Economic Situation – Reducing Required Expenses - Article 012

Reducing Required Expenses:

May 11, 2009

To balance our budgets, we can either increase our income, or reduce our expenses.  Expenses such as mortgage, utilities, food, clothing, transportation and medical are required.  It may take a change in lifestyle or relocation, but these expenses can be reduced.

California is one of the States with a very high cost of living.  In general, the states with the lowest cost of living are in the Midwest and South.  Detailed cost of living information for the United States is available at:  http://www.ded.mo.gov/researchandplanning/indicators/cost_of_living/index.stm.  If you are thinking of relocating, an excellent website to compare the specific cost of living, can be accessed at Bankrate.  For example, this website shows that if you live in San Diego, and have an income of $50,000 a year, you can maintain the same lifestyle in Prescott, AZ on a yearly income of $39,465.  This website also shows that you would need an income of $81,597 to maintain your lifestyle in Manhattan.  

Mortgage:

If you decide not to relocate, some of the things you can do to reduce your mortgage expenses are: downsize your home to a smaller home or apartment.  You could move into a complex for active seniors.  These complexes often provide inexpensive social activities.  Or, you could invite either your children or parents to come live with you and share expenses.  Depending on their financial situation, this could reduce your costs for mortgage, utilities and food.  In addition, non-working family members can help out by providing child care or elder care.  

Utilities:

We have had enough energy problems to know that we can reduce our utility bills by turning off lights, unplugging your phone charger between uses, turn down the heater, wear a sweater on cool days and turn off the faucet when brushing your teeth or shaving.  You can go a step further and turn down the thermostat on your water heater to 100 degrees rather than the customary 125 degrees.

Food:

You can reduce your food expenses if you cook at home more often.  If you live alone, perhaps you can trade off cooking duties with a friend or join a dinner club in your neighborhood.  You could grow a vegetable garden.  Not only would your food be less expensive, it would be healthier.  You can buy food in bulk at Costco or Sam’s Club and share it with a friend.  You could buy less expensive cuts of meat and use a crock pot.  And, of course, you can always shop with coupons.

Clothing:

You can reduce your clothing expenses by buying clothes in a consignment shop or Goodwill.  It’s amazing what interesting clothes you can buy if you take the time to look around in a used clothing store.  Other options are to sew your clothes or lose weight so you can fit into your “skinny” clothes again.

Transportation:

You can reduce your transportation costs by carpooling or taking the bus.  It’s important to plan your trips in such a way that you minimize driving.  Also, avoid running your car in idle for more than a couple of minutes when waiting.  You can also downsize your car to one with higher miles per gallon.  

Medical:

You can reduce medical expenses by joining an HMO or carrying a higher deductible on your medical insurance.  If you are on Medicare, don’t include generic prescriptions in your Medicare Part D purchases as several pharmacies, such as Wal-Mart, offer generic medicine for less than most “Part D” plans.  The best way to save medical expenses is to remain or get healthy by quitting smoking, losing weight, eating broccoli and exercising.

Please let us know if you can think of any other ways to reduce required expenses.  We are all in this together.   Let’s help each other as much as possible.  It makes you feel good when you help other people.

Mark Halsey

www.wealthanalytics.com