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How I Save $14,000 A Year More Than My Peers – 9 Budget Cuts You Should Make

Save Money

I have a confession to make. Your good friend, Blake, is thrifty and proud. It’s not my fault. It was the way I was raised.

Since I was a baby I would hear my Dad addressing my Mom with his favorite saying, “It doesn’t take a genius to spend it”. Constantly.

Now, it wasn’t said in a mean way, I don’t think, but it was consistent. With his mantra, I was thoroughly indoctrinated into his cheapskate ways. Now, I hear his voice in my head before making any purchase, big or small.

One of the main reasons I share my story here is because I think a lot of people spend money without thinking. I suspect my father’s “life view on money” can help others.

While I fervently believe dividend investing is the most viable strategy for long-term success in the stock market, I realize you have to have money saved before you can put that money to work via investing.

So, in an effort to save that money – here are 9 things I don’t spend money on that allows me to save and invest more in the stock market.

Car Payment

I have never purchased a car with anything but cash. I won’t deny, I come from a privileged home and my parents helped me with my first car purchase to the tune of $3,500. I put down the rest – $5000. But, stay with me here. I have been driving for over 20 years, purchased three cars and have never had a car payment.

According to Cars.com, the average monthly car payment for a new vehicle is $509 a month. That’s over $6,100 a year! If this is your situation, I strongly recommend you do some math and see if getting rid of the car payment makes cents for you. Buying a less expensive car that’s safe, reliable and that you can afford with cash, might just save your over 6,000 bucks a year.

Cell Phone Plan

So, this one is kind of a stretch, as I obviously have a mobile phone and plan. But, I don’t have the plan that the majority of my friends have. And I definitely don’t have the same expensive phone.

According to an unscientific poll I took of my friends and colleagues, their average mobile phone bill is $68.32 (8 people polled) a month. Now, that’s not a huge amount of money, but it’s double what I spend for my cell phone plan. I only spend $20 a month with a discount carrier.

As far as the phone, I purchased an older model smart phone for $200. That’s nowhere close to the $500+ latest and greatest phones my friends have (or the $20 monthly lease they pay the carrier for a fancy phone). Through my discount carrier service I save $48.32 a month or $579.84 a year. You might want pull out the calculator do some math and consider this too.

Pack Your Lunch

I pack a lunch, everyday. Sometimes, it’s leftovers from the night before. Other times, it’s a sandwich, raw vegetables and hummus. Either way, it comes with me to work and consumed without me having to spend a single buck at a restaurant for food.

For example, if you’re spending $6 bucks a day or $30 a week eating your lunch at McDonalds (MCD) – those hamburgers and fries are costing you a ton. Like $1,500 a year ton. Bring your food from home, save that lunch money and put it to work.

Cut Your Cable

Since you are reading this, I bet you probably don’t have cable. But if you do, get rid of it. Three years ago, I cut my cable and stopped renting my cable modem. I ended up saving myself a little over $900 a year. That’s a lot of money I freed up to invest. Alternative forms of entertainment are significantly less expensive and more enjoyable.

Drop the Daily Coffee

I don’t buy drinks at coffee houses. Here’s why.

According to this Forbes article, the average spend at Starbucks (SBUX) is $6 per visit!!! Now, if you’re doing that 5 times a week, you’re spending $1,500 a year on coffee.

Save a boatload and make your own at home. It tastes just as good and you get to feel that sense of accomplishment of being your own barista and saving yourself some serious coin.

Hair Cut – DIY

This is where it might sound a little strange to you.

I don’t pay for haircuts… and neither does my wife. We have both become DIY stylists and cut each others hair. Here’s the secret, we both watched some videos and became YouTube certified hair stylists. Granted, it was a little scary at first, but my hair looks great and my wife, well, she can still go outside with a hat on 😉 Not really, her hair looks perfect – I do good work!

The average haircut cost for men is $28 and $43 for women. I used to get my haircut roughly 7 times a year. That’s $196 for me and $301 for her. That’s $497 a year of found money and an excellent relationship building exercise. Give it a try, and cut out that extra $500 expense.

Gym Membership

I don’t spend money to workout. It’s not because I don’t workout, because I do… well, sometimes.

My workouts consist of running and bodyweight exercises (push ups, sit ups, burpees…), which are all free. According to this article, the majority of people with gym memberships spend $20 – $50 a month for a gym membership.

In my area, I see a lot of anytime gyms that advertise $25 a month. That’s $300 a year that could be used for savings or investing! That’s a lot of money to spend on a service that many people pay for and don’t even use.

Home Cleaning Service

I live in a house that I purchased when I was financially stupid. It’s significantly larger than what my family needs, however, we do something our friends view as unthinkable in our large home… we clean the house ourselves.

We spend 10 – 15 minutes every night picking up, cleaning and vacuuming our house. It’s hard to start, but it really is an easy routine to get into.

The average cost of a cleaning service is $150 per visit. Say you have cleaners come to your house once a month, that’s $1,800 a year!!!

Lawn Service

My lawn is as big as my neighbors and quite a bit larger that many of my friends. Instead of spending $60 twice a month (10 months out of a year) on a lawn service like they do, I maintain and mow my lawn myself.

That’s $1,200 a year extra I save that they spend (it’s also good exercise).  It takes me 15 – 20 minutes every two weeks… its worth it.

Total Savings a year:

Haircut – $500 (for two)
Car Payment – $6,100
Lunch – $1,500
Mobile plan – $580
Cable – $900
Coffee – $1,500
Gym Membership – $300
House Cleaning – $1,800
Lawn Service – $1,200
Total: 6100 + 1500 + 1500 + 500 + 580 + 900 + 300 + 1800 + 1200 = $14,380

So there you go. Tallying up all those savings is over $14,380 a year!!! What would you do with $14,000 a year of extra money? Invest it and put that money to work, or pay off some debts? If you are thinking of buying some new phone or TV, you might have a spending problem and probably need to read this one more time. Remember – “It doesn’t take a genius to spend it.”

Think before you spend, buy only what you need, and put that money to work by investing. You can do it!

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I'm a dividend growth investor who is aiming to retire in 7 years at the age of 45. My goal is to live off the income my dividend portfolio and rental property produce exclusively and leave the corporate rat race. I hope you will join me in this journey!

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  • Bob McCarthy Apr 16, 2018, 1:42 pm

    Right on. All small, seemingly simple things, that really add up over time. Great insight!

    • Blake Apr 16, 2018, 5:56 pm

      Thanks Bob, a few dollars here and there really do turn into big money!

  • Mr. Income Master Apr 19, 2018, 6:36 pm

    Skipping the daily coffee and making it at home for a fraction of the cost surprisingly makes a huge difference once you do the sums across the whole year.

    I also moved across to a different mobile plan late last year. Paying less money and getting double the download allowance.

    • Blake Apr 20, 2018, 4:10 am

      Hi MIM. I was really surprised at the average spend amount at Starbucks. I had no idea the hoards of people I see waiting in the drive through line every morning were spending that much!

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