10 Big Expenses You Can Easily Get Rid Of
If you're like me, your budget follows the 80/20 rule -- 80% or your income goes to 20% of your spending categories. To knock out the expense of any of these big ticket bills would have an immediately therapeutic effect on your cash flow. Ironically, these big items are also some of the most difficult to part with. (See also: See also: 7 Unnecessary Household Expenses You Can Cut Today)
Lucky for you, we've got a plan for scrapping them one by one….
1. Mortgage or Rent
Everyone needs a place to live, and we are not suggesting that you crash in a van — down by the river. But you don't necessarily need a full mortgage or pricey rental lease to live comfortably, either.
While it's difficult for families to go without a housing payment, single folks should be able to find a creative way to skip paying for housing. This can include taking on a job that includes free room and board, staying with relatives (while offering them something in return), or getting a school loan specifically for paying that dorm bill. And there is always refinancing your mortgage to pay it off early.
2. Car Payment
Technology has made it easier than ever to skip the car payment, and many are taking advantage. You can choose a car-sharing arrangement, public transportation, carpooling, or even biking it. My family of eight has opted to maintain a 20-year-old car over the cost of making payments, and we rent a new model from a rental company when we need a more reliable vehicle for going out of town. We save big money.
3. Other Car Fees
Did I mention that having a 1996 vehicle comes with extra perks? It costs just $30 to license and register our vehicle every year. And liability insurance is less than $12 a month!
4. Cable
You can find all kinds of articles on how streaming entertainment can almost fully replace the traditional cable box. We cut the cord two years ago and have never regretted it. The only thing our expensive $97 a month bill got us that the $21 total bill for Amazon, Hulu, and Netflix combined can't offer is live college football games. We listen to the radio when we can't make it to the local eatery to watch the games on the wall of TV's. It's a small sacrifice for the big savings we see.
5. Internet
With most smartphone plans offering Wi-Fi hotspots as part of your plan, it's possible to skip having broadband in your home altogether. This won't work for the homebody who streams Netflix all day, but it is perfect for the person who is almost always in a public Wi-Fi location and only need their hotspot for using apps or checking email. You can also add on extra data for a lower cost per month than buying a contracted plan through many internet providers.
6. College for the Kids
Not all kids go to college, but for those who want to, having a college savings plan can make all the difference. We have straight up told our kids that they won't be getting a fat plan from Mom and Dad when they graduate. We do contribute a small "allowance" that they put into their funds, but the rest of each child's cost will be paid through their own contributions from after-school jobs, gifts, scholarships, and creative use of transfer and dual credit courses. Our daughter, for example, can take classes while still in high school at the local community college for 50% of the tuition cost. These transfer to her chosen 4-year college at 100% credit.
7. Retirement
Yes, you will need something to live off of when you retire, but who said it has to come from a traditional "retirement savings" plan such as a 401(k) or Roth IRA?
Since stocks can be just as volatile as other investments, and the funds can't easily be touched until you retire, many are turning to business investments as an alternative. Buying farmland, investment property, or real assets in your own startup can start paying off right away, and the value can increase to well over what you'll need when you retire. As with any investment, there are risks, but since you are involved in the day-to-day of these investments, the chances of another Enron-style scam are limited.
8. A Big Wedding
Big "I do's" can cost in the tens of thousands of dollars, but why? The happiest day of your life doesn't also have to be the most expensive. Invest in a small function, or elope and have an intimate reception with close family and friends. The money saved can be put to more useful things (such as knocking out expense #1 on our list.)
9. Funeral
While not as fun to think about, the same approach for the happiest day of your life can be taken for the last day of your life. Things like satin-trimmed caskets and premier burial plots can take a healthy life insurance policy and whittle it down to nothing; prepaid plans burn money you could easily invest while you're still alive. A simple cremation and memorial service can be a beautiful, but budget-conscious, alternative. Be sure to discuss your frugal wishes with family before you go; or better yet, include it in your legally-binding last will and testament.
10. Baby Delivery
While you can't get rid of all the costs of having a baby, you can significantly cut back by delivering at home. I have no experience in this matter, so I can't say that it's for everyone. Paying an experienced midwife to facilitate a home-birth is known to be a blessing for all involved, however, and if you and baby are healthy enough to try it, the savings can be $5-$15K or more!
How much can you save by cutting out just one of these high-cost items? We'd love to hear how you got rid of your "80%" in the comments!
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Interesting points Linsey. Expanding on your comments with regards to education, I don’t think many people realize the savings to be had just by encouraging your child to look into community colleges. Chances are your son or daughter isn’t 100% sure on what they want their major to be and even if they do they could change their mind at a moments notice. By going to a community college, they can explore their interests and see which major might fit them best all while saving tens of thousands of dollars. Plus after two years they can still transfer to the four-year institution of their choice!
Thanks for your comment. This is exactly what we plan on doing with our kids. Not everyone is destined to be a doctor, and there are plenty of trade schools that offer real-life career training for a fraction of a private college price tag!
Please don't talk about the savings of home birth without talking about the risks and potential costs. If you are insured, a midwife will be more expensive than the copays. If you end up having complications, you will not only be on the hook for the midwife and all of the cleanup required, but will also be on the hook for an ambulance ride, the hospital and obgyn costs (except instead of standard costs you will have emergent costs) and the potential costs the NICU and ongoing costs of a brain damaged baby. Home birth babies are 18x more likely to have brain trauma from lack of oxygen than hospital born babies.
This would be comparable to saying a way to save on costs is to drive home drunk instead of taking a cab. Technically accurate but significantly risky.
Our home-birth midwife is covered by our insurance. I think this is becoming more and more common, thankfully. I had a very healthy pregnancy and easily delivered a healthy baby at our home. I would recommend this option to anyone looking to save money and avoid the potential risks associated with delivering in a hospital (higher chance of having a C-section and avoidable/unnecessary interventions).
The risk of being transferred in an ambulance (i.e. a serious emergency) is extremely low. The vast majority of births proceed normally. There are risks to not progressing "fast enough" and many state laws require that women be transferred to a hospital if their water has broken and they have not delivered within 24-36 hours. If that is necessary, an ambulance ride is not needed-- you simply drive to the hospital because it is not an emergency. I have never heard your "18x more likely to have brain trauma" point before-- Is that a fact?
Definitely do your homework and decide what the best option is for your individual situation.
I went the opposite way with internet. We have a stay-at-home parent so we pay more for internet, but my husband doesn't use a cell and I use one that uses wifi when available. Last month my bill was ~ $15. Cheaper for us than some friends I know that pay outrageous "unlimited" cell bills.
The wi-fi phones are amazing! I agree that there is no one-size, fits all solution for internet. It seems like you are being smart and considering "value" over price!
"10 Big Expenses You Can Easily Get Rid Of", and number 1 is Housing? The solution proffered are live with relative, get a job with free housing, use a student loan to pay for it, or hell, just refinance. These are all incredibly NOT easy, or wholly unrealistic.
Please, if you're going to be so lazy as to write a listicle, at least write one that is rational.
This article is the biggest reminder of the dangers in giving a voice and an audience to any unqualified person who can string together a sentence. The author is well-intentioned, but to suggest people get student loans to pay for housing is a giant red flag as to the lack of financial acumen from the writer. All loans have to be paid back, student loans more than any other type of loan. Taking out extra student loans to pay for housing is not frugal, but foolish. Share a room with a person or two (instead of having your own room) is frugal. But to sacrifice your future financial well-being? No, no. Additionally, in my ten years since graduating college, I have yet to find a job posting that, along with traditional benefits, offers free room and board.
But the most foolish, dangerous comment of all is to genuinely advice women to, oh, just have a home birth, as it if was the same as eating at home or going out to dinner. To preface is with "I know nothing about this" should be a huge red flag to the author herself not to write about the subject at all, particularly in such a flippant manner.
Yet, we live in a world where our opinions must be shared, our thoughts disseminated no matter their weight, value or relevance. We live in an age where websites will pay pennies for words strung together rather than insightful pieces. And then idiots like me sit here, appalled, attempting to make sense of why? Why would this person write about something she is so magnificently unqualified to discuss? Why would intelligent friends of mine share this drivel?
Why, just why?
Just to offer a counter perspective... Since graduating from college 4 years ago, I've found 3 jobs that all provided free room and board. It was one of the main reasons I decided to take those jobs in fact. I'm an English as a second language teacher and I've been fortunate enough to work in China, South Korea, and Japan. All three companies not only paid for my room and board but they also paid for my round trip flight as well as other benefits. In China particularly, I was able to save a lot of money. These were all great jobs for someone who was right out of college and I got to do an incredibly amount of traveling in the mean time.
I'm currently back in school working on my MA in teaching English as a second language and my plan is to go work in Dubai where they also provide free housing and flight reimbursement. I should also add that there is no income tax there.
I'm not saying this article was full of brilliant tips for saving on the necessities of life, I'm just saying that it is possible but I had to be flexible and creative.
Not sure I'd say these are things you "easily" get rid of. Housing and a car would be better off in a list of things you can get rid of with a significant amount of effort.
I think you are trying to stir a big debate here. I understand that you can save big if you don't have a mortgage or rent. However, this may be one of the best times to have a mortgage and buy your home. House prices are still low and mortgage rates are not going to get any lower. Think it as an investment for the future and secure your home. Cars as well another area. Many people live with a dream to drive their ideal automobiles. I don't think you can pursuade many people to drive a 20 year old car. What I think is stupid is to buy a sports car for a 16 year old. They are the riskiest drivers and giving them a sports car will make it even riskier. On top of it you will need to be slaving away to pay the auto insurance premium if you can get it insured at all.
I don't agree with not paying for your children's school fees. I would do anything for them. But I totally agree with not having big weddings or spending money for funerals. What is the point of inviting hundreds of people to a wedding when only handfull of them are your real friends and family? I don't have cable and don't intend to have.
I have a 14 year old car that I will be driving until the wheels fall off. :)