Thinning Down on a Bare Bones Budget

Lately I have been thinking of my income and expense, seeing what goes in and what goes out.  I couldn’t help but start to think that there are two ways to increase your financial moat to reach financial freedom in a shorter fashion.  Those two options are increasing your income and reducing your expense.  Without speaking on behalf of increasing your income, what if you already had a bare bones budget in your mind?  Are there ways of thinning down still?  Are there hidden pockets that one can slim down on?  Let’s see what I’m talking about.

thin-budget

Budget background

I am not talking about slashing any expense that you have, as one should think about value you receive over the items you spend your money on.  I have a house that is a perfect size, that’s safe and is fairly easy to clean, entertain guests and relax at the same time; as well as focus on blogging and work of course : ).  I have a car, that is more than likely more than what I need, but will last a very long time and with family dispersed everywhere, will more than likely be required at this point in my life.  I have health, auto and house insurance, which are necessary.  I buy groceries from different places and try a new restaurant every now and then (which is very fun, adds an element to my relationship with the girlfriend and brings friends together occasionally).  It then truly dawned on me.  One needs to take a look at your expenses that add no value to your happiness.  It makes no sense to pay premiums or large amounts of your cash on these items.  I know what you are thinking – Lanny, you are a dumbass, this is easy to get.  Sometimes yes, but sometimes, no.  So what did I do and what challenge am I laying on myself?

Thinning the budget challenge

I took a look at my last three month’s worth of expenses, in which my savings rates were 63.61%, 66.74% and 65.74%, respectively (see why we aim to save 60% of our income), to find out what I spent my money on that literally provided no real happiness or value to my loved ones and me.  First, I am very lucky to be able to save such an extreme amount of money, but this is for me to achieve the financial goals that I have placed in front of me.  Secondly, I already thought that I trimmed my budget down to the bare bones that I could!  Seriously, if I found a nickel on the floor, I would have scratched my head wondering how I missed even that!  So what did I find when looking at my income and expenses for the last 3 months and see what I can do for the budget going forward to open up the moat wider, in order to save & invest even more.

1.) A bare-bone budget is real – After reviewing what I spent my money on, the amounts are very thinned down to begin with, I’ll definitely admin that.  I have kept expenses in line and consistent, I can’t truly have a savings rate within 3% of eachother without doing so.  There were 4 bigger events during these months that definitely are not “typical” but (heck they even may be typical, as more people involved in your life means more big events) were related to birthdays, anniversaries, a weekend trip to Chicago and a wedding.  So some higher expenses there, no doubt.  However, expenses that were well worth it, all were amazing.

2.) Expenses that add no happiness value – However, upon reviewing, though they have been kept in line/consistent, there were in fact expenses that added no happiness or value to my life.  What were they?  You may ask.  You’ll laugh.  Auto insurance, house insurance, property tax and I could even say – my fitness pass.  Yes, there were quite a few expenses that I truly don’t pound my chest and say, “Hell yes, that is amazing!”.  What do I mean by these adding no true happiness or value?  Well, I should slim down my auto insurance and negotiate that even further, as I really have no care in the world on who provides my my auto insurance, just as long as I’m covered where I need to be and it’s as cheap as possible.  This is the EXACT same as my house insurance.  Property tax?  This one does not make me happy, especially given that I am in Cuyahoga County, Ohio; aka the worst county in Ohio for anything tax related.  And the one interest piece was my fitness pass.  Do I enjoy it?  Yes, but that’s because I enjoy working out.  I do more running outside, indoor strength work outs (pullups, pushups, abs and even indoor cardio) as a frequency where my gym membership doesn’t get used.  However, the caveat with my gym membership is that my firm pays me $240 at the end of the year for having one, so it ultimately costs around $16/month.  But what do I do about these?

3.) The Challenge – Yes, I want this to now be a challenge.  The last thing I have found out about reviewing my budget going forward is that I need to challenge myself even further.  Therefore, in the short-to-mid-term, I am going to try to push down a few of these expenses.  Though one of my 2016 goals was to reduce my auto insurance to where it is now – I am setting a new challenge that by mid-2017, I want my auto insurance to be no more than $50/month, which would save me around $17 per month going forward.  This doesn’t take much effort and will mean an annual savings of $204.  Next, I will call and talk to home insurance carriers and see if I can bundle and/or negotiate my current rate, with a proposed savings of 5%.  After this, I will talk to my gym for my membership to see if I can negotiate, at least on a short-term, to see if there is anything they can do from there.  Property tax will take more planning, as I may have missed the window here.

The ultimate realization – again not talking about increasing your income, just yet – is that even when you have a budget that you think is bare bones, take a second look or have someone else look at it.  Bert and I had a discussion the other night on this and I would say it truly helped.  It definitely helped having that extra pair of eyes that may not see something you do.  So just when you think you can’t thin it down – look at what you are spending money on that doesn’t add value/increase happiness to yours or anyone else’s life that is within yours.  You may have to wipe the blur from your eyes, trust me!

Conclusion & Challenge to you!

With that – I want to challenge the readers to think of new ways to negotiate and bring down your expenses!  Why?  Because if you are in this pursuit of financial freedom – this is one other method you can do to deploy this into the field.  See what you negotiate.  Bert had an article to negotiate everything that you can.  Why?  Because it’s your money and it’s up to you to make the most of it.  Heck, you can even say this relates to my older article that every single dollar counts.  Why?  Because it just does!  Drill down your budget on things that don’t make you happy, so that you can let more of what makes you happy into your life.  Shouldn’t it be that simple?  Go on and challenge, everything.

Please comment below on methods and ways you will negotiate and reduce your expenses.  Definitely leave comments regarding what I said above and your tactics that have worked, so that I can use them : )  I’ll give you a shout out in a post, I promise!  Feel free to comment on anything else and/or let me know what you think.  Good luck and open that moat!

-Lanny

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15 thoughts on “Thinning Down on a Bare Bones Budget

  1. Hey Lanny – I started tracking my spending in November of last year. I went back through all my statements and filled in my spreadsheet. It didn’t mean much at the time because I had nothing to compare it to. Well….yesterday I got my final electric bill for the year. Just looking at my electric usage alone, I have saved 66% of the overall bill from last year. The main savings (I believe) was from unplugging the power strip for my tv/cable/wifi when I left the house and at night while we sleep. The cable modem alone runs constantly! I also unplugged an old computer I use as a desktop maybe 2 times a month and all my phone chargers. It seems silly but it all worked out! 332.72 vs 219.37 = $113.35 🙂 Here is the post that started it all if you’re interested:
    https://missmazuma.com/2016/06/23/miss-mazuma-vampire-slayer/

    • Miss Mazuma –

      NICE JOB! Unplugging appliances/items when you can is CLUTCH. $113.35 is a great chunk from ONE area of thought – unplugging. That’s so easy. It also means/cuts down on unplugging items until absolutely having to. I know I keep my bill very tame, unplug everything. Sitting here – there are (excluding furnace, hot water tank, A/C); 7-8 things plugged. Not too bad. Appreciate you sharing this, talk soon!

      -Lanny

  2. OK, devil’s advocate here.

    It’s clear your budget is pretty bare bones, and I’m of the opinion that, if this was a non-blogger, you’d be hitting the law of diminishing returns here. Let me explain.

    Doing these little things that will squeeze another couple dollars of savings per month… is it really worth it for the average person? I don’t think so. At some point you need refocus effort away from driving your budget lower and toward increasing income.

    What if you spent an extra 5 hours per week at your job working toward a promotion that boosts your income by 10% in the next 12 months rather than squeezing dollars out of your budget? That’s a far bigger win. For most people that’s the wise move if they’ve hit this point with their budget. Again, for you it’s different.

    All the time you’ll spend squeezing a little bit extra from your budget gives you something to write about. That’s more content on the blog generating more visits, page views, ad impressions, etc. You’re essentially increasing your income while also squeezing a bit more out of your budget. So for you it makes sense.

    But I’d argue that someone who isn’t blogging is better off focusing on increasing their income if they have a bare bones budget. I think it’d benefit your readers by acknowledging this, but something tells me you’ll disagree regardless 😉

    • Drowning American,

      Actually.. I think I made a few reference above that specifically state “Excluding increasing your income” – as in, let’s leave that on the side for the moment, as I whole heartedly agree – kick ass and do things to bring in more money, hands down. However, I wanted to leave that out of the discussion, for now.

      This was really about – not letting dumb money go out the window that doesn’t make you happy. Should I let $36/month for a fitness pass go out the window ($432/year up front out the door) or take 5 minutes to cancel or ask for a $9.99 promotion? OR – spend the 30 minutes on a Saturday to shop around online to save $200-$300/year on insurance costs? I don’t think it’s a waste to do it, if you are minimizing what you spend on things that don’t make you wake up and say “hell yeah”.

      I will state – this was not an article about focusing on cutting your expenses vs. earning more income. This was an article about – cutting even further on things that just don’t do anything to bring happiness to your life. But increasing income is and will be part of it all, hence why I referenced 1-3 different times in my article.

      Thanks for sharing the comment, keep it coming!

      -Lanny

      • You did make reference to excluding increasing income. My point was that for most readers a better use of their time WOULD be to focus on increasing income IF you already have a barebones budget.

        It seems you actually didn’t have a barebones budget though, which negates the point of the post a bit. If you weren’t using your gym membership, that’s just silly. I not only use mine, but I locked in a very low rate years ago. They bump it for inflation each year, but if I were to cancel and then want to renew I’d be paying much more.

        I shop my car insurance every six months when it comes up for renewal, so not fighting you on that… just think it should be part of a logical routine, especially for the frugal minded.

        All I guess I’m getting at here, and I really don’t mean to sound attacking or offensive, is that the article is pretty fluffy. You could sum it up with, “make sure you don’t spend money on things you don’t use and shop around for things you might not think about regularly (e.g. car insurance)”.

        To that I’d say, “Yeah… already doing that”.

        It’d be a much more interesting article if you took an approach like “once your budget is truly bare bones, you can spend tons of effort and time attempting to cut expenses further (w/ examples) or you could spend the same amount of time generating more income by doing X, Y, Z.”.

        That type of content would definitely also be much more evergreen, driving actual organic traffic for a long time, and (ironically enough) end up being a much more valuable use of blogging time by generating more income for you. Full circle, baby.

        Sorry if you feel I’m out of line here, but trying to offer a different perspective other than, “yeah, great points!” when these seems like pretty logical things to be considering already.

        • DA –

          All good. I guess my article was for – if you felt like you were at a bare bones budget, to think again and to look deeper. I love working out, I do love the gym, but I have found out that I have to travel quite a distance to get to my gym, which yes happens to be the only real one in the area at a certain $ amount.

          I negotiate my auto insurance every 3-6 months as well, trust me – have the articles to prove that; but sometimes it’s just being more aggressive to see what more you can do there.

          I had another article in the pipeline to talk about – after really honing in on the expenses, to then shift the focus on what you can do to increase your top-line, so excited as heck to write that out and publish – as I completely agree – if you want to speed your closure to freedom – that is necessary for most people.

          Honestly – I wish I could slash my car and dump that old thing and be an extreme frugalist – but sadly, with loved ones so distant, makes it damn near impossible. As that is one area of having a car that doesn’t provide satisfaction and has been providing more of a necessity.

          Yes – that is one avenue of making sure you dont use your money poorly, but I think for the most part everyone has an image that their expenses (even when checked upon) are satisfied with where they are at and think they are down to the nitty gritty, when in reality – they aren’t. I was hoping this motivated people to budget/track everything, hone in on what goes out that they don’t find any real happiness from and even if they have negotiated down, to re-look/re-think to either strip or reduce those down.

          Nope, don’t feel you’re out of line, I think it depends on which direction you look at it. Some items I’ve listed may be just thinking of it a little differently – such as establishing a broker to search his/her ass off to find you the right monthly price for auto insurance that gives you the same coverage; or thinking that hey – if you love the gym – should you either build one at home if you can, cancel it altogether and see how it feels to not have the instance access to a gym during winter months and/or work through them again to negotiate even further if at all possible.

          I dig your comment and want these comments as well. Keep them coming, as always.

          -Lanny

  3. Wow! Those savings rates are amazing. Well done. To be honest I am not that good on saving. I also do not track it much. That is something I have to start still. I completely agree that you should think of the value you got for whatever the price you paid. In that regard, am really interested in how you plan to reduce your car insurance. Will you just drive less Km or reduce other means of coverage terms?
    Either way your post is very inspiring and motivates me to also set some savings goals for 2017.

    • DIBuilder –

      Pumped for the comment. I think you should start with tracking. Tracking for 2-3 months will open your eyes at what goes in and what goes out.

      I will negotiate on insurance policies. I will shop around 3-5 different places (online makes it fairly easy). I will see if there are any other discounts available. And then also let them know my mileage also has decreased substantially the last 6 months due to renting a car for work lately; so should be able to reduce a piece related to this. Additionally – my car gets older/not younger, so should be a reduction from that standpoint haha

      There will be an article for sure once it’s a done deal. Appreciate the post!! Definitely start tracking if you are able to.

      -Lanny

  4. It’s always a good reminder to check your expenses, even if you’re already downsizing in costs. We are currently on the way to increase our savings rate by earning more but definitely also spending less money. Our biggest move lately was to change in our car, which provided us with 111 euro of extra savings each month. Which is pretty awesome 🙂

    Curious how far you can go with trimming down in the budgets!

    • Div –

      Exactly, even when you have an inch of “I am as low as I can” – get aggressive and fight to get them down or get rid of them once more. No way – you added $111 more in euro per month? Did you write about it??

      -Lanny

  5. That is impressive you are still reaching for greater savings. I saved somewhere in the neighborhood of 50%-60% of my income from month to month in 2016. I have to admit to being a little burnt out on tracking. My wasteful expense are almost 100% food related. I have back slipped on eating out and grocery shopping. On the plus side, my drinking at bars has reduced by almost 95% this year and that is a huge expense. We don’t buy consumer bull-shit like TVs, video games ect but that is just ingrained in our personalities. Food is my biggest issue. I did not realize you are in Cleveland metro area. My wife and I are headed back for Xmas. You should let us buy you a beer. I am an index fund investor but would love to hear more about your strategy. Christmas ale??

    • Josh –

      Thank you very much. Food definitely can creep up, especially depending on where you get your groceries at – just when you think you are doing very well, you’ll be surprised when you switch to a lower-cost store, such as Aldi.

      Oh no way – are you from Cleveland then? May I ask which part? Bert and I would be pumped to share a beer!! Christmas Ale for sure… or even 12 dogs of Christmas.

      -Lanny

  6. You mentioned you missed the window on property taxes and that really struck me. What did you mean by that exactly? We’re you going to try to negotiate a better Tax rate? If so, how would one even go about doing that?

    • Thanks Diligent –

      When I received our notice of property tax assessment, there is a window that you can battle the county. I received it during busy season and I am a traveling CPA during mine, so never had the time/way to be home to really go there – and didn’t want an agent to represent me, I need to review further to see if I can negotiate/argue a lower assessment at any time – but from the notice it was from a defined window and is then set for a 3 year period, I believe. The life of a traveling public accountant… it’s great haha.

      -Lanny

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