Author Topic: Where can we cut our expenses?  (Read 2516 times)

Suba

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Where can we cut our expenses?
« on: April 16, 2013, 07:56:39 PM »
Hello everyone!

I am new to the forums. I hope I am posting it in the right section. I could use some Mustachian critique.

I thought I was reasonably frugal but this year we are going through a lot of life changes, the biggest one being buying our first house. Naturally we are scared. We want to make sure we are not wasting money and spending too much. We are immigrants, so we do not have anyone we could talk to regarding these things (some of our friends don't talk about money at all so it is awkward for us to bring it up, others talk about the latest Lexus car they leased and think we are stupid to have just one older car, so we choose not to discuss anything with them). I tried a financial planner, that didn't work out well either. He kept telling us we have to get rid of high interest debt first! We do not have any.

This is what we currently spend -

  • Rent :$850 (we are planning to close on a house soon, the PITI will be ~$1250)
  • Charity: $1000 (we do not tithe, this is mainly for supporting several mentally challenged kids)
  • Groceries: $200 (includes toiletries)
  • Dining out: $200
  • Car+renter's Insurance: $75 (our insurance went from $550 to $900 after we moved from CA to WA a couple of weeks ago. I have to shop around, I have got a few quotes and I comfident I can get it back to $550 or less. $62/year for renter's insurance.)
  • Gas: $50-$100 (if we take weekend trips)
  • Electricity: $50
  • Water/sewer/trash: $40 (This is standard bill, shared between 16 apartments in my building).
  • Cell phone: $160 (out of which $100 is paid by my husband's employer).
  • Internet: $45 (also paid for by the employer).
  • Clothing: $25
  • Netflix: $8
  • Coin laundry: $10
  • Misc.: $50 (any hobby stuff, non-reimbursible expenses while traveling for business)


Savings, that will be spent
  • Baby: $300 (we don't have a kid yet, this is for the future expenses. We would like to fund our kids' education till their undergraduate level.)
  • Our next car: $150 (Our current car is a 7 year old Honda Fit with 100000 miles on it. We would like to save ~$8000 for a new to us Honda when our car bites the dust.)
  • Parents: $300 (We send money to my husband's parents back home. They can live on their pension but we send this for them to have some savings in case they have a medical emergency. So far they have been saving this but we send this with the idea that we will never see it again.)
  • Health: $200 (copays, prescription meds. We don't spend this every month but I am not a very healthy person so we keep it like a separate health emergency fund to cover the entire deductible which is $2500 for our insurance)
  • Travel: $300 (want to increase this to $500 after we see how comfortable we are with the house payment)
  • Irregular expenses: $200 (car maintenance, any bump in insurance premium. Whatever is not used by the end of the year has been going into the down payment savings bucket, from now on we are planning to put it in the next car bucket until we get a suffient amount).

Will be added soon
Life insurance
Home maintenance savings

The rest of our income goes towards saving for retirement(50%), future real estate investment down payment(25%) and taxable investments (25%).

Some other (ir)relevant information
  • We are 31 and 32.
  • Our mortgage will be 1.5x our annual income.
  • We have emergency funds to cover 8 months worth of expenses, 12 if we cut down to real basics.
  • We do not have any debt. Yet. We will be taking on mortgage debt in July of this year.
  • My husband works from home, so the only "commute" is my volunteering part. We do take a long drives during the weekends.


I recently quit my job to volunteer full time. We don't want to create a situation where I will be forced to work because of our stupidity. This is our first home, so we are really thinking hard to make sure we don't spend more than we can afford.

My question is how can we cut our expenses any further? We are working on reducing the dining out budget to $100 a month. Other than that and the charity what else can we cut?

Thanks for any suggestions/comments.

Dynasty

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Re: Where can we cut our expenses?
« Reply #1 on: April 16, 2013, 08:25:57 PM »
When you move into a house, your utilities are going to go up quite a bit, but will be saving money on not having to go to the laundromat. Of course, might need to purchase a washer and dryer though.

Immigrants? E. Indian?

$1000/month on charity? I cannot imagine donating that much unless I was bringing home at least 250k a year.

plainjane

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Re: Where can we cut our expenses?
« Reply #2 on: April 17, 2013, 07:13:36 AM »
What is your take-home?  Why do you want to cut expenses?  What is your goal?  How much are these new bills going to be?  Where will you take the money from?

Have you looked into all the costs for housing?  How handy are you guys at fixing things?  I once heard to budget 5% of your house's value for maintenance (we live in a century home, so this is an important one for us - sometimes we're over, sometimes we're under, but it's good to know when the basement leaks that you can afford to have someone to replace the old cracked pipes between you and the city lines).

Your bills seem reasonable to me, especially if you're working on the eating out one, and I'm assuming you won't move on charity (does it have to be cash? can this be part of your volunteering?).

Some things to think about
- travel.  Can you visit (I'm assuming this is for trips to see family) less frequently? 
- money sent to parents. If this is for medical emergencies, can you hold on to it yourselves until they say they need it?  Or at least set a limit on how much they need, and then stop sending any?  That way it buffers _your_ emergency fund and gives you more options in case your partner is out of work.