Need A Raise? Cut Your Overhead!

Happy SMART Day Everyone!

Our new "shared" yard saves us about $7,000 a year!

When was your last raise?  Everyone I know would love to have one, but they don’t usually come all that often.  Still, if we consider that a raise is just a new inflow of money—we all have one readily available.    That new inflow or “raise” in income is always within your grasp by simply cutting your overhead or monthly expenses.   And even if the idea of cutting back sounds like a sacrifice, you may just discover that reducing overhead—especially when unnecessary or unused—can actually be a pleasure.  And your pocketbook will thank you as well.

A couple of years ago when my husband Thom and I decided to right-size our living arrangement we sat down and calculated how much we were actually spending each and every month.  While I realize that budgeting is not that much fun—we did uncover some amazing insights that helped us make some valuable decisions—and improved the quality of our lives.  Here are several things we did to give ourselves a $30,000 a year raise:

1) It started with realizing that although we liked our 2,300 sq. ft. house, we only lived and used about ½ of it on a regular basis.  Insight:  We were paying for and maintaining over 1,000 sq. feet of living area that was seldom used or necessary.

2) We had a lovely oversized back yard with a pool, grass and trees that provided us with a great ambiance.  Insight:  That ambiance had a price tag of about $500-600 a month.  Eliminating the pool (that was seldom used) and most of the yard, we now save about $7,000 a year—and instead created a much less costly space in a new house that we enjoy as much.  Plus, we presently take advantage of local parks  and public areas that are even more beautiful than what we had before.

3) While the mortgage on our larger house was easy for us to pay on a monthly basis—it was still unnecessary.  Insight:  Eliminating the mortgage saved us over $19,000 a year. Of course, we did chose a home in a more modest neighborhood to meet our goal.  But even if you have no resources to buy a home free and clear—any choice to lower your mortgage payment (or rent) is a step in the right direction.

4) Although utility costs for the larger house were not a burden to maintain—it was still a waste.  Insight:  Rightsizing our home to space we actually used, making it extremely energy efficient, and adding solar saves us approximately $1,500/year in utility costs.

5) Our property taxes for the larger home cost approximately $4,400.  Insight:  Our right-sized home saves us over $2,200/year.

6) Although we had a nice house in a nice neighborhood, it was necessary to get in our car to go to the grocery store, the gym and any other form of entertainment.  Insight:  Now living in a diverse and walkable neighborhood we are surrounded by entertainment and exercise options and our need to use the car has been significantly reduced—saving gas money and wear and tear on our vehicle.  We now also have a variety of free entertainment options saving us incalculable amounts.

7) By eliminating things that we didn’t really need or use like a land-line phone $35/month; gym membership not being used $20/month; extra meals out $500/month; etc. etc–we continue to save money.  Insight:  We still spend money on lots of thing we really enjoy and use—we just don’t waste it on things that we don’t need or those that had become habitual.

Overall, we estimate that moving to a house with a size that we actually utilize saves us over $30,000 per year.  That’s quite a raise!   Plus, living in a neighborhood where we drive less and one that contains lots of free entertainment, we save approximately another $2,000 to $3,000 as well.  The trade-off of letting go of a bigger, more impressive home in what might be considered a more desirable neighborhood has been easy.  In fact, even though our neighborhood is considered less-upscale than some others, the location is filled with side-benefits that make us feel richer than ever.   We feel the move has tremendously added to the quality of our life while saving us a chunk of money—even better than a raise!

Of course, every family is different, so our savings may not be achievable or desirable to everyone.  Unfortunately though, most people don’t consider that if they cut the things they spend money on and/or those they don’t really need or use—they can save enough to consider it a “raise” in income.   Here are some questions to ask yourself:

1) What am I paying for every month that I don’t really need or use?

2) What am I paying for every month that I used to think was important but I or my family no longer appreciates?

3) What am I paying for every month because I think it “looks good” to others regardless of how it makes me feel?

4) What am I paying for every month because others told me it was important or desirable to have?

5) In the space of 24 hours, what experiences make me feel content, happy and fulfilled—and what can I do to bring more of those into my everyday life without spending a dime?

6) What expenses can I easily eliminate in a way that makes it feel like I got a raise?

SMART Living is all about getting in touch with those things that make you feel happy and fulfilled on a regular basis—and that seldom has anything to do with what you own or possess.  Cutting your overhead or expenses in any way that reduces time spent earning money to buy things you don’t really want or need is a great way to experience a raise.   Plus, not only is “rightsizing” a more sustainable way to live, the truth is it allows us to become more aware of what benefits our lives individually, and then spend our time, energy and resources on those experiences and connections that really matter.

“Simplicity in its essence demands neither a vow of poverty nor a life of rural homesteading. As an ethic of self-conscious material moderation, it can be practiced in cities and suburbs, townhouses and condominiums. It requires neither a log cabin nor a hairshirt but a deliberate ordering of priorities so as to distinguish between the necessary and superfluous, useful and wasteful, beautiful and vulgar.”-David E. Shi, The Simple Life, 1985

“Abundance is about being rich, with or without money.” -Suze Orman

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