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Right now, I pay $841 a month for my rent, Internet service, cell bill, electricity, gym membership, and car insurance. By January 2013, I plan to reduce my bills for all of this from $841 a month to $335 a month. I plan to do this by reducing the amount I pay on my cell bill and completely eliminating my monthly rent payments. Doing those two things will cut my living expenses by more than 60 percent.
Cell Phone
I've had the same cell provider for over ten years which means I'm grandfathered into my text messaging and mobile web plans. Currently, I receive 450 anytime minutes, 1,500 text messages, 200 multimedia messages, and unlimited Internet on my phone for $71 a month. However, I do not have tethering. It was removed from my plan sometime in 2006, and I want unlimited tethering and Internet. I'd also like to upgrade to a smart phone. Unfortunately, because I am grandfathered into my plans, I cannot upgrade to a smart phone or an iPhone. If I upgrade, I'm subject to different Internet and text messaging plans that would increase my cell bill and put data limits on my Internet service.
Thankfully, I only have one year left on this contract. At the end of this year, I plan to switch phone providers to a provider that provides unlimited Internet, text messaging, tethering, and minutes for $55. This move will save me $16 a month or $192 a year.
Housing
I'm also tired of paying endless amounts toward rent. I don't feel like I am throwing my rent away, but it is a bill and it's one I would like to eliminate. My rent is currently $540 a month. By eliminating that bill, I can save $6,480 a year.
I have two choices when it comes to eliminating that monthly bill. I can move and pay off my next lease up front, or I can buy a fixer-upper house for no more than $10,000 in my area. Ideally, I would like the house. I already have $5,200 saved, so I only need to save another $5,000 in the next eight months. That's entirely plausible. My bills only come to $1,200 a month which means I only need to earn $2,000 a month to make my savings goal. Of course, I'll also set aside an additional $2,000 for immediate repairs which makes my monthly income target $2,200 a month. Repairs will only cost me the price of the supplies. Between my brother and I, we can fix and repair drywall, floors, insulation, plumbing, install appliances, rewire electrical outlets and paint.
The only bills that I would have with a house that I don't have now would be water, sewer and trash. Those amount to $50 a month, so I could very easily save $5,880 in housing payments in the first year.
Money Management
Of course, saving that much money on my bills doesn't mean I get to blow it. I plan to put 75 percent of the saved money into my savings account where it will earn interest. The other 25 percent I will invest in stocks. I already own stocks in two companies so I will simply purchase more shares with the saved money. The 75 percent that I put into my saving account will go towards any additional repairs. If I don't need the money to make repairs, it will sit and earn interest.
By preparing and making these changes, I can expect to decrease my cost of living from $10,092 to $4,020 which is a decrease of $6,072 a year, and I will have the option of earning interest, dividends, and more cash with the money I'm not using to pay bills.
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