Expense Reduction Project 2013

Although I want to reduce my expenses as much as possible this year I’ve decided that it might be better to tackle a few categories at first so that I can gradually change my behaviors that tend to be the root cause of higher expenses.  On the chopping block for 2013 are the following:  food, electric, and transportation costs.  The goal will be to reduce these as much as possible without entirely eliminating them.  I’ll look at what the current cost for each item is, a goal for where I would like it to be, and possible ways of reducing the expense.  I will then do a quarterly follow-up for the year to gauge progress.

Before digging into the nuts and bolts of this project, let us consider why it should be undertaken.  Some of the expenses may not seem extravagant to some and the possible means of reducing them may seem radical to others.  This is a reflection of two main factors; the variability of experience amongst individuals and values.  It would be difficult to take my situation and extrapolate that information to another.  For example, being a single male is very different from the married man with three children.  The number I use for what qualifies as a reasonable expense for food may be very different to the person who is married and feeding a household of five; there is a degree of relativity involved in comparing the two.  The second point I made has to do with values.  People view food in different ways.  Some see it as merely a means of sustaining ourselves, others see eating as a social function, and still others have exotic palates that require expensive ingredients.  I think that most would agree that despite the difference in circumstance and values there is such a thing as a reasonable expenditure of resources for something like food, electric, or transportation costs.  That reasonableness is what I’m after, considering the resource I’m trading for these items is non-renewable; my time.  The credit for this idea comes from the book Your Money or Your Life.

Now that we have taken into consideration individual difference let me answer the original question; why should I worry about reducing expenses?  My old self was fond of stating that a minor isolated expense really wasn’t that big of a deal.   I could justify little expenses as not being that much, but failed to consider the cumulative impact these minor expenses represented.  Things like food, utilities and transportation cost are reoccurring so even though they may not seem like a lot on a monthly or even yearly basis looked at in terms of decades it adds up.  Add in the compounding you would get from saving that money and you can quickly see that those little amounts turn into significant amounts given enough time.  Do I want the utility company or grocery stores to get that money?  Not really.  At least in my mind it is worth the effort to restrict costs when it can be done.


For the past two months my spending on food has been right at 400.00.  I think this is too much to be spending on feeding myself.  Would I notice a reduction in my quality of life by cutting my food budget?  Not likely.  I enjoy cooking and the more I cook at home the less I eat out.  That is the culprit, eating out.  I tend to eat out due to the convenience of it.   Now that I am settling into the apartment I find myself cooking more and craving eating out less.  If this trend continues it should be easy to reduce my food bill from 400.00 to 100.00.  That is my goal going forward: 100.00 or less in food costs.


My apartment is a little under 800sf.  It’s inhabited by me alone and there are few electronic gadgets sucking a lot of electricity.  I was shocked to get my first bill for Jan. and see that it was 84.70.  This doesn’t sound like much, but I can’t figure out why it is even this high.  Where is the usage coming from?  I keep my thermostat around 64 so the heat is not always running.  Besides the hot water heater, washer, dryer and refrigerator there is not much energy being used. There were 34 billing days last month and with this month only having 28 it should naturally be lower.  I’m going to keep an eye on how many kw are being used daily.  I would like to cut this down to 50.00 a month or less.

Update:  After investigating this a bit further I believe the usage is coming from the furnace.  I turned the heat off for 24hrs and the kw usage was 9kw in that time period.  Last month the average per day usage was 24.7kw.  That is a big difference.

What is the best way of reducing this expense?  I could lower the thermostat even more.  Turn it off.  I have no problem adding layers of clothing when I’m at home.  It seems to make more sense to regulate the loss of body heat versus trying to increase the heat of the space surrounding that body.  I could also reduce the duration of my showers.  If you guys have any suggestions let me know, I would love to hear them.


My transportation costs are comprised of two vehicles: a truck and motorcycle.  Although there is no loan associated with either one of these there are still costs associated with owning them.  Consider the following:

  • Taxes
  • Insurance
  • Maintenance
  • Fuel
  • Storage (motorcycle)

Owning one motorized form of transportation is a luxury, but having two seems to border on extravagance.  Considering I went without a vehicle overseas, why do I feel like I need one here?  Part of it was because in Saudi I was responsible for getting rid of a vehicle before I could leave.  I didn’t like that kind of commitment to a possession.  The other reason is that by living in a company sponsored community everything was in walking distance.  I walked to the gym, work, movies, library, pool, and groceries.  To do that here I would need to plan my residence in relationship to where I work much better than I currently have.  Housing is an expense to be dealt with in 2014 and its proximity to work will certainly be taken into consideration.

The motorcycle is a pure luxury and is held for no other reason than the fact I love riding.  The question is how can I reduce the cost associated with holding both of these modes of transportation?  I’m still estimating what the holding cost for these two vehicles is, but so far here is the breakdown of the above items:


My first approach will be attempting to reduce each of these items.  The next phase will be the serious consideration of going to the motorcycle full-time.  That is a big step and one I need to think about quite a bit more before I jump into it.  Besides getting rid of the truck entirely I see these being other options that might be worth looking into:

  • Selling the truck and getting something more fuel-efficient
  • Moving closer to work cutting fuel costs
  • Planning my driving more carefully

All of these would reduce the biggest holding cost of all which is fuel consumption.  I will also be looking at insurance and shopping around for better price.

The Payoff

Early in the article I talked about how small amounts can add up to big amounts over time.  I think for myself I’ve always been guilty of justifying my emotional wants with the phrase, “It’s not that much, what is the big deal?”  For me it’s useful to see what a change in behavior could save me in spending and what kind of return I would see over the course of twelve years.  The expenses I’ve discussed in the post will still be with me in twelve years so it’s helpful for me to see what not changing would cost me over a period of time.  Why twelve years?  That is when I hope to be retried or at least semi-retired, at the age of 50.

Her are the assumptions:

  • I’m successful at cutting 300.00 off the food expense
  • I’m successful at cutting 44.00 off the electric expense
  • I’m successful at cutting 185.00 off transportation costs
  • I save this money each month
  • A consistent 6% yearly return over twelve years is achievable

The results:


Wow!! This is amazing to me!  How can such seemingly small cuts add up to such large amounts?  The answer can be found in the power of consistent savings and compounding.  Saving 113k by cutting three expenses; what happens next year when I reduce the housing expense?  What about other areas that I have not even mentioned?  Looking at the cumulative impact of behaviors that cost money is extremely motivating to make changes.  None of the reductions I mentioned above taken individually seems to be that much, but taken together and infused with the power of compounding you can easily see what kind of difference is possible.

This is my goal for the remainder of the year.  I’m using January as my starting month to compare expenses to and will provide an update at the end of first quarter.  Wish me luck!

If you guys have any suggestions on ways of cutting the expense above that I have not mentioned please don’t hesitate to share.  I’m always open to new direction.

20 thoughts on “Expense Reduction Project 2013

    • arthurdent– Thank you. It’s not so much a new way as starting off my life back home with the right habits. It would be easy to just let these expenses pass by without much thought, but then that seems like a waste of good resources, my time!

  1. Wow! Huge amount of savings over 12 years! The food budget has a simple solution as you point out – eat at home more.

    Electricity is trickier. Hopefully you live somewhere warmish to not need heat. Look into turning down the temp on your water heater, getting a water heater blanket, and making sure lights are off as much as possible. That said, electric bills tend to have 2 basic charges: energy and network. The network charges are a (mostly) fixed amount that the utility collects simply by allowing you to use their wires. The energy portion is where you are charged directly for usage. Your bill cannot go lower than the network charges, fyi.

    Transportation is just expensive, period. Replacing the truck with a fuel-efficient car would involve transaction expenses, behicle registration, and possibly higher insurance premiums.

    Good luck!

    • Headed Home— I was impressed with the savings amount as well. When you think of it terms of being reoccuring and the return you could get by cuttin the fact it becomes a very noticeable amount.

      I had not thought of cutting the temp on the water heater. Good idea! Thanks.

  2. As long as you take those savings and invest then it’s great. Unfortunately most people will take those savings and spend it on other things. As the calculation shows, investing those savings month in and month out can give a great boost to your overall savings.

    I’m trying to pare down my food expenses as well in 2013. I spent way too much on food in 2012!

    Best of luck!

    • PIP— That is a fair enough rebuttal. I listed those assumptions because, as you state, it’s great if the money actually makes it into savings, but can (will) that be done consistently?. I’ll keep a running tally of how this plays out as well. I’m not going to lie, from time to time I may use the funds for something else, but overall I think I will be fairly consistent in putting it in my cash account for investments.

      Good luck with cutting your food expenses. I will have to check in with you and see how you are progressing.

  3. Hi Stoic,

    An eye-opening calculation which inevitably leads to the exact thoughts you have listed – what other areas of our lives cause us to spend precious capital today, which could have increased our net worth by hundreds of thousands over the coming decades.

    What I think is important is acknowledgement of the fact that quality of life has a price too. Yes, expense reduction leads to higher wealth, but what about your own comfort? It should not be either “save” or “waste money”. How about a balance: we know it costs $80 to heat the apartment, and we are ok with it because that’s part of being alive and enjoying yourself. So long as you are reasonable its ok to spend on a cup of coffee in Starbucks, just don’t do it daily (or even weekly). Its ok to eat out once a week – there is no need to cut the budget to absolute zero. Of course there is a cost to it, but are you truly willing to put on a sweater every day for 12 winters to be 10k richer at the end?

    Attaining financial freedom is a great goal, lets just not make a fetish out of it. Bare minimum living standards can be tolerated, but how about raising them a bit even if it means retirement in 13 years rather then in 12?

    As for saving tips: my favorites are eating out (cutting to a few meals per month) and telecommunications (cell phone, home internet, home TV, home phone). Insurance costs and interest costs on any mortgages/lines of credit/loans go without saying. Switching gas heating contract to another company had also been effective on occasion….

    I am sure you will look at every line on your budget and will find ways of reducing it if you only shop around or reduce the frequency of usage. Just don’t overdo it.

    • AverageCFA– Thanks for stopping by! I enjoy your comments, they are always engaging.

      What I think is important is acknowledgement of the fact that quality of life has a price too.” I could not agree more. If I have misled you into believing that putting savings above quality of life is supreme then it has been unintentional. We each have a different conception of what quality of life represents. Half of the transportation costs come from owning a motorcycle. One could make an argument for getting rid of the bike, but unless I really had to I won’t. Why? Because it greatly increases my quality of life. Would I put a sweater on vs. turning on the heat? Yes I would and have been all week. The funny thing is I see a gradual change in what my comfort zone is. Cooler temps are not that uncomfortable and the body is capable of adjusting to its surroundings with little stress.

      we know it costs $80 to heat the apartment, and we are ok with it because that’s part of being alive and enjoying yourself.” I would have to disagree, at least for myself. We have the same goal; comfort. We have two options: put on an extra layer of clothing or raise the thermostat. The end result is warmth. The most interesting question of all is not which action should be taken (I’m not championing frugality here), but what makes a man/woman choose one action over the other? That interests me…

      These expenses are by no means recommendations for others to follow; they are simply moves that I am making to move towards a more efficient economic life. To say that I am merely cutting expenses to have an extra xxx.00 in net worth is false. It is however a motivating tool to to change my behavior, and really that is all i’m doing, chaning behavior with the expectation of a different outcome.

      Thank you for the suggestion in other ways to cut expenses. For cell I have went with a prepaid phone. I don’t have a TV, cable, or home phone. Also no internet. Wow, I kind of sound like a hermit eh? 🙂 I assure you life without these distractions is still a life worth living.

      Thanks for thought provoking comment AverageCFA.

      • Thanks for the reply. I was getting worried that you are joining the ranks of extreme retirement and minimalist living supporters. It is of course an individual choice to pursue such goals. However I am glad to hear that you are balancing the desire for financial freedom with at least some pleasures of daily life (way to go on the bike!).

        Which expense to cut and which to keep is certainly up to you. If the sweater-a-day keeps the heat bill away then go for it and let us know whether it actually worked for you 🙂

        All the best in 2013!

      • AverageCFA– I certainly have nothing against minimalist living. In fact I’m a big supporter of it as the ends not just a means to an ends. This is a personal choice we all make. My only hope for both myself and others, is that we stop and question. “Question everything”, I think that is a good mantra for every aspect of our lives. How ever you decide to live your life, do so from an authentic vantage. Don’t mindlessly accept the way you have always done things (and when I say “you” I mean all of us). It is quite possible that much of what we do is habit originating from old beliefs handed to us from others. If we never question we are merely reflections of the others beliefs and values; never uniquely our own. The habit is so ingrained in our psyche that we forget that it once started with a belief that guided our action. I find that I am questioning the origins of those habits more so than at any other time in my life. This blog is as much about personal philosophy as it is investment philosophy…

        Thank you for the support and I will definitely let you guys know what the pay off is for sweater wearing ( and beanie hat wearing b/c I have a shaved head) 😉

        All the best to you as well my friend…

  4. I’m working on reducing expenses too. I’ve cut the fat out of *most* of the big ones, so now I’m starting to tackle the “little” ones. The fat I’ve pulled out of them should save me about $200-400/month! So I guess they weren’t so little after all when you added them all up.

    $100 on food seems pretty ambitious, but go for it! My condo isn’t nearly as convenient to grabbing food on the way home from work somewhere as my apartments were, which has definitely helped to get me cooking more.

    Did your first electric bill have an activation fee on it? Turning the heat off should make a huge difference. My January bill was ~$240. I finally figured out how to program the thermostats better, which should cut the majority of that cost down. My electric bills have been all over the place since moving in ~7 months ago, which is driving me bonkers! It’s so hard to budget. Can you line dry your clothes instead of using the dryer? I do that for a lot of my clothes and it’s better for them too. The towels and sheets, not so much… Other ideas: make sure you only have the lights you need on. Instead of turning the thermostat off completely, I only heat the living room from 6-8 am and 5:30-11 pm and the bedroom from 5-7:30 am and 8-11 pm. That way, it’s somewhat warm while I want to be in the rooms and no colder than 55 F the rest of the day.

    You’re spending a ton of money on fuel. How much do you drive on a monthly basis? I tend to fill up once or twice every other month, so my gas costs are pretty cheap. Why are you paying to store the motorcycle? If you reduce your commute, your insurance should go down as well as your fuel costs.

    I like seeing how much sooner I can pay off the mortgage by cutting line items and money out of the budget. One of the things I’m trying to do though is to cut money without cutting my quality of life.

    Wait, no internet? How are you blogging???

    • Hi Leigh. The 100.00 for food is a bit ambitious, but it gives me something to work towards to see where money is going and where cuts can be made.

      No activation fee on the first bill. I think only using heat when the temp really drops will make a big difference. I should be able to gauge that better after seeing this months bill and how that reduces energy consumption. Good suggestion on using a line to dry clothes. I will put that one on the list with Headed Home’s suggestion to adjust the temp on the hot water heater.

      Wow! refueling once or twice every other month?! What do you drive and how many miles do you log a month? I have an older truck and it gets horrible gas mileage. The storage is one of the costs I’m wanting to cut soon. I’m not willing to keep the bike at my apartment during the winter. Perhaps in the summer I will keep it at home. Riding it more in the summer should cut the fuel costs considerably.

      I have internet on my phone as well as wireless in the clubhouse of the apt. complex. I can also stay connected when I’m at work. It would be a little more convenient having it at home, but I’m not ready to pay for that convenience.

      Thanks for stopping by and good luck with your expense reductions for the year!

      • I hang dry all of my shirts in my extra closet space and then have a folding drying rack for socks, underwear, and jeans.

        I drive a recent year subcompact car that gets between 28 mpg for mostly city driving and up to 40 mpg for mostly highway driving. I walk the two miles each way to work (or take the bus if I’m feeling lazy). I grocery shop on the way back from driving somewhere else usually or if not, it’s only a mile driving total round trip. I’ve averaged about 400 miles per month since buying the car. I highly recommend subcompacts. They are much roomier than you think!

      • Leigh– After reading your suggestions on subcompacts and reading this:


        I’m giving serious consideration to ditching the truck, aka gas guzzler. This was purchased at a very different time in my life and I really have no use for it any longer. It’s time to move on.

        When April arrives with warmer weather I may go to just the motrocycle for the summer. If I decide to get a vehicle it will mostly likely be something like a Civic or Prius.

      • One thing to note about subcompacts is that they do tend to have small tanks. Mine is 12 gallons, which means that I fill up every 300-400 miles or so. It is pretty awesome for carting stuff around too since you can fold the back seats down. I was able to fit a friend’s bike in my car without taking any of the wheels off! Hatchbacks can be better for carrying stuff than sedans because of their unique shape.

        I would definitely consider using the motorcycle as your only vehicle! They’re pretty cheap to maintain.

  5. Stoic,

    Best of luck with this.

    I know that my ditching of big expenses and minimizing as much as I could really catapulted me to the point I’m at now.

    The best part of it all is that I now enjoy living on less, so it is truly an end, rather than a means to an end. This is “it”. This is life. Once you stop chasing “stuff”, you find that you’re actually happier for it. Worldly desires are insatiable.

    I find the “Big 3” are where the attention is most warranted – housing, transportation, food. It sounds like you have a plan to attack these three. I sold my car, moved into a cheaper apartment close to the bus line and then radically cut my food budget. From there, the rest is cake!

    Best wishes!

    • DM– I think that is why I went for those three vs. trying to tackle everything at once. Those are my biggest expenditures and needed to be evaluated critically to see if I am ok with the spending. Obviously I’m not and that is why I’m taking steps to reduce those expenses.

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  7. My thoughts are late, but better late than never…?
    1) enjoy your food. Don’t waste. You’ll cut the bill, but I think $100 may be too small. As the single mom of 7 children, I have found that cooking at home most of the time, but enjoying what we eat is good. I spend $450 a month (on all grocery items for us). But, we expect you to finish what is on your plate.
    2) electricity was interesting for me. I don’t use the heat much (super cold times, I do). Laundry is a must around here, so I can’t really cut that (and 8 people’s laundry hanging doesn’t work too well for me…I’m not THAT good!). But, What I did find was lots of things plugged in that I wasn’t using. Like the can opener on the counter top. Or my printer. Or the TV (we watch movies sometimes, but maybe only 5 times a month??).
    So, I decided to leave everything where it was, but simply unplug what wasn’t being used. I’d plug it in for the minute I needed it, but unplug it the rest of the time…
    20% reduction on my electricity by losing NOTHING in my life.
    Switched to LED light bulbs and that saved another 15%.
    3) I have driven my Chevy Suburban for 12 years. LOVE THAT TRUCK!
    But, some of the kids have gone to college…so I had to decide whether to keep the truck, or buy a more efficient vehicle. I decided to do the new car. Got a VW Jetta TDI. LOVE THE CAR! It’s got zip, but most importantly, I get 45-52 mpg. I use this for 90% of my driving. I do need my truck, too, so I kept it (and it’s used for work sometimes). I changed my insurance on the truck to “suspended” for now…I don’t drive it very often at all, so why insure it? On the rare times I need it (ice storms in winter, a specific family trip in the summer), I call the agent and they reactivate it for awhile. That saved me quite a bit in insurance costs.

    BTW, love the charts…little things do add up. What does that $6K savings per year add up to in 30 years (you look young…so I think you’ll be around longer….). That’s a BIG number. It’s worth unplugging the can opener, for me.

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