Every month we review our expenses and we separate everything into Fixed Expenses and Variable Expenses. You can take a look at our post on tracking expenses to see more about the specifics! Today we here to reveiw what our monthly fixed expenses look like. These are the items we have to pay every month and come in a fixed cost so we can plan ahead. But first…
TTF Family, how are you? It is hard to believe we are midway through July already. Less than half the year is left?! It is absolutely, positively incredible how time flies. Weren’t we just watching the ball drop in Times Square? Well actually, weren’t most of you just watching the ball drop? Miss TTF and I struggled to find this happening live as we scrambled on YouTube just minutes before the clock struck 2019. In fact, I think we both missed it and ended up watching the ball drop bringing in 2018….whoops!
Nonetheless, we had a great time. We reflected on some attitude of gratitude and I laughed my way to sleep watching a New Year’s episode of one of the greatest shows on turf, Friends.
To be clear, this is a classic Mr. TTF tactic. Whenever I am exhausted, I convince Miss TTF to watch one of her favorite shows while I slowly, but almost immediately, fall asleep. She always catches me. I think the snoring might give it away. At any rate, I think she carried me to bed… or woke me up and told me to get my ass to bed. Yeah, the latter is probably more like it.
Goal: Reduce our Spending
One thing I remember for sure, is that when we kicked off the New Year, we vowed to reduce our spending. In 2018, we did a good job tracking our spending, meeting about it occasionally, but at the end of the day – or year for that matter – we didn’t feel like we had the grasp on our spending that we had hoped. We didn’t know whether we had a “good month” or a “bad month” or if we spent a lot in a category.
So Miss TTF did the unthinkable… because not knowing how we did in 2018 was not an option. She went through ALL of our 2018 expenses that we did a “C+” job categorizing and broke it out in an excel document that looked like a modern day Profit and Loss statement.
Here is a copy of our December sheet. This is just the Expenses portion and yeah, it’s pretty intense. Now, we only use our new sheet which is far less complicated.
It was incredible and eye opening. We were astonished at the amount of money we had spent without a second thought. The total came to right around $66,800!!! How, when, and where did we spend all of this money?
So we went through it to get a better understanding of it. It was completely legit… all of it. We came away more motivated than ever before not to let this disappearing act happen again. After we first reviewed it, Miss TTF suggested a “no spend year.” While I couldn’t agree more that this would be a great idea, we quickly realized how difficult it would be to accomplish. With that said, we were laser focused. We buckled down and took a hard look at what we could cut.
Why Should You Monitor your Fixed Expenses?
By tracking, categorizing, and finally settling our fixed expenses we are able to take a look at what can be cut down and take full advantage of the Waterfall Effect.
The Waterfall Effect
By cutting down on each or any of your fixed expenses, even if only by a percent, a waterfall effect of those savings will flow throughout the life of the payment.
This means that not only will you get the savings once but you will be able receive those savings again and again, month after month.
This also has an even greater effect given that your fixed expenses are usually your higher ticket items. By being able to cut down on these cost, you will have a much higher impact on your finances than cutting out a few $5 Starbucks throughout the month.
For example, say you are able to negotiate a 5% discount on your rent when you resign your lease. You were able to do so since you pay early and have stayed in the same apartment for the past 3 years, reducing their turnover rate. If they were trying to raise your rent to $1000 a month, you just put $50 in your pocket every month.
Compare this to if you coupon clip for groceries every month. On average you are able to get a 10% discount on your entire grocery bill (with a lot of work finding and cutting coupons every single time). Your grocery category is normally $400 a month and with a 10% discount, you save $40 a month. A great savings, but not only do you save less but you have to put in far more effort to get those $40 than the 1 or 2 calls necessary to reduce your rent just the one time.
“Balances your Checkbook”
Regularly tracking your fixed expenses also allows you to spot any errors from month to month. This is like balancing your checkbook but without all the stress of counting pennies in a separate spreadsheet. Using our method of tracking your expenses you can easily see if your Internet company suddenly raised your Internet prices because the promotion was over (happened to us) or if they double charged you for your phone bill (also happened to us).
Not only should you figure out what your monthly expenses are to see where you can cut down, but you should be tracking them monthly to ensure you are being correctly charged and there are no future discrepancies.
Our Monthly Fixed Expenses
Now, for the details you were really looking for: what each of our fixed expenses look like, down to the penny.
Rent – $1,250.00
Yes, we are still renting. We have gone back and forth and back again on whether or not we should buy a primary residence and we always leave off on renting… for now.
In our defense, the cost of purchasing a home in Southern California is INSANELY expensive. There are many other places in the U.S. of A. where your mortgage would be about the same as you pay in rent. That is not the case in most places in Southern CA.
If we were to carry a mortgage, plus property taxes, property mortgage insurance, and home insurance, we are looking at a minimum of $2,000 per month. This is, of course, with anything less than 20% down as 20% down can cost you anywhere from $75,000 to $110,000 for the homes that our “in our price point.”
Since this is our reality, we have opted to rent, and yes, make someone else wealthy. I know, I know, this is doesn’t sound like a very FI decision, but we have our reasons.
And yes this rent seems astronomical, given that I live 20 miles from work and we have a 1 bedroom, 1 bath apartment. But given the current cost of living anywhere closer to work (a 1-bedroom averages $1,900/month), we actually have a killer deal (comparatively, right?).
Disney Annual Passes – $97.00
So Miss TTF wrote an awesome post about our decision to purchase Disneyland Annual passes.
Are they expensive? Damn right. Did it make sense for us? We think so. We visit Miss TTF’s family often and they are located very close to the Happiest Place on Earth. This gives us free lodging so we don’t have to drive there and back in a day. And so far we have been 16 times this year! That averages out to just $45.56 per visit… and we still have 2 more months to go.
If you saw the joy this place brings to Miss TTF, you would surely agree with me that is was a good call. I mean she literally skips… until she gets tired (she will hit me for this one :)). Add to that, this is our tradeoff for putting every other vacation we have “planned” on hold for the time being. We also use this as our monthly date night, so compared to a nice dinner, a $97 tab runs just about even.
Truly, we have a blast every time we go. And even though we are intensely focused on FI, you have to enjoy the journey.
Car Insurance – $90.01
This covers both the lovely Miss TTF and yours truly. We each pay about $45 per vehicle.
Miss TTF is still on her parents’ plan, paying her own monthly cost. This has allowed her to keep their 26 year history and the benefit of multiple cars on one plan to keep the cost down.
Having a good driving record and older vehicles has also helped keep our costs down here. With that said, we still call on an annual basis to ensure we have all offered discounts applied and that our coverage still makes sense for our circumstances.
Internet – $55.99
Now this one is too, too expensive. I have prided myself in keeping this at or below $50 for the past few years, but this year my “luck” ran out. When I called last December after our bill went up to $63.99 to see if they had any specials, they told me to call back at the end of the month. Well that was smart of them to do knowing full damn well that the end of December is freaking busy and that I would clearly procrastinate longer… and they would be right. I didn’t end up calling back until mid-January.
When I ended up calling back, they told me I needed to buy a new modem because the current model couldn’t accommodate the latest and greatest speeds which they did have specials running on. Well done, they delayed me yet again and obviously knew I am an obsessive researcher of any and all purchases, big or small.
So I did some research. Then I did some more research. And damn it if I didn’t do some more research. I went as far as to order a re-he-he-he-heally nice modem only to cancel it once I told Miss TTF the cost… back to square one.
Then I freaking finally ordered a new modem, it arrived, and about a week later, I called them to get my “special” after paying full rate for about 4 months. Damn their delay tactics!! It totally worked.
When all was said and done, I was able to get another annual promotional rate of $55.99. The difference in the monthly bill, over a year, will pay for that damn modem. Better yet, the next time I am looking for the promotional rate, it won’t be at the end of the year in peak holiday season.
Cell Phone – $54.98
Now this might not seem like much, but trust me when I say, I earned this rate. When I muster up the strength to recount the nightmare that was once my disastrous phone bill, I will write the post detailing the entire experience. Long story short, I realized through a bitch of an experience, to never, ever, and I mean EVER, lease a phone from a carrier. As long as they have you under their finger, they can put you through the wringer. The second I purchased my phone outright and told them where they can put their “free upgrade,” I have had control of my phone bill.
It is miraculous that since I own my phone, and can switch carriers within an hour, they never mess up my bill. I will never buy a phone through a carrier again. I will happily buy my phones refurbished from Apple.
Another perk, which stems from my job, is a $30 reimbursement per month bringing my total cost down to $25 per month.
Renters Insurance – $12.48
What can I say here other than our apartment complex requires that we have this so they don’t have to pay for our stuff if shit hits the fan. It is a necessary evil. If shit ever truly hit the fan, I would probably take the insurance money and get out of dodge.
Spotify – $9.99
Spotify is how we jam on the weekends. “Tailgate Party” is typically on repeat. We actually share an account so we just have the one payment for it. Since we are usually together when I want to listen to music, it just made sense. I listen to it while I am at the gym, but Miss TTF is sleeping so she doesn’t need it at the same time. And she will listen to it almost all day now that she is at home, so we are definitely getting our money’s worth.
Identity Protection – $9.99
I am definitely a “psycho” as Miss TTF would say about protecting my identity. She doesn’t give flack for this since it’s only $10 a month for peace of mind. But when it comes to sharing my passwords, she’ll lose it.
Netflix – $7.99
New Girl, and Stranger Things, and Friends, oh my. These are just the list of shows we watch together. If Miss TTF is out of town, that is when I have to cram in my favorites such as Narcos. For some reason, she doesn’t really like that one so much.
We have really cut back on our TV watching but we can’t officially give this one up quite yet. The price is just too good and even if we only watch a movie or two a month, it definitely makes it worth it.
Acorns – $1.00
Of all the “roboadvisors” that I have investments with, I love that Acorns pulls their fees from your bank account leaving all of your invested money to grow. With other roboadvisors, they sell a portion of your investments to collect their fees. While I realize this makes the fees “feel” less burdensome a.k.a. hidden, I prefer to allow the compound effect to work fully and would rather be charged out of my everyday checking account.
iCloud – $0.99
Extra cloud storage for my iPhone. B-o-r-i-n-g… but true.
Total Fixed Monthly Expenses – $1,590.42
So there you have it! Our total fixed monthly expenses totals up to $1,590.42. We have really honed in the past year to reduce these as much as we possibly can. This same time last year (June 2018) our fixed expenses totaled $1,739.16. That puts us at a $148.74 year over year savings. There are obviously lots of factors that go into this (car payment, clothing subscription, no Disneyland passes, increased rent, etc.) but we feel that we have optimized our fixed expenses extremely well and are happy with where they are at… for now.
Additional Fixed Expenses
Now you may have noticed that our fixed expenses were pretty bare. In reality, we only have 11 line items and 5 of those are under $10 each. You may be looking at yours and wondering how you have so many more. And there are a few reasons for that:
1. We don’t take on debt
There are lots of stores allowing you to easily get new shiny things and in turn pay a “simple” monthly payment. Some common things even our closest friends and family do this with:
- Gym Memberships
- Infomercial Items
- Credit Cards
- Amazon Prime
If you ever add up all your monthly payments plus the down payment that you put down, you would find that 9 out of 10 times, the total is more than the item was had you just paid the full amount upfront.
Of course, this may not always be the case, as with our Disney passes. But always be sure to do the math yourself and see what the actual cost is going to be.
2. We don’t include bills that vary month to month
Yes, we know that every month we have to pay more than just these bills like the utilities bill. But since that price can vary so much from month to month we don’t include it in our fixed expenses. It is included in our variable expenses budget and we usually use our historical data to budget for that. An example of our utilities bill varies would be how July is so much higher because we run the AC vs. December where we aren’t home a whole lot and barely even run the dishwasher.
3. We don’t include Annual Fixed Expenses
Sometimes you will see people budget with their annual fixed expenses budgeted out as a “monthly” payment. This is can be super helpful so you can save that money up for the next year’s expense.
We don’t do this, though. We found that too often we would just cast it aside and not actually save that amount since it was technically already paid. Now, we have a new system to ensure that we will have all our annual expenses covered by the time they come around. We’ll be sure to share soon!
So there you have it. Our monthly fixed expenses. How do yours stack up? Are you saving in as many areas as you possibly can?