A 2 Part Series: Increasing Income, Boosting Your Investments and Assets.

Updated: Nov 29, 2020

PART 1-The Expense Piece

The title really says it all for what I want to cover for this week’s blog post. And, now that budgeting has been discussed and some groundwork has been laid, let’s dive in a bit deeper. First of all, whether you make $30K a year and are single, or $200K plus in a dual income household, there is still an ability to save and be frugal. In fact, the $30K earner can potentially have more funds on hand to increase savings, if that individual is smarter with his/her finances than the $200K example. You see, although having more income can result in a higher savings rate, it doesn’t mean that is always the case.

There are plenty of people I know that have things they don’t need and work simply so they can afford them. An example of this are nice cars, unnecessarily large homes, and every knick-knack you could imagine. Conversely, I know folks that have and make very little, but go about their life in a very simplistic manner, always looking for ways to save money,  cut costs, etc.


To demonstrate what I mean, let’s differentiate between a rich individual and someone that makes significantly less. Let’s say the rich individual with a $200K income spends every dime they make, saving nothing. They buy the nicest car, house, toys, frequently go out to restaurants and bars and overall live a lavish lifestyle. Now, let’s say the $30K earner, has a very modest home, no car payment, only purchases items they need, allowing them to save $5K per year.


In this example, who is really winning? Personally,  I’d say the $5K saver. They are saving nearly 17% of their annual income, while the higher earner is saving nothing. See, just because you make a lot of money, doesn’t mean you are setting yourself up for a successful future. And, just because you might not make a significant amount, doesn’t mean you too can’t utilize some frugal strategies and techniques to enhance your overall wealth.

 This leads me to the overall topic for this post, which is a 2 part discussion. There are ultimately two ways to increase your savings rate. One, is by increasing your income. This might be the obvious one to most people. It makes sense, right? You make more money, you keep your budget the same, you save more. However, you can also increase your savings by spending less and minimizing your expenses. Since that is something that anyone can start doing right now, let’s start with that topic first.


Now, assuming you read the last blog and have now implemented a budget (or already have one), let’s look at ways to analyze it. I highly recommend you get a budget in place if you haven’t already. I’ll go over some basic (and unique) ways to minimize expenses, analyzing several basic categories, primarily those of which we discussed in the budget example last time. Below is the expense table I’ll be referencing:

First is our savings category. This category is going to be either increased or decreased depending on what happens with all of the categories below it. What I mean is, if you over spend on your groceries, your savings rate falls. If you under spend on miscellaneous, your savings rate increases. There are a number of variables that go into increasing or decreasing different categories; these are just a few examples. Now, some items are “fixed”, meaning they don’t vary month to month. There are a few things I want to mention before we go further, however. First, although an item may currently be “fixed”, that doesn’t mean you can’t decrease that expense. One example in the above would be eliminating your car payment, or decreasing it (hopefully not increasing). Another way to increase your savings bucket that doesn’t involve decreasing your expenses is earning additional income. We’ll touch on that in Part 2 of this post, so keep that in the back of your mind for later.

Now, let’s dissect. First up after savings, we see the mortgage/rent section. As with each and every one of these, I want you to analyze and ask yourself, “how can I lower this category”? So, let’s say your mortgage is $1,000 per month (you’re either laughing or crying right now). What are some ways you can reduce this number? Well, look at your personal situation. Maybe you have a 30 year mortgage, with just a few years left. You could pay it down quicker to eliminate the payment entirely (besides tax & insurance). Maybe your house is too big and you can downsize into something smaller and hence, decrease your payment that way. Look at your interest rate. This is extremely important. Now, recently rates have started to climb. But, let’s say you have a 6.5% interest rate for example. Why not refinance it and get a lower rate? One side note: it may make sense to even pay more temporarily and knock out your mortgage entirely. This obviously would increase the expense for this category temporarily, but most certainly provide for future months/years of increased savings.


On the renting side, think about why you are renting and the benefits of doing this. There are obviously costs associated with home ownership and owning a home isn’t for everyone. If you’re on the move a lot for example, it may not make sense. Heck, in that case maybe it doesn’t make sense to rent or own. Maybe just live in your vehicle :). I think I have covered a variety of ways that this category can be decreased. Any changes in regard to your living situation will certainly require some deep thought and discussion before acting. With a mortgage/rent often times accounting for one of and if not your largest expense category, it is absolutely vital to analyze logical ways to decrease this expense.


Before I move on, I want to touch on an important subject.  It would be irresponsible for me to leave this out. In covering the mortgage expense, I discussed paying down your mortgage and/or additional payments to expedite paying off your home sooner. There is an opportunity cost associated with paying off a low interest debt. In a nutshell, what I mean by that is, can you make more off of the additional money you would be investing than you would paying off the debt? Example: we could aggressively pay down our mortgage or student loans and cut these debts out entirely much sooner if we were to take any additional savings each month and put them towards these obligations. If you were to simply invest in the S&P 500 (Stock Market Index Fund), historical data says that you should earn on average about 7% or so (accounting for inflation). If your debt percentage is less than that, you’d likely be making the smarter move by investing and continuing to pay on the interest. On the flip side, there would potentially be a missed opportunity by paying off your debt instead of investing. The  key with this approach is to continue to maximize savings in order to continue to invest.

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Next, let’s address car loans. I’ll try to not get angry when discussing. And, as with anything I say or write, no offense, I’m just giving my honest and personal opinion. Car loans are completely unnecessary. Let me say that again. Car loans are completely unnecessary. Have I personally had them? Yes. Do I regret having had them? Yes. They do help you establish credit. I guess that’s one benefit. However, let’s dive into what you are doing when you have a car loan. I’m going to GOOGLE the cost of a 2019 Nissan Rogue, since I have no idea the cost (only that’s it’s going to be excessively too much). I used this as an example, because my wife and I proudly own a 2010 Nissan Rogue (which also happens to be the newest vehicle we have). Okay, so MSRP is $24,800. MSRP stands for Manufacturer’s Suggested Retail Price. This price of course does not include tax, warranties, additional options (manual vs. automatic, power options, additional accessories, etc.). For all intensive purposes, let’s say you are at $30K out the door when all is said and done.


Let’s say you put $1,000 down. You’re likely expected to at least bring something to the table when you buy. This leaves you with $29K to finance. Now, let’s say for example sake that you get a 4.74% interest rate (I used Bankrate.com for my illustration). If you finance the vehicle for 5 years, your monthly payment will be $544 a month. Total interest paid will be $3,637. So, you have added $544 to your monthly expense column, just purchased over $3,600 in interest and are borrowing something that is day by day depreciating. I want to emphasize that my goal is not to make you feel horrible about yourself. Especially if you currently have a car loan. I’m just giving my reasoning for not having one. You might be asking yourself, well, I want a reliable vehicle for my children, or commuting, or whatever the case may be. I hear you, I understand your concerns, but that doesn’t mean you need to buy new. Cars, along with any purchase, need to be analyzed before they are bought. In fact, it is even more important to utilize due diligence when making an important purchase such as a vehicle. Just because a car is used, doesn’t mean it will not serve you well or be reliable. I want to re-emphasize that. A co-worker and I recently discussed this same conversation. He has a 20 year old vehicle, still runs, still serves its purpose, etc. Obviously, the vehicle is not flashy, but does its job of getting him from point A to point B. If your desire is to show off your vehicle to others, go for it, but remember, it’s increasing that loan category in your expense column.

Car Insurance. This is a good segue, considering we just discussed car loans. This is an additional expense that will likely be heightened with a newer vehicle, so you’ll most certainly want to include this in your thoughts when making your vehicle purchase. There are a number of ways to decrease this category. First, be a good driver. I know that’s easier said than done. I myself am guilty of getting an occasional ticket. However, be extremely cognizant of what getting a ticket does to your insurance. It increases it, which is not something you want to do obviously. Other ways to decrease this category are to shop around different insurance carriers, pay in full for 6 or 12 months in advance to get the rate discount and play around with your deductible amounts & coverage variables. Please note: make sure you are covered properly for the type of vehicle you have.


If you have a car loan, you’ll need full coverage and be sure your coverage limits are adequate to account for any unexpected liabilities from collision, medical expenses, property damage, etc. However, if you have a lower cost vehicle and one without a loan, you can hedge your bets and opt for lower coverage amounts. First, you’re insuring something that is valued less than a new or newer vehicle. Your risk is much lower if the vehicle is destroyed, so why would you over insure something with limited value? When I say limited value, I mean in terms of how it is valuated (Kelly Blue Book for example). The way I value a used car is two-fold. It allows me to add more funds in that savings category and less in the car insurance category. It’s a win-win. Now, moving away from vehicles. At this point, I think you can see my point on the costs associated with vehicle ownership and how they can be minimized and eliminated.


Groceries. This is a big category in a lot of ways. Food is obviously one of our main elements for survival (along with water, shelter & clothing). We all need it. I’m going to start by saying that I will do a blog post in the future entirely devoted to this subject, so I’m not going to dive in super deep here, but will touch on a few ways to lower this expense. First, set a realistic grocery budget. Do not go to the store hungry (we’ve all heard this one before). Utilize coupons, store apps with discounts and purchase items on sale (combining some or all of these will lead to additional savings). Prepare a meal list for the week. This can be time consuming. I’ll admit, I don’t really do it,  but it’s a technique. What I like to do is buy whatever is on sale (meat for example) and structure my meals for the week around that. For example, let’s say chicken is on sale one week. I’ll buy the item in bulk (at Sam’s Club or a large container from a regular grocery store), freeze whatever I’m not using in the near future and I’ll never buy chicken unless it’s on sale. I should have enough chicken for a few weeks and I’ll monitor the ads, simultaneously with my inventory to see when I need to buy again. Because guess what? Next week I’ll buy beef or pork, or whatever other meat is on sale for the week. Even if you run out, have a few fall back items that you can eat instead.


One prime example I like to use are Belvitas (little breakfast crackers). Let’s say you eat those as your go to nutrition bar on the run in the morning, but you just ran out. Well, have another nutrition bar on hand and be flexible. Go grocery shopping as infrequently as possible. We go once a week. I think that is a sufficient amount to keep fresh fruits and vegetables on hand and limit time in the store. The less time you spend in the store, the higher the likelihood that you won’t buy things you don’t need. This brings about the importance of planning. Make a grocery list. Jot it down on the fridge, note pad, Amazon Alexa, whatever the case may be throughout the week so that you’re ready to go come the weekend. These examples are kind of the basics. Just be attentive to prices and try and not buy things that aren’t on sale if you can get by. In summary, ways to decrease your current grocery budget would be things like making meals in bulk and stretching them out over several days, tightening up on purchasing items on sale (as we discussed), utilizing coupons and other discount/savings methods, making a grocery list and last but not least, being strategic.


Next up, is Gas. Most of us have a vehicle and utilize it to drive places like work, the grocery store, errands, trips, anywhere and everywhere we want to go. Unfortunately, gas is the side effect of owning and maintaining a vehicle. There are however ways to decrease this expense. First, you can look at non-gas options (electric for example). I don’t and have never owned an electrical vehicle, so I’ll admit I don’t know a ton about the cost differences (up front vs. entire cost of ownership over time, etc.). Second, bundle your errands. Don’t take separate trips for things, when you can make time to do them all at once. Carpool with a co-worker if you’re able. Work remotely if possible (this one is 2 fold, as it saves you gas money and time). Bike or walk when you can. Now, I know not all of these options are entirely doable for everybody, but if you look closely, I think most people could at least find one way to cut back on gas utilization each month.


Cell phone, internet & cable. I’m going to bundle these together. First, your cell phone. This is pretty much a necessity in this day in age. Especially if you are a busy individual, have a job, side jobs, etc. It allows for an easy way to connect. However, you don’t need to overspend. A few ways to minimize this cost, are to share a cellular plan with family (or friends). Splitting the cost can help decrease your portion. Next, negotiate deals with the cellular companies (by the way, expect a blog entirely devoted to Negotiation). Richard said it best in “Tommy Boy”, “Don’t take no for an answer”. That statement couldn’t be more prevalent. Carriers ultimately don’t want to lose you as a customer, so they will likely offer discounts if you threaten to go else where. Lock in a deal. If you can lock into something that doesn’t fluctuate, this can be a great thing. Internet is also an item you can negotiate. I can’t tell you how many times I’ve called Comcast, Charter, etc. threatening to leave once the 12 month promo ended and they upped my rate. Every single time they were able to revert me back to the promotional rate. Sometimes that took a few phone calls. But, I did not take no for an answer. Next is cable. This one is easy. GET RID OF IT. Do you really need it? Are there other things you can be doing with your time? I haven’t had cable for like 7 years. Not one day have I lost sleep over it. Right now, my current TV plan cost per month is $1. Yes, you read that right. Actually, let me revise that, it’s .99 cents. I got a 12 month promotional deal through Hulu. A friend has a Netflix subscription which we use and in turn, allow him to use our Hulu access. $11.88 for the year. Now, I imagine some of you are reading this and thinking, crap, I would die for my cable cost to be $11.88 for just the month. Well, you can certainly do that and it’s easy. First, think about what you can give up. Do you need to see every single sporting event? I enjoy watching sports when I can. However, I’m not going to break the bank to watch them. I can still find ways to watch some of the games if I absolutely feel the need. Does your package need to include cooking shows, cartoons, history channels, etc.?  I suggest cutting the cord and giving it a try. You might be surprised how much you don’t miss it and your bank account will thank you.

Student loans. My least favorite to discuss, because I have plenty of them myself. But, it needs to be examined. The first step is assessing the situation.  What kind of mess are you looking at? Whether you have $20K, $50K, $100K, whatever the number may be, there is most likely room to modify your monthly loan payment amount. This can be done by refinancing. I highly recommend you select a fixed rate loan. I would not recommend dealing with the unpredictability of a variable rate loan. Find a time frame that works for you as well. Most providers will give you a sliding scale, where you can quite literally pick your loan repayment time  and payment amount. Typically, the fewer the years selected, the lower the interest rate, the less paid on interest, and the quicker you pay off the loan. Choose something manageable, but don’t select an option that’s going to take a good chunk of your life to repay. We have found by refinancing, that by choosing a shorter time frame to pay off the loans resulted in a slight increase in payment amount and saved us 10-20 years in loan repayment time frame and thousands of dollars in interest. There are many loan refinancing companies. For example, we use Sofi and Earnest. Here are links to both, with referral bonuses for when you sign up:


SOFI-https://www.sofi.com/share/360110/?src=copy&fbclid=IwAR148AUFjcwZbWi4QSX8ett4r935kwBfynYsHTp2Va1ze5lCNBsbbgrObrQ

EARNEST-https://www.earnest.com/invite/nicole4443

Miscellaneous Expenses. This is another bucket that can drastically change the outcome of how much/little you save each month. I consider any items in this category to be those that don’t fit any of the others discussed above, such as fun activities, or simply anything else. This category requires a lot more self control, where the impulse buying takes place and where self discipline manifests. I quickly discovered that I spent a lot more on random items than I thought. And, that’s with me already having felt like I made minimal spends to begin with. My suggestion is to find things to do that don’t cost money. When people are bored, they spend money. A few things I like to do for fun that don’t cost a dime are hiking, dispersed camping (okay, a little gas money), watch Netflix (already covered in a different expense category) and brainstorming ideas for ways to not spend money (like writing a blog about frugality).


Everyone will have different things that come to mind, but the point is still the same, you don’t need to be buying something to have a good time. I’ll point to a prime illustration. Since moving to Colorado, my wife and I have been to the movie theater twice. I’m not exaggerating. And, I’m not even talking about your standard theater. I’m talking about the ones that play movies that are a month old. One time we went to one of those and used a BOGO coupon, so it cost about $5 total. We didn’t buy concessions of course. The second time, we bought tickets through Groupon. I am actually fairly confident we’ll never see another movie at a theater again in my life. For one, it’s expensive. These days, you’re shelling out anywhere from 10-15 bucks per person for the movie, plus snacks, etc., which can easily tally up to $40 plus bucks for a couple by the end of the night. An alternative would be to watch a movie on Netflix at home for no cost (again, that cost has already been covered in the category above). Secondly, I always fall asleep at movies anyways. I will admit, I’ve gotten some of the best sleep of my life in a theater, however, I’m not willing to pay extra for a good nap.


Last but not least are your utilities. These can absolutely be decreased. The easiest way is to WATCH THAT THERMOSTAT! Does your heat really need to be 70+ degrees? I don’t think so. Have you ever heard of a sweater?! We keep ours at 63 degrees in the winter. We are almost always wearing a sweater around the house. Saves lots of money. Another thing is to minimize air conditioning usage in the summer. Open some windows and use fans most days if you can. Lastly, solar panels. The up front cost can obviously be very expensive, but can certainly pay off in the long run.

Ultimately, there are numerous ways to minimize your monthly liabilities. My suggestion would be to start with 1 or 2 things to work on and put a strong effort into meeting your goals of decreasing them by your desired amount. This allows you to not try and do too much when starting out. However, if you feel you already have things dialed in pretty well, there’s no stopping a motivated individual; go for it! Part 2 will focus on the Income side of thing. Cheers to tightening up that budget and stay frugal my friends!

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