How does anyone approach making cuts to their basic living expenses? What is fair game and what isn’t? How much can be cut? Will the cuts actually mean doing without something of personal importance or value?
I probably had all those questions in the back of my mind for a long time. And so for a long time I just cruised on a "fat" $25,600 in annual basic living expenses. But accidental (literally) things happened that gradually awakened me to the possibility of
significantly earlier financial freedom. And so, over a too-long ten-year period, cut by cut I brought my yearly basic living expenses down to $15,000. Which dropped my financial independence stash number by over $265,000. Which got me to financial independence
8 to 9 years sooner.So here is the story of my basic living expenses cost cutting. Compare it to yours if you are already doing your cutting. Look at it as one more real-life testimonial if you are still undecided about cutting. Because I am telling you that it is all good.
I was worried, too, about having to give up my house and live in an apartment, depending on public transportation or on an old beater car, freezing in winter or broiling in summer, eating a third-world diet, or putting my stash at risk from unexpected and catastrophic costs. But I learned that I did not need to worry. There were a lot of ways for me to trim down my basic living expenses WITHOUT making any significant sacrifices.
My Cost-Cutting Big PictureMy
present $15,000 budget is set out in detail in another MMM forum post, at
http://forum.mrmoneymustache.com/welcome-to-the-forum/how-i-live-well-on-$15k-a-year/ . Instead of repeating that in this thread, here is a closer look at how I took my previous $25,600 budget down to $15,000.
The steps I took to reduce my basic living expenses by 42% occurred over a 10-year period and, for the first few years at least, by isolated chance epiphanies. It was only after discovering MMM that I undertook a concerted cost-cutting campaign over a time span of less than a year to arrive at my present $15,000 basic living cost.
So here are the MONTHLY cost cuts to that original $25,600 budget,
in the order that they happened.
[] winter home heating* ^: $38 originally ===> reduced to $12
[] vehicle installment loan*: $150 originally ===> reduced to 0
[] home phone service*: $20 originally ===> reduced to 0
[] investing newspaper: $10 originally ===> reduced to 0
[] weekly maid service*: $200 originally ===> reduced to 0
[] home mortgage*: $500 originally ===> reduced to $120
[] life insurance*: $20 originally ===> reduced to 0
[] stockbroker commissions: $100 originally ===> reduced to 0
[] cable tv service*: $25 originally ===> reduced to 0
[] general electricity usage*: $130 originally ===> reduced to $113
[] credit report monitoring: $13 originally ===> reduced to 0
[] internet radio service: $3 originally ===> reduced to 0
[] pet food & cat litter*: $96 originally ===> reduced to $32
[] monthly total: $1155 originally ===> reduced to $277
By the time I was done, my annual basic living expenses had dropped by $10,536
without actually changing my lifestyle (except for each of us doing 2 hours a week of house cleaning.) Otherwise, I found a lower or no-cost alternative for every other budget line item that I cut.
And in so doing, I also "found" an extra 8 to 9 years of job-free financial freedom.
My budget optimizing is still a work in progress. I am pretty sure I can find other cost reductions. And each one of them will be another step forward. How is your cost optimizing going?NOTES:
* these numbers are my half-share of the expenses; my wife covers the other half
^ the home heating cost is amortized over the full year (12 months)
