I've been tracking my expenses for over 15 years now, and it's paid off in a number of ways. Just the other day, I was going over expenses from 2002 -- just a short time after I graduated college -- and I realized that miraculously, I've managed to get my expenses nearly a decade later down to near 2002 levels. I say "miraculously" because since 2002, I've become not only a home owner but a husband and a father of two, which can add substantially to regular expenses.
Impossible? Well, it's true; and here is how I've managed to get expenses down so much.
Eliminate a Rent and a Mortgage
Back in 2002, my future wife and I were renting a small one bedroom, one bath apartment. It was a nice new little apartment with a fireplace, balcony overlooking a lake, and was in a safe area that was close to our jobs. We split the rent, which was $650 a month.
Eventually, we relocated and bought a home after the birth of our first child. In the process, our home-related costs soared. With property taxes and a mortgage, we were looking at around $1,700 a month. After several years of these costs, we decided to downsize our living situation, selling our costly home and using the proceeds to purchase a smaller condo outright. With this condo, we not only to cut out our mortgage costs, but reduced expenses on things like maintenance, repairs, and utilities, but cut our property taxes as well. This means that with our property taxes averaged out at about $230 a month, and our monthly association fee of $300 (which includes water/sewer services, trash pickup, common insurance, and exterior landscaping and snow removal), we're able to keep our home-related costs about $100 a month less than our 2002 apartment was costing us.
Ditch a Vehicle
In 2002, both my future wife and I owned a vehicle. After I eventually became self-employed at the end of 2007, I sold my vehicle. In essence, this allowed us to cut many of our transportation-related costs significantly. Our vehicle insurance is now about $600 a year less than in 2002, we save over $500 a year on parking costs, there is repair work and maintenance on only one vehicle, and while gas prices have gone up, we have one less vehicle to fill up.
Even though my future wife and I were expense sharing in 2002, there were still items that we were paying for individually. Individual health insurance, individual vehicles, income taxes, individual student loans (although I had just paid mine off when she was just starting to take more on at the time), and similar expenses meant that there were aspects of our financial lives that we had yet to combine.
Now however, we're able to share pretty much everything, and she's able to cover insurance costs while I cover childcare as a work-at-home dad, which decreases our overall financial obligation and helps us combine forces financially to make our spending abilities (and saving abilities) more powerful.
Less Travel, More Vacation
In our younger days, we used to do more traveling, but for shorter durations. Since I was working full time, it was difficult to get any sort of extended vacation. My vacation breaks were limited to long weekends of three or four days. This meant that when we took a break and headed for Vegas or a similar destination, the costs to get there (airfare or gas for the vehicle) were the same whether we spent three days or a full week.
As we've grown older, and as we gain more control over our lives, our time, and our finances, and as our family grows, we've changed our outlook on vacation. Rather than take four or five short trips, we instead take one or two longer trips. This means that rather than having to pay roundtrip airfare of $200 or $300 a piece, three or four times a year for the two of us ($1,200 to $2,400) as we did back in 2002, we can cut those costs -- even though we have more people in our family now -- by making one roundtrip for three (either driving or flying), paying around $1,000 for the entire family.
By making these smarter financial decisions, we've largely been able to minimize our costs while still maximizing the enjoyment of our time together.
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More From This Contributor:
- Personal Budgeting
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