Making the cuts to your monthly expenses are some of the most difficult decisions you will make on your journey to your Year Off. Your life might change drastically, but remember, it is temporary. Remember delayed gratification. You can have that nice apartment downtown after your Year Off. Your main goal now is paying off your debt, saving for retirement, and saving for a Year Off.
Your monthly expenses are everything you pay on a month to month basis. This does not include student loan, car, and credit card debt payments, which are a part of how much money you need to save for a Year Off. You receive these monthly bills every month and you have a good idea of how much money they cost. Make it your goal to cut your spending on your monthly bills by $100 a month.
Now let’s take a closer look at your monthly expenses and ways to cut back.
1. Rent
First of all, let’s assume you don’t own a home or condo. You’re a renter and you have the flexibility that renting offers. Rent is likely the biggest monthly cost you have. Depending on where you live, rent can vary from $1000-$3000 a month for a regular-sized apartment. But you can significantly reduce this cost in several ways.
Are you able to live at home with your parents for a while? This eliminates your monthly rent payment and allows you to focus solely on paying off your student loans, adding money to your retirement savings, and financing your Year Off. It may be difficult to stay with your parents for an extended period. It certainly won’t be the “coolest” thing to do, but remember delayed gratification. You can get your own apartment after your Year Off.
If moving in to your parent’s house isn’t an option, find a small apartment. If it’s small enough, you only need to spend money on a bed, dresser, couch, and other small furniture to furnish it. The cost to heat and cool the place will be lower as well because of the lower square footage.
Find a roommate or roommates. This can save you significantly without sacrificing the quality of the apartment you are living in. Find someone you get along with and get an apartment together and cut your living expenses in half immediately.
Finally, find a cheaper location. You may need to move within your own city or possibly to another city. Find a small apartment outside of the “hip” areas of town where you will pay a lower price per square foot.
2. Utility Bills
Utilities are a necessity but these are minimized by living in a small apartment and by being electric and water conscious. Don’t keep the lights and electric appliances running all the time. Keep your thermostat set high in the summer and low in the winter. Keep your apartment size small so you have less cubic feet to heat and cool. Take quick showers. This will save a significant amount of money over the course of a year.
3. Internet and TV Bills
An internet bill is pretty much a necessity so count on that as one of your expenses, but shop around for the best deal. Or can you drop the internet bill and just use the data service with your cell phone carrier as your source of internet? Most, if not all, smart phones have the ability to create a wi-fi “hot spot”. This allows you to log on to the internet with your computer through your cell service.
Cable TV is the biggest waste of money out there now. You pay a premium price for a bunch of crap stations that serve up nothing but reality TV shows that do nothing to improve your life. Get Netflix or some other streaming service instead. Check with your library as well. They are likely to have hundreds of DVDs of TV shows and movies or a free streaming service. Take advantage of this! I watched all 8 seasons of “Entourage” by renting the DVDs from my library.
4. Gym memberships
I’m a fan of gym memberships because I find it motivating to have a designated place to go work out. Good health is essential to a successful Year Off, so if a gym membership helps you accomplish that, then spend the money on it. There are many low-cost gym membership options out there. Don’t spend the extra money per month on an expensive membership when you can get the same workout at a discount gym. Look at local YMCA’s or community centers for good deals. Check with your employer for discounts on gym memberships.
Otherwise, find alternative ways to work out. Find a work-out video at your library or just stream any of thousands of workout or yoga videos on You Tube. Utilize your city and county parks and go for a run. Get creative and have fun with it. Remember, you can get a tremendous workout in without spending a dime.
5. Digital and Paper Media
Where do you get all your music? Are you able to get it cheaper by only buying songs you really want through the iTunes store? Do you use Spotify enough to justify the $10 monthly charge, or does the free version give you everything you need? Does your library have a free media download agreement with a company? Do you need both Spotify and Sirius XM or can you cut one?
Do you still pay for a newspaper subscription? Switch to the online version and get your news for free. If you love books, use your library or your library’s free eBooks and audio-books. It’s amazing how much free entertainment you can get out of your local library.
Eliminate/reduce/find a cheaper alternative.
Answer those questions for every single thing you spend money on every month. And start making the necessary changes NOW. If you’re paying a lot for rent, start looking into reducing that cost TODAY, not tomorrow.
What are some other monthly bills you receive and what are some ways to reduce the amount you spend on them?