Three years ago I stumbled across a passage from Mr. Money Mustache that completely changed how I view my expenses.
It came from an article I had read on many occasions prior – and is one of his most popular – but for whatever reason it never hit me as hard as it did then, perhaps because I wasn’t open enough to fully appreciate it at the time.
Here’s what it said, from “The Shockingly Simple Math Behind Early Retirement:”
“The most important thing to note is that cutting your spending rate is much more powerful than increasing your income. The reason is that every permanent drop in your spending has a double effect: it increases the amount of money you have left over to save each month, and it permanently decreases the amount you’ll need every month for the rest of your life.”
Think about that for a moment…
Every time you cut one of your permanent/recurring expenses, it *increases* the amount of money you have let over to save each month.
But even more powerful, it then *permanently* decreases the amount you’ll need every month for the rest of your life! (Provided you don’t go back to it, of course ;))
It’s one of the most simplest concepts in the world, yet so many of us still haven’t fully understood it.
And I was one of them, up until three years ago when I stumbled across this again. And then do you know what happened??? I started the Challenge Everything mission where I went on to shave off roughly $223/mo from my recurring expenses, and banked a whopping $5,484.07 by the time the project was wrapped up 12 months later! Amazing!
And really, it’s only “wrapped up” in terms of being a blog series, as the savings are still very much hitting my account month in and month out! Further motivating me to do even more, such as finally cutting cable TV from my life, as well as hawking more stuff on Craigslist and stepping up my minimalism game.
Here’s a breakdown of the savings after the first full year in effect:
(Similar to our current Spavings Challenge, I threw all extra money I came across into the Challenge Everything fund as well for extra motivation)
But here’s the even crazier thing – it didn’t affect my lifestyle a single bit! In fact, it actually improved it. Not only did cutting stuff out help me appreciate all that I had more, but it also gave me a better sense of pride and confidence, knowing that I was (finally) optimizing my expenses once and for all as a 30-something adult. (And as a financial blogger, at that!).
If you think about the last time you switched phone carriers or called to lower your cable/insurance bills, you might be surprised how much you’re leaving on the table as well. Especially those you’ve just got into the habit of paying every month without even giving them a second thought.
For me, one of the biggest shocks was how much we were paying for our two iPhones year in and year out… We were hovering between $150-$180/mo, and because there was no way I could “live without my iPhone” (words many of us have spoken!), I never even considered cutting it from my life. It was just “one of those things” I paid for and couldn’t do anything about!
And then after reading that same passage from Mr. Money Mustache, I thought to myself, “Is there another way? Is there a different phone/carrier that does the exact same stuff so I don’t hate my life, only costs me gobs less?? ‘Cuz that would be awesome!” And sure enough, there was. Republic Wireless. And these days there’s even MORE options out there for people as the competition – and “wireless over wifi” technology – has only exploded in recent years.
But the point is – what we think we can’t live without is seldom not true, and even when it is there are usually alternatives that can do the same thing, but for much less.
It’s not always the easiest or most fun making it happen (switching phone carriers is a bitch no matter where you transfer to!), but if you’re committed enough it’s well worth sucking it up for a hot minute.
That initial $223/mo of savings three years ago have now blossomed to a total of $8,028.00 (more than enough to max out an entire Roth IRA, and halfway towards a second!), and doesn’t even factor in all the other benefits the shavings have had on my financial and mental life.
And the best part? Most of these savings were from ONE-TIME actions! Just like with investing, only for your expenses! Put in the money (time), and then watch the dividends (savings) roll in!
It’s a beautiful thing :) And I owe MMM approximately 13 six packs now for finally beating it into my head. (Thank you, sir!)
I was reminded of this recently when someone told me she couldn’t believe how obvious it was and that it’s taken her so long to realize it, and so I share it all with you guys again today in hopes it gets YOU closer to that epiphany as well.
Cutting out expenses from your life goes on to do TWO very powerful things:
- Frees up more money for savings every month forward!
- Allows you to *need less* to survive every month forward.
Those who live off $2,000/mo can retire a lot earlier than those who need $10,000/mo to survive. We’re all in different phases with this stuff, but let today be the time you kick it into overdrive if you know you can be doing better.
And then make sure to email me with how much you’re saving, so I can be the first to congratulate you :) I’ve gotten a lot of emails over the years from people challenging their expenses, and I have yet to hear anyone now say they hate their lives because of it! Ain’t no one enjoys wasting away their money!
Full article again from MMM can be found here – highly recommend it: The Shockingly Simple Math Behind Early Retirement
And then here’s the recap of our 12 month challenge experiment as well, if you weren’t around back then and want more of the backstory behind it (or to see some of the notes people have written in after trying it themselves – some people absolutely killed it!): The Challenge Everything Mission
Jay loves talking about money, collecting coins, blasting hip-hop, and hanging out with his three beautiful boys. You can check out all of his online projects at jmoney.biz. Thanks for reading the blog!