Expenses That You Should Cut Back to Boost Your Retirement Savings
Financial expert Steve Adcock shares his story from being in software and development with a 6-figure salary to going on early retirement at 35. His wife, Courtney, also joined him in early retirement a year later at the age of 31.
He says that it’s far from easy. To up their savings, they contributed the annual limit for the retirement savings plan. They also invested in the stock market. Courtney’s entire monthly salary even went straight to their investment portfolio. They say that it’s hard at first, so here’s a couple of non-essential expenses you can cut back.
According to a 2019 survey composed of over 2,000 Americans, 69% of them have admitted that they have wasted money dining out. Having someone cook for you and enjoying a different ambiance can be nice, but it can be expensive too.
The Adcocks used to spend an average of $750 a month, so that’s $9,000 per year on restaurant meals ($210), drinks ($189), takeout or delivery ($178), and lunch ($173). Just imagine how much you can save by prepping your own food.
Steve and Courtney still eat out from time to time, but they don’t order drinks, appetizers or desserts to help control costs. Overall, just sticking to the free lemon water and keeping a tub of ice cream at home reduces their bill by $21 to $30.
A lot of us are guilty of giving in to the hype of those newly launched smartphones. But with technology nowadays, your phone can function for a long time. Although the updates people have been raving about are great, they’re not all life-changing.
In most cases, it would only make sense to get an upgrade if your existing one is having some major technical issues or has ceased to function entirely. Even with some issues, taking it to the repair shop first can save you a couple of hundred bucks.
Getting the latest model through financing or leasing can set you back an extra $25 a month while buying it outright can cost you at least $600. So, Steve and Courtney kept on using their old phones for 4 years before finally upgrading last year.
For each year that they didn’t upgrade, they were able to save $1,500. For them, rather than spending money on tech that would depreciate, they’d rather pour their money on appreciating assets like stocks.
Clothes and Apparel
Based on a 2019 report by GOBankingRates, an American spends around $1,866 a year on clothes and apparel. With fast fashion, keep in mind that it will only take a short time for your clothes to be replaced by another trend. Before going on another shopping trip, ask yourself if you really need it and if you have room for it.
Steve adopts a simple clothes-buying rule: he vows to buy less. He only buys the essentials and makes sure to wear it until it’s already in bad condition. He also only goes into the mall about 2-3 times a year and spends somewhere around $50-100.
Ah, the cause of a lot of regrets and bad decisions. Impulse buys mean things that you don’t need right now but you’re tempted to buy at that very moment. Steve has had to stop himself a number of times when he’s about to get that 24-pack toilet paper just because it’s on sale because he’s fully stocked at home.
Big purchases are even more dangerous. You might think that the Peloton bike is a smart investment now, but consider that you’re paying $1,995 for an exercise bike. That doesn’t even include the $250 delivery fee and $39 per month subscription to the live classes. Try to give it some serious thought or else letting it collect dust inside your basement
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