My last post, Dream Vacations!, made me excited and depressed at the same time. On the one hand, just writing about a kiteboarding and sailing cruise made my heart race while my mind was flying along with my imaginary kite. On the other, I look at our family iCalendar, and I see no kiteboarding sailing cruise scheduled or any other trips that are on our Dream Vacations list. I know this is a first world problem and we do usually (but not now) have some travel on the books, but it made me really think through what are the actions we’re doing today so we can eventually work part time and/or both work remotely so we can go explore the World. After scouring the web for “how to save money”, I’ve listed the tips have helped us save money for our dream vacation.
1.) Track your expenses.
(Saved $250/month – $100 on groceries and $150 on miscellaneous) You could get rich by boosting your income, but there are probably some low-hanging fruit in your list of expenses that could quickly help your bottom line. First, it helped us estimate how long it’s going to take us to pay off student loans and our house. Maybe that’s just a mental thing, but we are both focused on paying down debt and it helps knowing how long it will take. And, if we decide to take a month or two to shift our focus, we can quickly estimate how many months that tacks on to our debt payments.
Second, it did shine some light on a few categories where can cut some costs. We’ve been spending $1,380 per month on groceries for our family of two adults and two young kids (the youngest is still nursing). That is definitely a lot, so we have decided to buy fewer groceries from Green Bean (grocery delivery) and fewer meals per month from Blue Apron. Both of which we love, but I don’t mind taking a trip to the grocery store once or twice a month. I should be able to handle that. Especially for meat; just getting meat from a brick and mortar grocery store should save some $$.
We’re also being more selective on what we click “purchase” on from Amazon. Amazon makes up nearly the entirety of our Miscellaneous category. We spend $1,185/month on Miscellaneous stuff. We can easily cut this down by putting items we want into a wish list for a few days or a week and then going through the wish list later. If you still want it, buy it. If you can live without it, ditch it.
We use Bank of America to track our expenses from our multiple credit cards, Schwab online bank, and of course BoA. We have years of data, but if we were starting over I would probably use Mint. It’s a little quicker to categorize expenses, smarter in how it anticipates expense categories, cleaner design and faster. Not a big enough difference to switch and lose our past data, but that’s what I would use given a blank slate.
UPDATE (1/23/17): Bank of America deleted years of data! They left us with 3 months worth of data! Well, I said I would use Mint if I was starting over so now’s my opportunity…
2.) Shop around for home/car insurance
1 year after we moved into our current house, that we’ve lived in now for 2.5 years, we got the first rate increase on our home insurance. That letter made me furious. The amount that we agreed upon with our insurance company was no longer valid. They raised the price without asking us! We weren’t entirely surprised as we’ve lived through this before, but it’s always shocking. Year 2 went by and another rate increase came our way. I am calling the insurance company tomorrow to renegotiate our rates.
3.) Do not buy an expensive house and cars.
(Saved $400/mo on house and about $150/mo by not buying the cars we really wanted) This is a long term strategy (maybe not something you can do today), but it is worth keeping in the front of your mind when going into major purchases. Saving a couple hundred dollars per month on your house can quickly add up to several trips per year. Or saving $100 per month on a more reasonable car will also add up fast. Our house is relatively affordable ($130k plus $50k in remodel work primarily done by me) and our cars are reasonable make and models (2011 Mazda CX-7 and 2008 Nissan Frontier lowest trim package), so this lets us be able to travel even though we still have student loan debt, two car loans, a mortgage and child care expenses. Hopefully the first two will be paid off by the end of 2018, but the reasonably priced cars and home give us a lot more flexibility.
4.) Refinance to get the lowest rates
($85/mo – 2.2% down from 6% on $50k over 5 years) The student loan consolidation market has changed dramatically in the last 12 years that we’ve been paying for student loans. We both added to our undergraduate debt by pursuing Masters degrees thus extending how long it will take us to pay everything back. As a result, the total amount we will pay over the life of the loans is very sensitive to the interest rate. When I graduated from college in 2008, I called about 3 different big banks who offer student loans. Interest rates were low, so I was hoping to consolidate several high interest (~6%ish) loans into one lower one. Their unified response was that no one offers consolidation loans anymore. I guess I shouldn’t have been surprised considering credit was tight everywhere. But, things have changed.
Starting in about 2015, we started receiving mailers from Sofi, an online loan issuer. Upon googling into it, we ended up choosing Earnest over Sofi because of the referral perk: $200 in cash for both you and the friend that signed up. Both of their rates were about the same. We had the choice of variable vs fixed rate, and we chose variable hoping to get it paid off within 2-3 years. Jessica refinanced first. Then I refinanced using her referral link and then we goth got $200. We ended up with $400 and interest rates around 2.2% down from around 6%! Here’s my referral link if you want to give and receive $200: https://www.earnest.com/invite/michael1034
If credit card debt is weighing on you, find a no interest credit card that you can transfer the balance to. Check out the Points Guy for a list: http://thepointsguy.com/2016/09/top-cards-0-percent-intro-apr/.
5.) Optimize home heating and cooling
Get a smart thermostat
(Hard to measure exactly how much. Just guessing, probably about $40/mo, but it will depend on your current situation) There’s a few points in here. First, you want the furnace/ac to not work as hard when you’re not home or not awake. To do this, you’ll want to install a programmable thermostat. In the past we’ve had a “dumb” programmable thermostat where it takes 10 min to program it. It was nice to upgrade to a Nest where the programming is easily done on your phone or the computer. Making changes to the program is done quickly and it’s kind of fun. You feel like you are programming your house to do what you want. The Ecobee was runner up in my research. It has a remote temperature sensor so you can control the furnace/ac to get the correct temperature at the remote sensor. This didn’t quite apply to our situation, so we stuck with the Nest.
Only heat/cool the spaces you use
Our house is 3 stories with one furnace/ac system, so there really no chance of having the whole house be at the same temperature. The third floor (master bedroom) is guaranteed to be hotter than the first floor by about 5 degrees. Despite that, we have found ways to zone heat/cool our house so that we are only just keeping the right temperature where we are actually spending time.
For AC, the kids are ok with temperatures between 70-78 at night, but we like it cold. We installed a window ac unit in our third floor bedroom to get our room the right temperature at night. That way, we can let the AC take a break by setting it to 76 while everyone is sleeping. The window unit definitely blocks the view of the window, but it’s worth it for us considering we can get the room exactly the right temperature.
It’s also fairly cheap to buy and run. We bought our Frigidaire 10,000 BTU/hr unit from Lowes for $300. I have it connected to a Belkin smart outlet that can tell me how much power it uses. In the middle of the summer here in Saint Louis, the window unit was drawing $25 per month of electricity. I also double checked this number with another power measuring outlet that has a local readout; it said about the same number. I consider this a good deal considering we can make our room about 70 degrees at night and save some money by letting the AC not work as hard elsewhere in the house.
For heating, we put space heaters set to a particular temperature in both of the kids’ rooms. No matter what the furnace is set to their rooms will remain a constant temperature. This way, we can let the temperature drop at night so that that all unused spaces aren’t unnecessarily heated and our bedroom will get nice and cool.
We would love to hear how you all have saved some money on monthly expenses! Respond in the comments below.