When Saving Money Costs You More

I started really analyzing my expenses last year and shrewdly cut activities and expenditures I felt were unnecessary or a waste of money. After cutting expenses, hindsight allows for a little perspective as to when saving money ends up really costing me more through a reduced quality of life or increased ancillary expenses. Some expenses, like a spare car in the driveway or trips to the trendiest restaurant in town, can be cut without regret. Other expenses, however, once eliminated can cause a disproportionate reduction in one’s quality of life. These expenses must be analyzed a little more carefully to see if they can reduced instead of cut out completely, or perhaps they can’t be changed.

At one point or another, the law of diminishing returns takes hold. Cutting out huge expenses like your car, overpriced rent and cable TV can yield huge savings. Once you get to the point of making your own clothes or laundry soap you’ll likely be taking up a lot of time and seeing very little benefit.

I want to talk a little bit today about my personal experience in cutting expenses and yielding diminishing returns.

  • Cell Phone

I decided to cancel my expensive iPhone contract through AT&T earlier this year. It was costing me over $80 a month, which I figured would require $32,000 in equities at a 3% entry yield in order to pay the bill every month (once retired). This was simply too much money for me to part with every month to have the right to speak with people. I looked into a lot of different options, and at the time I decided my best option was a VOIP service where I used wi-fi to make and receive phone calls for $10 a month. The savings of $70 a month was fantastic, don’t get me wrong. However, I noticed that the service was spotty and I had no access to phone service outside of wi-fi spots. When it did work there was a pretty decent delay in the conversation, which is common for VOIP services. This started to negatively impact my personal relationships as I noticed that friends and family started calling me less as it generally became a pain in the butt to contact me. Either I wasn’t in wi-fi range, or my voice continued to echo and delay to the point of diminishing the quality of the conversation.

I decided to do something about this. Saving money is of the utmost importance on my road to financial independence, but it shouldn’t come at the expense of interpersonal relationships. I canceled the cheap VOIP service and signed up for a prepaid month-to-month service with MetroPCS. I now pay $40 a month for unlimited talk, text and web services. I can cancel at any time. It’s important to note that this $40 includes all taxes and regulatory fees. I felt it was important to keep in touch with the people that matter for me. I also felt that after selling my car I needed reliable cell phone service in case an emergency presented itself or the bus was running late. This fee, although higher than the VOIP service was, is still half of what my AT&T contract was. I’m saving money and I’m still able to maintain my relationships. That’s a win-win.

  • Gym Membership

I’ve been without an expensive gym membership for about two years now. The apartment I lived in had a pretty decent fitness center with everything I felt I needed to stay in shape. Since moving to my smaller, cheaper apartment I’ve been a little limited in my ability to work out. This is mainly because the “fitness center” here at the new apartment complex is nothing more than a small closet filled with an elliptical, an exercise bike and a universal machine. Being my frugal self, however, I was determined to make it work.

After working out a few times in this small space I realized it wouldn’t work. It really can’t accommodate more than two people at the same time, and this apartment complex has around 400 units. You can do the math. For better or worse, there is a YMCA located only a short walk away. I decided to sign up for $30 a month, which includes unlimited access to this facility and any others in the area. This membership can be canceled at any time.

Staying in shape is one of my 5 steps to retire early. Saving $30 a month is fantastic, but not if it comes at the price of a reduction in overall health and fitness. I don’t necessarily think having a gym membership is the only way one could stay in shape. I am limited though. I don’t have the space for any type of home gym setup. I’m on the second floor, so I can’t do any type of P90X workout that requires a lot of moving around. My neighbors would probably put up with that for about a week. I can run and bicycle outside for free, but I feel it’s important to be both aerobically and anaerobically fit. I’m a former competitive bodybuilder, and I actually enjoy getting a good free weight workout in.

In the end, saving $30 a month isn’t worth the possibility of increased health care costs later in life. I could save the gym membership now, but risk extra costs down the road. I’d rather feel and look good now, spend the small sum and hopefully save myself exponentially in terms of hospital bills later. My view on this may change. If I lose my love of anaerobic exercise, running and bicycling are still excellent forms of staying in shape. It’s really all about staying in shape, and if you have to spend a little bit of money to do so…then you have my blessing!

Balance is important…

By increasing my expenses in these two categories I won’t save as much money every month, and I’ll have less to invest with. I feel that you have to strike a balance in life. Enjoying today, while still having an eye on tomorrow is extremely important. These expenses are still minimal, but the benefits are tremendous. I’ll be able to stay in touch with friends and family and I’ll also look (and feel) great!

What about you? When have you saved money that ended up costing you more?

Thanks for reading.


  1. says

    When you state your monthly cell phone bill would take $32,000, that really changes the perspective and makes retirement sound awfully expensive. It just got me to think quite a bit.

  2. says


    Thanks for stopping by!

    Every expense I have I always think in terms of how much money I’ll have to have in equities in order to pay that bill. That’s one of the thought processes that has enabled me to be so motivated on cutting down expenses.

    I’m glad it got you to think!

    Take care.

  3. says

    I went through the same process a while back. Wasn’t watching TV, so I cut cable and got my occasional fix through Netflix. Moved to pay-as-you-go plan from a monthly plan. Huge savings!

    Cut home phone service and moved to free voip. Joined a library!

    These are small costs but add up over time. If I’m not using them, no point paying for it!

  4. says


    Great job in cutting costs there. I totally agree, if you’re not using the services then there is no point paying for them.

    Those little costs add up over time for sure! Just like dividends. :)

  5. says


    I’ve found that most major sports (football, basketball, baseball) have a lot of broadcasts on the major networks like NBC, FOX and ABC. I purchased a cheap over-the-air antenna and am able to watch most major events on HD local channels.

    Try it out!

  6. Dienekes says

    Great post. I’ve been meaning to head over to the ERE forum to see if there are discussions about how folks have evolved their cost cutting. Your article directly gets at this issue.

  7. says


    Thanks for stopping by and commenting.

    I agree that everything has to evolve over time. You really have to find balance. If I cut out my cell phone completely (and saved $40/mo.), but lost all communication to the people that matter the most, would it be worth it? No. You always have to weigh the upside and downside to expenses, just like investments.

    I think there are quite a few posts like this over at ERE. I think people always question whether they’re doing the right thing…too much, too little? Ultimately, only you can answer those questions for yourself.

    I may add to this post soon, as I feel like I didn’t include enough examples.

    Take care!

  8. MySavingStyle says

    DM- I really enjoyed this post and am glad to see you joined a gym. Without health, you have nothing. Also keeping in touch with people/family is important. I think you made good informed decisions.

    My goal is to limit my living expenses to what I would spend in retirement(not there yet, or even close). I can’t limit them to much because I would isolate myself, and my friends/family are important to me. Plus I enjoy my job, and I want to retire in comfort in style, but early, by 50, I’m 36.


  9. says


    Thanks for stopping by.

    I’m glad I joined a gym as well. As I said in the article, I don’t believe a gym is the only (or even the best) way to stay in shape, but it does a great job of keeping me motivated. Something I didn’t mention in the post is that when you’re paying a monthly fee you’re ever so more motivated to get the most out of your body.

    My goal of limiting expenses to what they would be in retirement is the same. I’m trying to get as close to $1,000 as possible. I’m getting very close now.

    50 is a great goal to have. That’s still 15-20 years earlier than what a lot of people plan for. 15 years is a long time to sit and enjoy the fruits of your labor.

    Best of luck in your journey. Please keep in touch!

  10. says

    WRT exercise: I read a comment on a New York Times article in which someone used the term “Prison workout”. Google it.

    These days I pretty much do squat thrusts and calisthenics in y apartment. I am just as fit as I was when I went to the gym. Granted, I may never get Ah-nold size muscles. And sometimes it gets a bit lonely. But I started it when I was unemployed, so saving money was the main motivation.

    I usually listen to some podcasts while doing it (after I could do squat thrusts for 30 minutes without dying), so I get my news at the same time as my exercise.

  11. says

    Everyday Freethought,

    Thanks for offering up the tips.

    Working out in a gym isn’t necessary, and the benefits of a membership will serve you well or not depending on your goals and strategies. I do enjoy getting anaerobic exercise in, which usually for me means heavy barbell/dumbbell workouts. This, at the current time, is not possible in my apartment.

    In the future, I may revise this workout strategy and may change my personal outlook on my body and the way I want it to look. I’m currently 5’9″ and about 190 pounds..and pretty built. I may change that in the future.

    In the end, it matters most that you engage in physical activity to keep the body as rich as the wallet. If you don’t have your health, you truly are poor. Whether you spend a small sum to do this in a gym or not, matters not.

    Again, if this $30 fee increases or becomes too much to bear I may just jog and bicycle outside and get a very cheap bench/dumbbell combo for the apartment and do what I can.

    Thanks for stopping by!

  12. Anonymous says

    There’s a great book out there called “You are Your Own Gym” by Mark Lauren and he uses his own body weight to get the anaerobic exercise in. Using rope, trees, tables, chairs etc. You might want to check it out.

  13. says


    I’ll have to check it out. Thanks for the tip. It sounds like that’s a great low-cost (free) way to stay in shape. Sounds like a sustainable long-term plan there.

    Thanks for stopping by!

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