How I Eliminated $5000/year in Spending in One Afternoon

It seems that at the end of every year I do two things:

  1. I go through my email and unsubscribe from a bunch of promotional newsletters I never buy from
  2. I take a look at all of the recurring monthly charges in my accounts and eliminate as many as possible

This year was no exception. When looking at money though, I looked at 3 different areas:

  1. What am I paying for that I don’t use?
  2. What am I paying more for than I need to be?
  3. What spending am I not accounting for, and where is it going?

I’ll break down where I landed in each area.

1. What am I paying for that I don’t use?

This one was easier than it seems. I have 1 credit card and 1 debit card that I use to pay for monthly recurring charges that aren’t the day-to-day household things like electricity, cable, etc.  In reviewing those charges I found the following:

  • $10/month for a web site I subscribed to 4 years ago to get content. Haven’t used new content in at least 2 years (and much of what they offered is now free)
  • $16/month in contact management service that I don’t use anymore. I did a free trial. Liked it. Tried it a few months and then lost interest.
  • $20/month for a monthly underwear subscription service (it seemed like a good idea at the time)
  • $15/month for a social media cleaning service that I use roughly 2x/year (will now just pay for 1 month, clean my Twitter account then cancel)
  • $8/month for LegalZoom – I needed 4 or 5 release forms and the monthly fee was cheaper – except I never cancelled and have been paying for it for 2 years.

Savings: $69/month (or $828/year)

2. What am I paying more for than I need to?

We get complacent about monthly charges. In this area, I looked at all of our household expenses – car insurance, homeowners insurance, investment accounts, gas & electric, cable, etc.

Insurance

Insurance is one that we generally just ride out. I took a few minutes and looked at our car insurance first. We currently spend $222/month for 2 cars with Progressive. My first step was to call them and have them do a review to see if they could save us any money. Turns out they couldn’t. We had every discount available.
Next I called Liberty Mutual, who has our homeowners insurance. All in all we could save about $10/month on car and another $75/year on homeowners. Not bad at all, but I wasn’t done. I took a look at all of the discounts Geico offers and realized we qualified for more than we had last time we looked. We did a quote with them online, and then called to ensure it was accurate (it always changes a bit when they have your VIN and Driver’s License numbers). $191/month – or a savings of $31/month.
My other half, Brian, just started working for the Department of the Navy, and is a Navy veteran, so we took a quick look at USAA since we will qualify. Unmarried they are a match with Geico at $191 but married (which we have planned for January) we drop to $182/month – a $40 savings over Progressive.  Jackpot.
For homeowners, USAA’s quote site was down, but we plan to look into consolidating there once we get the car insurance moved.

Gas & Electric

We’ve done a pretty good job in this area. I converted all of our landscape lighting and most of our interior lighting to LED over a year ago so our kWh usage is significantly lower there. We’re also good about not leaving things running. However, I took a look at SDG&E’s web site to see what they analyze our usage at. Turns out, the pool pump is our biggest culprit.
Our pool service has had the pump running 12 hours a day for the last 3 years. This was their optimal.  We have a two stage pump, so it runs on the lower cycle, but that’s still over 1/3 of our electric bill. SDG&E recommends 4-6 hours of regular run time, ramping that up when the pool has heavy usage in July, August & September.  We cut it back to 6 hours to be on the high end of that and the first month saw a $30 decrease in our electric bill.  Our gas bill is ridiculously low and we have a NEST Thermostat, so no issues there.

Cell Phone

We’ve had Verizon forever and my work gives us a decent discount. However, they revised their discounts and AT&T became the preferred provider with a whopping 27% discount. Worth looking at.  In the end, for the same service we had with Verizon we were able to go to AT&T for $13/month less. Not a huge savings, but it adds up.

Other Accounts

I did a review of our investment accounts, bank relationships, credit cards, cable internet, DirecTV, etc. and found that they are all pretty optimal. We can cut $10 from DirecTV for instance, but we would lose 3 channels we watch regularly. So not worth it for us.
Savings: $83/month ($996/year)

3. What spending am I not accounting for and where is it going?

This is the trickier. I use Simple for banking and they have some great category reporting features. Turns out it was fairly easy to find – 10% of my spending is on food & drink. We love dining out and enjoying great wines, but it’s amounting to almost $600/month just from my personal account (not to say what we spend from the household or what Brian spends). The real culprit there, though is lunches.
The average lunch during the week costs me $10. So $10 x 5 days x 4 weeks/month = $200/month in LUNCHES. I know that doing grocery shopping and bringing lunch most days runs me about $4/lunch – or $80/month. Saving $120.
The rest is our dining out cost, so we’re looking to trim that back, ideally cutting it in half to about $200/month. Hopefully reducing $600/month in spend to under $300.
Potential Savings: $300/month ($3600/year)

Summary

In short, the biggest culprit here is restaurants and my lunches. No doubt about that – but combined, the other expenses total nearly $2000/year on their own. That’s not small change. Hopefully you found this helpful – feel free to let me know in the comments if you take stock in your spending and what YOU found in savings for 2014.
Photo Credit: 401(k) 2012.

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2 Responses

  1. Hi Rich! Isn’t this type of stuff fun! Matt and I have tuned in more to this stuff too and it is fun seeing what you can save. Our goal is financial freedom by 45 so this has become a game! Being vegan endurance athletes we were spending the most on food too so instead of using credit for any food/beverage consumption, we moved to a cash kitty of $600/mo and use that so we can see what we are spending. If we travel or have guests in town we usually go over the $600/mo. but generally is a good gauge so it doesn’t get into the $1,000/mo range (easy to do when you hit Jimbos or WFS deli a couple times a week!). We haven’t had cable for 16 years but that is not for everyone ($100/mox12x16=$19,200 savings.) We also went to a one car/one motorcycle and bike commute family several years ago so save on gas and insurance (http://mps75.net/wordpress/2012/04/10/on-commuting/). We just took the plunge and cut out a housekeeper which is a good savings plus it helps keep one in tuned with stuff that needs to be done around the house for overall up keep. A guy Matt likes to follow is http://www.mrmoneymustache.com/. Pretty extreme but we are going down the minimalist path so interesting to see what he has to say. Happy savings in 2014!

  2. Great information. I enjoyed the very useful detail that I can apply to my own budget. You really should be paid for doing things like this!

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