For starters, consider cutting these four expenses, all ones that have been given up by early retirees, self-made millionaires and other super-savers.
1. Excess Living Space
Financial blogger Matt and his fiancee, who asked to withhold their last names, went from living paycheck-to-paycheck to banking more than $50,000 in 2016. The Chicago-based couple upped their savings through various strategies and, if they were to pinpoint the most effective one, it would be to live big in a small home.
“We live in a neighborhood where most of our neighbors are paying a higher percentage of their income towards rent,” he writes on his blog, “Distilled Dollar.” “Of course, we could pay the same percentage and upgrade to a nice two-bed, two-bath, but we’re more than happy with where we live today.”
They pay less than 15 percent of their income for their 700-square-foot condo in Chicago. They estimate that they save about $12,000 a year, “seeing as how we could easily afford paying an extra $1,000 a month,” says Matt.
2. Lunch And Dinner Every Day
Scott Alan Turner paid off more than $70,000 in loans and became a millionaire by 35. His top savings tip is simple: Pack your lunch every day. After all, dining out can add up to hundreds or even thousands of dollars a month if you’re not careful.
“My biggest savings tip I learned from my parents,” he says. “My dad worked for the town his whole life. He packed a lunch every day and brought it to work. In our small town upbringing, we didn’t have restaurants and we didn’t go out to eat all the time.”
Turner carried that habit into his own life: In the 10 years he spent working a corporate job, he only bought lunch out a handful of times. Instead, he cooked large batches of food on Sunday to eat throughout the week.
3. Things That Aren’t Important To You
Keeping up with the Joneses, or trying to live up to your friends’ and neighbors’ standards, is a tempting but expensive habit. Often, it leads to spending money on cars, gadgets and clothes that don’t actually make you happy.
“Question the things you’re spending your money on,” says soon to be early retiree and personal finance blogger “The Money Wizard,” who asked to remain anonymous. “Thinking through your purchases will keep your spending in check and help you refrain from shelling out more than you should to keep up with the Joneses.”
“Just because your friends enjoy spending lavishly on clothes, doesn’t mean that’s for you,” writes the 28-year-old, who already has already managed to bank $250,000. “Don’t waste money on things that aren’t important to you.”
4. Excessive Car Payments
The average monthly loan payment for a new vehicle hit an all-time high of $523 in 2018.
The good news is, “vehicle spending is far and away the easiest category to control,” says “The Money Wizard.” He drove a 13-year-old pickup truck before upgrading to a Mazda 3, which he bought for $13,000 in cash — which means he doesn’t make any car payments. “Taking a reasonable approach towards the new car upgrade is key.”
You can also save on gas by carpooling with co-workers or neighbors. And if you live in an area where public transportation is an option, consider using it at least a few days a week. While you may not save time, chances are you’ll save money.
Finally, if you live within a few miles of your office, consider investing in a commuter bike, which could easily pay for itself in less than one month. Trent Hamm, author of “The Simple Dollar,” estimates that you could save nearly $6,000 a year by leaving your car in the garage and riding to work. Plus, your commute would double as a workout.
Source: USA Today