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Taking A Hard Look At Expenses In Order To Boost Savings

25 November 2009 13 Comments

In my recent post, Planning for Various Expenses [Nov 19, 2009], I talked about the different kinds of expenses, the best ways to manage them and prepare for them and how it relates to overall savings targets.  I’d like to continue the discussion here, looking into the specific expenses in my life.

First, my savings goals are at least $15,000 a year.  Most of this will come from additional income, i.e. sales commissions, but the more I can have left over from my base income from my regular expenses, that obviously helps.  Currently, I spend between 90% and 95% of my monthly base after-tax income on monthly expenses (includes tithing).  This leaves between 5%-10% in savings.  The goal is to boost this.  As such, I must decrease expenses since the base income part is fixed.

I’m going to break out my expenses into the following categories:

  1. Residence – Includes mortgage/rent, property insurance, property taxes, HOA dues, home maintenance, utilities (power, water, TV, internet, phone, etc.), lawn care, etc.
  2. Food & Essentials – Includes groceries, eating out, toiletries, baby food, diapers, etc.
  3. Personal Care – Includes dry cleaning, hair cuts, gym membership, grooming, etc.
  4. Lifestyle – Includes entertainment, alcohol, buying clothes, buying electronics, cell phone, buying furniture, etc. (the nice-to-have non-essentials)
  5. Pet – Dog food, vet bills, etc.
  6. Auto – Car payment, auto insurance, gas, maintenance, etc.
  7. Financial/Insurance – Life insurance, etc.
  8. Other

My goal over the coming months is to figure out how to shave a few dollars off each area in order to get my expenses down to about 85% of my after-tax monthly income which would result in saving about 15% of my monthly income.

Here are a ideas for each category:

  1. Residence – Consider getting rid of cable, consider buying a lawn mower instead of paying for lawn service (cash outlay required for lawn equipment of approximately $300; monthly savings of $180)
  2. Food & Essentials – Stop eating out for lunch; be much more smarter about planning meals (Estimated savings of $150-$200 per month)
  3. Personal Care – Get rid of gym membership – running and pushups will suffice (monthly savings of $70)
  4. Lifestyle – My lifestyle is pretty barebones right now other than eating out which I addressed in point #2.
  5. Pet – Unfortunately, unless we get rid of our dog (which I have considered), we’re stuck with some expenses here which drive me nuts.
  6. Auto – No car payments, but we could be possibly more efficient with combining errands (Estimated savings of $20 per month)

In those main categories, I’ve identified approximately $420 to $470 in monthly savings.  This would easily get me into the 15% range of savings each month which I mentioned is my goal.

Am I willing to adjust my expenses to accomplish this?  It would require me to mow my own lawn each week (about 30-45 minutes per week).  This is very do-able.  The hardest thing will be to alter my spending on food.  I will have to enact serious discipline on this one.  Giving up the gym is a no-brainer, I run most of the time anyways.

The other thing that I hate spending money on is dry cleaning.  I wear my shirts several times before getting them dry cleaned, but I still hate forking over $50-$60 each time I go in (probably once a month or every 3 weeks or so).  But, I guess I’m stuck with this until I work for a company that doesn’t care about dress code or become self-employed.  Got any tips for minimizing dry cleaning expenditures?

Please read my previous post, Pursuing Complete Independence [Nov 23, 2009] for more details on my overall financial plan and where the $15,000 in monthly savings fits into my overall goals.


  • Daniel said:

    What do you think about changing your cell phone plan? I've had a lot of success negotiating with AT&T, and have saved about $50-$60 a month. A lot of times you can find codes for free minutes. For a family of 5, we are paying under $100. In 2 months, we went from the 2,100 minute plan to the 700 minute plan, without cutting back on our usage.

    Do these figures include retirement savings, or is that coming out pre-tax so you don't count that?

  • 20smoney said:

    Yeah cell phone is an area where lots of people can save significantly. I've heard of some people going the pre-paid route and saving huge amounts of money.

    Yeah, for me, this includes retirement savings because I don't have a 401k so nothing is pre-tax.

  • Josh said:

    90 – 95% of your base take home is extremely high. Perhaps you should down size your residence? My personal goal is 60% of my take home towards bills and expenses. Currently I am at 69% and am running out of ways to cut. Savings I contribute just enough to my 401K to get the company match, then save 10% of my take home pay, putting me around 16% of my salary.

    Savings I keep in buckets as you call them but not for specific type of expenses. I rather have short term, midterm, and long term savings each with specific amounts and uses. I keep a short term slush fund bank savings account of $1,000. I keep it exactly at that and never go over. It is only there to provide short term emergency use. Washer / dryer go out, car needs sudden repair, etc. My midterm savings is a high interest online savings account where I am trying to keep 3 to 6 months of my salary. This is my Oh S*** account. Never touch it, just there for peace of mind. Lastly is long term savings kept in broad ETF indexes. I have no cap on this one and if the other buckets are full then the full 10% goes towards it. It is my wealth builder account and will remain invested until I find a better opportunity for the money.

  • 20smoney said:

    Josh, are you married and/or have kids?

  • Josh said:

    Both, married with one small daughter age 5

  • 20smoney said:

    Awesome! You're definitely in a great position with your expenses.

    With regards to the 90-95% of my base pay, I rely fairly heavily on commissions which end up being about a 25-30% of my overall pay, but again they are not constant, so I try and calculate expenses based on the base pay, then pile most of my bonus/commissions straight into savings.

    Thanks for the comments.

  • Zai said:

    Some of your dress shirts( that's what I'm assuming is getting washed a lot) can be washed, and then starched at home. it's really a pain and takes some practice, but that would save you a $1-2 per shirt. As for suits, you only really need to dry clean the jackets quarterly, and the pants more frequently.

  • Working Rachel said:

    I suspect you’ve got a lot of room for trimming, but an obvious first step to me would be to ditch the lawn service. The lawn equipment will pay for itself in less than two months and you or your wife will be spending more time outdoors doing physical activity (making the gym membership less necessary).

  • Moe said:

    I used to own a lawn care service. In theory (in some parts of the country at least) it should be cheaper to have someone else mow your lawn, but in reality that isn't always the case. A standard, consumer model walk-behind mower is relatively inefficient and offers poor reliability and longevity when compared to a commercial riding mower (this was the case 10 years ago at least, perhaps not now). Anyway… the point is comparison shopping lawn services might allow you to realize some savings and not have to buy your own mower.

    As for shirts, I wear Land's End No Iron Oxfords, and they seem to work out well without using the cleaners. The no-iron thing wears out eventually, as does the shirt itself. I generally get about 12-18 months out of one. I buy 6 business outfits and rotate them sequentially. Some of my work contacts always occur on a wednesday or friday or whatever– I don't want to have an outfit linked to a specific day of the week, and I don't want to have to repeat the same outfit during a week, therefore 6 outfits are needed. This also makes shopping more efficient, since I only shop to replace a worn out item– rather than the guesstimate of "I think I need a few more shirts…."

    Perhaps you can get your auto insurance costs lower by either comparison shopping, or altering your coverage somewhat.

  • ParisGirl111 said:

    I cut my cable off and watch tv online through Hulu. I also switched my cell phone carrier to Straight Talk. They use the same towers as Verizon and have the cheapest rate I have seen on unlimited minutes – $45. Not sure if that would lower your costs any?