27 February 2008 163 views 3 Comments Print This Post  Email This Post

It’s well known that there are two primary ways to financial freedom. You either make more money or save more money in order to invest more money and build wealth. I’ve mentioned on several occasions that its easier to save more money because that can be put into action immediately. I’m an advocate of frugal living while maintaining a balanced life. The first step to becoming more frugal is to reduce on-going expenses. If you decide to not buy that bag of potato chips on impulse, thats good, but if you decide to cut out your daily Starbucks and brew your own coffee, thats great. You don’t notice it, but these type of on-going expenses are the ones that add up to big bucks over the long run. If I recall correctly, another blogger talked about how smoking cigarettes can cost you up to $2 million in actual and opportunity costs through your lifetime. Most people think of the habit as only $5 a day. Don’t let that be you.

Here’s a checklist of on-going expenses that you should re-evaluate and make sure you’re getting the best deal on. Bring these costs down to a minimum and you can save tens of thousands of dollars, or even more in the long run. If you’re able to save $500 a month in on-going expenses and re-direct those dollars into an index or mutual fund earning 8% a year, that’s $296,473.61 in 20 years. Surely that can bring anyone closer to financial freedom.

Housing

-Renting or owning more house than you need.
-Insurance premiums
-Cable/Internet/Phone service
-Maintenance/Handyman
-Heating Costs/Insulation
-Any monthly or yearly costs

Automobile

-Insurance premiums
-Maintenance and repairs
-Gasoline
-Tires

Routine Expenses

-Food
-Entertainment
-Personal care items
-Pet products
-Medication
-Cell phone

Can you think of any others monthly expenses that we’re overpaying on? Please feel free to add it to the list by commenting.

Thumbnail image by starbuckguy