Wednesday, January 27, 2016

Have You Ever Looked at What Your Bare Minimum Spending Is?

Have you ever looked at how little you could spend each month - your bare minimum amount? I haven't done this in a few years now and I think it is time to take a good look. Especially since we are trying to save $50,000. this year out of our net income, which is after Federal and State Income taxes.

You all know that I track my spending and investing every month to the penny. But it has been a while since I took a good look at how much over the minimum I am spending. So in order to do that, I am going to set a baseline. I suppose you could call it a budget. But to me it is just the minimum amount we have to spend each month for the way we want to live.

So let's take a look and we will start with utility bills.
Our yearly electric and natural gas bills were $1736.65 for the past year. It averages out to $144.72 a month. Is that high? I don't think so considering we have a 2000+ sq. ft. home and live where it is cold and snowy all winter. Would I like to reduce that amount? You bet and I  try every month by carefully watching our usage. 2014's bill was $1998.66. So I reduced our bill this past year by $262.01 or about 13% even though we have had rate increases. If I can do that again this year, I will be very happy.

Our garbage and recycle costs are included in our property tax bills. We also have no control over this cost because garbage and recycle pickups are required by our town. I yearn for the days when I could just take the garbage and recyclables to the dump each week for no cost. I just took the kids along with me when they were little. They thought it was fun.

Water and sewer is billed quarterly and we also get a large charge included in our property taxes for maintenance of those systems. The quarterly bills for the year were $ 234.05 or about $19.05 per month. The water was a very low year for us because we only used the sprinkler system 3 times all summer since we had lots of rain.

Cable TV, Internet and Telephone is about $ 1677.96 a year or about $ 139.83 (I fought for a reduced rate) a month. Each month changes by pennies. I have no idea why. These are a necessity in our home because Hubby insists on having it. If I had my way, I would cancel the Cable TV and just watch shows on the computer, the Roku Netflix and Amazon Prime. That should be enough entertainment for anyone. Time Warner just had a rate increase for both TV and Internet so I don't know how much it is going up until we get the bill after the increases. Then they will try to increase the bill again in May on our yearly anniversary. I will fight to keep the bill the same. The telephone is a necessity for now. If we went bare bones, we would drop TV and telephone and keep internet. We would get another cell telephone with nothing but dial tone to use for our alarm system.This would cost about  $50. a month total.

Guardian Alarm System monitoring is $29.85 a month or $ 358.20 a year. Many people ask why we pay for alarm system monitoring. If your home has ever been broken into, you wouldn't have to ask.     

Netflix was $ 7.99 a month or $ 95.88 a year but it is about to go up to $ 8.99 a month or $107.88 yearly. 

Amazon Prime is costing me $ 106.92 yearly or $ 8.91 a month because our state requires 8% sales tax. We order so many necessities through this service that we get free shipping on that it has saved us a bundle. We also enjoy all of the movies, music, books and cloud storage of our photos. This is priceless to us. This is an example of spending money to save money. Sure I could shop for everything in local stores and just use Netflix but Prime saves me time, energy, and gasoline and at my age that is a bonus. 

Food which is groceries. I have been spending a lot in this area lately. I believe that if Hubby and I ate all of our meals at home we could with careful planning reduce the $ 400.+ bills a month to $ 200. a month. But that would not leave me wiggle room right now to feed guests, be charitable to someone in need for a dinner dish, etc. So I would be happy if right now I just spent  $300. a month heading down to $200. So I have to work at this.

Restaurant meals I would like to keep below $ 50. monthly or $ 600. per year. Bare bones we would eat at home all of time so our minimum would be 0.  

Household goods (no food) runs about $75. per month or $900. yearly.

Haircuts for both of us run $810. per year or $67.50 a month including tips. Bare bones would be $ 150. per year for Hubby and I would grow my hair and just have him trim it once in a while. 

Medical is extremely high. The total for the year was $7500. out of pocket which is $ 625. a month. I have no idea what the bare minimum would be. Sure I know what the insurance is but we see a lot of doctors and the dentist quite a bit for both of us. Yes when you get old they have you running to appts. and for labs constantly. We are trying our best to lower these bills. So I honestly right now would have to say this is the minimum.  

Auto insurance and homeowners insurance bills totaled $1337. last year or $ 111.12 a month. I will be working on getting these down.

Automobile maintenance is usually just oil changes and snow tires put on and taken off. We also pay about $80. for AAA. Those things run about $ 380. for the year or $ 31.67 a month. This could go up as the car ages but for now the car is running great.  

Gasoline last year averaged $80. a month for a total of $ 840. a month. This includes many long trips a year.

Household maintenance ran $2500. last year. It was high because of exterminating services for voles in our lawn which cost $1000. We have decided not to hire them next  year because it did not get rid of them. With fields behind us we will just have to live with them until they build behind us which may be this year. We do pay for lawn service for fertilizing which runs us about $ 350. per year. The rest of the $2500. was for furnace and A/C checkups and miscellaneous maintenance. I am hoping to reduce this down to $ 1500. for this year. 

Gifts have been budgeted for $ 1640. for this year or $ 136.67 a month which will include wrapping paper, cards, and any shipping that has to be done to get them to where they need to go. I could make all homemade gifts and ship all year and that might save me 1/2 or $68.33 a month.

Entertainment such as going to the Zoo or some other place usually costs us about $ 300. per year. 

Vacations have been an every other year occurrence and we usually end up spending about $3500. So I don't budget for them. I just pay them out of current funds when they occur and they could be given up all together for a minimum spending plan. I believe as we get older and older, we will not take vacations anymore. P.S.: Hubby does not like to travel so it is usually me that goes.    

Property and school taxes for the year were $  7862.66 out of pocket (which is after a state reduction of school taxes) which everyone can apply for).  We get no reduction for old age on property or school taxes because we have too much income. These taxes are totally out of our control. Taxes always seem to go up so we have to plan for them. I suppose we could sell our home and rent but it would cost us more than that a year to rent. We do have home maintenance costs but it is worth it not to share walls with neighbors.

My cellphone is $596. yearly using my son's account. That is about $ 49.67 a month. Many of you have shown me how to get it cheaper and I will be looking at that come December. I already paid my son one year in advance. The cellphone is a necessity for when we leave the house especially when we are out in the car for a  medical emergency or to call AAA.

We are buying no clothing this year.

Here would be our bare bones budget monthly if it became a necessity:

Electric and Gas:               $ 144.72
Water:                                  19.05
Internet & Telephone:            50.00
Alarm Monitoring:                  29.85
Netflix:                                   8.99
Groceries:                           200.00
Household Goods:                 75.00
Haircuts for Hubby:               10.83
Medical:                              625.00
Auto & Homeowners Ins:      111.12
Auto Maintenance:                 31.67
Gasoline:                              80.00
Household Maintenance:       125.00
Gifts:                                    68.34
Property & School Taxes:      655.22
Cellphone:                            49.67

Total:                                $  2293.37  

That would be $27520.44 yearly. In the bare bones budget there would be no eating out, cable TV, entertainment, or vacations.  We are spending a lot more than this now but I am happy to know that we could live on less.

If you haven't looked at what it would cost you to live on a bare bones budget, do it this week. Anyone could have a cut in income at any time. A spouse could die and you could lose income. A wage earner in the household could lose their job or even take a pay cut. Maybe you have an extremely sick spouse who only has a couple of  years or months  to live.    For seniors when one spouse dies, sometimes their partner would lose some pension or social security income. Now is the time to look at this before something happens. Better to know ahead of time if you can afford to live in your own home or if you would have to sell it. If you know that you will have  the income to cover something like this, you can breathe easy. If it shows you don't, now is the time to do something about it.

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