Do your Need it or Just Want it (Lower Your Expenses) - (W4:D1) Debt Free Millionaire Podcast

Debt-Free Millionaire

Simplified Explanation: What are your needs in life? Housing, utilities, food, and transportation. These are the essentials. We have already gone over fixed and variable rate expenses. Now, for those things that are essential, here are ways to lower how much you spend each month (on things other than your debt).

Real Life: Now, what happens when you have so many expenses that what goes into your wallet is the same amount as what leaves your wallet, or restated, when your expenses are just as much - or more - than your income? What needs to happen? This is when a purge is needed. Here are some ways to purge your spending and bring down your expenses.

• Create a shopping list and stick to it – All grocery stores are designed to make you pay more. Everything from where the necessities are positioned in the grocery store, to what is on the shelf at kid or adult eye levels. Make a list at home of your necessities, and even your wants. Then go to the store, and strive to only buy what’s on your list. Even if you have an impulse to buy something more, don’t. Try this out a few times in a row, and you will begin to break the habit of “must-have” retail. Or, even more effective, make your list and order it online, and pick it up outside the store, so you aren’t driven to buy more.

1. 1. Use coupons, discounts, and rebates – If you are going to stores like Michaels, grab their coupon online. There is an active 20-40% discount on everything they sell, so don’t forget to look it up at home, or on your phone while you are in line. Though coupons are not as common these days, there are usually discounts online for most products to get you to try their brand. But, be sure to compare the discounted price to the store brand price. Pick the less expensive one. If you are on the computer, install a program like Honey, which finds active discount codes to try (which they found online).
   2. Shop Online – You can buy nearly everything on your list on Amazon or a grocery store, and they will either deliver it to your house, or pop it in your back seat (when you order beforehand and pick it up from the store). Use online discounts as well. There are normally no differences in price when you are buying in the store or online, if you go to the store’s website directly. Be careful of services like Instacart, whose prices are actually higher than the prices in the store, or on the store’s online ordering system. You may want to compare the pricing though. Since the online price is the same around the U.S. (on Amazon, for example), if your groceries cost less than somewhere in CA, you will most likely pay less in your local store. If you buy online, you can always price compare, or use the discount codes provided online.

• Buy in Bulk – One big issue in overspending is constantly buying smaller packages of groceries. Almost any grocery item is more expensive, per ounce, when you buy the smaller quantities. Buy larger packages of things you use all the time, such as rice, flour, oil, and even spaghetti sauce. Buy the canned sauce and pour what’s left into smaller containers, or freeze it in ziploc bags.

1. Buy Off Brands – You don’t need to buy a brand-named product. They are priced to cover their marketing expenses, as well as the product they are selling. Most grocery stores have store-named products, which are always cheaper – or they would not be selling them – and they usually taste the same.
2. Kill the Monthly Subscription - Streaming Service – Everyone will agree that $5.99 a month is not a lot of money, and $20 is okay with some products, but $100 a month is very expensive. Well, how many $5.99 subscriptions does it take to make $20? And how many $20 does it take to make $100 a month, however you look at it? They are expensive over time. $100 a month is $1,200 a year. Do you have that just lying around? The big question is, do you need all these monthly services? To this day, I pay for one service, outside of utilities, and that is the one streaming service I want that month, or 5 months. I will watch everything they have on there, and then change to another one while they fill up. For example, Disney has The Mandalorian. I like this show, but they aren’t set to release another episode for more than a year, which means, I don’t need - or want - to hang around until they put that back up. This is living life intentionally.
3. Kill the Yearly Subscriptions – Maybe once a year you will want to purge your expenses, but most of the time those yearly subscriptions are not visible, since you paid for them 6 months ago, and you only pay once a year. For example, Amazon Prime charges you once a year. These are accounts that charge you once a year so you don’t realize you are paying for them each month. This takes a little extra effort, but go through all your expenses and find any that renew yearly. Cut those out. Most of the time, these are monthly expenses, paid at one time. If they are not 100% necessary, cut them out as well.
4. Be Smart with Utilities – Turn off your utilities when you aren’t using them. When the sun outside is enough to fill your room with light, turn off the unnecessary lights. Turn your hot water heater to the temperature that is perfect to shower in, and not something that will boil you alive. Don’t crank up your heater above 70 degrees during the winter or below 72 in the summer. Sounds reasonable right? Buy LED bulbs. Also, find out if your local utilities use Peak Usage Hours. Some utilities charge more if you run your appliances during the day, during peak electrical usage, instead of at night. If they do, run your appliances outside of peak times.
5. Purchase new appliances – Most older appliances are utility hogs - everything from your old toilet using way too much water, to your washing machine using too much water, and electricity to move this abundance of water. Newer appliances do more, with less amounts of energy or utilities. At the same time, most older appliances are better built and last longer.
6. Cell phone’s stranglehold – Find out exactly how much you are spending on your cell phone. Do you need that amount of data? Do your kids all need lines? Why? Compare it to when you were a kid, did you have a phone and do you feel they need one? At what age do they actually need a phone? Go to debt-freemillionaire.com/cellphone/ to find more ways to save on a phone plan. If you have to, buy a landline at home; it costs $20, instead of $40 per line.
7. Do things at home – Do you need a membership to a gym? Most things you can do from home, if you are intentional enough. Some will buy a membership and rarely go. Exercise needs to be intentional and consistent. If you buy a membership, will you go every day, or at least several times a week? That is the only way to lose weight, or get/stay healthy. The same goes with getting your morning coffee. Even if you need to rush out the door, wake up a little earlier and brew your own coffee. If you need to, splurge on a good coffee maker, because in the long run, you will still save thousands of dollars every year, if you brew coffee at home. You don’t need to eat out; often, you can make better food at home. If you have to eat out, cut it down by half. Every time you stay home you could save $30-50 - that could be a savings of a few hundred dollars a month. If you are going out with others, think of sharing entrees.
8. Shop Used or Refurbished – Thrift stores, like Goodwill and Savers, are great when it comes to buying used items, while stores like Ross are great for refurbished or marked down household products. Frequent these stores for necessities, such as clothes.
9. Shop at Warehouse stores – Nearly every warehouse store (Costco, Sam’s Club, etc.) has a gas station attached. These gas stations are normally priced $0.05-$0.15 lower than all competitors. One tank of gas (20 gallons) will save you $3 per fillup. Fillup 4 times a month and you just saved yourself $144 a year, just by paying the membership to this store, which is usually around $45. You can also save by using these stores to buy in bulk. Watch out though, it is not always cheaper to buy bulk in these stores, compared to normal grocery stores. Look at the price per ounce, or item, typically located somewhere on the price tag.