Minimalism Update: Finances

Created with Nokia Smart Cam In January of this year (2014), I initiated the plan to minimalize our household. This undertaking was prompted by the hideous filth I encountered while retrieving an item under our bed and subsequently inspired by two books I’d read on recommendation from a good friend (Minimalism: Live A Meaningful Life, by Ryan Nicodemus and Joshua Fields Millburn, and The Simple Guide to A Minimalist Life, by Leo Babauta). In the ten months between initiation and today, I’ve emptied our property of over half its possessions, including furniture, paperwork, clothing, technology, tools, paperwork, photographs, redundant household cleaning products, and just about any other category I can’t think of off the top of my head. The results have been, as I predicted, profound. Order has emerged from chaos, organization from anarchy, workflow from confusion, prosperity from debt, and cleanliness from filth have been only a few of the most obvious benefits.

With acquisition of “stuff” now under control via a variety of mechanisms (such as the 30 day list rule, whereby no purchase can be acted upon without first placing the desired item on a list and waiting 30 days), we turned our attention to minimalizing our financial outlay, focusing on recurring bills, spending habits, grocery shopping, travel expenses, and entertainment spending, such as eating out, movies, and non-necessary items (like beer). Without spoiling the punch line at the conclusion of this piece, we’ll tease you with a dollar amount that exceeds hundreds of dollars per year. The first area of concern was recurring monthly bills, which included mortgage, power, water, gas, cell phone, internet, television, online subscriptions (Netflix, Hulu Plus, Xbox Live, Amazon Prime), car insurance, and healthcare/insurance. The table below illustrates our monthly outlay before cutbacks:

Mortgage (includes property taxes)2700
Power, water, sewage, garbage250
Gas50
Cell Phone (family plan)250
Internet/TV/Phone (land line)165
Car Insurance90
Healthcare Insurance (Kaiser)550
Groceries500
Outside dining400
Online services (Amazon, Netflix, Hulu Plus)30
$4735.00

As you can see, maintaining our household is an expensive endeavor, and this doesn’t include trying to put away money for retirement, our son’s college, and emergencies (hint: we don’t). The largest outlay – our mortgage – is fixed for the duration of the loan, so there’s no opportunity to save money as our interest rate is low enough to sit tight and avoid refinancing. Besides, our house payment is fairly low in relation to current property values and rents in our area, and the $2700.00 amount includes not only the loan, but property taxes and insurance as well, making it a relative bargain when factoring in the tax benefit. Similar homes (3 bedroom, 2 bath, single family) in close proximity are now creeping toward or even exceeding the million dollar mark, while rents can range from $3500.00 to over $5000.00 depending on a home’s condition.

Moving down the list, however, are outflows ripe for savings. Our cell phone plan was one specific area of interest, especially since our two year contract with Verizon was finally up for renewal and our family plan had gone down $75.00 over the past year. This alone represented $900.00 per year in savings just staying put with Verizon, but competitors – especially T-Mobile – offered even more savings and, even more impressively, no need to commit to a 2-year contract. The only caveat was that I had to buy three phones outright, perhaps learning to live without the latest and greatest gadgets to which we had become so accustomed over the last decade since Apple’s iPhone addicted us to smart phones. Since then, we’ve always gone first class, owning the latest iPhones and Samsung Galaxy phones and upgrading constantly whenever a new one hit the market. On a whim, I rolled the dice and picked up three inexpensive Nokia Lumia 521 units for $59.00 apiece at our local Microsoft Store and switched over to T-Mobile’s no-contract family plan, which cut my cell phone bill by almost $150.00 per month. Aside from the astronomical $1800.00 per year in savings, the phones have proven to be capable, if not spectacular, and we no longer live in fear of cracking the screens or losing them as we did with our former high end handsets. They’re not iPhone 6’s or Galaxy S5’s, but we figured the less reasons to be on our phones would be a long term benefit, if anything.

Following in the connected, high tech realm, we then went over our internet, television, and land-line phone (again, provided through Verizon), which totaled $165.00 per month, despite the fact we rarely watched live television or used our home phone. When I attempted to at least get the phone removed from our service (in one of the most frustrating conversations I’ve ever had), we were told by Verizon that doing so would not affect our monthly rate as it came as part of a package and couldn’t be altered. In a rage, I simply cancelled everything with Verizon and signed up for internet only service with Time Warner at $40.00 per month (and in the process ditched live television and in-home phone service). As our household already used Netflix, Hulu, and Amazon Prime Instant Video for most of our viewing, we’ve barely noticed the loss of live TV. This brought the monthly bill down $125.00 per month for a total savings of $1500.00 per year.

With our remaining utility costs, we finally swapped out every light bulb for LED versions, turned off our heater’s pilot light, and asked our tenants occupying our back unit to vacate (taking a power sucking refrigerator and fire hydrant shower head with them), reducing the property’s water, power, and gas use by two people. This resulted in an amazing drop in our monthly costs and we removed the last bit of lawn in our backyard to reduce our water usage even further. Power, water, sewage, and waste disposal (garbage) dropped from $250.00 per month to $175.00, with gas going down a modest $15-20.00.

Finally, we took aim at some of the more mundane expenses, such as car insurance, healthcare insurance, groceries, and entertainment (restaurants, movies, bars, travel) and scraped a few more dollars in savings, accordingly. With healthcare, for example, we were able to sign up for a plan via the Affordable Care Act that saved us almost $200.00 despite it being ALMOST THE EXACT SAME PLAN WITH THE EXACT SAME PROVIDER (Kaiser). Likewise, with car insurance, we were being charged for collision on our 16 year old Toyota truck that’s effectively worthless in terms of Blue Book value, so we dropped the coverage and switched to liability only, resulting in further savings. Here is what the chart looks like after taking a minimalist approach to money:

Mortgage (includes property taxes)2700
Power, water, sewage, garbage175
Gas30
Cell Phone (family plan)110
Internet/TV/Phone (land line)40
Car Insurance55
Healthcare Insurance (Kaiser)335
Groceries600
Outside dining200
Online Services (Netflix, Hulu Plus, Amazon)30
$4275.00

As you can plainly see, by simply tweaking our lifestyles slightly (I’d go so far as to say imperceptibly), we ended up saving almost $5000.00 per year! Maybe you’re wealthy and this amount doesn’t mean much, but for us it’s life changing. I understand that most of you won’t go to the extreme lengths I undertook to put my life – and by extension my family’s – on the path of living minimally. Minimalism is about examining what you need as opposed to what you want; discerning between what’s meaningful and avoiding things that provide temporary emotional salve. It’s tough giving up our toys, attachments to luxury (no matter how small), and lifestyles; but by doing so and forging through the difficult adjustments has rewarded our household with more money to direct toward experiences over things, more time to enjoy people over objects, and more opportunities to follow our passions over our possessions.

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