situation was rare, though.

1967mama

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #22 on: January 12, 2015, 01:15:32 PM »
I mentioned dropping Amazon Prime because all the big ticket items had already been taken care of by a number of posters upthread.

IMHO, looking at the little things adds up too. You can borrow all the free movies and documentaries you want at the public library.  Most city dwellers can pick up a number of HD channels OTA and can also stream plenty of free content. You'd have to order an awful lot of stuff from Amazon to make the $99 worth it for the year when you can still get free shipping if your cart totals $35 or more. I put things in my cart that we are needing/buying in the next few weeks, and wait for it to pass the $35 mark.

Guess it depends on how truly badass you want to be.

colganc

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #23 on: January 12, 2015, 01:56:43 PM »
Clothing, I don't really have lots.

But you do presumably have enough.  If you have 8 outfits each for summer and winter, including 5 for work you should be fine.  Don't buy any more clothes unless you end up having to get rid of something. Savings: $15

Drop Amazon prime.  Unless you would otherwise be spending $100 a year in shipping this is not a good deal, and in the first case you have bigger fish to fry.  If you use it to watch movies and you would otherwise spend more than $8.5 a month, keep it.  Savings: $8.5

Hygiene: Do you go through 8 sticks of deodorant a month?  This seems high, make it $10 unless you've got a reason behind this (anti dandruff medication, etc. you're paying for laundry) Savings: $10

Get a roommate: Charge $350, save $50 a month to put friends up in hotels.  I don't think that this is really high risk given that you don't need a roommate.  Interview people carefully, and consider doing monthly trial leases before you sign a full year long lease. Savings: $300

Don't count both the car payment and saving up for a new car.  Your car sounds awesome.  Keep it for 10 years.  Savings: $200

Fix the food stuff.  I spend $70 a month on food, so cutting back on restaurants doesn't have to shoot your spending through the roof: Savings $200

Total Savings: $933.50

It's pretty easy to see what is big savings and what is small.  If Amazon Prime makes your life better, keep it.

Things sound a bit strange with your girlfriend.  What do you mean she can't help with housing?  What would she do if you weren't dating?  I would advice that she pay at least the minimum that she would have to for outside housing, maybe $250.  This will keep her from building a lifestyle where she is financially dependent on being in a relationship with you.  Obviously each relationship is different, so my advice may not apply in your situation.

Clothing wise, I have 6 outfits worth, total, including 2 "formal" that have been worn twice in the last 4 years.  I'm open to cutting my clothing costs, I just don't know what would be reasonable.

The car replacement "cost" keeps coming up.  To re-iterate the idea is to have enough saved in a bucket that by the time I actually need a new car, I can pay for one in cash.  I'm trying to think of a cost/replacement model to factor vehicle costs.  Do I assume I can make the car last until FIRE (10 to 15 years, currently), at which point I don't need a car?  If so I can remove the replacement cost from my budget.  I'm not totally positive I can make the LEAF last that long.  5 years for sure, highly likely to 8 years, probably/possibly to 10.  It is not about part wear, but the battery.  Nissan tweaked the battery a bit as production has ran on.  My battery may last longer than the earlier LEAFs from circa 2011.  My house is positioned a 15 minute walk to a light rail station that can get me to many other locations without using my car (but not work).

I haven't read about per mile insurance, haven't heard of that being an option unless I wanted one of those tracker devices.

I could drop the restaurant spending to $0 and it does make sense.  Psychologically, I don't think I can cut eating out at this time.  Dropping it to $100 per month and eating out a couple of times per week looks like a good starting point for me.  With my experiments from last month my current at home per meal cost is somewhere between $2 and $3.  I need to work on lowering this before I can make $100 stretch the whole month.

Tenant is risky due to my existing relationship.  It is not worth risking that, at this time, for the extra money (due to not having a hair on fire situation).


Future Lazy

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colganc

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #25 on: January 12, 2015, 02:18:31 PM »
Curious:

Is the GF on board with frugality?


RE: Clothing...
http://forum.mrmoneymustache.com/ask-a-mustachian/what-is-your-monthly-clothing-cost-what-does-it-buy/msg505932/#msg505932

So far and seems fine with further reductions (this thread is part of figuring out what is next).  it might not look like it, but over the past year expenses have been ratcheted down, tracking improved, and budgeting enacted.

Future Lazy

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #26 on: January 12, 2015, 02:25:58 PM »
Curious:

Is the GF on board with frugality?


RE: Clothing...
http://forum.mrmoneymustache.com/ask-a-mustachian/what-is-your-monthly-clothing-cost-what-does-it-buy/msg505932/#msg505932

So far and seems fine with further reductions (this thread is part of figuring out what is next).  it might not look like it, but over the past year expenses have been ratcheted down, tracking improved, and budgeting enacted.

So, if she's OK with frugality, why not get a tenant/roommate? If she's on board, wouldn't she understand the benefits and the way it services your overall goals? Not 100% on why sharing a space would compromise your relationship.

Different solution (I think suggested somewhere above?): If you don't want to share space, move to a 1 bedroom or studio apt, and rent out the entire house. Either way, it would seriously benefit your future goals to reduce housing costs down to only what you really need for the two of you.

Dexterous

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #27 on: January 12, 2015, 02:54:35 PM »

Mortgage, Insurance, and Tax - $1360.58  |  For a "single" guy with no children, that's very high for many areas.  Without reducing this you will not save $1000 from your budget.  I think this should be under $1,000 unless you have several children (or increase your income / reduce your goal)
Improvements and Maintenance - $300.00  |  You can likely reduce this by a third easily
Car Payment - $248.26  |  Pay it off ASAP with your saved money from "improvements" above ^
Car Insurance - $215.00  |  Shop everywhere!  Reduce things you don't *need* such as towing, etc... most of those are ripoffs anyway because they only tow a certain distance and you pay for part of it as an example
Car Repairs and Maintenance - $5.00  |  I doubt this is accurate, factor in car tires, battery replacements, lighting, wipers, filters, etc
Car Replacement - $200.00  |  Move some of this money to your car repairs/mx category and invest the rest
Restaurants - $450.00 - Drop to $100?  |  Learn to cook, let your girlfriend buy dinnerware she likes, buy some fancy table items to create a better atmosphere for romantic dinners, then reduce this section drastically
Groceries - $50.00 - Increase to $100?  |  Increase this as the restaurants section decreases, and this category can be less than $300 for two people eating decent food
« Last Edit: January 12, 2015, 03:01:25 PM by Dexterous »

colganc

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #28 on: January 12, 2015, 04:10:49 PM »
I don't really understand the GF's position. She doesn't pay anything for rent or utilities, but is opposed to taking in a roommate to lower costs?

Re: car replacement costs. I think this type of fund makes a lot of sense for someone with a car that is old, dying, or 100% necessary for a work commute. Since your car is a 2014 model with low mileage, and you already state that you are near commuter rail and can walk/bike in sunny months, this is not the case for you. Nobody can predict what would fail on your car, but if it's the battery, that looks like it costs $5500 to replace. $5500/8 years/ 12 months = $57 per month seems like the max you should be saving, to me. Dump the rest ($150) into accelerated mortgage payments to help you get rid of PMI. That will return a $150 savings (that's your PMI cost, I believe) for the life of the mortgage.

Yes, you are likely going to need a GPS tracker on your car to qualify for per-mile insurance. Shop around and see if it's available in your state by any provider. If you drive less than 10k miles per year, it may work for you. Given that you're paying more than $200/month, this could be a big savings for you. http://www.fastcompany.com/3033107/fast-feed/a-new-take-on-auto-insurance-pay-by-the-mile

here are three cuts that would save you $1000 out of the gate, without even optimizing other areas:
- Take in a roommate ($500)
- Drop restaurant spending to $90 ($360)
- Cut your savings for car replacement down to $60 ($140)

Your hair is not on fire and you're still progressing to FIRE without making them. However, if you are truly looking to save $1000 per month, you have to accept that it will require some true optimization of your biggest expenses. If you aren't willing to make those tradeoffs, that's fine, you just have to accept a slower path to FIRE.

Cutting the car replacement budget item is making sense to me now.  Assuming I can make the batteries in my car last to 10 years I should be ok.

Restaurant spending is going to be dropped to $100 next month, but based on my current cooking knowledge I will need to increase my groceries to $100.  Further optimization can happen after I get more cooking experience.

colganc

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #29 on: January 12, 2015, 04:37:24 PM »

Mortgage, Insurance, and Tax - $1360.58  |  For a "single" guy with no children, that's very high for many areas.  Without reducing this you will not save $1000 from your budget.  I think this should be under $1,000 unless you have several children (or increase your income / reduce your goal)
Improvements and Maintenance - $300.00  |  You can likely reduce this by a third easily
Car Payment - $248.26  |  Pay it off ASAP with your saved money from "improvements" above ^
Car Insurance - $215.00  |  Shop everywhere!  Reduce things you don't *need* such as towing, etc... most of those are ripoffs anyway because they only tow a certain distance and you pay for part of it as an example
Car Repairs and Maintenance - $5.00  |  I doubt this is accurate, factor in car tires, battery replacements, lighting, wipers, filters, etc
Car Replacement - $200.00  |  Move some of this money to your car repairs/mx category and invest the rest
Restaurants - $450.00 - Drop to $100?  |  Learn to cook, let your girlfriend buy dinnerware she likes, buy some fancy table items to create a better atmosphere for romantic dinners, then reduce this section drastically
Groceries - $50.00 - Increase to $100?  |  Increase this as the restaurants section decreases, and this category can be less than $300 for two people eating decent food

Maintenance on the car is now optimistic based on updated plans to own the car longer, however it shouldn't be more than tires, wipers, and cabin air filters.  Vehicle is electric, lights are LEDs, I'm averaging 500 miles per month during the rainy/dark seasons.  I should only need one set of tires over my course of ownership, wipers once or every other year, and probably one swap of the cabin air filter.  I'll be surprised if it's more than $10 per month.

colganc

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #30 on: January 12, 2015, 06:25:22 PM »

Drop Amazon prime.  Unless you would otherwise be spending $100 a year in shipping this is not a good deal, and in the first case you have bigger fish to fry.  If you use it to watch movies and you would otherwise spend more than $8.5 a month, keep it.  Savings: $8.5

Hygiene: Do you go through 8 sticks of deodorant a month?  This seems high, make it $10 unless you've got a reason behind this (anti dandruff medication, etc. you're paying for laundry) Savings: $10

Amazon Prime was my "frugal" replacement for "cable" TV since we don't care about live TV.  Cheaper than Netflix and some other side benefits that are enjoyed at times.  I use it a decent amount and my GF less so.  I'll have to go investigate to see how much shipping I actually do and if this makes sense.  If I do drop it, as someone posted, I could use the library for free movies.  I will need to check out their selection.

On hygiene, I had to revise it up as I originally had it at $10.  Part of this was buying in bulk instead of individually.  I don't feel I have enough data to decrease this yet.  Something to watch for.

colganc

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #31 on: January 12, 2015, 06:44:19 PM »
Some of you have mentioned my house maintenance and repair item.  I could really use help with this one.  I have a number of projects that I want to be done and a few that need to be.

Examples:
Side gate, currently only have one. - Need? Better security.
Backyard lawn removal and replacement with something close to 0 maintenance. - Want
Can ceiling light replacement - Want?  Older design that does not allow for insulation to cover them.
Front door replacement - Want?  Poor design that is mostly glass, reducing the thermal performance of my home.
Refloor 90% of the house - Want, small portion an eventual need.  Kitchen flooring is likely to need replacement due to poor installation and materials sometime within 10 years and possibly as soon as 5.
Gas fireplace replacement - Want?  Doesn't work, but may be a more efficient way to heat my home.
Eventual refrigerator replacement - Need?  Something to plan for and assure an amount is ready, however fridge was bought new after the house purchase and is only 3 years old.
Eventual washer/dryer replacement - Need?  Something to plan for and assure an amount is ready, however fridge was bought new after the house purchase and is only 3 years old.
Eventual dishwasher replacement - Need?  Something to plan for and assure an amount is ready.  Dishwasher works fine, estimated age is 10 years.
Repaint most walls - Want

I have other things I want to do and want to plan for, but the above list should give an idea.  I don't have the experience to properly estimate or budget for the above expenses.  I don't have a simple model to use either.  I would love to reduce the $300 I'm currently budgeting, but I have no clue to know its validity.

kathrynd

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #32 on: January 13, 2015, 05:40:44 AM »
Some of you have mentioned my house maintenance and repair item.  I could really use help with this one.  I have a number of projects that I want to be done and a few that need to be.

Examples:
Side gate, currently only have one. - Need? Better security.
Backyard lawn removal and replacement with something close to 0 maintenance. - Want
Can ceiling light replacement - Want?  Older design that does not allow for insulation to cover them.
Front door replacement - Want?  Poor design that is mostly glass, reducing the thermal performance of my home.
Refloor 90% of the house - Want, small portion an eventual need.  Kitchen flooring is likely to need replacement due to poor installation and materials sometime within 10 years and possibly as soon as 5.
Gas fireplace replacement - Want?  Doesn't work, but may be a more efficient way to heat my home.
Eventual refrigerator replacement - Need?  Something to plan for and assure an amount is ready, however fridge was bought new after the house purchase and is only 3 years old.
Eventual washer/dryer replacement - Need?  Something to plan for and assure an amount is ready, however fridge was bought new after the house purchase and is only 3 years old.
Eventual dishwasher replacement - Need?  Something to plan for and assure an amount is ready.  Dishwasher works fine, estimated age is 10 years.
Repaint most walls - Want

I have other things I want to do and want to plan for, but the above list should give an idea.  I don't have the experience to properly estimate or budget for the above expenses.  I don't have a simple model to use either.  I would love to reduce the $300 I'm currently budgeting, but I have no clue to know its validity.

We just bought a new dishwasher today basic one is $299+tax (Canada)
If you need to replace anything, deal with it then.
If you need to take one payment, from paying extra on the mortgage...no big deal.

Seriously consider your needs first.
The g/f is coming across as a 'princess' type. (to me anyways)
The money she earns, is hers?... 
Does she ever pay for restaurant?

Use the envelope system for food.
Put the amount in there, when it is gone,i t is gone.
Next month you learn to budget better :)


ShoulderThingThatGoesUp

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #33 on: January 13, 2015, 05:52:54 AM »
Just my thoughts as somebody who also has this as their most challenging budget item>

Some of you have mentioned my house maintenance and repair item.  I could really use help with this one.  I have a number of projects that I want to be done and a few that need to be.

Examples:
Side gate, currently only have one. - Need? Better security. Security is an illusion, no gate is going to stop a determined criminal, but there really aren't that many of those.
Backyard lawn removal and replacement with something close to 0 maintenance. - Want How big is your backyard? A small backyard takes less than half an hour a week in the summer to maintain. How much do you value your leisure time, and how much would this cost? What's the payback?
Can ceiling light replacement - Want?  Older design that does not allow for insulation to cover them. Seems unlikely that the insulation could be very good post-replacement unless they're going in the attic or opening up the ceiling. If going in the attic, you can probably DIY this
Front door replacement - Want?  Poor design that is mostly glass, reducing the thermal performance of my home. Try a curtain attached to the door over the glass and weatherstripping around the door
Refloor 90% of the house - Want, small portion an eventual need.  Kitchen flooring is likely to need replacement due to poor installation and materials sometime within 10 years and possibly as soon as 5. Flooring technologies seem to be improving rapidly. Might as well wait
Gas fireplace replacement - Want?  Doesn't work, but may be a more efficient way to heat my home. Fireplaces are not an efficient way to heat your home
Eventual refrigerator replacement - Need?  Something to plan for and assure an amount is ready, however fridge was bought new after the house purchase and is only 3 years old.
Eventual washer/dryer replacement - Need?  Something to plan for and assure an amount is ready, however fridge was bought new after the house purchase and is only 3 years old.
Eventual dishwasher replacement - Need?  Something to plan for and assure an amount is ready.  Dishwasher works fine, estimated age is 10 years. None of these are especially old but it's good to plan for them
Repaint most walls - Want DIY, right?

I have other things I want to do and want to plan for, but the above list should give an idea.  I don't have the experience to properly estimate or budget for the above expenses.  I don't have a simple model to use either.  I would love to reduce the $300 I'm currently budgeting, but I have no clue to know its validity.

colganc

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #34 on: January 13, 2015, 08:40:40 AM »
Some of you have mentioned my house maintenance and repair item.  I could really use help with this one.  I have a number of projects that I want to be done and a few that need to be.

Examples:
Side gate, currently only have one. - Need? Better security.
Backyard lawn removal and replacement with something close to 0 maintenance. - Want
Can ceiling light replacement - Want?  Older design that does not allow for insulation to cover them.
Front door replacement - Want?  Poor design that is mostly glass, reducing the thermal performance of my home.
Refloor 90% of the house - Want, small portion an eventual need.  Kitchen flooring is likely to need replacement due to poor installation and materials sometime within 10 years and possibly as soon as 5.
Gas fireplace replacement - Want?  Doesn't work, but may be a more efficient way to heat my home.
Eventual refrigerator replacement - Need?  Something to plan for and assure an amount is ready, however fridge was bought new after the house purchase and is only 3 years old.
Eventual washer/dryer replacement - Need?  Something to plan for and assure an amount is ready, however fridge was bought new after the house purchase and is only 3 years old.
Eventual dishwasher replacement - Need?  Something to plan for and assure an amount is ready.  Dishwasher works fine, estimated age is 10 years.
Repaint most walls - Want

I have other things I want to do and want to plan for, but the above list should give an idea.  I don't have the experience to properly estimate or budget for the above expenses.  I don't have a simple model to use either.  I would love to reduce the $300 I'm currently budgeting, but I have no clue to know its validity.

We just bought a new dishwasher today basic one is $299+tax (Canada)
If you need to replace anything, deal with it then.
If you need to take one payment, from paying extra on the mortgage...no big deal.

Seriously consider your needs first.
The g/f is coming across as a 'princess' type. (to me anyways)
The money she earns, is hers?... 
Does she ever pay for restaurant?

Use the envelope system for food.
Put the amount in there, when it is gone,i t is gone.
Next month you learn to budget better :)

YNAB is in many ways a digital envelope system with other nice features.  I'm not looking to deal with things as they come up.  There seems to be a finite and fairly knowable number of items in a house that eventually breaks down.  I'm not looking for spot teplacement costs, but a way of thinking or model that can be applied to estimate these costs.  If I am constantly doing a "deal with it then" i will not be budgeting effectively and will constantly be missing planned objectives that are based off needs.  I'm attempting to treat items like a dishwasher or new siding as I would with food.  Spend the amount budgeted and prioritize, just like groceries should be my first stop on spending for food and the extra (if I have it) to restaurants.

colganc

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #35 on: January 13, 2015, 08:52:43 AM »
Just my thoughts as somebody who also has this as their most challenging budget item>

Some of you have mentioned my house maintenance and repair item.  I could really use help with this one.  I have a number of projects that I want to be done and a few that need to be.

Examples:
Side gate, currently only have one. - Need? Better security. Security is an illusion, no gate is going to stop a determined criminal, but there really aren't that many of those.
Backyard lawn removal and replacement with something close to 0 maintenance. - Want How big is your backyard? A small backyard takes less than half an hour a week in the summer to maintain. How much do you value your leisure time, and how much would this cost? What's the payback?
Can ceiling light replacement - Want?  Older design that does not allow for insulation to cover them. Seems unlikely that the insulation could be very good post-replacement unless they're going in the attic or opening up the ceiling. If going in the attic, you can probably DIY this
Front door replacement - Want?  Poor design that is mostly glass, reducing the thermal performance of my home. Try a curtain attached to the door over the glass and weatherstripping around the door
Refloor 90% of the house - Want, small portion an eventual need.  Kitchen flooring is likely to need replacement due to poor installation and materials sometime within 10 years and possibly as soon as 5. Flooring technologies seem to be improving rapidly. Might as well wait
Gas fireplace replacement - Want?  Doesn't work, but may be a more efficient way to heat my home. Fireplaces are not an efficient way to heat your home
Eventual refrigerator replacement - Need?  Something to plan for and assure an amount is ready, however fridge was bought new after the house purchase and is only 3 years old.
Eventual washer/dryer replacement - Need?  Something to plan for and assure an amount is ready, however fridge was bought new after the house purchase and is only 3 years old.
Eventual dishwasher replacement - Need?  Something to plan for and assure an amount is ready.  Dishwasher works fine, estimated age is 10 years. None of these are especially old but it's good to plan for them
Repaint most walls - Want DIY, right?

I have other things I want to do and want to plan for, but the above list should give an idea.  I don't have the experience to properly estimate or budget for the above expenses.  I don't have a simple model to use either.  I would love to reduce the $300 I'm currently budgeting, but I have no clue to know its validity.

http://rootofgood.com/budget-home-repairs-billion-dollar-project/

That is kind of what i am looking for, but most analysis like these don't take into consideration longer term choices and planning.  Choosing a tile floor over a carpet is at least superficially one of these choices.  A tile floor can last alot longer than a carpet and may be cheaper over 30 years.  Those types of decisions are not reflected.  Maybe I need to budget more at the beginning of home ownership because I will have larger upfront purchase and need the budget to handle those, but over time can reduce it as I need to replace items less frequently.

Dexterous

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #36 on: January 15, 2015, 07:24:14 AM »



Maintenance on the car is now optimistic based on updated plans to own the car longer, however it shouldn't be more than tires, wipers, and cabin air filters.  Vehicle is electric, lights are LEDs, I'm averaging 500 miles per month during the rainy/dark seasons.  I should only need one set of tires over my course of ownership, wipers once or every other year, and probably one swap of the cabin air filter.  I'll be surprised if it's more than $10 per month.

Sorry I didn't pay close enough attention to the type of car you own when making that particular comment.

You seem like a very smart person and have thought out the budget rather well now!  The only thing that seems a bit unfortunate to me is that you're saving so much money in every area, but the house is going to continue to be a big drain on the overall budget.  I suppose I've been fortunate to live in fairly cheap areas though, so maybe I'm a bit biased in that regard.

colganc

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #37 on: January 15, 2015, 10:38:37 PM »



Maintenance on the car is now optimistic based on updated plans to own the car longer, however it shouldn't be more than tires, wipers, and cabin air filters.  Vehicle is electric, lights are LEDs, I'm averaging 500 miles per month during the rainy/dark seasons.  I should only need one set of tires over my course of ownership, wipers once or every other year, and probably one swap of the cabin air filter.  I'll be surprised if it's more than $10 per month.

Sorry I didn't pay close enough attention to the type of car you own when making that particular comment.

You seem like a very smart person and have thought out the budget rather well now!  The only thing that seems a bit unfortunate to me is that you're saving so much money in every area, but the house is going to continue to be a big drain on the overall budget.  I suppose I've been fortunate to live in fairly cheap areas though, so maybe I'm a bit biased in that regard.

I live in a "suburb" of Portland OR.  I do not know how it exactly compares COL wise.  The lack of cash for a downpayment is one of my financial regrets and it is coming back to haunt me with a longer working life.  I went and examined my list of homes I had looked at, especially the cheaper ones I missed out on.  Running the math on them and I could have been looking at a two year payoff period at this same point in time.  My only solace is this wasn't by far the most expensive home I looked at.

With the rates continuing to drop, a refi to a 20 year loan is looking better and better.  I am collecting more information and I may be able to drop my monthly by $440.  I can treat the money I put in for principal as a X% bond and then tilt my tax advantaged accounts heavier towards equities.

Still not the way to theoretically maximize my returns, but not bad and will be very helpful psychologically.

minority_finance_mo

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #38 on: January 16, 2015, 12:48:10 AM »


Curious: Is the $30/mo clothing for one person, or two people? Most mustachian budgets put clothing at $0-20/mo per person... Wear what you have!


I was thinking this myself... That is a lot of clothes...

minority_finance_mo

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #39 on: January 16, 2015, 01:03:00 AM »
Some of you have mentioned my house maintenance and repair item.  I could really use help with this one.  I have a number of projects that I want to be done and a few that need to be.

Examples:
Side gate, currently only have one. - Need? Better security.
Backyard lawn removal and replacement with something close to 0 maintenance. - Want
Can ceiling light replacement - Want?  Older design that does not allow for insulation to cover them.
Front door replacement - Want?  Poor design that is mostly glass, reducing the thermal performance of my home.
Refloor 90% of the house - Want, small portion an eventual need.  Kitchen flooring is likely to need replacement due to poor installation and materials sometime within 10 years and possibly as soon as 5.
Gas fireplace replacement - Want?  Doesn't work, but may be a more efficient way to heat my home.
Eventual refrigerator replacement - Need?  Something to plan for and assure an amount is ready, however fridge was bought new after the house purchase and is only 3 years old.
Eventual washer/dryer replacement - Need?  Something to plan for and assure an amount is ready, however fridge was bought new after the house purchase and is only 3 years old.
Eventual dishwasher replacement - Need?  Something to plan for and assure an amount is ready.  Dishwasher works fine, estimated age is 10 years.
Repaint most walls - Want

You did a great job at outlining your wants/needs in terms of investments in your house - i.e. things that will help you reduce costs or increase efficiencies. Now the next step is to calculate break-even for all of these projects that you have in mind. That's how you evaluate investments.

For example:
Reflooring House for better insulation
 - Cost: $25,000 (complete guesstimate)
 - Monthly savings as a result of greater efficiency: $25
 - Break-even = 25,000/25 = 1000 months = 83 years.


Then you decide if that break-even date is acceptable for you to make the investment, or if you feel it's too long to be worth it.

Lmoot

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #40 on: January 16, 2015, 09:21:00 AM »
Holy crap. What type of flooring costs 25k? Are we redoing the subflooring also? To make your equation accurate, if the flooring needed to be replaced anyway, I would enter the difference between contractor grade flooring and this special, insulating flooring and use that in the equation. That seems like a more real world calculation.

terran

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #41 on: January 16, 2015, 09:28:04 AM »
I may have missed this, but are you sure you need to refi to get rid of PMI? I was very careful to be sure that we could get rid of PMI once we'd built enough equity with our mortgage. It turned out we were able to put in 20% anyway and avoid it altogether, but if we hadn't we would have had to get to 22% of the original value and then request that PMI be dropped. If we wanted to count any increase in value of the house that may have required a refi, but as long as we got the loan down to 78% of the initial assessment we would have been good to go. Might be worth checking with your bank.

minority_finance_mo

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #42 on: January 16, 2015, 10:48:59 PM »
Holy crap. What type of flooring costs 25k? Are we redoing the subflooring also? To make your equation accurate, if the flooring needed to be replaced anyway, I would enter the difference between contractor grade flooring and this special, insulating flooring and use that in the equation. That seems like a more real world calculation.

Lmao, that's city dweller me throwing in a number - I really wouldn't know how much a flooring costs, as I've only ever lived in apartments in a big city. That said, the actual values in my previous post don't really matter, but the concept behind them do for the sake of cosmetic investments.

colganc

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #43 on: January 16, 2015, 11:10:04 PM »
I may have missed this, but are you sure you need to refi to get rid of PMI? I was very careful to be sure that we could get rid of PMI once we'd built enough equity with our mortgage. It turned out we were able to put in 20% anyway and avoid it altogether, but if we hadn't we would have had to get to 22% of the original value and then request that PMI be dropped. If we wanted to count any increase in value of the house that may have required a refi, but as long as we got the loan down to 78% of the initial assessment we would have been good to go. Might be worth checking with your bank.


FHA loan prior to the rule change.  This means I have to wait at least five years AND have at least 20% equity.  Or I can refi :)


colganc

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #44 on: January 27, 2015, 10:51:21 PM »
Update

I did some shopping and I think for now my $30 per month for clothes is about right.  As a reminder these are essentially all average spend per month.  I think i can lower it, but this number is already lower than what I ised to spend.  I work for an apparal designer so it is psychologically difficult at times not to shop :)

My food experiments have gone well.  I am on pace to finish out the month at a $150 restaurant budget and $75 grocery budget.  I plan on making it $200 and $75 next month followed by a further evaluation.

I have continued to follow the mortgage interest rates along with my deployable cash.  A $400+ mortgage reduction is possible.  I've run some simplistic spreadsheet models showing that moving the cash to investments or putting it into a refi with principal reduction should be pretty comparable.  The difference between the two options for me is around $50 per month I'd guess.  This represents the cost reduction leading to more sacings and earlier FI vs investing.

I haven't pursued the auto insurance angle yet, it hasn't sounded fun yet.

On home maintenance I've been filling out some estimates and expanding my list.  I am up to around $100k and will need to do some trimming.  That represents the projects I will want to complete over the next 20 years.  That leads to a budgeting shortfall of $1000 per year currently.  I may post the list of items in a bit after some more "internal review".

Travel budget continues to make sense.  Using miles and staying with friends/family I am able to take two trips per year.  Looking back at past years i have not been constrained by budget, only scheduling.  The travel budget looks good.


colganc

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #45 on: January 27, 2015, 11:47:09 PM »
Known Expected (wants and needs) Home Costs, 20 Years

I estimate the below list will come in around 100k if I was to have it all done this year.  Over 20 years that leaves 5k per year not accounting for inflation.

Direct Vent Gas Fireplace - gas fireplace is broken right now.
Flooring - carpet is worn.  Want to replace with something "permanent"
Landscaping - goal is a near 0 maintenance yard.
Interior Painting
Attic Insulation - looking for more insulation, better thermal performance for better comfort and may e some "savings"
Updated Lighting
Front Door - too much window, low comfort, not enough privacy
Siding - back half of the the house could use new siding in areas.  Ebentually will need to be replaced.
Windows - assuming these are "supposed" to be replaced at some point
Water Heater - likely to need a new one at some point
Furnace - likely to need a new one at some point
Kitchen - worn in areas, want to refresh
Earthquake Ties - more investigation needed.  Not sure if codes required the house to be bolted to the foundation
Exterior Trim Painting - need to do soon.  Can see some trim paint peeling.
More Efficient Washer/Dryer - happy with current ones, but they will break eventually
Drywall Garage - keep the garage a more even temperature, add better organization, and nicer visual.  Entirely a want
Kitchen Table and Chairs - have a small cheap table and chairs. Want a larger and nicer set
Nook Lounge - a few pieces of furniture to go next to the kitchen.
Shed sewer tie - drainage off the shed that is very close to the house is just run off into the yard.  Long term concerns on too much water eventually causing issues to the foundation.  Live in Portland OR, get a good amount of rain.
Garage drywall and insulation
Bed Frame and Night Stand - dont really have bedroom furniture currently, would to have some real furniture eventually.

former player

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #46 on: January 28, 2015, 02:16:17 AM »
As you are not in a hurry, you will be able to pick up the furniture (table and chairs, bed frame and nightstand, lounge furniture) for next to nothing by keeping an eye on on Craigslist, ebay, thriftstores, auctions and castoffs from friends and family.  Check out a site like Apartment Therapy for ideas on refinishing stuff.

Interior painting is cheap if you do it yourself.  Landscaping is hard work but not complicated (geotextile will be your friend for low-maintenance) so perfect for a mustachian to learn, and like painting it is a lot cheaper if you do it yourself.    Ditto attic insulation.

You should prioritise doing/paying for the work which contributes to the long-term preservation of your house.  I'd put it in the following order: gas fireplace (if it's a safety issue), painting external trim (this will be a recurring expense), earthquake ties (if needed), shed drainage (you might be able to sort this yourself with a bit of thought), siding, front door (you could hang curtains or blinds as a temporary measure).

"Permanent" flooring isn't going to happen unless you put in slate/stone - anything else will wear sooner or later.

colganc

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #47 on: February 03, 2015, 10:22:24 PM »
Insurance Update

I think I can cut $115 from my car insurance and $10 or so from home insurance.  Going to finalize the new insurance and get it setup over the mext week.

As I update my mortgage costs after refi, it is looking better and better.  I may be able to cut $450 per month.

I'm continuing to work on the food situation.  I had a bit of a back slide.  I had an expensive meal in the last day of the month, $125.  I am trying to expand my cooking range to prevent that in the future.  This week will have a mix of pork, chicken, fish, sauces, and grains.  I was looking for a sweet drink to replace desserts and found a cheap/quick "lemonade" mix.  Even with the expensive meal I spent less than usual, hope to continue the improvement this month.  Still shooting for the same goal mentioned above.

I will have to recount my actual and potential savings as I may actually be on track for cutting $1000 per month and meeting my goal.

colganc

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #48 on: February 03, 2015, 10:35:47 PM »
As you are not in a hurry, you will be able to pick up the furniture (table and chairs, bed frame and nightstand, lounge furniture) for next to nothing by keeping an eye on on Craigslist, ebay, thriftstores, auctions and castoffs from friends and family.  Check out a site like Apartment Therapy for ideas on refinishing stuff.

Interior painting is cheap if you do it yourself.  Landscaping is hard work but not complicated (geotextile will be your friend for low-maintenance) so perfect for a mustachian to learn, and like painting it is a lot cheaper if you do it yourself.    Ditto attic insulation.

You should prioritise doing/paying for the work which contributes to the long-term preservation of your house.  I'd put it in the following order: gas fireplace (if it's a safety issue), painting external trim (this will be a recurring expense), earthquake ties (if needed), shed drainage (you might be able to sort this yourself with a bit of thought), siding, front door (you could hang curtains or blinds as a temporary measure).

"Permanent" flooring isn't going to happen unless you put in slate/stone - anything else will wear sooner or later.

Would you consider ceramic tile as "permanent"?  Gas fireplace isn't a safety issue, a comfort and aesthetic thing.  The shed is semi attached to the house and with the poor drainage I am worried it may eventually cause an issue with the foundation (say over 15+ years).

ShoulderThingThatGoesUp

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Re: Reader Case Study: Cost Cutting, Reduce by $1000
« Reply #49 on: February 04, 2015, 05:16:54 AM »
You seem to have garage drywall on your list twice, under "Drywall Garage..." and "Garage drywall..."

Make sure you're not double-counting the estimated cost in your more detailed list.