Wednesday, February 6, 2013

Expenses Down, Freedom Up!

I constantly stress I am no expert, and I want to make that abundantly clear with this post!  We have made our share of completely stupid bad decisions in our financial life, but we have been working the last three years to leave all that behind.  With every debt paid, every expense lowered, we breathe a little easier.

We still eat out, we still buy (some) new clothes, I tried extreme couponing for a couple months and realized I'd rather play with my girls than sit at a coupon notebook/computer/stack of sale bills in my free time.  I'm not saying there is anything wrong with doing any of those things, but we just didn't want to cut back in those areas.  Here are a few things [that you probably already know] we did to really cut our expenses back:

1) Apply for income based repayment on student loans - Especially if you have children, you can likely get your loans cut back by hundreds of dollars per month.  Neat fact...if you are granted any reduction due to income based repayment for twenty years, whatever debt remains after the 20th year is forgiven!  FORGIVEN!  

2) Crunch the numbers on your health insurance plan - My hubbs is a teacher in Arkansas, so our insurance is TERRIBLE.  However, we were able to cut nearly $600/month by going with the high deductible plan and a Health Savings Account.  The zero deductible plan was $1000/month for a family, and the $3000 max deductible plan is $230.  We put $200 back each month into a tax free Health Savings Account (HSA), bringing our total to $430/month.  Don't let the giant deductibles scare you, plan for them.  The plans offered to you may not work out this way, but make sure you add it up before you commit for another year.

3)  Cut cable -  60-ish channels in our area run about $55/month after tax.  No extras, no DVR, just extended basic.  We stream Netflix and Hulu through the PS3 for $15/month total.  No commercials on Netflix, and limited on Hulu, no storage limits, plus the ability to pause each movie or series and go back and forth between everything, makes it better than DVR.  Since most DVR services and equipment rentals run $10-$15/month, I feel it's a good trade.  We've added Amazon Prime as well ($6.25/month), but not just for the shows and movies.  More on that in a bit. I know....husbands need their ESPN.  It was a hard sell at our house in the beginning, but with smart phones, and super fast internet, my hubby was able to adjust.  Now with each professional sports offering it's own supply of internet streaming games, you can pick and choose what you want and still save quite a bit of money.  I've also found that when the big games roll around, friends with cable are more than happy to have company for the games...especially if you offer to bring treats :)

4) USE AMAZON SUBSCRIBE & SAVE!! -  All of our diapers and wipes come straight to our door, every month, free shipping, with 5-15% off the bulk prices (I'm honestly unsure how they decide what discount you get.  I got 15% before we had Prime, but when I looked it up, it said save 5%).  No more running out of diapers.  No more lugging giant boxes from the shelf to your overflowing cart, to your too full car, and into your house along with the kids and groceries.  They just show up at your door.  You can change your delivery date, or skip deliveries any time you want from your amazon account.  Here's another place where Amazon Prime is great.  If you sign up for the free Amazon Mom program, have Amazon Prime, AND Subscribe & Save on diapers and wipes, you save 20% on all diapers AND get free shipping!  The Math on size 4 diapers:
Scenario                                               Price per diaper  #of Diapers in Pack    Price per Package
Diapers at Dollar stores                            $0.37                      27                             $10
Buy in bulk while grocery shopping           $0.28                     190                            $53
Subscribe & Save saving 10%                      $0.22                     190                         $42.47*
Amazon Prime+Mom+Subscribe &
     Save saving 20%                                        $0.19                     190                         $36.76*
*Amazon orignal price of 190 count is $47.19

Soooo, both my girls seemed to go through diapers like crazy.  We did the buy at the grocery store method with Kyndall, and seemed to always be grabbing $10 packs from the dollar store when we did not plan well.  Saving nearly 50% per diaper, AND having them dropped at my doorstep has been FANTASTIC this time around.  Highly recommend this money, time and sanity saver!

5) Tithe - Save money by spending it?  Whaaa? It's a God thing, plain and simple.  Malachi 3:10 spells it out "Bring the whole titheg into the storehouse,h that there may be food in my house. Test me in this,” says the Lord Almighty, “and see if I will not throw open the floodgatesiof heaven and pour outj so much blessingk that there will not be room enough to store it."  I can't explain it, but I know from our personal experience and the experiences of close friends, when we give God what He's asked us to, He takes care of us. When we disobey, times are tight.  It is what it is :P

6) Pay off your car ASAP - I know good old Dave wouldn't agree here, but I'm a little middle of the road with Dave Ramsey.  I think it's great to encourage our charge-it generation to get out of debt, but when his video has him on stage, seemingly filled with the Holy Ghost over having six million dollars waiting in retirement, I feel like that's loving money too much.  I won't get any further into my Ramsey rant...not tonight.  He's helped thousands of people straighten their finances, and that really is wonderful.  ....anyway.  We decided to focus on paying off our cars before other debt because of the ratio of what we owed compared to what we paid per month.  Please note we buy used, non-loaded vehicles and have never spent over $10000 on a car (which unfortunately won't be the case after our next purchase of a 7-seater :P).  The payment on our Envoy was $300 + $160 in full coverage insurance.  After making 2 years of payments we owed about $6,000, which was close to what we got back on taxes the last year before I was self-employed (Ugh.  Hate tax time now :P).  We put our savings and tax return to the vehicle, cut down to liability ($40/month), and instantly had an extra $420 to put toward debt and savings.  
Of course, liability isn't for everyone.  I will be on high doses of blood thinner the rest of my life, so I am an extremely cautious driver.  Liability has worked for us, and saved a ton of money.  However, if we had maxed out our credit line and purchased the $35,000+ vehicle, the situation would be completely different.  Ramsey is right on target when he says to buy used and avoid "buying a vehicle you don't need to impress people you don't know."

Please, please know that I realize these strategies won't work for everyone.  The important thing is to decide where you want to splurge (for me it's clothes for my girls), and where you want to save.  Live within your means, whatever they are.  

So.  Here's the breakdown of how much we've cut out in the last three years:
                       Item                                         Original Amount                     Current Amount
Income based repayment on student loans               $400                                      $70
Changing Health Insurance Plans                               $1000                               $430 w/ HSA
Cutting cable and DVR                                                  $70                                       $15
Discount diapers to my door                          around $70+gas and time                   $38 
Paying off both cars                                     $800 (2 cars, 2 FC insurances)            $100 Liability
                                  TOTAL                                  $2340                                     $653

                                             $1687/month reduction


1 comment:

  1. How do you learn more about Income based repayment on student loans? I've never heard about the 20 year and then it's forgiven policy! Do you know if this works still if you've consolidated your loans through Sallie Mae?

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