How you look at your expenses
Posted 17 June 2011 - 08:34 AM
I bring up the subject of insurances; yes plural.
As we all look at how we spend our money and more importantly how we save I'll throw out what I've been thinking about for a long time.
Insurances. Monthly they are about 3/4 of what I pay a month in mortgage payments. If we're only supposed to pay 25-39% of our monthly salary on keeping a roof over our heads what is it we're supposed to pay as a percentage all the insurances we have?
Here is my list;
Health Insurance (I don't get it through the union.)
Supplimental policy too.
Equipment (good deal, its just an insurance so its on the list.)
Just to be clear and not bash the insurance companies what you're buying is calculated risk for a specific amount of time. The sad/good part is if you don't use it that money is gone and you are buying more "risk/time".
I'd encourage you to take a hard look at the specific things and see.
Remember under-insured is bad too so those Internet insurance companies are not often good deals. . .
(The forum's slow now so I thought I'd bring this up.)
Posted 17 June 2011 - 09:20 AM
We recently got some sort of class action lawsuit mailing for Farmers insurance which totaled everything we paid for our two cars and home with them since 2004; over $21,000 and that's not including my equipment and general liability insurance we carry or life insurance. We get health through my wife's company. Our total claims through that period were $5500 when my car got broken into and vandalized. In this case the insurance company won the bet.
We recently switched from Farmers after shopping around and saved $3000 a year by going with Liberty Mutual. I had nearly given up since all the Geicos and others held about the same price then a few friends turned us on to Liberty Mutual. LM goes after 40+ couples who own their own homes and avoids high risk groups whoever they are that raise premiums for everyone.
Over the last two years I've generally been cleaning up tons of little expenses like my T-Mobile Hotspot account I used for traveling WiFi but rarely use anymore. I was with them 97 months at $29.95 = $2,905.15.
Other things like changing from a credit card / merchant services processing company that cost me $210 a month to a PayPal Merchant account that costs about $120 a month less adds up.
We've been lucky that the economic woes haven't hit us too bad so far and we've worked our way to be debt free other than our home. But the threat of the economy did motivate us to start looking at all the tiny little expenses we let slide but add up. It also motivated us to create four budgets; Normal today budget, super trim back budget, one of us can't work budget and both of us can't work budget.
For most people, ourselves included it's not the big expenses that kill you, it's the little ones that amount to a few dollars a day that we don't pay attention to.
Living debt free has given us a huge peace of mind but it was work getting there. Dave Ramsey and Suzie Orman both have books that helped us.
Posted 17 June 2011 - 09:33 AM
Robert has done what I'd hope we'd do with this topic which is discuss the larger issue of expenses.
I've cut expenses again and again, in ways I never thought possible and like Robert said its seldom the big ones. Its the little ones that will get you over time and make you wonder where all the money is going. Over the past 3-4 years, let alone 10-12, I've saved myself probably 2k-3k a month in stupid expenses.
Look at re-occurring expenses like cable and netflix and 'fruit-of-the-month club's' etc. This year I finally got rid of a horribly, horribly expensive and bad accountant for a 1/4 the price guy who does a better job. Now I'm just pissed for putting up with it for so long.
A Suzi Orman book a long time ago started with "How to you treat the money in your pocket, wallet, purse? Is it neat, together, etc or just bunched up?" I thought what a stupid way to start a book, then I thought about it, it was a symbol of how I treated money overall. (A quick, not-so-obvious tip, don't buy the books, go to the Library and borrow it . . . is your brain just going ahahhhh?)
I'm not debt free yet but getting pretty close.
(Amazingly you will find the stress of life, at one big level, just melts when you are.)
Posted 17 June 2011 - 07:05 PM
Posted 18 June 2011 - 03:30 PM
One tool that I've started to use is Mint - mint.com. It seems a little scary to link all your accounts and passwords, (let me say that I think it really is safe) but I've found it invaluable to see everything in one place - all my assets and debts. Then I started to go make the budgets, and finally, figured out how much it really takes to run my household on a monthly basis, including the lifestyle things I want to have (putting away every month for vacations, etc). If you don't want to link your accounts you could just use the budgets feature to get those expenses figured out - but if you link in your credit cards, checking, etc, you can see if you're really spending what you think you spend on each category. In a few cases Mint sent me an alert on a fee from a bank that I wouldn't have caught myself because I didn't check the account that often.
As far as insurance, I agree it's out of control. I spend (including health, life, house, car, general liability, etc) about exactly what you are saying - 3/4 of the mortgage. If it makes you feel any better, I was having dinner with a friend who has a very stable job as a CFO of a company, full time, it turns out her "benefits" of health insurance cost her in premiums almost exactly the same as my free-lancer's health insurance costs me, but her coverage is much worse - a $10,000 deductible and $15,000 out of pocket max - compared to my $1k/$4k! So many of those with full time jobs (if you've ever found yourself in the "should I just take a regular job" boat) have almost no benefits other than getting to show up to the same place every day.
We are basically debt free except for the house, and do have sufficient liquid assets to just pay that off (at the expense of a retirement!) but I still stress all the time - money is a major headache in life, although I think there's also ways to make thinking about it and dealing with it enjoyable and rewarding mentally.
Posted 19 June 2011 - 03:09 AM
I try to keep the minimal amount of insurance I can while still being able to squeek by after something major happens. I feel that I will be better off if something happens if I have my debt paid off and money in savings so I try to put money there instead. Wish I could spend even less on insurance than I do but its already rather bare bones.
Anyone have disability insurance? It is one area where we seem to be particularly vulnerable.