So as you all know by now I’ve radically changed my life, now broadcasting this blog from Michigan. This move came with its own unique set of benefits and drawbacks, as any major change in life does. I wasn’t quite sure what to expect, as a lot of time has passed between the time I moved away from Michigan to start a new life path and my return home. But it’s been really great being close to family. In just the two weeks I’ve been here there’s been a family barbecue, mid-week drop-ins by various family members to say hi, and a Sunday afternoon ride on a pontoon boat. All activities that were impossible for me to participate in when I was 1,300 miles away.
Of course, one major benefit to this move has been my re-examination of all my expenditures and leaving nothing sacred. Once I decided I was going to try to live solely off of the income this blog generates, I knew I had to get serious about spending and figure out exactly where my experience with frugality could be leveraged. So what I’m doing is I’m cutting expenses when and where possible to a level where frugality is balanced with quality of life appropriately, which will give my three-month trial period time to incubate and see if it’s indeed realistic to write for a living.
What you see below is my explanation of individual expense categories and what I tweaked. I anticipate some costs to go up slightly, but overall I think most of my expenses will be reduced dramatically.
Before: I was sharing a two bedroom apartment with my girlfriend and her son. The rent was $925/month, and split down the middle. So my portion was $462.50.
Now: I’m renting a room in my younger sisters’s house. She has a three bedroom house where currently her and her husband (my brother-in-law) live. However, she’s seven months pregnant. My niece will take the second bedroom, and I”m renting the third. My rent is $200 per month.
Before: I’m on a graduated plan, and my payment is currently $224 per month on a balance of approximately $18,000 with an interest rate of ~3%.
Now: I applied for and received a 60-day forbearance on my student loans. I may extend this a bit if I absolutely need to. This forbearance allows me to conserve cash flow as much as possible while I’m going through this transition. However, interest continues to accrue in the meantime. I may end up paying at least the interest in the interim depending on how cash flow looks.
Before: I was budgeting approximately $280 for food every month, which I consider a bit high. However, this budget wasn’t just for me, as I often took my girlfriend out for dinner 1-2 times per month, and also grabbed takeout or pizza for the three of us here and there. As such, my food budget was a bit more stretched than I would have liked. And looking over the past three months, I averaged $347 per month in total food costs, which includes groceries, restaurants, and fast food/takeout. This average was pushed higher by an expensive night out in April, which could almost be considered a gift. But no matter how you slice it I was spending too much on food.
Now: I’m going to budget $220 in total food, which I consider very realistic. This also includes the occasional times I take a family member out for lunch or dinner. I think I may even spend less than this, but I want to see how things go in new surroundings.
Before: I was paying half of electricity and water, which wasn’t included in the rent. This averaged approximately $62.00 per month.
Now: I’m paying no utility costs, as the $200/month in rent covers all of that.
Before: Me and my girlfriend were sharing internet costs, and my half ran $30 per month.
Now: The internet fees are also included in rent, as I just log into my sister’s Wi-Fi.
Before: My girlfriend and I shared a family membership to the gym that was located right next to our apartment complex. It worked great because I could just jog from the apartment to the gym and immediately start hitting the weights without having to head upstairs to the cardio equipment. I paid $30 per month for my share of the membership.
Now: I vowed to get by without a gym membership up here. My sister lives in a fairly rural area, and the closest gym is more than 10 miles away and costs more than $40/month. This just wasn’t going to work for me. So I bought a pair of 25 lb. dumbbells last month and I now use them for almost my entire workout routine. This worked great because my brother-in-law had a quasi-gym already set up in the basement with a basic bench and a pull-up bar attached to the foundation of the house. I’ll probably write a post soon on my new workout routine which only required the $55 I paid for the dumbbells. And the great thing is that these dumbbells will theoretically last forever, so I should never need a gym again no matter where I live.
So all told these changes have led to savings on the order of $735.50 per month. This should bring my total spending down near the $1,000 per month area. In addition, with limited income I’ll be extra sure to watch any small expenses that come up here and there, although I’ve been pretty good about this all along.
Of course, some of these changes are temporary. The student loan payment reprieve will only last 60 days, and then I’ll either have to reapply for another forbearance or start paying on the loans again. And there’s no definitive time frame as to how long I’ll live with my sister. At some point I’ll figure out where I want to live up here and start my own life again. I’m still contemplating a few different areas and looking at local rents. I may even stay in this same small town where one bedroom apartments run ~$500/month. I’m a big city guy at heart, but the only bigger cities I would consider living in up here – Grand Rapids and Ann Arbor – are a substantial distance from family, and family is the main reason I moved back in the first place. And, of course, the bigger cities come with bigger expenses.
And as I mentioned above I anticipate some costs to go up. Fuel may rise slightly since everything is much more spread out up here. In addition, insurance costs (health and auto) may rise, although I had to cancel my dental insurance due to the fact that they don’t offer the plan I had in Michigan. I’ll also have to get registration on my car and a Michigan driver’s license soon, which will raise my expense load temporarily.
However, I anticipate the cash flow to be positive right away as my expenses drop significantly across the board. The income I can generate from writing and dividends alone should easily eclipse ~$1,000 per month, which would still allow ample free cash flow to continue my investing activities. In addition, I have an ace in the hole as the $300 per month I’m amortizing for my Toyota Corolla all-cash purchase at the end of last year isn’t actually a drain on monthly income.
What do you think? Did I cut enough? Go too far? Any areas I missed? Have you cut your expenses recently?
Thanks for reading.
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