A new reader, Chantelle (welcome!) asked a question:
How do you manage to save up $2,000 a month? After spending my hard-earned $$ on utilities, food, gas, car payment, car insurance and other expenses, i’m left with half that amount! Do you have any tips? (And eating at my parents’ place is not an option, since they live 15,000 miles away!).
Here are 10 reasons I can save $2,000 a month – they have to do with spending discipline, some hard work, but also a lot of luck.
The big stuff:
1. I work in a field that has relatively high entry-level salaries. I net ~$3,800 a month. So, I have discretionary income to save. If I were to change careers, it’s unlikely I would be able to match my current salary just starting out.
2. My major fixed expenses (rent and car) are relatively low. I share an older apartment in an okay neighborhood. I drive an old car that is reliable, reasonably gas-efficient, and most importantly, paid off. My only car-related costs are insurance, gas, and repairs.
The smaller stuff:
3. I have no cable, and do not pay for any type of monthly subscriptions except for high-speed internet. Along that vein, I also have no expensive electronic items.
4. I don’t spend that much money on clothes or shoes, and recently have stopped pretty much cold-turkey. I do still have some gift cards that I expect will tide me over for a couple months.
5. I’ve started cooking at home instead of going out to eat every weekend. I almost always bring my lunch to work. I also don’t go to bars very often (when I really feel like a splurge, I buy a bottle of Godiva chocolate liqueur).
6. I write this blog. Seriously, it works for me.
But, I’ll be the first to admit that I did not get here alone – my parents helped (and continue to help) me a lot, especially with a lot of the “start-up” costs. And here’s where the luck comes in:
7. My parents paid the bulk of my college tuition so that I only had to take out ~$20K in loans.
8. Whenever I go home, I get free food and free laundry. I am still on the family plan for cell phone, which Mom pays for. Those costs add up.
9. Dad gave me his old car (and did a whole bunch of repairs beforehand), so I didn’t have to spend money to buy a used car.
10. Last, but definitely NOT least, I am healthy.
So there you have it. As for money-saving tips, I guess my biggest tip is to lower fixed expenses. Rent, car payment, credit card payments, insurance, etc. Lower them as much as you can. That’s what has helped my bottom-line the most. Not traveling would also help me save more money, but there comes a point where you gotta live a little.
Readers, what are your suggestions for Chantelle?
You May Also Want To Read :
1. rent 2. auto insurance 3. high-speed internet 4. health insurance 5. student loan repayment ( ...
Have you heard? Consumer confidence is down. Foreclosures continue to rise. The whole de-leverag ...
Well, I thought that because I don't have a car payment the cost of owning and operating a vehic ...
{ 2 trackbacks }
{ 12 comments… read them below or add one }
Track your spending if you don’t already, and identify where you can cut back. There may not be anything immediate if you already are frugal, but rent and car payments and debt payments are things that can eventually be lowered.
But you may find that there are some areas you are spending more than you think.
Keeping a budget definitely helps and, like SP said, it begins with tracking your spending. Mint is a useful tool, I have introduced some friends to it and they couldn’t believe what their spending actually was! (Some were spending $600/month on groceries/dining out/trips to 7-11…)
Maybe see where you can cut back. Do you have a habit of getting a $4 latte/mocha every day? Do you go out to eat for lunch every day? Etc, etc…
As always, great post!!
I have found that writing everything down in a notepad has helped me stay on track (the husband is always on track). Kinda like blogging your expenses, this makes you responsible. We had Mint.com, but unfortunately, it didn’t work as well for me to track it on there. If I’m physically writing down a $5.00 cup of coffee, I may reconsider buying it.
With that said, I pretty much cut out lunches out and coffee at Starbucks. It’s true that it adds up quickly.
You were a lot luckier than I. My parents never paid for my tuition nor my cellphone bill, or gave me a car. I even paid for my own citizenship test!!!!
But all that you’ve listed – is exactly what I’ve done too (other than the parent-helping stuff)… and add in there $60k of debt in the start of my life, and you can see why it’s so true that blogging really helps people get out of debt.
I think the job and renting part says it all. I don’t make enough to save that much even if I wasn’t paying for room and board…at all!
But I own my own home with comes with a world of money issues you don’t have to deal with while renting:
buying costs: outside of the principle theres interest, mortgage insurance (if needed), inspection, and fees you pay when buying the home.
taxes (HUGE in TX and apparently in CA where you are)
repairs: You can take care of it, or try to go through insurance.
Speaking of which, insurance: MUCH more for owning than for renting.
Maintenance: HOA fees, taking care of the yard, etc. (I just had to landscape the backyard by HOA mandate to the tune of $2,000)
Other things that may be covered by landlords: sometimes they pay for utilities or garbage, etc.
All in all I pay about 400 more a month than I did when renting…and I have to drive further to work since NO WAY could I afford a HOME as close as I was renting. So add gas to that too.
Keeping fixed costs low is key. You don’t HAVE to spend 30% of your income on rent. You don’t HAVE to have cable or internet or even a cell phone, you don’t HAVE to even have a car in many places. Sure, it’s OK to have all that stuff – if you can still afford to save on top of everything – but if you can’t, then you might want to rethink some fixed costs.
Rent and income are Wanda’s 2 major factors. Rent is the one that’s universally applicable. Live WELL below what you can afford and you’ll save a fortune.
I lived for 2 years in a college apartment; it was fully furnished, and rent included all utilities, including cable, internet & local phone, with individual leases for the 3br apartment. It cost me $300/month less than what I’d pay for just rent at an average 1-br apartment, and probably $500/month less than what I’d pay when you roll in util’s and added features.
This will give you an idea of what I’m talking about: http://www.theplacetolive.com/
I didn’t have to pay for: any utilities, a gym (apt had one), a pool (apt had a very nice one), etc. I did have to live with 19 year olds so that’s really the only reason I moved out when I did. If I’d stuck it out 2 more years I’d be $10K richer.
Writing that, I feel ashamed I couldn’t do it for 2 years more than I had!
It is MUCH easier to control one big expense than to fight with spending on lots of little expenses.
Others:
(1) Learn to cook in the thrifty Midwestern housewife kind of way – how to reuse things, and how to be efficient with your time.
For example, if I stuff and roast a chicken on Sunday, I’ve got dinner for 2; a pair of lunches; then I pick the wings & carcass clean to make chicken noodle soup. The celery left over from making the stuffing goes into the soup too.
Many of the same vegetables that go into a stir-fry are also suitable for a pasta primavera. This helps ensure veggies don’t go bad before you eat all of them, while still giving you a variety of tastes during the week. But, if I chop all the veggies at once, I save time on the 2nd night.
Freeze cookie dough. I’m trying to maintain my college weight, so I don’t want to eat 6 dozen cookies before they go stale. I bake half and freeze half. In fact, I’ll thaw what I’ve got stored, so I can make cookies for my dinner date tomorrow.
You’ll save money, time, and develop an essential skill that will wow any potential boyfriends. Oh, yeah, when I bring cookies to my guy friends I generally get offered a free drink. So, cooking saves via reciprocity too.
(2) Stay a consistent size. If your weight fluctuates, you’ll spend more on clothing to accommodate your changing figure. You’ll also look more attractive in more things, so you won’t have to spend money on figure-fixers, and possibly reduce your need to pay for alterations. It’s also helpful if you know you’ll fit into your interview suit the next time you need it, rather than being faced with shelling out a couple hundred bucks when you find that you’ve gone up or down a size.
I’ll give you that saving is hard and I’ll reiterate what some of the other readers have said while putting my own spin on it. I have a somewhat unique situation where I’m in grad school and I work full-time but I’m taking out minimal loans while in grad school. Unfortunately, for me, being in a masters program doesn’t give you a lot of funding options (aside from yourself and loans) so that means I’m shelling out something just over $4k a class. This is a fixed cost for me, but my mother has also instilled a sense of savings so while I manage to shell out half my tuition every quarter that means my loans are significantly lower than what they would be if I were to just rack up some crazy bills. This also means that by the time I’m out of grad school I’ll be less than $40k in debt (including undergrad) which is really not so bad considering I have gone to those stupidly expensive schools (typically ~40k/year full time) both for undergrad and grad school. Now all this background does have a point.
I’ve managed to work out a budget for myself where, while I have deferred my undergrad loans, I am still chipping away at them with my monthly payment (it’s just coming straight off the principal because I’m in deferment, which ends up working out well for me also my consolidation company is one of the better ones and doesn’t charge for early/extra payments). I also have 2 roommates in a somewhat shadier apartment which makes rent *super* cheap and keeps utilities down in a phenomenal neighborhood. I also use public transportation/bike (biking also helps you stay in shape) everywhere to cut down on fuel costs and makes my monthly gas/getting-around-town expenses under $100, which I know can be hard to do if you don’t have good public transportation. If you keep your basic living costs, like housing and transportation, you can save *a lot* more than you think you can (even if you don’t watch some of the smaller expenses like food costs etc, like myself) and it also gives you an allowance to splurge every once in a while just for fun.
I think that your savings plan is fantastic! 2K a month. It’s definitely inspiring.
What helped me to trim down spending was track all purchases and then set ceilings on spending in those areas. I also did the basics scale back on things (cable, cell phone plans…) and then cooking all my meals instead of eating out has helped.
Insurance, gas and repairs, huh? That’s it!?? Fantastic. We should all look to your example to lead us to higher savings! Good for you.
Jerry
http://www.leads4insurance.com
Thanks Well-Heeled. I just now got around to reading your post. You really inspire and motivate me to track my expenses and try to turn a blind eye towards all the shiny purses and shoes I lust after!
You said the main point in the beginning… Low rent and car and high income