5 Ways We Saved Money

Once we identified our goal, I began looking at all of our regular expenses using the simple calculation to identify savings with compound interest over a ten year period.  Some expenses were very apparent.  Here are some of the top things we adjusted:

#1 Cut the Cable

This was a no brainer, there are countless financial sites from Market Watch to Consumer Reports to my favorites The Simple Dollar and Mr. Money Mustache that say to do this IMMEDIATELY.  Even AARP recommends ditching cable.  Since we already had an Amazon Prime EDU account, the next logical choice was to get Netflix streaming service for $8.99/mo.  There is so much content for both adults and kids, we have been lacking for nothing.  We used the DVD trial for 1-month, but there is no way to make it worth the expense, so we cancelled.  We have discovered great programs like Cosmos and House of Cards.  We even had a Star Trek marathon during our frigid President's Day break. We use a Roku and AppleTV to watch all of our programs.

We could not cut the cord completely because we needed Internet.  The great thing about just having basic Internet service in my area is that the cable company cannot filter out the basic cable channels.  So we still got the Super Bowl in HD and enjoy a commercial laden version of Walking Dead every Sunday.

• Previous cable bill with Internet: $136/mo
• Internet Only: $35/mo
• Netflix: $8.99/mo
• $136-($35+$9) = $92/mo or $15,916 savings over ten years

#2 More Economical Vehicle

My '09 Pontiac Vibe is a great car.  I love the hatchback and it is great on gas getting 28mpg combined.  My car was not the issue.  Stephanie's vehicle on the other hand only got 14mpg combined, her beloved '05 Jeep Wrangler had to go.  Although awesome in so many ways, we were outgrowing it.  The boys were outgrowing the backseat, they play two extremely large instruments and our puppy is only getting bigger.  We will miss the top off, raising the roof to Usher's Yeah!

We traded the '05 Jeep Wrangler (85k) for a '06 Subaru Outback (69k).  A much better fit for our family.  We did not go with something even more economical because we live in the snow belt of Western NY and AWD is pretty awesome in the snow.

• Gas Difference: Jeep 14 MPG @ 10k miles * $3.00 =  $2142 vs. Subaru @ 23 MPG @ 10k miles = $1304
• Savings of $838/yr or $70/mo
• $12,110 savings in 10 years

* Subaru is also cheaper on insurance by $121/yr or $1730 savings in 10 years

#3 Auto Insurance

We also adjusted out auto insurance removing comprehensive and collision.  Our cars are older and high milage.  They are worth more to us, than the insurance company.  We are willing to accept the risk.  Insurance companies make money based on a high percentage of people NOT getting into accidents and scaring them into taking the highest level of insurance possible. We do not own new cars, we do not own expensive cars and they are 100% debt free.

• Savings of $580/yr or $48/mo
• $8304 savings in 10 years (A new car!)

#4 Vanguard

Since I was young, I have been investing with Wells Fargo.  We did not know any better and thought they were looking out for our best interest.  With the help of some education (See Jim Collins' Stock Series among others), we made the decision to divorce Wells Fargo and invest in Index Funds and REIT's at Vanguard.  It is too early to tell exactly what this is going to save us, but initially I am estimating minimally 2.4% (1.5% WF Brokerage fee + 0.9% avg. fund expense*).  I am through paying for their Audi's and Mercedes!

* Vanguard's Admiral Shares Total Stock Market Index Fund Admiral Shares expense ratio is 0.05%

#5 Sold Items on Craigslist and Ebay

In the spirit of simplifying our lives, we went through our basement and began selling items on Craigslist and Ebay.  We have collectables, old gold chains, car parts, pictures, etc that we just did not need anymore.  Our first pass yielded over $1200 and still many more things to sell.  All of this money went directly to our mortgages.  Once you resolved to not be attached to any THINGS you will find your options for making some money are endless.

• This $1200 should be $2,411 savings after ten years.

In Summary

These 5 simple changes yielded some real cash over the course of ten years assuming 7% annual compound interest.

• Cutting Cable: $15,916
• Change Vehicles: $13,840
• Auto Ins. Redux: $8,304
• Vanguard (assume $100K investment): $34,000
• Ebay and Craigslist: $2,411

After ten years, we will save $74,471.  Not much work to save almost $75k!