Of the 10 characteristics of debt-free people, we’ve always had several of the criteria sewn up.
“Debt is a mortgage on our future.” – Len Penzo
But we fell into the debt trap that comes with lifestyle inflation believing that debt is necessary, but that it’s OK because our assets will appreciate, income will increase and we’ll reap the benefits of such a lifestyle some number of years later. Not anymore.
Our attitudes have completely changed, and as a result, we’ve made a significant number of changes to our spending as we chart another path for ourselves.
ICYMI, check out our July spending YOY. Icky.
Now, let’s get to the good stuff. Below are our biggest budget buckets, how we’ve spent over the years and optimizations we’ve made to improve our spending. We’ve saved the “debt” category for last as it is the largest.
Health & Fitness
We have spent a ton of $ in health due to a personal health crisis last year as well as five surgeries between the two of us in the last four years or so; as a result, this is an area we will budget a lot of $ for in the future, maybe more than most 30-somethings.
Optimizations to Reduce Health & Fitness Expenses
Exercise and food get most of our attention, in between full-time employment and side hustling, because we’ve been eating poorly and exercising infrequently. Preparing organic raw foods at home, we hope, will benefit our health in the long run. Also, we canceled our gym memberships, and have subsequently, exercised more often via the great (free) outdoors.
We’ve spent a ton of money on home improvements for the big house, which included a new roof and replacement windows. Because we’ve purchased a new
546 536 sq ft house, capital expenditures like roof and windows are decades away, so this portion of the budget will be nearly $0.
Optimizations to Reduce Home Expenses
We’re selling our oversized house and we’ve purchased a small, manufactured house that was less than one-third the cost of the big house. Say what you will about manufacturing housing, but few home builders could match the quality we’re getting for the price we’re paying.
Update: We sold our 1,500 sq ft house!
Food & Dining
Warning: the amount we used to spend on food will scare and disgust even the most non-judgmental of folks, so please don’t beat a dead horse. We stopped going to restaurants cold turkey this year, so we’ve easily saved more than half in this category.
Optimization to Reduce Food & Dining Expenses
Today, we cook all of our meals at home, seldom traversing to local and mostly mediocre restaurants.
Bills & Utilities
We pay the highest rates for public water/sewer in the entire county. And the quality of the water isn’t even great, so we had to purchase a multi-stage filtration system to produce something potable; however, this system generates a serious amount of waste, which we will talk about in a future post. Our bills and utilities also include electricity, trash service, Internet and cell phones.
Optimizations to Reduce Bills & Utilities
We’re moving to an area where the rates for water/sewer are significantly lower than where we live currently. We’ll also have several choices for Internet providers that have introductory rates half of what we’re paying now. We’ll also have several trash haulers to choose from.
Auto & Transport
Originally, we drove two decent Volvos with OK gas mileage, but they weren’t optimal and Volvo repairs can be pricey even when we do them ourselves. Because we’re moving to a location more convenient for employment, we should be able to eliminate another car in the future.
Optimizations to Reduce Auto & Transport Expenses
We’re relocating to an area more conducive to electric car leasees like ourselves so that we can keep using our smart cars. For longer trips, we’ll keep driving the used Volvo that has more than 100k miles. As much as we can, we’ll also continue to repair our own Volvo. And we can hope for a reduction in auto insurance premiums when we Challenge Everything. 🙂
With weekly free concerts in a local park and numerous places to hike nearby, we get to enjoy the great outdoors at reasonable temperatures most of the year for the low, low price of $0. But if you’re like us and you side hustle, maybe you enjoy a movie on Netflix or Hulu after finishing your blog posts or client meetings.
Optimizations to Reduce Entertainment Expenses
We haven’t had cable in five years, because we have Netflix and Hulu. We started to participate in more community events rather than paying for concerts or movies. I’ve also started side hustling again (doubles as entertaining and income producing).
This graph should probably be red and have negative numbers.
Maybe a skull and crossbones, too.
Credit cards and loans, including a mortgage, round out our current liabilities of about $200k. The PF community isn’t short on tips to help one pay off debt faster, so for these countless articles and tips, I am forever grateful. If you’re looking to get out of debt, check out our sources of inspiration (new blogs added regularly). Below is an outline of the steps we’re taking in an attempt to eliminate all $200k of debt in one year.
Optimizations to Eliminate $200,000 of Debt in One Year
Big House Mortgage: $-155,186
We are selling the house, so this should eliminate about 75% of our debt. If we have to continue paying the mortgage once we move, this will delay our plan to pay off “other debts” (BAD since our small house is nearly complete).
Other Debts: $-49,785
Our other debts include interest-free credit card debt and student loans. Here’s how we’re going to pay these off:
- Challenge Everything challenge – Moving makes the Challenge Everything challenge a lot easier, because we have to cancel and set up a bunch of stuff, which opens the door for challenging all of our expenses and saving more $ to pay off debt. More on this in the future.
- Side hustling – I am a digital marketer by day and by night, so income from side hustling will go to debt.
- Budget surplus – Because of the steps we’ve taken to cut our expenses and side hustling, we had a budget surplus of 53% in July, so surpluses will be applied to debt.
- Bonuses – We both took full-time jobs with performance-based bonuses; these bonuses will go to debt.
Our recommendations for how others can improve their lives will be limited to the few times we feel we truly have something unique to share. Rather, this blog will continue to focus on the application of and successes (or failures) we’ve had as a result of implementing the amazing and interesting ideas of others as we work toward getting out of debt and achieving financial freedom.