(By the way, NCN has a new podcast out after taking a break for a few months. He talks about staying true to the basics in this one.)
In times of plenty it's natural to want to enjoy more of what life has to offer. When people feel rich, they feel the draw to supersize their lives. Larger vehicles, larger houses, larger vacations, larger boats, larger plasma TVs.
Larger things often cost more money to buy, more money to maintain, and more money to fix. When money becomes tight, these large things become large liabilities, and downsizing is a way to lessen those liabilities.
Downsizing in times of hardship isn't fun. Giving up the Hummer for a Yaris is probably very scary, especially the first time you take it on the interstate. Trading a yearly trek to Disneyland for a staycation can sting a little bit. Getting rid of the boat can … well … OK, that one might feel pretty good 😉
But just as any major life event has an adjustment period, adjusting to a lower-consumption lifestyle takes time, too. As a rough analogy, after six and one-half years of marriage I hardly remember what it was like to be single, and by all measures it's better than being single. This isn't to say that moving from a 4,000 square-foot home to a 1,500 square-foot home or an 900 square-foot apartment will ever be better than it was, but it will become more familiar with time and easier to deal with.
Where are some areas that can be effectively downsized?
- Downsize your vehicles. Many people are already doing this because smaller cars are less expensive to fuel. Even though we've gotten a little bit of a breather on gas prices recently, they're still north of $2 per gallon. It's still expensive to gas up a Hummer.
- Downsize your cable. Going from extended cable to basic cable can save $30/month or more, depending on how many premium channels you carry. Or turn it off entirely, save even more money, and find lots of extra time to build your wealth.
- Downsize your memberships. Maybe the gym membership has to go, or the monthly massage.
- Downsize your vacations. Instead of an elaborate cruise, maybe visit a few nearby museums or hike on a trail near your home. Besides, the boarding pass is just the start of the expenses on a cruise.
- Downsize your taxes. (Legally of course!) Take advantage of a 401(k) if it makes sense, or contribute to a flexible spending account for health care with pre-tax money to reduce your tax liability. This requires a little planning, though.
- Downsize your family's activities. Being involved in three kinds of dance lessons, little league, PTA, Awana, Cub Scouts, etc., are great. Some of the more expensive ones maybe can be cut. What may end up happening is that the children can dedicate more time to the activities that remain, and may become more proficient in them more quickly. For grown-up activities, it may come down to giving up ones that consume lots of cash in consumables (like paintball, for example).
- Downsize your house. This downsizing is one of the more drastic ways to cut expenses, but it has the potential to save quite a bit of money, assuming of course that the current house can be sold. Heating and cooling costs probably will go down with a smaller home, as well as other repairs, landscaping, etc.
- Downsize your location. This is more drastic still. Are you in an expensive area? The cost of living definitely varies from place to place. Moving means leaving many things behind: friends, family, school, church, work, and everything else that's familiar. If the cost of living is too much to bear, then there may not be too much choice.
- Downsize your tithe? Some friends from church are self-employed and in the course of their business have run into lean times. They tithed faithfully through these times, and the Lord provided richly for them. (This isn't meant to suggest causality but regardless, God will provide.) (Update: I should have been clearer: I don't think downsizing your tithe is a good idea. The question mark on “Downsize your tithe?” and the example of what happened when a family didn't downsize their tithe weren't enough to convey this.)
What other areas are ripe for downsizing?
Eat cheaper… eat out less, stop drinking soda
Cutting cellphone bills by switching to lower plan or finding a company that offers unlimited call to same networks.
MBH,
I am all for cutting back, but I have to disagree with you on the tithe issue. If someone were giving 15%, I can see cutting back to 10%. But I wouldn't suggest going any less than 10% if they were already there. Don't you think?
Going along with kivers, buy less meat. Meat can be pretty expensive – especially when you can buy a pound of beans and a pound of rice for every pound of super-on-sale chicken.
Another thing you can do is only buy certain fruits and vegetables when they are in season because this is when they are cheapest.
Yet another thing you can do it stop buying anything that is processed (chips, sodas, mac and cheese, top ramen, canned soups, cookies, breakfast bars, cheese, etc.). These things rip into your budget and really increase your cost per person per month.
Great list!
Re: Downsizing vehicles. While what you say is true in general, it's easy to use this to rationalize getting a vehicle that ends up not saving as much as expected. You have to take capital expenditures into consideration and not just gas cost.
For example, you have a paid for vehicle that gets 20mpg. You're looking at a replacement that gets 30mpg and will cost you, after using the money from the sale of your existing vehicle, $10k. Assume all other costs are equal (maintenance, repairs, etc). The difference between these vehicles is 10mpg. At $4/gallon you could buy 2500 gallons for that $10k. Given the 10mpg difference, you have to drive 25,000 miles to break even. For the typical American, this is 2 years before realizing any savings to the budget.
If you have to finance the $10k, the break even point is further out.
If the insurance on the new vehicle is higher, the break even point is further out.
If you spend more than $10k, the break even point is further out.
Downsizing a vehicle makes most sense (to me anyway) only if you're replacing it with a vehicle that costs the same as what you can sell your existing vehicle for. In other words a zero capital expenditure transaction. This may involve getting a vehicle not quite as nice as what you have currently or getting something older than what you'd want. The problem is we tend to want to upgrade when we make vehicle changes. If we follow this desire, our savings on gas will probably not be happen as soon as expected.
Re: Downsizing your tithe: Need to mention Malachi 3:10: "Bring the whole tithe into the storehouse, that there may be food in my house. Test me in this," says the LORD Almighty, "and see if I will not throw open the floodgates of heaven and pour out so much blessing that you will not have room enough for it."
Currently, I am also downsizing my belongings. There's nothing more satisfying than getting that clutter out of your life.
Thanks for the list … I need to do one or two more of these things.
Buying generic foods, eat in more (cooking is fun!), and utilizing your library can save you a lot of money with no real drop off in quality of life.
I've decided to downsize my traveling back home this holiday season.
Yes, it will be hard to not see family and friends around Christmas, but I know that they understand why a soon-to-be-newlywed would want to try to save as much money as he can. I'll just make more phone calls instead.
I'll also scale back on gifts this year, by suggesting a gift exchange with family and friends instead of everyone buying a present for everyone else.
ChristianPF and Harley: I don't think downsizing the tithe is a good idea. I put the question mark on the end of that one ("Downsize your tithe?") as an indication of this, but it was a very weak indication. Thanks for calling me on this and reminding me that I need to be bolder with God's work.
You've got a great list here! 🙂 I enjoyed reading all of them, and found them helpful.
Here are some tips I do to save money, and help me have more income at the end of the month (or year if I were to go that far)
1. Make your own lunch and bring that to work instead of buying in the cafeteria or eating out.
2. Cut down on the gourmet coffee or tea expenses. If you want gourmet coffee, make one yourself with the ingredients you have at home! 🙂
3. To get from one place to another: Carpool if you can. Walk if you can. Ride a bike if you can. —This saves gas, money from parking and gas, and helps you trim down your waist. ^^
4. A variation of my number three is to plan out your commute itinerary the night before with your family—this way, you can do things in one round instead of going back and forth.
Cheers! 🙂
I agree that it is important to prioritize your expenses, and cut the unnecessary ones. But I have to take issue with cutting things like massage. For those of us who try to avoid spending lots of money on health care and doctor visits, things like massage, chiropractic care, and acupuncture can actually save money. These types of alternative health care can lower your stress, increase your energy, and boost your immune system. Spending $55-75 once or twice a month on one of these treatments can later save you the cost of antibiotics, antidepressants, doctor visit co-pays, and the time that anxiety and lethargy can suck from your life. I feel like investing in my health is one of the best investments i can make!
Erin: I should clarify. I agree with you. My wife had a "massage club" that was basically a year-long commitment, and she found that she didn't need that much massaging. So she paid for her "monthly massage" and had to really use up a lot near the end of the contract. It would probably be better for us to buy as we need rather than make a commitment.
Stretch out your dinners. We had a pot roast last us two days worth of meals … we had tacos the first night, barbecue sandwiches the next. No one knows the difference in the meat, just keep it going in the crock pot on warm. As for cellphones, get a prepaid cell phone … and pay for only the services you use and you can cancel it anytime without having to be trapped for years in contracts. Just live below your means and you’ll do fine.