5 fixed expenses you can cut to balance your personal budget

by Helen

I have good news for you! Though fixed expenses are those essential and must have for you, there are ways to reduce these expenses and leave more cash in your pocket every month. No, I am not so cruel as to ask you to not buy new clothes, eat just bread, drink water and share your home with a bunch of people to save a couple of bucks. I am talking about small adjustments that you can make that will really make a serious dense in your cash flow.  I sort of chickened out and only tackled my variable expenses when I began to create my personal budget but as I got into the saving groove, I looked for ways to reduce fixed expenses and I DID IT! I am totally jazzed about this development and I want to share with you my tips on cutting fixed expenses. This was how I did it.

  1. Housing

If you read my post on Cohabitating with friend – Is the saving worth the headache, you will know that I now hunker down in Karen’s basement. I made a drastic change in my living arrangement because I realized that I didn’t need all the space in my 2-bedroom condo.  I am a single girl who works long hours, and yes, I have a life so I don’t spend all my time at my condo.  Realistically, I just need 1 bedroom, kitchen and a bathroom and I still have plenty of space for myself.  I paid a $1500 monthly mortgage payment for a 2 bedrooms, 2 bathrooms, kitchen, living room, veranda, courtyard, locker, parking and bike space. This meant that I was paying a hefty amount of money every month for 1 bedroom, 1 bathroom, veranda, courtyard, parking and bike space that I never used.  There I was busting my bun off working long hours to pay for a more than half of my living amenities that I never wanted or needed to use. Did this make sense, Helen? You are supposed to be a finance person. Come one, think!

Couple of my friends thought I was going nut when I made this change. They told me that: “Don’t you want to have an extra bedroom and bath for guest? Well, you can enjoy the veranda and courtyard when the weather is warmer. Don’t just take the public transportation, buy a car. And you can learn to bike”. Well, I may have 1 guest per year, so does it make sense to paying for these spaces for an entire year for just couple of day use?  I live in Canada which knows for cold weather, I may get 2 months of use my outdoor space at the most. And what is wrong with taking a picnic blanket and make use of the lovey park in my area if I want to enjoy outdoor reading? As for transportation, it actually takes me less time to travel on public transportation than drive to downtown Toronto.  By the way, best of luck finding parking in Toronto financial district. Lastly, I don’t and never want to bike. You get my point right? If you truly want to you can find way to have the amenities that you want without paying a huge amount of monthly mortgage or rent for it. A little creativity goes a long way. Now someone else is paying for my mortgage while I gain a monthly $500 surplus along with profit that I will likely get when I decide to sell my condo.

If you don’t want to live with your family, consider renting out the unused room in your house. Karen and my brother in law rented out their unused basement for years and practically lived rent free. This helped them saved a lot of cash in a short time and they invested their disposable income into stocks and real estate instead of paying for the unused spaces. Karen, budget hawk had good ideas occasionally.

So, don’t pay for unused living space. This rule applies to both renter and homeowner. Living with roommate, family or renting out portion of your home, subletting are just some ways you can use to live comfortably,  financially smart and in a space you enjoy.

  • Transportation

Fully disclosure, I live in Toronto and the TTC (Toronto Public Transit) is terrific for travel within the city. I work in the financial district locates in downtown area, so it makes a lot more economically sense to use public transportation which average takes 30 minutes to get me from door-to-door. If I drive, it takes about 40 minutes and I have to find a spot and pay for a cutthroat daily parking cost of about $30. So I am a TTC user and if I really need to drive somewhere, there is always zipcar and uber.  If you are living in a metropolitan city with good public transportation then I encourage you to take full advantage of that. In Toronto, a monthly subway pass is $146 for unlimited travel, while car ownership will cost an average of $790. Let’s do some math. (($790*12) – (146*12)) = $7,728 annual saving. WOW! I definitely hitch my ride with the public! That’s my Thailand trip right there.

If you live in a place where there is limited or no public transportation system, consider carpooling or alternative green transport. I am not crazy about biking but I can enjoy a Vespa which makes less of an impact to the environment. Also, I can imagine myself riding thru somewhere romantic (say Rome) when I am on a cute Vespa. La dolce vita!

  • Bundling your telecom stuffs

No, don’t cut your cable. I won’t either but cable can be expensive.  Nowadays, there are a lot of telecom companies for you to choose from. So, invest 1 hour of your time to make a few calls to see which company can make you their best offer. My favorite thing to do is to pit providers against each other. I called my provider and let them knew that their competitor offered me a lower price. It worked every time!  I could get a lower rate or a different bundle that would either give me more usage or lower my overall cost. Even if there are no telecom competitors in your area, you can still use leverage what you have as a loyal customer to get a better deal. There are now so many alternative ways to get TV shows and other entertainment online, so call up your cable company and tell them you are thinking about switching to Netflix or Hulu instead of being a cable subscriber. They will most likely make some concession to keep you on. If you are not fussy about on-line TV streaming, try a Raspberry Pi. You can totally cut cable off if you have a Raspberry Pi and decent internet service.

Another way is reduce your telecom cost is to bundle T.V, internet, home phone and cell phone together.  Bundling is my last bargaining chip with my service provider. The more products I have with a company, the more likely they will bend to my will because they make more money from customers who have more products and stay with them longer such as myself.

  • Reduce your electrical usage

There is no need for me to burn candles. Though I occasionally turned off the lights and just have the candles on for reason that I can’t say but ladies, you know why.

There are ways to reduce your electrical usage such as:

  • Change your light bulbs to LED or CFL.  These bulbs are about 4 times more energy efficient than traditional incandescent bulbs and they lasted much longer too. You will share on cost of purchase and pay less on electrical bill.
  • Unplug your electronic devices when they are not in used. I am guilty of this too. I often left my laptop, Chrome book, iPod and phone plugged in the chargers long after they reached 100%.   But I learned to unplugged and just kept a time check to make sure I didn’t waste energy. It is good for your pocket book and the environment if you can reduce some electrical usage
  • Lower the temperature of your water heater. Ok, I am not taking about freezing bath. I am not that extreme, but I used to have really hot bath. Karen was the worst at this. She always looked like a tomato after bath because she had really hot water bath. Slowly, I steered them into the right direction, you can have an enjoyable warm bath and it is better for your skin. So, turn the heating off so you can save on energy that uses to heat the tank when you don’t need it.
  • Look at your cell phone bill

I save the best for last. An average cell phone plan with data, talk and all the hoopla is CAD$70 (generally give you 1G of data) or US$80.  That’s CAD$840 or US$960 per year!  Whew, that’s a lot of cash to stay connected.  So try to shop around, bundle it and negotiate with your service provider.  I have unlimited data, talk and text plan for $60 per month in Canada. That’s unheard of pricing by a large and well-known carrier, so I took the best offer from a smaller carrier and saved $120 per year. Not a lot of cash but it will get me that nice Cole Haan bag that I eyed the other day.

I will admit that there is a downside with a smaller carrier which is some service disruptions and inconvenience when I travel oversea.  But these are minor inconvenience and I think the trade-off (nice Cole Haan bag) is totally worth it for me.  Well, Karen thinks I should buy few more stocks with that cash, but I gotta have some enjoyment. I am ok with this trade-off.

Lastly, more saving tips from the hawk

I want to end here, but I know of a few more tricks to cut fixed expenses that Karen told me. What that budget hawk wouldn’t do to build more wealth. Though I will share and hope you find them useful.

Consolidate your debts

Karen loves to talk about debts consolidation and helps our friends in this area. I think she is traumatized after spending the early part of her career as a lender.  She knows how debts can destroy one’s wealth and health. For a while, student debts were both my and Karen’s headache and pain. So, when there was enough equity in our house, Karen consolidated both of our students’ debts into one mortgage. Check out her post and learn about leveraging and debt consolidation. By consolidated the debts into one monthly payment (and hopefully at a lower interest rate), you can save a lot of cash.

If you don’t own a house or have enough equity in your home, try to apply for a low interest rate line of credit or a loan. The topic of debt consolidation deserves its own post and I know just a person who would love to write about it. Over to you, Karen!

Auto and Renters or Home Insurance slash

Similar to my advice on telecom bundle above, shop around with different provider, you may surprise on what price you can get when you invest time to negotiate creatively.

Get a Good Workout for Less

Well, this one is subjective. Some people will say, work out is a variable cost not fixed one. I would beg to differ. By now, you probably can guess that I am a total believer in healthy and active lifestyle so this is a fixed cost for me because it is a necessity as much as shelter, food and water. And if you read my post “5 exercises that you can do at home without hitting the gym mat”, you will know that my home gym cost me $4. Yep! Best investment ever!

Ok, I promise to stop now. I will write another post on savings tips for variable expenses. I will leave you one last thought: if there is a will, there is a way. Nothing is impossible even fixed costs. Use your creativity to optimize your resources to spend less and live more. There will always be some trade-offs that you will have to make but ask yourself honestly: do you really need it or do you just want it? You and only you know the answer. Share with me your expense reduction tips. I love to hear and learn from you.

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