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Reducing Our Expenses and Frugal Living

If you are new to frugal living, I would suggest doing a Personal Savings Recap. In other words, review your efforts to reduce expenses, say over the past 3 months, and figure out exactly how much you are actually saving each month. To me, this becomes more of an empowerment tool… a sort of pat on the back on my behalf for the effort I have put into saving more money. Personally, we have made many changes over the past 3 months that are really adding up! Without these cost-reduction strategies in place, we know we would not be able to work towards our goals in an effective manner. Below is a list of major methods we have been able to use to reduce our expenses.

Groceries and Restaurants – Groceries, for us, were probably the area in which we were throwing the most money away. We were purchasing non-filling foods with high cost to nutrient density. The first step was to stay away from the middle aisles and shoot for the perimeter of the supermarket. Recently we switched to shopping with a ‘plan’. Instead of just going shopping for the foods we like, now we actually plan all our meals for the week in advance. It is estimated that between 8 and 12% of the food we buy ends up in the garbage can! We have dramatically reduced our wasted foods with our meal-planning strategy. In addition, we don’t hit the fast food as much for lunch or supper. Estimated monthly savings = $174!

Paying Off College Loans – We were able to essentially borrow money from ourselves to pay off some of our smaller school loans. By doing this, we were able to free up monthly expenses to put towards the down payment of our house. Estimated monthly savings = $120 (3 college loans averaging about $40 payments)

Credit Card Balance Transfer – We were about $3000 in credit card debt. When we decided to move I was unable to get a steady job for the 2 months, although I did plenty of small jobs. The costs associated with moving and renting an apartment are not cheap (moving truck, gas for moving truck and two personal vehicles, application fee, deposit, pet fee, first month rent, utility company charges, etc.). Therefore, the credit cards went up to $5,000 on a mixture of 3 cards. One of these cards was actually at 27.99% (massive!) which was due to a couple of late payments in college. Our new bank offered an interest-free credit card on balance transfers until the beginning of 2010. The math suggested that it would be cheaper to pay the $300 transfer fee than to keep paying the high interest rates on our credit cards. Since then, we have been able to pay down our ONE credit card to $3500. Estimated monthly savings = $100

Reduced Cable Bill and Switch to Netflix – This one was a tough one for us at first, until we realized how much we don’t watch TV. We were paying $67/month on our expanded cable package. By switching to basic cable ($13) and signing up for Netflix’s 3-out-at-a-time service ($18). We were able to save quite a bit per month…and we actually like our situation better! Estimated monthly savings = $35

Car Insurance Policy Change – Moving away, we decided to go with a new insurance company. . . Wow! I didn’t think it would be this substantial of a savings. With SafeAuto, auto insurance was nearly $200 alone. By switching to Geico, our auto insurance shot down to $113 per month. The coverage is better, also. Paying the 6-month premium upfront also saved us money. Estimated monthly savings = $95

*The following changes have definitely saved us money, however, it would be immeasurable. This could come in the form of paying bills online, changing daily habits to save a buck or two here and there, and just having a better understanding of our financial situation

Tracking Expenses – This change has been huge for us. Together with and spreadsheets, we put all of our financial information together. This gives us a clear and concise view to see if we are heading in the right direction financially. Without this step, all of the other steps would not have been possible!