Thursday, December 16, 2010

Cutting the fat

I first started looking at my spending habits when our son came along in 2009. With my wife deciding to take time off from work for a while, we went from dual to single income. Plus we had heard the general horror stories of the increased monthly expenditures involved with an infant around. The need to put more funds away for the future (to cater to the child's future needs) could also not be overemphasized. Clearly the savings ratio needed to be cranked up. But I was pleasantly surprised at how easy it was to cut out some of the fat without trying too hard at all. Here's three minor behavioral changes I made in 2010, which have helped save me a neat pile of cash.

1. Re-negotiating the phone contract : This one's cute. My employer has an agreement with my phone service provider for staff rates. And I was oblivious to this all the while. Our average monthly mobile phone bill in 2009 was approximately $200 (including mobile internet usage on a pay-per-use basis). After the re-negotiation, our combined monthly phone bill is now $97 and is inclusive of a data plan, which allows me more mobile internet use than I need. Money for nothing? You bet.
Annual savings: $1,236

2. Cutting out Starbucks : The route I took to work required me to walk past a Starbucks outlet. Thrice a week on average, I'd give into temptation and pick up a latte on my way to work. Soon this became routine. And I don't even dig coffee that much. It was all about the routine and not the coffee. I would be just as happy with a 3-in-1 Nescafe concoction as with a caramel macchiato. So I changed my route to work this year; a route which required me to walk a minute extra, but helped avoid the the coffee shop. And that was it. It was difficult at first and I struggled with it but slowly and surely my Starbucks morning coffee purchase was a thing of the past. I still do buy coffee at Starbucks once in while. But only when I really want to.
Annual savings: $936

3. Taxi, taxi, taxi : Again, a habit that carried on from my early working years. I'd take a cab to work twice a week, mostly on Mondays (because I felt I needed to get to work quickly on the first day of the week) and on Fridays (because I thought I was too knackered by end-week to bother with trains and buses). Financially not very smart at $35 a pop, but who was really thinking about cost control? And given that I ran into peak hour traffic most times, I didn't even save a huge amount of time taking the cab, which sort of defeated the purpose. It wasn't much fun sitting in a taxi stuck in traffic watching trains whizz by! So 2010 has been mostly cab-free, work wise. I still manage to get to work on time on Monday!
Annual savings: $3,640

These small steps have helped us put more away for the proverbial rainy day (read emergency fund) as well as invest for the little one's future. And it hasn't been particularly tough at all. I see lots more fat in our monthly budget and I look forward to getting rid of it in the coming year. Lets see how that goes.