How I reduced my monthly bills by over $1000
It’s all about your quality of life
I tackled new adulthood the wrong way.
I thought I was off to a great start. I had a student credit card and was working to pay for the classes I took at a community college. Then I fell into a bad couple of years (OK so maybe it was closer to a decade). Part of it is my fault and at the same time, a lot of it isn’t. I won't give you a life story but the point I’m making is that we all have a lot of events in our life that make for negative changes. Some are avoidable, and others aren’t.
Some of the mistakes I made include things like moving out of my parents’ house because of a fight (and moving back in because I was broke). I bought older sports cars that were ready to fall apart and always lost money by the time I sold them. I moved across the country to start over and allowed my family to cosign for art school, which they failed to continue and forced me to drop out. I went to community college again and got my associate's degree but took out more than I needed for student loans, accruing more debt than I needed. I defaulted on many credit cards during school and ruined my credit for seven years.
All of this set me up for a difficult financial life. I was working to pay off collections, student loans, and other unexpected life events. I needed to rebuild credit so I obtained more credit cards. I needed to pay for things like an engagement ring, electronics, a wedding, honeymoon, rent, and eventually a house.
I did it well enough. I paid the collections off. I am married, live in a house that I own, and have a sixteen-month-old child. We invested in two brand new cars in 2015 and still have them. We made huge house-repair decisions that made for more debt. The issue is that the progressiveness of our goals landed us with a mortgage, car payments, credit card debt, personal loans, and new baby expenses. I found myself straddling the line where one emergency could send me into financial ruin … again.
The turning point was a decision
When the pandemic hit, it became clear that emergencies are definitely possible and I wanted to do something about it. I had already been making extra payments on one of the cars when I used my tax return and my company profit-sharing bonus (yes, I am lucky enough to get one of those) to pay one of them off. I now have a 2015 Mitsubishi Lancer ES with 62,000 miles on it and no lien. That was the first time I owned something of value completely and yet my expenses went down by $300 per month. Not only do I save money, but I should have this car for several more years with regular maintenance.
I got hooked
I am not following a defined formula like the Snowball Method or anything like that. I’m not maxing out my 401K first or even targeting only my high-interest loans and credit first.
I have done a lot of research about money and have made decisions solely based on what would benefit my life the most right now.
Some would probably call that unwise and be totally correct about it. I am not following what would be a “by the numbers” approach to having the most money possible. To be honest, that’s not really my goal.
My goal is to increase the quality of life for my family and myself. The definition of “quality of life” will change sometimes by the hour, and that’s OK. Being fluid about how I go about my financial wellness has allowed me to make decisions that ultimately helped me the most.
I took the $300 per month saved on my first car and made additional payments to the second car. Luckily my balance neared the $2900 mark when the stimulus checks for families got distributed. I didn’t think twice about what to do with that money. I spent it all to pay the car off and at that moment had freed up $600 per month. Now I have two 2015 Mitsubishi Lancers but this one has only 36,000 miles on it. At first, I was scared. I was spending all of the extra money I was getting and still on the verge of financial ruin should an emergency happen.
I started using that money to build my savings account up to $1000 as a buffer, then started targeting some of my credit cards. Over the year I have cleared many of them and have multiple forms of emergency spending. I changed cell phone carriers to reduce my bill and am still going to shop for better home and auto insurance. I am not rich, but each of those cards and accounts had bills. I was up to around $850 per month saved, and I was starting to notice it. For a while, it didn’t seem gratifying to pay out thousands of dollars so a bill would go away but it was adding up.
Just last week, I applied for a refinance on my house. Rates are low because of the economy and they have a nice program for FHA loans to streamline the rate. My account is in good standing so I inquired. I won’t go into the details but I was able to save around $213 per month. That puts me over the $1000 per month mark.
I wanted to write this article to show you that there’s no official structure. I simply looked at my options and picked for myself (or the family) the next steps that would allow us to pursue goals faster. If I started with the high-interest credit cards then I would only have saved $25 per month at first, then $50, then $200, etc. For me, that didn’t make sense. If I stopped attacking my debt so hard right now and paid my minimum due for each bill, I would get to keep over $12,000.00 than what I would have the year before. Knowing this just makes me want to keep eliminating debt.
This all sounds great, but I’m not out of the woods. I have student loans and personal loans that aren’t paid off. I have a couple more high interest and high balance credit cards to pay off. When my child is older I may have a need for a bigger vehicle. So many things are going to happen that will incur more debt but those are also fluid decisions that I’m going to make because they will enhance our lives.
I have a long way to go, but I’m going to keep reducing expenses as a practice for the rest of my life. The point is to improve the quality of your life, so do it in a way that works for you and doesn’t detract from the best parts of it.
