Finally! I’ve been wanting to do an expenses summary post for quite some time now. I’ve been discussing it in “Future Work” sections since the beginning of the year, and probably before that.
I already do a bunch of (fun spreadsheet) work to track our expenses every month and year, so I’m excited to share all that info in a more public way. I’m hoping this will be a great way to hold my wife and I accountable in our finances and lifestyle.
I’m also excited to show others what’s possible: if you’re spending more than us and are looking for ideas to cut down your expenses, hopefully this post will help.
A couple years ago my wife and I were procrastinating yet again on selecting a health care plan option. Specifically, which of two plans to select for her and our son that were offered by her company. My health insurance is super simple: I’m fully covered, no premiums (ignoring dental and vision). But hers was hard! There’s a huge amount of information to consider, from premiums to deductibles to co-pays to co-insurance rates to tax-savings to traditional vs high-deductible plans to how much to put in your FSA or HSA…. Insane.
I got fed up with trying to eyeball this decision. So, I broke out Python! I managed to script up and plot a wide variety of scenarios, and as a result the decision finally became clear. I love Python and plots – I’m definitely an engineer to the core.
Note: this article was originally posted on a different site and written prior to the Coronavirus global pandemic that caused the vast majority of people to significantly reduce their entertainment expenses. But I think it’s still valuable content, especially for when we get back to “normal times” (whatever those will look like). Also note that some of the comments below are from that original post (thus the older comment dates).
When you’re getting started down the more frugal path, it can be challenging to figure out where to start when it comes to cutting your expenses. Some folks will argue you should start with the biggest expenses, just like mathematically it makes sense to pay off your highest-interest debt first (versus loans with smaller balances as part of the standard “snowball” approach). For example, work on moving to a more affordable area or house first.
While I am a proponent of paying off your highest-interest debt first (regardless of the balance), when it comes to expenses I definitely encourage folks to start with the easiest effort items and work your way up as your frugality muscles gain strength. Cutting expenses is more challenging (in general) than just picking which card to pay off next. And hopefully credit card debt won’t be a problem for you for very long if you work hard on reducing your expenses!