Downsizing To Save Hundreds Per Month & Reduce Needed Income.

May 04 2010

Downsizing To Save Hundreds Per Month & Reduce Needed Income.

Posted by Aaron Cruz in Finance Online

Yep, moving again. Granted, this move isn’t as far as my last few – California to New Mexico and then New Mexico to Colorado – but in a week or so I will be moving exactly 1/2 of a block. After much angst and discussion, I decided that I wanted to stay in Colorado for a while but that I also wanted to cut out a big chunk of my expenses, which in turn means I don’t need to bring home as much money as I do currently to pay the bills. So I will be moving from a 2 bedroom/2 bathroom apartment to a 1 bedroom/1 bathroom apartment and going from 1300 square feet to 756 square feet. I have known for a while now that I had way more space than I needed, so this will be a nice move to the “right” size place for me. But even better than that is the amount of cash I will be saving!

This move is going to save me $400 per month in rent alone. That’s $4800 over the course of the next year! My heating and cooling costs should be less as well because my square footage is being cut in half, meaning I should save at least a little there also. That $400 a month is about $550 in income before taxes, so that’s $6,600 less per year that I would HAVE to make just to stay at my current level. This should potentially free up some of my time for traveling, starting new ventures, and spending more time in the great outdoors rather than sitting behind this here desk. $400 less per month in expenses is nothing to sneeze at, but that’s not all I will be saving starting next week…

I also sold my Subaru Forester the other day. The payment on the Subaru was $300 per month, so I no longer have that monthly expense either. That’s a savings of $700 per month starting immediately! And that’s also another $430 or so of income I no longer HAVE to have each month (before taxes). I have bought and paid for with cash a used car that is smaller and gets better mileage, so I will still have transportation, but I will no longer have that big monthly car payment.

From just these two changes alone, I have eliminated $700 per month in monthly expenses or about $1,000 in necessary pre-tax income. That’s a huge difference in how much money I need to live and how much I spend each and every month. In adjusting my monthly budget with these new numbers, it appears (and I bet this is subject to change) that I can now comfortably live on less than $2000 per month, including a few meals out and still putting money away for a rainy day. Of course, I will still try to save as much as possible, but cutting my expenses down by this much could open worlds of opportunity to me to try other things.

I write this not to just “tell” you what is going on, but to encourage you to take a look at your expenses, income, and budget – and see if you can make any changes that could really benefit you. Sometimes we just accept things “as they are” without really digging any deeper, and being comfortable with downsizing and wanting other opportunities gave me the courage to move to a smaller apartment and sell my expensive car.

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