Submitted by COKeefe88 t3_10qe7m2 in personalfinance
Hey all,
I've been doing a ton of work on cutting expenses and optimizing credit card rewards in the new year and was looking for a place to share some notes in case it's helpful to someone.
My situation is I own a home with a great mortgage at 2.375%, low-to-middle COL area, married, 5 kids, 2 (old used) cars plus whatever I happen to be working on at the moment as a side gig. Low 6 figure total earnings across my work and some side gigs. Seems like even with all the kids, saving/paying down debt should be easy, but it hasn't been—we've pretty much always lived paycheck to paycheck. Working towards changing that this year.
- Looking to cut my $85/mo internet bill, I found out for the first time about the Affordable Connectivity Program. Turns out I qualify for that. Additionally I called my provider and cut back to a lower speed plan. Those two changes got me down to $50/mo.
- Cell plan had gotten all the way up to $130/mo for two lines. Switched to different provider, service sucked, so I looked at switching back and am now paying $60/mo. That was a temporary promotional rate for people who'd switched away. But the plan is the same one I was on before...just $70/mo cheaper.
- I opened a few new credit cards for sign-up bonuses, and as cards to keep permanently for rewards. Got the Amex Blue Cash Preferred card. There was a promotion through my etrade account, $400 sign-up bonus for $3k spend. But that card has 6% back on groceries, so we'll keep it indefinitely even with the annual fee.
- And I have to mention the Wells Fargo Active Cash card. That is a newer card with 2% cash back on everything. No categories. We were previously using Cap One Quicksilver (1.5% cashback) as a default card, but Wells Fargo wins this round. I believe that 2% is unparalleled. So we're using a few different cards to optimize rewards, like Costco card for 4% on gas, US Bank Cash+ card for 5% back on utility payments, Amazon card, etc. but the Wells Fargo is the new default card for everything else.
- Shopping better. Less Amazon. Don't assume Amazon is the cheapest price even if you're buying something online. More Walmart, maybe more Costco, definitely more Aldi, less small/local grocery store shopping.
- Lifestyle changes—in 2022, we spent about $15,500 on groceries, not counting a few thousand more on alcohol and a few thousand more on eating out. We've been much more selective/planning ahead about eating out and entertainment options, and doing much better with meal planning. Our local small town grocery is much more expensive than Costco or Aldi, but those are 30 mins away and I only go that way about every 1-2 weeks. So we've been cooking one or two dishes on the weekend that are economical and can feed the family for most of the week (casseroles, stews), planning our fresh veggie purchases at Aldi better so we don't need to pay inflated prices locally, and buying lots of cheap meat on sale and freezing it. I have three hams that were each $0.89/lb. We've cut out the sparkling water, and weeknight alcohol, and pretty much all seafood. In an area where cheap seafood is $8/lb and pork is easy to find at $2.50/lb. For January we're right around $500 on groceries—barely a THIRD of what we were spending before—and it's pretty sustainable too!
- My wife's guilty pleasure is buying clothes she doesn't need, and my guilty pleasure is getting a burger and a beer while I'm out running errands. We've cut down our budget for these kinds of personal expenses, and we're talking to each other about them more often. My idea there is that more frequent, shorter, informational conversations will help avoid future arguments even if those short conversations are stressful too.
- Honorable mention to one of the things I've always managed well, financially, which is buying and maintaining older used cars. I've learned to do more and more maintenance over the years, but my recommendation to anyone is the same even if you can't do so much as check the oil yourself: buy a 10+ year old, 100k+ mile Honda or Toyota. Via craigslist or marketplace if you can afford to buy cash, otherwise find the car you want online and arrange financing through your bank. My current cars are an 05 Honda Accord with 138k miles and no end in sight, and an 04 Honda Pilot with 248k and no end in sight. I paid $3800 for the Pilot in 2018 with 160k from the original owner, with all the dealer maintenance records included. It might have cost $6k at a used car lot and I would have had less confidence in the maintenance history. But the more important thing is that I have mostly reliable (I admit, not perfectly reliable) transportation, I don't need to have collision or comprehensive insurance so I save a ton there, no worries about someone stealing the car or scratching the paint, and no monthly car payments.