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Good morning, long-time lurker here. I have been living a pretty frugal lifestyle for awhile now, but need to cut back even more in order to put more toward retirement.
Here is the monthly budget for 1 person household:
No cable
No mortgage
Property taxes: $300/month
Utilities total $225/month on budget plan (trash,water,electric,natural gas)
Cell phone $50/month
Internet $50
Dogs/household/beauty/food: averages $350
Auto $450 ($325 car payment + $125 gas)
Insurance- home & auto $150
Installment loan: $125
Credit cards- use only for emergencies or only if I can pay it off w/in 30 days.
Clothes- maybe $250/year maximum
The obvious places to cut back that I see are internet, cell phone, and auto.
I plan to sell my current auto in the spring to downgrade to a smaller model (Mazda 5 to Honda Fit) with better gas mileage which will save me between $100-$150/month. I am hesitant to buy used for a few reasons- first, good used cars are not cheap, and with the higher interest rate and lower term used would cost almost as much as a new car with a warranty. Also, I will be retiring in the next few years about the time I would pay off a new car.
Internet- this will be tough, but I can read news at work and use my laptop at the library, so I am willing to discontinue
That leaves my cell phone- I have an old flip dumb phone with ATT for $50. I don't use a phone much at all. I need suggestions on the cheapest way to go- Do you think I would be better off with a pay as I go phone (would need to buy the phone, right?) or is there a better way to go?
Any other suggestions would be greatly appreciated!
That adds up to $1,950 a month. Is that your monthly income, or are you over/under budgeting?
Cell phone -- Yes, you are getting totally ripped off at $50 for a plain old flip phone. Even if you had to buy a new phone for pay as you go, the savings would pay for itself in a month or two. You can get smart phone plans cheaper than $50. I find a cheaper plan right away, it's a quick-hitter change to your budget.
I think you're incorrect about the car. You're trying to rationalize buying new when you probably shouldn't be.
Quote:
I plan to sell my current auto in the spring to downgrade to a smaller model (Mazda 5 to Honda Fit) with better gas mileage which will save me between $100-$150/month.
Why are you waiting until spring?
Quote:
first, good used cars are not cheap
They are cheaper than new cars.
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and with the higher interest rate and lower term used would cost almost as much as a new car with a warranty.
This is the classic mistake people make when buying cars. Monthly payment is not how you should budget for a car, total cost is. Why would you plan to be in debt for 3-6 years? You want a car you can pay off ASAP, ideally one you can buy with cash.
Quote:
Also, I will be retiring in the next few years about the time I would pay off a new car.
So right as your income drops you'll be just about due for another brand new loan?
I think you have too much car for your budget. Get a cheaper car, put the difference towards an emergency fund. You can use the emergency fund for car repairs if they become necessary, and if they don't become necessary then you still have the savings for whatever else pops up in life. It sounds like you want to spend an extra $10,000 just to avoid maybe $1-2,000 in potential repairs.
Good morning, long-time lurker here. I have been living a pretty frugal lifestyle for awhile now, but need to cut back even more in order to put more toward retirement.
Here is the monthly budget for 1 person household:
No cable
No mortgage
Property taxes: $300/month
Utilities total $225/month on budget plan (trash,water,electric,natural gas)
Cell phone $50/month
Internet $50
Dogs/household/beauty/food: averages $350
Auto $450 ($325 car payment + $125 gas)
Insurance- home & auto $150
Installment loan: $125
Credit cards- use only for emergencies or only if I can pay it off w/in 30 days.
Clothes- maybe $250/year maximum
Any other suggestions would be greatly appreciated!
You must live in a high property tax area. $3600/yr. for home taxes is non-frugal, to me. Unless for some reason you must stay in that house/area. You didn't list "home maintenance" which is something else you should definitely budget for in retirement. I budget about $2,000/yr. Just replacing a dishwasher these days will cost you $700. A heating system: $6,000 (which I just did in January, yikes).
Life without a $325/mo. car payment is frugal all day long. Even if you cut that payment in half, you're better off. You've already got a good used car evidently, pay it off and keep it.
Agree about a basic cell phone w/no contract, or no cell phone if you're not using it enough.
$225/ month for utilities/trash etc. seems high, you must be in a cold area? northeast?
I'm a dog/cat lover, so mine get the best I can afford; innocent animals have no control over the owner's care -- so they get what they need in or out of my budget. I'd sacrifice something else for proper care for my pet(s). You have 12 paws = 3 pets. Triple the avg. one pet/household.
Matter of my own priorities: Internet, HD, cable, land line etc. for me are $120/mo.; I don't do internet at the library, I borrow free books from the library. Or put them on my Kindle which was a gift for an avg. of about $10 per book. Save gas running to the library. Save gas by doing shopping online and pay off online credit card purchases in full each month; and keep only one credit card. Save at least 10% of your monthly income, no exceptions.
There is missing information in your post, so hard to recommend one approach over the other without you filling in the blanks. First, as one poster just mentioned, your real estate taxes are high for someone needing to be a on a tighter budget. I realize moving to a different state may not be doable now with your job, but might be a consideration when you retire. As an example. I have a 1700 sq. ft house in Nevada and pay about $150 a month in RE taxes. (and no state taxes)
Phone. If you don't have a land line (which you probably shouldn't) consider buying an Ooma for the house. It works over your internet connection, but works just like a regular phone in that you can use regular phones all over the house with it. Cost about $129. You will pay a tax of $3.50-$4.50 (approx.) a month for the service. Unlimited calls all over the US. Then if a dumb phone is OK for you for while you are out and about, T-Mobile has a pre-paid plan where you purchase 1000 minutes at one time ($100) which lasts you a year. This works out well when you don't use your phone a lot. If you need more minutes, (depending on your cell phone service) consider buying a Moto G from Republic. You can read all about that on Mr Moneymustache. If that service doesn't work for you because of carrier, look at Page Plus which uses Horizon.
Car. My advice if you had the cash would be to sell your present car and try and find maybe a 4 year old Honda Fit with lower miles on it, and pay cash for it. But here, I don't know your finances, so it's one of the blanks that needs to be filled in.
TV. I ditched cable 3 years ago, and subscribe to Netflix ($8.00) and belong to Amazon Prime because I order so much from them it saves me money, and with that I get their Amazon Prime TV service free. I also have an outdoor antenna hooked up and record shows with a computer using Windows 7 with Media Center which allows you to receive TV schedule and record shows just like DVR. (Windows 8 omitted it, unless you purchase their Professional) So between all these sources, I find I always have something to watch.
Utilities don't seem unreasonable to me. Mine are even higher, but my house is older single story, and I have a spa that requires a motor running at least 8 hours a day.
What's this installment loan for? Sounds like you don't have any cash reserves. Perhaps that's what your trying to achieve?
You did not mention medical, so I am assuming you have it provided by your company. However, consider that when you turn 65 and retire, you will have medical costs one way or the other, even if you select an Advantage Plan over traditional medicare with a supplement and part D subscription drug coverage. As an example: Part B $104.90, AARP F Supplement $259, Part D Drug policy $50 mo. Total Aprox. $415 mo.
An Advantage plan is usually an HMO and is restrictive in where you can go, can have more co-pays, but lower monthly premiums.
So to me and I'm sure to most, the only areas that could be substantially reduced would be your phone #1,
your mo. car payment, and hopefully later on at least, your real estate taxes. But part if not all of those savings may need to go towards medical once you retire, unless you will be receiving some sort of employer medical retirement package. And as another poster mentioned, if you own your own home - you will have some large outlays from time to time, so budgeting in at least $200 a month for those is wise, as they will come.
Last edited by modhatter; 08-01-2014 at 09:49 AM..
You must live in a high property tax area. $3600/yr. for home taxes is non-frugal, to me. Unless for some reason you must stay in that house/area. You didn't list "home maintenance" which is something else you should definitely budget for in retirement. I budget about $2,000/yr. Just replacing a dishwasher these days will cost you $700. A heating system: $6,000 (which I just did in January, yikes).
Life without a $325/mo. car payment is frugal all day long. Even if you cut that payment in half, you're better off. You've already got a good used car evidently, pay it off and keep it.
Agree about a basic cell phone w/no contract, or no cell phone if you're not using it enough.
$225/ month for utilities/trash etc. seems high, you must be in a cold area? northeast?
I'm a dog/cat lover, so mine get the best I can afford; innocent animals have no control over the owner's care -- so they get what they need in or out of my budget. I'd sacrifice something else for proper care for my pet(s). You have 12 paws = 3 pets. Triple the avg. one pet/household.
Matter of my own priorities: Internet, HD, cable, land line etc. for me are $120/mo.; I don't do internet at the library, I borrow free books from the library. Or put them on my Kindle which was a gift for an avg. of about $10 per book. Save gas running to the library. Save gas by doing shopping online and pay off online credit card purchases in full each month; and keep only one credit card. Save at least 10% of your monthly income, no exceptions.
My 50 cents worth.
3600 a year for taxes is awesome!!! I live in jersey and mine are over 6 grand for 900 square foot home... wow I would love 3600 in taxes..
@ Ferraris- You make a lot of good points. I totally agree that I need to cut my auto expenses.
That said, I don't think I am rationalizing buying a new car- if I am going to cut my expenses, I need a lower monthly payment and more fuel efficient car to reduce gas expense of about $125/month.
My plan is to pay off whatever car I buy while still working and then keep it after retirement, NOT look for a new car. I generally keep my cars until they drop.
Where I live, good used cars are almost as expensive as new, so guess I don't see the advantage in buying used when I consider possible repair and reliability issues. I take your point, and I understand used is cheaper, but is it worth it, especially if I can get a good low interest rate for new (which is why I am waiting for spring- to get a better deal)
@ quilterchick- I am in a mid-sized city in upper midwest; our property taxes are high here.
Agree that we need to do right by our pets. My expense for them is about $100-150/month. They eat high quality food, get appropriate vet care, and yes, I would go hungry before they wanted for anything.
@ modhatter- Thank you for the MMM website- awesome. I will look into what he says about phones.
About selling the car and buying used- I love this idea, but the prospect of expensive repairs and possible lack of reliability is a huge concern for me.
I guess where I am stuck is on the idea of buying a used car. I am open to looking at this more, but I feel as if I would be giving up more than I would be getting. At the same time I agree I need to cut my auto expenses.
Would you suggest buying used from an individual or someplace like Carmax? I will think about this some more.
I will shamelessly plug Ting for cell phone service. My monthly bill is right around $65, for two smart phones and a dumb phone. I bought my smart phone refurbished on Ting's website. I paid $80 plus shipping. Ting uses Sprint's network. If Sprint works well in your area, then Ting will too.
Why don't you get a good cash back credit card and dump as much as your expense on it as possible except for taxes, utilities and gas since those places usually charge a fee for credit card use. Make it habit to pay it off every week online like the first thing you do on a Saturday morning. You're getting money for things that you're already going to spend anyway.
Why don't you get a good cash back credit card and dump as much as your expense on it as possible except for taxes, utilities and gas since those places usually charge a fee for credit card use. Make it habit to pay it off every week online like the first thing you do on a Saturday morning. You're getting money for things that you're already going to spend anyway.
That's a very good suggestion. I use rewards cards for everything I can, and apply for new cards offering sign up bonuses. Until 2014, I did not keep track of how much I was earning. But so far in 2014, I have redeemed $895.51. Not too shabby.
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