The money you spend on a yearly basis is a big area to look at for saving money to pay off your debt, fund your retirement savings, and save for your Year Off. These expenses are things you pay for once or twice a year or things that pop up randomly throughout the year. Many of them are unplanned or impulse purchases, so remember delayed gratification.
These are some of the areas where I think you can save, but everyone’s spending habits are different so look at your own list and think about where you can eliminate/reduce/find a cheaper alternative. I think a goal of saving $500 on all your yearly expenses is a reasonable goal to start with.
Here’s my list of areas you can save big.
1. Car Insurance and Renter’s Insurance
Shop around for car insurance, plain and simple. If your rates continue to go up, call your insurance company and ask for a discount, or start calling other insurance companies to find a better rate. Eliminate non-essential coverage like comprehensive. Shop around for your apartment renter’s insurance as well.
2. Yearly Professional Association Dues
While I think professional organizations are great for many professions, the association dues are often quite expensive. If you don’t get much out of your membership, consider dropping it for now. You can always rejoin the association after your Year Off.
3. Magazine Subscriptions
How much enjoyment do you get out of your magazines? Is it worth what you’re spending on them? Better yet, can you find the magazine for free at your local library?
4. Credit Card Yearly Fees
Spending money on yearly fees for credit cards that have better rewards is not a good strategy for saving large chunks of money. You often need to spend a large amount of money to take advantage of the rewards points programs. But the goal is to cut your spending, so it doesn’t make sense to spend more money to get more money back. Just don’t spend the money in the first place.
My go-to card is the American Express Blue, which has no annual fee and decent rewards points. I rack up enough rewards points to equate to around $100 per year in Amazon credit just by using it on my weekly and monthly expenses.
5. Entertainment
Things like amusement park season passes or Broadway show tickets or sports teams season tickets. These are all things you can repurchase later in life. For now, can you practice delayed gratification and pass up these things until after your Year Off?
6. Clothes and Shoes
Keeping up with fashion is something you simply cannot afford to do while preparing for your Year Off. Buying new clothes every year is extremely costly and can really eat away at the amount of money you can save.
Go through and organize your wardrobe and take inventory of everything you already have. Try on old stuff and see if it still fits and looks good. I found several good pairs of jeans that were hiding in my closet when I went through my clothes. Get the clothes you already have dry-cleaned. The clothes may look nasty and worn out but having them dry-cleaned for $3 a shirt will make it look brand new. This is much cheaper than buying a new shirt.
Look for cheaper ways of acquiring new clothes. Talk to a friend and raid each other’s closets. Pick out stuff the other person no longer wants or fits into. Shop at second-hand clothing stores and buy name brand clothes at steeply discounted prices. Buy in bulk and take advantage of sales like the ones Joseph A Bank runs, buy one shirt get two free.
Having large numbers of shoes is out of the question too. Find a couple good pairs that you like and will work with multiple outfits and just use them. Avoid the consumerism bug!
7. Vacations and Travel
Vacationing and traveling while preparing for Your Year off should be a part of your life even if you’ve really tightened up your budget. First of all, you can’t expect to keep your sanity for several years by working non-stop and having a super frugal budget. It’s OK to spend some money here and there on traveling.
This pre-Year Off traveling will also help you prepare for your Year Off. You will discover what you love doing while traveling, where you like to travel, and how to travel. Try to decrease the costs of your pre-Year Off travel though. Read the book “Travel the World on $50 a Day” by Matt Kepnes and start adopting some of the cheaper travel principles while not sacrificing any of your awesome experiences.
8. Electronics and Gadgets
TVs, laptops, gaming systems, stereos, smart phones, cameras, etc etc etc. The list of possible electronic purchases is endless, and for many people, a yearly thing. This is a significant cost savings category, so avoid the consumerism bug!
If an electronic you have still works fine, keep using it. Don’t buy the new release just because every one else is buying it. Find something used from a friend or family member or check out Craig’s List. Buy a refurbished product. Sell any electronics you no longer use to make some extra cash.
9. Pets
Pets are wonderful. They provide companionship and unconditional love, but they are quite expensive. I would highly recommend waiting to get the puppy you always wanted until after your Year Off. Costs are the biggest reason. Also, It will be very difficult to find someone to take care of your pet while you are gone. Practice delayed gratification and wait until you are back and established again at work to buy a pet.
10. Toys
For me, these include things like my bike and my camping and backpacking gear. Avoid accumulating a whole slew of toys that you hardly ever use. Think about what you’re purchasing and try to estimate how much you will use it. Avoid the impulse purchases. Slow down and take your time before you buy something. Go home and think about it more.
If you already own a whole closet full of toys, sell some of them on Craig’s List and make a little extra money while de-cluttering your life.
Remember delayed gratification, eliminate/reduce/ find a cheaper alternative, avoid consumerism.
These are all things you can purchase later in life. But for now, say no to them and save the money instead for an incredible year of travel.
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