Reducing Monthly Expenses
When it comes to making ends meet, you basically have two choices - increase income or reduce expenses. Having chosen to retire, it's a given that the income will actually be reduced, for a while, anyway, while waiting for Social Security full retirement age (FRA). And I can't depend on steady freelance income, so I structured our current budget to pay all of our expenses as if I had no other income at all. So in order to put off taking Socal Security payments and drawing on our annuities, we had to take a good look at ways to reduce expenses.
The very first thing we took a look at was eliminating waste. One of the bad things about our lifestyles nowadays is the sheer amount of things that we waste: time, food, you name it. Because we are so busy trying to get things done and live extremely busy lives that we often make hastily planned meals and fail to carefully watch what we buy. How many times have you gone to stores like Costco and bought huge amounts of something, only to take it home, forget that you bought it, and then finding out that it was expired when you finally decided to use it? We are now doing a much better job more carefully planning meals, eating all the leftovers, and just overall watching what we buy. You would be amazed at how many meals for two people that you can actually get out of a pound of ground beef!
I found this recent video by a YouTuber that I follow, "Prepper Princess," and saw some validation for things that I had already done, and even some new ways to further cut costs. Don't let the title of the video alarm you, however. She actually has quite a bit of money. But she is very much into eliminating waste, living well within her means, and having savings for retirement.
There are a lot of things that can drastically reduce monthly expenses by simply cutting out unnecessary bells and whistles with things like cell phone plans and insurance. Prior to watching her video, I had already cut our cell phone plan. When we first purchased our plan, we got the big 22GB/month shared data plan, thinking we would need it. I took a look at how much average data we were using per month, and it didn't even come close. Even while I was still working, I didn't use much data because I was able to connect to WiFi nearly everywhere. We were simply paying for way too much data, so I chopped our plan down to 3GB of high-speed data on each line, which is still plenty. That alone took $40 a month off of our bill.
Car insurance was also another big one. Now that I am not working in an office, I really don't need rental car coverage. Virtually all of my freelance and financial coaching work can be done from home. The cable TV will be the next to go when our contract is up. We just don't watch TV much, anyway. As Prepper Princess mentions in her video, there are simply some way cheaper (and FREE) alternatives available with the streaming channels as long as you have a good Internet connection and a Roku box. Speaking of which, you don't need to pay for the 300 megabits per second plan, either.
Utility expenses can be saved by simply turning off the lights when you don't need them. Additionally, many utility companies offer what is known as an "Average Monthly Payment" (AMP) program to make your bills the same every month. They take the amounts of your bills throughout the year, average them, and come up with a monthly payment that is always the same amount. This does wonders for budgeting! The amount is always the same every month instead of being extremely high during the months when you use the most energy. At the end of the year, they simply true up the amounts, and/or adjust your new AMP monthly payment amount. Over the last five years or so, our AMP payment has changed by only a few dollars each time.
And last but not least, take a look at your mortgage. If you are still paying huge interest rates, take a look at refinancing. You may be able to even refinance down into a 15-year mortgage and pay off your house much sooner than you thought. Getting rid of a house payment is a great way to retire! And along those lines, take a look at getting out of debt altogether.
After all is said and done, we were actually able to greatly reduce expenses and make our new income sources work without me worrying about getting another full-time job or drawing on Social Security or our retirement annuities earlier than we had planned.
Since "retiring" from my old 9-5 job, my new endeavor is building a coaching practice that allows me to help main-street families earn more income, become properly protected, debt-free, and financially independent. Ask me how I can help!
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