Update: March, 2020 - Well, it looks like the recession has arrived suddenly! With the Coronavirus/COVID19 pandemic currently sweeping the world, I put together a FREE Financial Crisis Survival Guide (blog post with available printable PDF) to help those of you either preparing for or responding to a cut in hours, layoff or termination.
Here's the blog post for the guide: Financial Crisis Survival Guide (Version: COVID19) Blog Post Version
Here's the free downloadable PDF version of the guide: Financial Crisis Survival Guide (Version: COVID19) Downloadable PDF version
My wife and I get lots of sideways head-tilt looks from many of our students when we tell them that our savings rate has been between 70-80% for the last three years running.
Yes, you’re reading that right, we live on 20-30% of our income and no, we don’t make a ton of money.
Our savings (and investment) rate is so high because we’ve really mastered the art and science of budgeting AND the complimentary desire and ability to constantly:
By the way, if you want a free PDF printable version of this list, just fill the form below and we'll get it right to you.
These are the very disciplines we teach when we’re coaching someone in their first budget and they apply whether you’re 1) trying to get current on your bills, 2) save for their $1000 emergency fund, 3) conquer their debt snowball and/or, 4) fully fund their 3-6 month emergency fund.
Is there sacrifice involved? Sure there is. But, we’re not suffering and depriving ourselves of fun or pleasure, living on the 'college starvation diet' of Ramen noodles. This is just a very simple, frugal and sensible lifestyle we’ve cultivated and try to encourage others to do as well.
Which leads me to stuff we don’t spend money on...
When you're in the process of eradicating debt (which you really should be), reducing and eliminating unnecessary expenses from your budget is pivotal. This is our list.
It's not exhaustive by any means, but we mean it to get your mind working in this direction.
This list meant to get you to think about what you’re spending your hard earned money on and maybe shine some light on some areas where you could either cut back or eliminate completely.
There may be just one or two things that you’re spending money on right now that, after reading this, you might begin to question, discuss and either cut back or eliminate altogether.
Also, I feel like it's important to mention that this is not meant to be an episode of “moralizing”.
In other words, just because my wife and I don’t spend money in one area, doesn’t mean that it’s morally wrong for you to spend your money there (although it might be, so just check with your conscience:)).
Again, this is just meant to be an exercise to shift your thinking and help you to assess the wisdom by which your monthly budget is being structured.
Be good to your budget and your budget will be good to you!
That’s right, we cut that bill years ago and haven’t missed it one little bit.
In fact, we even got rid of our TV about the same time and haven’t missed that either.
When we look at what we were spending (honestly, I can’t even remember what it was since it’s been so long ago) and multiplied it by twelve, we were astonished at how much it was and at what else that money could have been used for.
And besides, with the internet and YouTube in particular, we ALWAYS find free stuff to watch that is both informative and entertaining.
So ask yourself, what are you actually getting for all that money you're spending on cable?
If you're looking for permission to ditch cable TV, you've got it!
Even though we live in an apartment right now (for the purposes of stacking cash for the "100% down payment on a house" plan), this was something that we decided long ago to NEVER spend money on.
It’s expensive and doing it yourself give you some time to listen to your favorite podcasts as well as get some great exercise.
We rarely if ever buy books and never any of the latter. If we do buy books, we can usually find them used on Amazon for a fraction. We think the public library is one of the best ideas ever. Thanks Benjamin Franklin!
We never pay for credit report. You can always go to: www.annualcreditreport.com to get your free credit report once a year. Also, a lot of credit card companies are offering this as part of their normal card member services now (not that we recommend you use credit cards, mind you).
Fortunately for me, my wife grew up learning how to take care of her own hair so she’s never spent money on that. I was spending $20-ish per month until we decided to buy a $20 set of clippers and let me be my wife’s first and only hair client (so far).
It was rough the first couple of times, but I can say I’m proud of the job she does as well as the $240+ we save on haircuts every year.
I’m blessed to have a wife who can’t fathom why women (or men) would ever consider spending money on this (apart from the sparsely occasional reward perhaps).
If you're in debt, you should really look at this one if it’s one of your expenses. You could "DIY" it for the time being and maybe reconsider once the debt is paid off.
These are actually pretty easy to avoid these days.
Most banks require a $1500 balance to avoid fees and if you use your bank’s ATM or an “in network” ATM, you should never have to pay fees. So maybe pad that "starter emergency fund" of $1000 with an extra $500 if this a challenge for you.
My wife and I have the Otterbox protectors for our smart phones and love them. Wireless providers and phone manufacturers profit hundreds of millions of dollars per year selling cell phone insurance. And sometimes people don't even realize they're paying for it.
So, check your bill and make sure you're not. If you’re particularly adept at breaking your phone, maybe insurance makes sense, but otherwise I'd scrap it.
Admittedly, there have been a few critical ones that I’ve purchased over the years (maybe to the tune of about $5 total), but as a normal rule of operation, we don’t spend money on this.
I know for some families, particularly with "app-happy" kids, this can be an area of significant budget leakage.
I would put some eyes on it and see if there is and clamp down on it. There are so many free apps out there that are amazing, even if you have to put up with the annoying ads.
My first and only new car was also a leased car (way back in the 90s).
I bought it after I graduated from college because I felt like I "deserved it".
Oh, I "deserved it" alright. Suffice it to say, I paid an abundance of "stupid tax" in this category.
After I added up all the extra money I spent leasing (or being "fleeced" by) that vehicle I determined only to buy used cars and only with cash.
My wife and I are totally convinced that paying cash (i.e. avoiding financing/debt) is the only way to really win when purchasing such a rapidly depreciating liability (and yes, it is a liability because, apart from the transportation function, it’s just about all expense).
I've been offered them on my previously owned homes. I always though, "nah".
Clark Howard says they are, "not worth the paper they're printed (or not printed) on." So we’ve always avoided them. I also remember going to some consumer review sites to read the comments.
If you’re considering it, that might be a good place to start.
This one hadn’t occurred to me until I saw it on someone else’s list.
My wife and I are Apple/Mac users, which I know doesn’t necessarily make us immune, but we’ve never had the occasion to make us feel that this was a justified purchase.
Additionally, my "work" computer is a Windows machine and my company pays for that antivirus software (#winning).
I’m not going to say that we NEVER eat out. Rather, when we do it’s for more of a special occasion, rather than a default position.
The practice of meal planning and being intentional about not doing this will be a game changer for your budget.
My wife and I don’t consume alcohol, so that’s not an expense either for our home or for the bar life.
From what I can see that my company (corporate job) spends on alcohol, it’s REALLY expensive. Plus, it’s a big no-no on the ketogenic diet.
Again, I’m not trying to say that we NEVER buy clothes. Rather, it’s just not a regular occurrence for us to peruse the shops. Also, when we do, it’s thrift stores, discount retailers like Ross, Marshalls, TJMaxx, etc.
Then, if it IS straight retail, it’s got to be deeply discounted. Also, it’s important that it meets the following criteria: 1.) we LOVE it and 2.) we actually need it.
I totally see the value and merit of gym memberships for some folks.
Like financial coaching, sometimes people really need that external source of accountability to stay on track.
A gym membership can be great for that. I’m really more talking about buying a membership and then either never going or going very irregularly.
We don’t “upgrade” our phones in accordance the way the carriers and phone manufacturers would have us do.
Rather, we use our phones until they’re just irretrievably dysfunctional and absolutely require a new one. Then, we usually buy a few versions back.
To illustrate: my wife JUST upgraded her iPhone 4 to an iPhone 6s, when the most current is the iPhone Xs.
Dave Ramsey calls this an additional tax on the poor.
I totally agree. It’s complete and utter nonsense and is largely funded by the people who can least afford it. One sure fire way to stay away from this is to keep your eyes glued to your budget and try to pay cash for as many things as you can.
The physical parting with cash is much more painful than a credit or debit card transaction.
And again, if you want a free PDF printable version of this list, just fill the form below and we'll get it right to you.
So there you have it, the 18 things we don’t spend money on that we can think of right now.
It’s not an exhaustive list and we are certainly eager to hear about all the things you guys don’t spend money on.
So please feel free to leave your thoughts and suggestions in the comments.
If you consume our content on any regular basis, you know we're all about eliminating debt and increasing our savings rate.
Along the lines of savings rate and early retirement, here is a great book called "Early Retirement Extreme" by Jacob Lund Fisker.
This book will get your fired up about increasing your savings rate. In it, Jacob illustrates how elevating your savings rate is not only doable but advisable for so many reasons.
I highly recommend the book as a reference guide. That said, I will warn that there are some extreme suggestions. It's pretty amazing to see the lengths he and his wife went through to retire early.
And some of those lengths may not be palatable to most people (including me). That's okay, it's still a fantastic "how to" guide.
Regardless of that, it's a fantastic resource in that it gets the wheels turning. You'll start considering all the things you tend to spend money on without even thinking about it.
His story will encourage you to continue to think differently about your situation. For that reason alone I think it's a logical supplement to your following these 8 steps.
0. Stop All Retirement Investing (Until Step 4)2. Starter Emergency Fund of $10003. Eliminate Debts Smallest To Largest (a.k.a The Debt Snowball)4. Full Emergency Fund of 3-6+ Months’ Expenses5. Invest A Minimum of 15% Income Into Retirement Accounts (and increase savings rate to 50%+ if possible)6. College Funding (if applicable)7. Pay Off The Home Mortgage8. Build Wealth, Serve, Be Ridiculously Generous And Go FI (Financial Independence)!