Your Major Expenses Broken Into What Can Be Reduced in Cost What Can?

[rodi]

We spent $11k last year at grocery stores - but I include most grocery store purchases in that category - and there are clothes, and booze from costco in that figure. I also have 2 adult sons under roof - one was only home part of the year last year - so our grocery bill dropped during that window.

Our highest category is insurance. Health, car, home, rental policy, umbrella, earthquake. - Hit $20k last year just for all of the different types of insurance premiums. (This includes DH's medicare B payment deducted from his SS.)

Second highest category last year was education - had a kid in college, and another kid who was doing competitive swim and piano lessons. (I tag them as education because swim was for the school swim team, piano lessons were private - but I consider them educational.)

Groceries came in third - 12% of total spending.

I don't skimp on groceries. We cook from scratch and make really tasty food. Skimping would mean lower quality.

When I was interested in cutting expenses I looked at recurring bills. Changed cell phone plans, renegotiated cable/internet, figured out ways to drop our gas/electric utilities and water bills. These little changes add up.

 

[daylatedollarshort]

We went to the local dollar store today that always has a nice selection of fresh produce. Some of our purchases included eggplants ($1 dollar store / $1.68 supermarket), living lettuce ($1 / $3), oyster mushrooms ($1 / $4.49), leeks ($1 / $3), Wolfgang Puck Soup ($1 /$3.50), squash ($1 / $1.79), and cream cheese ($1 /$2.49), which were all the same quality and freshness as the local supermarkets but $1 each instead of the local supermarket price. For lunch and dinner we had pad thai with organic eggs for the protein for lunch and organic chicken for dinner; a big side salad with assorted veggies, fresh basil, cranberry goat cheese and macadamia nuts; and fresh grapes and papaya for dessert. We try to eat plant based, Blue Zone kind of meals so for us we wouldn't eat any different than this if even if we paid more.

I think we save about $6K a year on groceries over what we used to spend and now we buy healthier food, mostly from keeping track of prices and changing where we shop. Over a 40 year retirement that is $240K in after tax money. YMMV but $240K is a tidy sum to me.

 

[Bullwinkle]

Our highest is mortgage at 30k/yr, of which 8k is for property insurance... not really flexible.

Then groceries for two at 4k and restaurants at 2k. I'm not in charge of the groceries, and it's more than my life's worth to try to poke my nose into that business, so I consider it a fixed cost. Besides, we're not poor, and food is daily quality of life.

Utilities wind up at 3k year and they're mostly fixed... 80% of the bill is fixed and not dependent on how much we use. Of that, internet is 1k and could probably be reduced if I shopped for deals, but I rely on it heavily. Phone is 0.5 for two and I think it's already pretty low... Google Fi with fixed 40/mo plus 10 per gb of data.

Then there's "house things", from 1k to 4k depending on how much things need to be repaired. About 1k for education, classes and the like.

The biggest thing I should look at is car insurance at 0.8k and house insurance at... not sure how much. So the way I see it, really only the insurance and some utility costs have wiggle room, and not much. The rest is mostly just an expensive area (CA Bay Area). It winds up being 60k so if I made 40k/year we'd be in trouble, but realistically in that case we'd either move someplace cheaper, or both work, or do both things!

 

[VanWinkle]

Hi,



As for major expenses I can NOT reduce within reason:

i) Home and car insurance
ii) Water, Gas and Elec costs
iii) Property tax
iv) Health insurance

1. I reduced home and car insurance from 1900 per year to 1080
by getting competitive quotes, using an online offering from
a major insurer's subsidiary, and raising my deductibles to what
I really could afford.

2. I was able to reduce my electric bills(all electric home) from 2800
per year to 1200 per year by installing geothermal heating and cooling
in a home built in 2011. The 4000 additional cost(after 4000 Tax credit)
was offset in about 36 months.

3. Property tax freeze was obtained for the last two years and I am
currently considering moving from Illinois (6000 per year) to
Tennessee(1350 per year) to reduce property taxes.

4. Prior to Medicare I was able to qualify for substantial subsidies
for Affordable Care Act including cost subsidies by controlling
my taxable income. My cost went from 1400 per month for COBRA
to 0 per month on the ACA. Once medicare age, I went with Medicare Advantage from
UnitedHealthCare with a premium of 348 per year for 0 ded
4400 OOP max.

These decisions were made for me and may not be suitable for
everyone. All expenses are subject to reduction depending on
how aggressive you want to pursue savings.

Best,

VW

 

[Midpack]

Our typical spending is about 1/3rd discretionary, in several categories. We could easily cut back significantly on groceries, wine/liquor, travel, dining out (at least 3X per week), charity, gifts, boating, golf and entertainment (live theater & concerts mostly for us). It would be harder to cut back on auto, home, utilities, insurance, HOA, prop taxes, fitness but we could if we had to. Even harder to cut back on medical, but as a last resort. I planned all along, well before retiring, to build significant discretionary spending into our spending budget so we wouldn’t be caught flat footed in an unprecedented economic downturn/geopolitical event. Thirty years in retirement is a long time, and going back to work just becomes less and less of an option as the years go by.

 

[brett]

We have reduced our home and auto insurance by 25 percent. Simply by not renewing insurance that has large premium increases. We shop the policy every few years, or sooner if a large increase comes along.

Last year it was a 25 percent increase in home insurance. We remained with the same insurer but compared rates for a new policy (on the internet) vs the renewal rate. We asked to become a 'new customer' vs a new one. They reluctantly agreed.

 

[ncbill]

I break my expenses out into fixed & variable.

Some fixed costs are beyond my power to reduce (e.g. property tax, HOA fee)

Others require effort (research or capital outlay) to reduce, so I classify them as fixed for budgeting purposes (e.g home/auto/umbrella insurance, utilities)

Things like food I do consider a truly variable expense.

 

[ivinsfan]

. I



4. Prior to Medicare I was able to qualify for substantial subsidies
for Affordable Care Act including cost subsidies by controlling
my taxable income. My cost went from 1400 per month for COBRA
to 0 per month on the ACA. Once medicare age, I went with Medicare Advantage from
UnitedHealthCare with a premium of 348 per year for 0 ded
4400 OOP max.






VW

You're forgetting your Part B payment unless UHC pays it for you.

 

[tmm99]

Our major discretionary fund is for travel, so if money was tight, we could travel less. We could trim other recreational items in addition, but we probably wouldn't want to do that. Our homeowners and auto insurance have come down some during the pandemic, but I'm sure they will come back up soon. If money was tight, I'm sure we would tighten our grocery budget, but hopefully, we never have to do that.

 

[NW-Bound]

I break my expenses out into fixed & variable.

Some fixed costs are beyond my power to reduce (e.g. property tax, HOA fee)

Others require effort (research or capital outlay) to reduce, so I classify them as fixed for budgeting purposes (e.g home/auto/umbrella insurance, utilities)

Things like food I do consider a truly variable expense.

YMMV, but for us food cost is not that much, and perhaps of that, is somewhat inelastic.

We do not eat out much, so there's not a lot there. For grocery, my wife is so adept at shopping for bargains that there is not a lot to cut.

Our other discretionary spending such as the 2nd home, travel, and gift/donation dwarf food costs. If we get to the point of having to cut food costs, our quality of life really suffers.

 

[daylatedollarshort]

We always lived below our means when working, and didn't spend a lot on extras like luxury cars, but weren't good at watching all the regular, little expenses like energy use and cable bills. Since we retired and the kids grew up, some of our expenses naturally decreased like no more commute costs and lower car insurance with the kids not on the policies, but we also cut another $40K off our annual run rate through optimizing expenses and trying to live better for less.

I probably have another $5 - $10K potential at least. Some of our neighbors have electric cars and solar panels, so they not only pay $0 for energy but make a little extra off selling the excess electricity they make. Other neighbors have replaced their lawns with food gardens. Sustainable living is popular here so we don't have any shortage of future projects like those to add to our to do list, plus a lot of other smaller projects like learning to make our own yogurt, experiment with solar cooking and growing microgreens. Those kind of projects are both hobbies and extra ways to lower expenses.

 

[athena53]

I'm fortunate- there's a ton of slack in my budget. I have not attempted to reduce the mortgage (via refinancing), I don't shop insurance around, I buy what I want at the grocery store. I'm pretty "no-frills" with utilities (keep thermostat at 80 in summer, e.g.) and have pared monthly expenses down to just what I need- Ting for cell phone, Netflix my only TV subscription, no Sirius, Pandora, Amazon subscriptions.

The "All Other" is a large bucket that adjusts as things change. Travel wasn't much last year, charity up a bit, major home improvements and maintenance where they fit (quartz countertops last year, exterior paint and deck rebuild this year). Then there are the "oh, crap" expenses- replacing the car last year, some major dental work this year. What's left over from what I withdraw goes into the grandkids' 529 accounts and occasional gifts to DS and DDIL- I gave them $3K this year and may do more.

 

[SnowballCamper]

We found the "Open Space" tax incentive here in WA for property tax. The application fee isn't cheap, but depending on how "wild" your yard is you can get a significant reduction in assessed value for the "voter approved" taxes. This is not dependent upon income, disability, etc. as many other programs are. Interestingly, it turns out that there is not a minimum lot size requirement, and the discount goes as long as the legislature doesn't muck it up. Of course you'll owe some back taxes if you exit the program to build something...

 

[2017ish]

Travel is our biggest expense, and has been more than half of our post income tax spending in the four years since we retired. (By far, most income taxes are due to Roth conversions, which are also kind of discretionary). This past 18 months, however, it was only about 40%, due to inability to do much international travel.

Granted, we are in a great position, but in a pinch, we would have discretion to axe over half of our spending.

 

[athena53]

Granted, we are in a great position, but in a pinch, we would have discretion to axe over half of our spending.

And this is the key to solvency in retirement. When I read about retirees who "lost everything" in a crash such as the financial crisis, I suspect it's because the % of their portfolio they had to withdraw became unsustainable as the portfolio value dwindled.

My spending in a normal year is about 20% travel, 20% charitable. I could cut both back substantially but life would be a little less fun and our church Treasurer would cry.

 

[NW-Bound]

And this is the key to solvency in retirement. When I read about retirees who "lost everything" in a crash such as the financial crisis, I suspect it's because the % of their portfolio they had to withdraw became unsustainable as the portfolio value dwindled.

My spending in a normal year is about 20% travel, 20% charitable. I could cut both back substantially but life would be a little less fun and our church Treasurer would cry.

You should ask your church to consider how much of its expense is discretionary.

PS. Even in a market crash, I suspect the reason some people lost everything was because they put heavy bets on stocks that they counted on to continue to grow as Jack's beanstalk forever. Tesla? GameStop? AMC?

 

[ncbill]

You should ask your church to consider how much of its expense is discretionary.

PS. Even in a market crash, I suspect the reason some people lost everything was because they put heavy bets on stocks that they counted on to continue to grow as Jack's beanstalk forever. Tesla? GameStop? AMC?

Apparently the late John McAfee "diversified" into Lehman Brothers to offset his illiquid real estate investments.

But then got caught in a cash crunch when Lehman imploded at the start of the Great Recession.

So he ended up liquidating what was left (his real estate holdings) at fire-sale prices.

 

[athena53]

You should ask your church to consider how much of its expense is discretionary.

We built a sanctuary that could seat 250 people across the street from a site that was supposed to be multi-family housing- just before the financial crisis. It's still a corn field. We have a giant mortgage for a congregation our size but we're muddling through. Nearly everything is done by volunteers- mowing, gardening, cleaning, finances. I have mixed feelings about paying for the mortgage and the utilities when there's so much need elsewhere but I know there are people in the congregation who have little and they need a church community as well. Our priest is only PT and does not live lavishly.

OT, but I wanted to add the details anyway- I know it's different for other churches.

 

[brett]

Since retiring we eat better and healthier. Cut out all the processed food, all the fast food. More fruit, vegetables, seafood, better, leaner cuts of meat.

We do not care what we spend. The price is the price. We are however very cognizant of quality, freshness, etc. Overall I believe we spend about the same but we get much more value for our money. We have lost weight and we feel much better for the change in diet.

Last time I went to a barber was in Mexico-March 2019. Once covid hit I had zero desire go to the barber. Bought some hair clippers on line. DW does it now. Such a good job that I doubt that I will go back to a barber unless I need a haircut while travelling.

 

[VanWinkle]

You're forgetting your Part B payment unless UHC pays it for you.

I think everyone pays that, even those with medigap so it is pretty much
a universal cost that can't be reduced.

VW

 

[Freedom56]

Since we installed our solar panels in 2012 we have paid nothing for electricity versus $3671 in 2011. Our initial outlay was $23K cash and net costs with rebates and tax credits was just under $16K. Electricity rates have increased by 35% since 2012 so the return on investment is even more attractive.

Our top expenses during retirement have been:

1- Federal and State income tax
2- Travel
3- Health insurance premiums
4- Property tax
5- Food/dining out
6- Hobbies

 

[Katsmeow]

I'm curious, are there not inexpensive chains like Winco in your area?

Never heard of them. What is inexpensive often does vary by area. We moved about 200 miles within the same state and the stores we shop at are totally different here than where we were before.

We also save considerably by using our Amex Blue Cash card which gives us back 6% and for some non-perishable items we get the best price on Amazon and get 5% back with the Prime Visa card. This makes a large difference.

If you are interested in this type of analysis you might enjoy a zero based budgeting program such as YNAB. We have found it very helpful. I know, to a penny, how much we spend on our different categories of expenditures.

Some of the expenses you feel can't be changed may be able to be changed. Sometimes more easily than others. But, for example, if you really don't like real estate property taxes you could move to a state that has low real estate property taxes. Of course, they may have other taxes that are higher....

 

[Koolau]

Some of the expenses you feel can't be changed may be able to be changed. Sometimes more easily than others. But, for example, if you really don't like real estate property taxes you could move to a state that has low real estate property taxes. Of course, they may have other taxes that are higher....

Here's a site suggesting Hawaii has the lowest RE Tax RATE. I've shared before that we pay (in actual dollars) considerably less RE Tax than we did when we lived in the midwest. Of course, some other costs swamp those savings, so consider RE Taxes as only ONE thing to track when considering a move to save money. YMMV

https://sparkrental.com/property-ta...0.63% 9 Arkansas: 0.64% 10 Mississippi: 0.65%

Skip down a few pages to find the % rates by state.

 

[ownyourfuture]

I spend around $2K/yr on food for one person.
I don't eat out or order in and that includes food, drinks, and small household items like toilet paper, shampoo and such. I know i'm more frugal than most people on here but there is definitely a lot of room to cut costs if you want to.

WOW! 'around $2K/yr on food' including things like TP shampoo, body wash deodorant, etc. is incredibly cheap.

I started keeping track of all non-recurring spending/bills early in 2014.
When I retired in 2015 groceries & eating out equaled $12.90 per day.
Since retirement meant eating out less often, it's down to $10.05

I keep a separate category for what I call personal items, which includes TP shampoo, body wash, deodorant, nose and ear trimmers, Electric razors, haircuts etc. Those come to $1.48 per day.
Annual total: $4208.45

I'm impressed that you can do all that for less than 1/2 that!

 

[Koolau]

WOW! 'around $2K/yr on food' including things like TP shampoo, body wash deodorant, etc. is incredibly cheap.

I started keeping track of all non-recurring spending/bills early in 2014.
When I retired in 2015 groceries & eating out equaled $12.90 per day.
Since retirement meant eating out less often, it's down to $10.05

I keep a separate category for what I call personal items, which includes TP shampoo, body wash, deodorant, nose and ear trimmers, Electric razors, haircuts etc. Those come to $1.48 per day.
Annual total: $4208.45

I'm impressed that you can do all that for less than 1/2 that!

Yes, aaronc879 has long been my hero when it comes to cutting costs to the bone. He can "stop on a dime and give you change!"