Thriving on Less
February 20th, 2009. Filed under: Finance & Fitness Fridays.
It’s time for another installment of Leo Babauta’s Thriving on Less, a companion ebook to The Power of Less.
Chapter 6 – Look at Large Expenses for the Long Term
“I buy my freedom with my frugality.”
– Vicki Robins
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Once you’ve made easier changes, you can start looking at the big expenses. These are usually the items that take up the bulk of your budget: housing, auto, utilities, food, education, depending on your circumstances … the bigger ticket items. A change in any one of these expenses makes a big difference.
You could save hundreds of dollars a year by cutting out coffee and magazines, but you could save thousands if you had a cheaper car or house. Now, big changes like this are not so easy to make, but if you think about them for the long term, you can accomplish them. For example, if you decide you want to move to a less expensive house or apartment, you might not be able to do that this week … but in a few months, the opportunity to rent or buy a great place might come up and if you have your eye open for such an opportunity, you can make the move. And save thousands a year.
Some changes you might consider to lower large expenses:
Smaller house or apartment. This is probably the biggest expense for most people. For many years, a big house has been the American dream. But as we’ve seen recently, bigger houses aren’t necessarily better if you can’t afford them. They’re also harder and more expensive to maintain. And the thing is, we usually don’t need a big house, especially if we get rid of a lot of the clutter that
necessitates more space and more storage. (See The Power of Less book for more on reducing clutter, at ThePowerofLess.com). Keep your eye out for smaller houses or apartments – just what you need and not more. If you can keep things simple and uncluttered, you can live happily in a smaller space and save a lot of money.
Rent rather than own. This will probably spark a huge debate, as it always does. The thing is, just don’t assume that buying is the better investment. If you calculate the interest you pay on a mortgage, the cost of insurance and maintenance, buying is often much more costly than renting … and if you rent, save money, and then invest the difference, you can actually end up well ahead in
the long run. Now, it’s not a given, so do a comparison, factoring in all expenses.
Smaller or less expensive car. Do you have a big SUV or expensive vehicle that costs a lot of money? They’re a status symbol, to be sure, but they also cost a lot – in car payments, in gas, in maintenance. Look to trade your bigger or more expensive vehicle in and you can save a lot.
Closer location. If you currently commute a long distance to and from work, or to other places you go often, you might spend a lot of time commuting and a lot of money on gas. Consider moving somewhere closer to work (or working somewhere closer to home) to save money and time. As a bonus, you can also commute to work by bike if you live closer, saving money and burning calories
at the same time.
Reduced utilities. Utilities are always a big part of the budget, but you can reduce them: be more energy and water efficient, consider dropping your home phone and just using a cell phone, and possibly getting rid of cable TV.
Cheaper food. One of the biggest expenses for some people is eating out – the the average person spends well over $2,000 a year on eating out. Restaurants are expensive, including fast-food (not to mention the health hazards). It’s much cheaper to cook your own food. Our family creates a weekly menu, then we buy the groceries, and cook dinner (and lunch) each evening. Lately I’ve even been
prepping it in the morning, so it’s a snap when we get home. If you do eat out, look for inexpensive, healthy options, and of course go somewhere nice once in awhile. For lunch, if you normally eat out at work, consider brown bagging your lunch – you can save $1,000-2,000 a year.
Go with one car. Many families have two or more cars. Besides your house, your car is probably your most expensive item. If you can do with one, you should. My wife and I have six kids, and yet we have learned to manage with one car. You might have other large-ticket expenses in your budget … take a look at them and do a little thinking and research to see if you can reduce the cost somehow. If you do this gradually, one thing at a time, it won’t be so difficult.