Case Study - Please help lower my expenses

[TFB]

Life Situation: 35 years old, married with 1 kid (1 year old), live in Southern California

Net Income: $75,000 ($85,000 gross salary and $7,000 in interest income)

Current annualized expenses: $54,500 (this includes health insurance COBRA premiums) 

Annual expenses include:
$700 Automotive
$4,500 Charitable Gifts
$267 Credit Card Fees (have several for travel hacking)
$600 Dentist (no dental insurance so we pay out of pocket for teeth cleanings)
$500 Entertainment
$3,400 Food & Drink (eating out)
$1,000 Gas
$12,000 Groceries (this includes diapers, TP, etc.)
$1,800 Health/Wellness (Gym memberships)
$13,500 Housing (rent)
$2,000 Car and Renter's Insurance
$8,200 Health Insurance Cobra premiums
$540 Internet
$2,000 Merchandise (Amazon, Target, household items, gifts, etc.)
$70 Other
$60 Parking
$550 Phone (Mint Mobile)
$1,000 Gas and Electric
$780 Storage
$1,000 Travel

I would like to optimize my situation by decreasing expenses and would appreciate any advice.  I realize my grocery expenses are high and am looking at bringing these down.

[WheresMyMule]

27%(!!) of your expenses is groceries and eating out. That is insane. Meal plan, shop at Aldi, stop eating out. Cloth diaper, make reusable baby wipes for the pee diaper changes.

Your car insurance is very high, also, have you shopped that around?

Your COBRA is time limited. Have you looked on the exchange to see if you can get better/less expensive coverage?

Sent from my Pixel 2 using Tapatalk

[TFB]

27%(!!) of your expenses is groceries and eating out. That is insane. Meal plan, shop at Aldi, stop eating out. Cloth diaper, make reusable baby wipes for the pee diaper changes.

Your car insurance is very high, also, have you shopped that around?

Your COBRA is time limited. Have you looked on the exchange to see if you can get better/less expensive coverage?

Sent from my Pixel 2 using Tapatalk

Thanks for the suggestions! Unfortunately, there is no Aldi nearby but I know if we do more meal prepping and less eating out we can lower this. Any good sites or online resources to point me for meal prepping ideas?

My wife is currently staying home with our child but if she goes back to work we won’t qualify for lower rates on the exchange in CA. When Cobra expires, we’ll be looking into alternatives such as Medishare.

[ysette9]

You are in CA which means you can shop at the best grocery store ever: Trader Joe’s! Do that starting next trip and you should easily be able to get your groceries down by half. TJ’s is designed to make it easy for busy families to easily through together meals at home for not too much money.

Hell, no need to even suffer through cloth diapers. Just get sales from Target and/or a Target credit card for an additional 5% off. How much would you be spending on travel without travel hacking? That is a lot of money on credit card fees, so you should really be adding them into your travel line item.

[TFB]

How much would you be spending on travel without travel hacking? That is a lot of money on credit card fees, so you should really be adding them into your travel line item.

We did Southwest business ($99/year) and personal card ($69/year) this year to get companion pass. I also have SPG card which is also $99/year but gives us free hotel night each year. The Southwest cards pay for themselves as we travel back to see family for the holidays and covers one persons flight. I did look at other cards and realize we can cancel them to get fees down to $267/year so I’ve updated these numbers above. Will also cancel southwest cards next year.

[Freedomin5]

In SoCal, the cheapest grocery store I found was the local Mexican one. I still remember $0.99 for six avocados! I ate a lot of avocados while living in SoCal. The 99 Cent Store also sold cheap groceries. A dozen eggs for $0.99. Milk for $0.99. I picked up a lot of staples there.

Check out the “grocery bill under $200” thread on this forum. Also, several forum members like the Budget Bytes website for cheap and healthy meal ideas.

Also, why are you paying $780 to store things? Get rid/sell off those things. If they’re in storage, you’re obviously not using them right now.

[TFB]

Check out the “grocery bill under $200” thread on this forum. Also, several forum members like the Budget Bytes website for cheap and healthy meal ideas.

Also, why are you paying $780 to store things? Get rid/sell off those things. If they’re in storage, you’re obviously not using them right now.

Great resources. Thanks so much!

We’re paying to store baby clothes and baby items in hopes for another baby in the next year. We have several bags of hand me down clothes that would add up quickly if we purchased them. I agree, I hate paying for storage but view it as part of our housing expenses as we have a small condo we are we will quickly grow out of as our family expands. This is probably me justifying the expense though.

[ontheway2]

Check out the “grocery bill under $200” thread on this forum. Also, several forum members like the Budget Bytes website for cheap and healthy meal ideas.

Also, why are you paying $780 to store things? Get rid/sell off those things. If they’re in storage, you’re obviously not using them right now.

Great resources. Thanks so much!

We’re paying to store baby clothes and baby items in hopes for another baby in the next year. We have several bags of hand me down clothes that would add up quickly if we purchased them. I agree, I hate paying for storage but view it as part of our housing expenses as we have a small condo we are we will quickly grow out of as our family expands. This is probably me justifying the expense though.

$780 can buy quite a bit of used baby gear. You also don't know the sex of a possible future baby, so paying to store clothes seems not wise. Do you know anyone else with a baby now that might want to use any of the items and return to you when no longer needed?

Obviously, food needs to be cut drastically. I feel our budget is a little high, and we spend ~$800/month all in for 4 including a teenage boy. The USDA moderate budget for your family is $738.68/month and is, personally, rather liberal. Reducing just to that is a $6500 savings/year.

https://www.cnpp.usda.gov/sites/default/files/CostofFoodJan2019.pdf

[TFB]

$780 can buy quite a bit of used baby gear. You also don't know the sex of a possible future baby, so paying to store clothes seems not wise. Do you know anyone else with a baby now that might want to use any of the items and return to you when no longer needed?

Obviously, food needs to be cut drastically. I feel our budget is a little high, and we spend ~$800/month all in for 4 including a teenage boy. The USDA moderate budget for your family is $738.68/month and is, personally, rather liberal. Reducing just to that is a $6500 savings/year.

https://www.cnpp.usda.gov/sites/default/files/CostofFoodJan2019.pdf

Great points!  In storage is also some sentimental furniture from my wife's childhood years that she wants to pass on to our kids.  While she claims you can't place a value on these items, I beg to differ and would prefer not to have storage.  Either way, this will be temporary as we plan on getting a house in the next year or two and we'll stop paying for storage. 

You're right about the food category.  I see this as our best opportunity to save money and we need to do a better job at planning out meals and grocery shops.

[kroozin]

Any good sites or online resources to point me for meal prepping ideas?

I recently started meal prepping myself in an attempt to cut down my food spending. I'm a completely inept cook, but I'm determined, so I wanted to start as simple as possible. I highly recommend checking out budgetbytes. In particular, if you're bad at cooking, these are extremely simple and easy: https://www.budgetbytes.com/15-single-recipe-meal-prep-ideas/

So far I've made the sausage/sun dried tomoato pasta, the Southwest Chicken Skillet (twice), Penne Pasta with Sausage and Greens, and the Chicken Yakisoba. Each one cost me less than $2 per meal, and they were all delicious, even reheated later in the week. I'm starting to branch out now, but that site is a great resource for easy recipes and tips for meal planning.

[FIREsigns]

Not going to address the food/meals out, but agree with all other posters. The items that stand out to me are the gym fees, the $3,000 "merchandise" line item, and the charitable contributions.

1) Gym: once you know how to use the weights and equipment, you can get a great workout at any gym. Spending $150/month for working out is a big flush. I realize it may be for two, but it's still too much.

2) Can you break out the "merch" line item? That's a lot of dough.

3) Somewhat reluctant to question one's charitable donations, but can you pull back temporarily?!

[BicycleB]

Impressively low auto expenses - good job there!

Is your renter's insurance necessary? What does it cover that you couldn't pay out of savings or cash flow if needed?

I agree, eat out less. Cut 50% the first year, 40% of what's left the next year, etc if you want to ease into it.

The grocery thing is huge, work on that the most. It will pay. Soon it will be fun. Then it will become routine... a thrifty, tasty routine.  :) 

The above can raise your savings rate probably close to a third or half above where it is now.

Merchandise & gym - agree savings are likely possible there. Note you can buy weights off Craigslist and use them forever, or sell them when you move. Baby stuff can often be found as hand me downs, I'm told. Some types of "merchandise" show up pretty well on BuyNothing groups... you could join one, donate your used stuff, get other people's stuff that suits you. FOR FREE!

There are usually exercise threads in the Gauntlet section. Some of them list sources of free workouts (body weight workouts, etc if you don't have room for a weight rack). A few hundred dollars for equipment could last you for years of buffness! Or zero dollars, if you do the body weight thing. Your effort level and consistency make a lot more difference that specific equipment; you can get be healthy, thin or even ripped on no money. And your dwelling is a shorter "workout" commute than the gym, saving time.

The thread below may not have occurred in 2019, but many of the resources in the fourth post are still available online.
https://forum.mrmoneymustache.com/throw-down-the-gauntlet/strength-fitness-2018/

[feelingroovy]

You have some very low expenses in some categories and some fat to trim in others.

When we we're in a bad eating out habit, we just gave ourselves a hard limit: $100/month. For four of us. Now that we're out of the habit, we just don't even hit that usually.

What is merchandise?

[TFB]

I recently started meal prepping myself in an attempt to cut down my food spending. I'm a completely inept cook, but I'm determined, so I wanted to start as simple as possible. I highly recommend checking out budgetbytes. In particular, if you're bad at cooking, these are extremely simple and easy: https://www.budgetbytes.com/15-single-recipe-meal-prep-ideas/

So far I've made the sausage/sun dried tomoato pasta, the Southwest Chicken Skillet (twice), Penne Pasta with Sausage and Greens, and the Chicken Yakisoba. Each one cost me less than $2 per meal, and they were all delicious, even reheated later in the week. I'm starting to branch out now, but that site is a great resource for easy recipes and tips for meal planning.

Great, thanks so much for the link!

[TFB]

Not going to address the food/meals out, but agree with all other posters. The items that stand out to me are the gym fees, the $3,000 "merchandise" line item, and the charitable contributions.

1) Gym: once you know how to use the weights and equipment, you can get a great workout at any gym. Spending $150/month for working out is a big flush. I realize it may be for two, but it's still too much.

2) Can you break out the "merch" line item? That's a lot of dough.

3) Somewhat reluctant to question one's charitable donations, but can you pull back temporarily?!

What is merchandise?

Merchandise includes all Amazon, Target and mostly other purchases.  This includes household items, toiletries, gifts, etc.  I took the last two months of spending and annualized it in this category but after looking back there were a lot of items that we would not be purchasing each month (for example batteries, computer paper, some health supplements) so I've lowered this to $2,000 which admittedly still seems like a lot and an area to keep my eyes on for opportunities.

[TFB]

Is your renter's insurance necessary? What does it cover that you couldn't pay out of savings or cash flow if needed?

Thanks for the great feedback and advice!  The renter's insurance was added to bundle our policies together.  The savings of adding the renter's insurance and bundling the policies offset the renter's insurance premium so by adding it and bundling the policies we're getting it at no cost.