Extreme budget cuts

[daylatedollarshort]

One of the activities that help me decide what to focus on is to make a spreadsheet of all the ways I can optimize expenses or make a little extra money without getting an actual job (like credit card hacks and bank bonuses), how long does each one take and what is my ROI over 30+ years. For example, I don't make my own tortillas because I can buy organic tortillas at Costco pretty cheap, and making tortillas would require weekly work. Replacing a shower head with a low flow one is a one time activity that might take an hour or two of research and then the benefits last for years and years into the future without any additional effort on my part.

I'm not so sure about cutting travel and the big items as the most bang for the buck. Small ongoing expense cuts really add up combined together and multiplied by the decades, unless you are already living with very low overhead and there is nothing left to optimize. If you can cut your fixed expenses painlessly by $40K a year, that is $40K a year you can use for travel. Or not, if you look for last minute deals on travel and use credit card hacks for travel points, you might be able to cut that travel $40K as well.

If you work extra and make $40K that adds $40K less taxes to your retirement funding for one year. If you cut $40K annually from your expenses over 30 years that is $1.2M less you need in retirement funding.

 

[CRLLS]

As already stated, tax "return" has no impact on my budget. Certainly I don't base spending on the refund. Our planned expenses are somewhat different than most. in 3-4 years, our SS alone will cover the vast majority of our necessary expenses. Or our SWR of 3.5% would also cover those expenses. Unless the whole economy collapses and stays there for an extended period, or the USD is no longer accepted currency, I think we will do just fine. If the USD does collapse, I'm not sure there will be anyone here doing "OK".

If I had to, I could forgo hobbies, entertainment and travel. Then there would be marital discourse to deal with, potentially leading to an additional 50% cut in my potential income. That wouldn't be good.

 

[W2R]

I don't need to cut back right now, but I often think about how I would do that if the need ever arose.

1. Basically, whenever possible don't spend money! I know that sounds overly simplistic but that worked better than anything for me in the past. Spending on cheaper stuff, or spending on stuff to save money on other stuff, doesn't work as well for me as just not spending at all.

2. Delayed spending is sometimes possible, and often becomes spending that doesn't happen. That helps too. Sometimes the perceived need for something is not as urgent as one might think.

3. Enjoy life! Not having any fun leads to feeling deprived and spending more. Do something that is 100% free, and fun.

• Play a video game that you already own (on a console that you already own too).
• Go for a walk.
• Rearrange the furniture or reorganize your closet.
• If and only if you already have a microscope or binoculars, get out there and use them to discover and appreciate whatever you can.
• If and only if you already have a musical instrument, practice on it and learn to play it better for free.
• If you have flowers in your yard, pick a few and learn about flower arranging.
• Spend more time chatting about life and the world with your sweetie.
• Go fishing from the shore of a nearby lake or river with gear that you already have, using bait that you can dig up in the back yard or find elsewhere for free. (So what if you don't catch anything, if fishing is fun for you; and if by chance you do catch something, so much the better, free dinner!)
• Read that book that you bought way back when and never got around to reading.

Or whatever. Do something 100% free that floats your boat.

4. Write down every single penny that you spend. Compete with yourself to see if you can spend less this month than you did last month. Trust me, it's fun after a while and you will find ways to economize that you never thought of before.

I am already doing many of the things people have mentioned in prior posts, but I could push a little harder to do more of them. Right now I am pushing harder to spend more, not less.

 

[NW-Bound]

Fly business instead of first class

Only buy a new Mercedes every other year, instead of yearly.

Buy self winding Rolex to save on battery costs

Cut maids' and butler's salaries

Your previous comment on this subject:
"Stop bathing and drink sterno." Is what got me hooked on this forum.
Finally, someone who gets me.

I vaguely remember Travelover's earlier post about cost cutting. It's been a while, I think.

Makes me realize how long this bull market has run, allowing amazing lifestyle upgrade.

But then, the "blow dough" threads told me the same thing.

 

[bobandsherry]

Several years ago I tried and survived for 5 months without turning on the central AC in my home in Florida. I have lived in FL for over 26 years and I wanted to see if I could survive without AC like people did 30-40 years ago. I took quick cold showers 3x a day and slept with a circulating fan at my bedside. The ceiling fans that cost pennies to run always ran 24/7. I drank lots of cold tap ice water to bring my body temps down. I pretty much saved $300 approx monthly on turning off the AC. It was extreme but I wanted to see if I could survive and I did. This was from May thru Sept.

Wow, must be old home with no insulation. I'm in central Florida and my average electric bill, with all electric 2600 sq/ft 2 story house w/pool, and keep it cool 73-74, my bill averages only $130/mo. Highest bill was $180. Can't imagine what your costs were that you could save $300.

 

[COcheesehead]

Travel is the big and easy way for us to save. It's almost half our budget.

I would also focus on increasing income. There are easy ways to pocket a few extra hundreds to thousands of dollars a year without working:
Keep less in money markets.
Sell stuff on eBay
Do paid research
Use Ibotta

 

[audreyh1]

We can cut out travel and gifting and save a great deal.

But you know what? I’m not willing do that that. Nor do I see why I should.

We have been underspending our income and have quite a bit of surplus built up.

Also, we don’t get tax returns. We always try to owe a little.

As I don’t like to tempt fate so I am now officially knocking on wood.

P.S. we cut out using drier sheets years ago.

 

[kgtest]

(OP if a smaller tax refund has you rethinking your budget, then you've been doing it wrong)

I'm sure the OP was just tossing out initial ideas, but some should be done regardless of the need to be extreme:

Comparison shop insurance
Replace bulbs w/LED
Repair bad weather-stripping
Unplug unused electronics

Others will yield such small savings they wouldn't be noticeable, and would come with negative downsides:
Reducing vacuuming
Reducing bathing
"welcome to my smelly messy house that I can't afford to heat/cool, or leave"

Dropping/reducing books, internet, movies - these are inexpensive quality-of-life things. Their loss would exceed their cost for me.

Most of the items listed are not appetizing to me, vs. finding some short term employment.

For practical reductions: defer/delay/reduce travel plans, shop-in-my-closet, and watch my budget when food shopping/dining out a bit.

Lol. I'm glad this isnt the case. I keep reading or seeing and hearing of all these arrixles about people being surprised by tax changes and the actual effect. For me I always know what my liabilities are so no surprises. And heck no skipping baths would be the last thing I do heh. But hey its one idea.

 

[NW-Bound]

Several years ago I tried and survived for 5 months without turning on the central AC in my home in Florida. I have lived in FL for over 26 years and I wanted to see if I could survive without AC like people did 30-40 years ago. I took quick cold showers 3x a day and slept with a circulating fan at my bedside. The ceiling fans that cost pennies to run always ran 24/7. I drank lots of cold tap ice water to bring my body temps down. I pretty much saved $300 approx monthly on turning off the AC. It was extreme but I wanted to see if I could survive and I did. This was from May thru Sept.

Several years ago, I knew I would be able to do that. I even drove a car without AC. Heck, not all cars had AC then.

But now, I am too old to submit myself to that. I would die, and all this reduced spending became moot. If money were that tight, I would run a small AC just for my bedroom, and hide in there to survive through the summer.

 

[marko]

go back to work since you were obviously not FI when this started.

+1 Especially if washing and re-using plastic bags is going to make a difference.

 

[ExFlyBoy5]

Several years ago, I knew I would be able to do that. I even drove a car without AC. Heck, not all cars had AC then.

But now, I am too old to submit myself to that. I would die, and all this reduced spending became moot. If money were that tight, I would run a small AC just for my bedroom, and hide in there to survive through the summer.

I spent enough time in the deserts of exotic Middle Eastern destinations to know that on my "Maslow's Hierarchy of Needs", good AC comes in right behind oxygen to breathe. I will give a LOT to make sure I have good AC. Could I survive without it? Probably. Is it a life I would want? Nope.

 

[RobbieB]

I don't worry about money and I don't have a budget so no cuts for me.

 

[mpeirce]

Our budget is structured such that we could slash it quite a bit without incurring much if any pain. Last year travel was almost 25% of our budget and that can be cut a lot. Travel is enjoyable, but if we skip it for a while, NBD.

One item that I saw above more than one place was upgrading to LED lightbulbs. Sounds good, but if I have a short term crunch, buying new stuff wouldn't be first on my list. Let those old bulbs burn and slowly move to LED bulbs as the old one burn out. LED bulbs are certainly getting cheaper, but they still aren't nothing.

 

[Sunset]

......
.
upgrade incandescent to LED
.....

.

We already did this, sure the bulb costs about $1.00 each, but they save many dollars per year in electricity, so they pay for themselves within 6 months. After that it's free savings.

 

[MRG]

We could not eat out as often, cancel gym, hot springs memberships. Wheres the fun in that? Heck I could get a job too!

 

[Independent]

The short term impact of the new tax law for us is that we are paying less taxes. So thrift has nothing to do with taxes in our house.

Before I retired,

- we didn't eat out when we were at home. (we did buy take out Pizza Hut occaisionally)
- I read a lot but I never purchased books. We have a "public library" in my town. (full disclosure, we did make a donation when they expanded the library)
- We have never had cable.
- We didn't have expensive hobbies like golf or motorcycles.

So we can't cut restaurants, books, hobbies, or cable out of our budget because we didn't plan for them.

Things we have done to cut expenses:

- I had planned to travel a lot in retirement, that has been canceled due to reduced budget.
- I'm holding on to a car a lot longer than I expected, and my target replacement will be cheaper.
- I had hoped that we could trade up to a newer/nicer house. That looks impossible.
- I'm on the border regarding hearing aides, and I think the cost may be a deciding factor in not moving on that.

However, we do have money for high speed internet, a NYT subscription, and a Netflix subscription. We also eat out when we're visiting the kids.

 

[NW-Bound]

I spent enough time in the deserts of exotic Middle Eastern destinations to know that on my "Maslow's Hierarchy of Needs", good AC comes in right behind oxygen to breathe. I will give a LOT to make sure I have good AC. Could I survive without it? Probably. Is it a life I would want? Nope.

Many locations in the Middle East get only as hot as the US Southwest in the summer. We hit 122F one year. It was 120F last year, when I got back from Paris in early June. It was high 90's in Paris. Aye, aye, aye...

Yes, people managed to live without AC in the old days. However, I also remember that longevity was not that great then. I would be considered a very old man at my age now.

PS. It was not last year, but 2017 when we flew back to AZ into 120F temperature in early June.

 

[Nick12]

Wow, must be old home with no insulation. I'm in central Florida and my average electric bill, with all electric 2600 sq/ft 2 story house w/pool, and keep it cool 73-74, my bill averages only $130/mo. Highest bill was $180. Can't imagine what your costs were that you could save $300.

My home was built in the early 1990s and had original central unit AC for over 20 years and original insulation when home was built when I tried my living without central AC in Florida test during a summer several years ago. As of now the AC unit has been upgraded and insulation or lack of it addressed. 73 degreess-- you must be ok with it. We set it lower than that.

 

[NW-Bound]

Off topic, but some fun facts.

The highest temperature in the world is in the US, in Death Valley at 134F (56.7C).

The second highest temperature in the US was at Lake Havasu, Arizona, at 128F (53.3C).

Phoenix highest temperature was 122F (50C), as previously noted.


PS. I keep the thermostat at 79F in the summer, and it costs more than $400/month. If I set it cooler, would get thermal shock when I go in/out of the home.

 

[Ronstar]

Extreme budget cuts for us would involve selling our house, move to our little snowbird condo, quit travel and eating out, and getting rid of 3 vehicles. This would cut expenses by more than 50%.

 

[ExFlyBoy5]

Speaking of children and expenses, I have a live stream up of a beach destination (to take my mind off of the ice/snow/sleet that we are having today) and there is a couple there with what *appears* to be their 6 kids...and it looks exhausting! I would guess pretty darn expensive, too!

I do have to laugh, because I can see an adult female (mother, perhaps?) come into the screen on occasion to chastise one of the boys for being unruly. She then goes back to where the bar is (out of camera view). I am pretty happy that I am not sitting next to all those kiddos!

 

[ABQ2015]

Move to a smaller, more energy efficient home with a small or xeriscaped yard that I could maintain myself and would require little watering. Get rid of cable and landline phone. Trade in my luxury vehicle for an economical car. Reduce travel and stay at budget hotels or don't travel at all except to visit family. Stop being generous to nieces and nephews at Christmas and stop donating to charity. Start food shopping at Walmart and buy generic brands.

With those changes, I could live on my government pension alone. No SS or investment income needed.

 

[kgtest]

Speaking of children and expenses, I have a live stream up of a beach destination (to take my mind off of the ice/snow/sleet that we are having today) and there is a couple there with what *appears* to be their 6 kids...and it looks exhausting! I would guess pretty darn expensive, too!

I do have to laugh, because I can see an adult female (mother, perhaps?) come into the screen on occasion to chastise one of the boys for being unruly. She then goes back to where the bar is (out of camera view). I am pretty happy that I am not sitting next to all those kiddos!

I showed up to Siesta Keys with my 2 kids 3/1 and never had I been mean-mugged more then when I setup shop next to a clearly childless couple.



They eventually embraced my children's cute qualities (on the surface) and man did I smile, because I knew it was burning them up inside more than the hot sun having to sit by a family lol.



The thing with families, there is a time they come to the beach from like 10 to noon, then it's nap time. So just go to the beach from noon to 3, problem solved.

 

[kgtest]

Move to a smaller, more energy efficient home with a small or xeriscaped yard that I could maintain myself and would require little watering. Get rid of cable and landline phone. Trade in my luxury vehicle for an economical car. Reduce travel and stay at budget hotels or don't travel at all except to visit family. Stop being generous to nieces and nephews at Christmas and stop donating to charity. Start food shopping at Walmart and buy generic brands.

With those changes, I could live on my government pension alone. No SS or investment income needed.

 

[MichaelB]

If the budget gets tough and the going gets rough, it's time to put the kids to work. A double benefit - they stop wasting their minds and electricity on crappy TV, video games, texting, instagram and facebook, and they earn some money for the household.



Time to start working on those pesky child labor laws ..