Eliminate Recurring Expenses to Save Money

Reducing expenses has always been a tactic and strategy to improve one's financial situation. For us, a good approach to reducing expenses has been to focus on costs that occur on a monthly basis. Here are some examples:

Subscriptions and memberships. We've tried to eliminate products and services that have recurring monthly fee. For example, we do not subscribe to a local newspaper, cable/satellite TV, or a cell phone service. We have joined my company health club, but only pay for the months we actually use it. Also, I have a free subscription to The Wall Street Journal and Barron's through airline miles awards. Our only current recurring monthly subscription is our land line phone and Internet service.

Mortgage or rent. Our largest recurring payment used to be our mortgage, which was about 24% of our monthly expense. A little over a year into retirement, we paid off our mortgage and significantly reduced our monthly expense.

When I first started working, I rented an apartment for about 11% of my monthly salary. Keeping my rent cost low enabled me to begin saving part of my salary immediately.

Debt payments. After graduating from college, we've both had student loan debt, which created a regular monthly payment for 10 years. Fortunately, we've never carried a credit card balance that required a minimum monthly payment.

Additional car. Now that I've retired, we probably could become a one car family. That would eliminate the license, insurance and maintenance costs for a car. At this point, we still like the convenience of having two vehicles. We'll seriously consider going to single car if we should ever need to replace a vehicle.

Overall, I consider eliminating recurring payments an effective way to create a sustainable reduction in monthly expenses. The decision can be made one time, and is often easier to maintain than a expense reduction that may be reviewed on a monthly basis.

For more on The Practice of Personal Finance, check back every Wednesday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2010 Achievement Catalyst, LLC