Downsizing To Save Hundreds Per Month & Reduce Needed Income.

Yep, moving again. Granted, this move isn’t as far as my last few – California to New Mexico and then New Mexico to Colorado – but in a week or so I will be moving exactly 1/2 of a block. After much angst and discussion, I decided that I wanted to stay in Colorado for a while but that I also wanted to cut out a big chunk of my expenses, which in turn means I don’t need to bring home as much money as I do currently to pay the bills. So I will be moving from a 2 bedroom/2 bathroom apartment to a 1 bedroom/1 bathroom apartment and going from 1300 square feet to 756 square feet. I have known for a while now that I had way more space than I needed, so this will be a nice move to the “right” size place for me. But even better than that is the amount of cash I will be saving!

This move is going to save me $400 per month in rent alone. That’s $4800 over the course of the next year! My heating and cooling costs should be less as well because my square footage is being cut in half, meaning I should save at least a little there also. That $400 a month is about $550 in income before taxes, so that’s $6,600 less per year that I would HAVE to make just to stay at my current level. This should potentially free up some of my time for traveling, starting new ventures, and spending more time in the great outdoors rather than sitting behind this here desk. $400 less per month in expenses is nothing to sneeze at, but that’s not all I will be saving starting next week…

I also sold my Subaru Forester the other day. The payment on the Subaru was $300 per month, so I no longer have that monthly expense either. That’s a savings of $700 per month starting immediately! And that’s also another $430 or so of income I no longer HAVE to have each month (before taxes). I have bought and paid for with cash a used car that is smaller and gets better mileage, so I will still have transportation, but I will no longer have that big monthly car payment.

From just these two changes alone, I have eliminated $700 per month in monthly expenses or about $1,000 in necessary pre-tax income. That’s a huge difference in how much money I need to live and how much I spend each and every month. In adjusting my monthly budget with these new numbers, it appears (and I bet this is subject to change) that I can now comfortably live on less than $2000 per month, including a few meals out and still putting money away for a rainy day. Of course, I will still try to save as much as possible, but cutting my expenses down by this much could open worlds of opportunity to me to try other things.

I write this not to just “tell” you what is going on, but to encourage you to take a look at your expenses, income, and budget – and see if you can make any changes that could really benefit you. Sometimes we just accept things “as they are” without really digging any deeper, and being comfortable with downsizing and wanting other opportunities gave me the courage to move to a smaller apartment and sell my expensive car.

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Comments (14)

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  1. Dawn says:

    Housing and transportation are some of the biggest expenses – I will also be downsizing in housing and vehicles in order to attain my own goal this next year.

  2. Abigail says:

    Nice. It takes a lot of willpower to purposefully downsize on square footage by that much! And I’m guessing you’ll see a big boost in heating/cooling, too.

    We actually did go up in size when we moved here to AZ. There’s a couple reasons, though.

    An office would take $100 off my income each month, since I’m self-employed.

    It was only a little more than $100 more than most decent 1-bedroom apartments — and our price includes $15 pet rent and a flat $35 utility bill. (My husband takes 2-3 showers a day due to his health condition, so we were worried about water bills.)

    Since we’re now 1500 miles from family/friends, we wanted to have a guest room. (And now we’re trying to convince my mother in law to move into it, since she’s dreadfully unhappy and it’s affecting her health.)

    Also, yeah, it’s nice to pay $23 less per month, have all utilities included, and get 180 more square feet.

    However, if I were still single, I would definitely have tried to downsize as my expenses went up. It’s a great way to take off some pressure, and — in the case of a car — lessens your carbon footprint.

  3. david says:

    I am self-employed, too. Been for 4 years now. And I am also 2000 miles from family. 🙂 Just decided I didn’t want to pay for an entire room that gets used maybe 5 days a year by guests, you know? If it was only $100 more, I would totally consider it. But at $400, it’s totally not worth the cost.

  4. Olivia says:

    This is EXACTLY the kind of thing I wish more people would do. So many people complain about not having enough money, and yet they have so many unnecessary expenses they could cut back on. I’m sure you will be very happy about this decision in the long run. Think about how much money you can now save up for bigger and better things! Congratulations!

  5. Stephan says:

    This is exactly the type of behavior that I hope more people practice/ I do think the economy of the past 2 years has really changed how americans look at money and their personal finances. Why would a single person need 2 bathrooms? Simple questions like this used to be taken for granted as everyone had access to cheap credit at low interest rates. I think its great you took the step and dowsized both your housing and transportation.

  6. I think this is a brilliant idea and I wish more people felt the same way. I have implemented this into my life and hopefully others will as well.

  7. I try to do this about every six months.

    I review how many minutes I use on my cell phone, check whether my cable channel package is too much, so on and so forth.

    Our needs change over time and down-sizing can always be an option.

  8. Monevator says:

    Good stuff. It’s amazing how spending changes when you stop living like ‘money is for spending’.

    Well yes, it is – but you can only spend it once. I like it to breed a bit first. 😉

  9. Hello!

    What a great job you did–perhaps they were tough choices, but what great rewards!

    I am happy to say that one of our debts is officially paid off, giving us an extra $300 in cash flow each month. Then in July, our final car payment will be made, giving us another $400 to add back into our cash flow. Woohoo! The feeling is great.

    I enjoy your blog, so keep at it:). Check out mine sometime if you get the chance.

  10. Wow those are some serious changes, and a HUGE increase in your monthly cash. I would recommend upping your 401k allocation before you get used to your new available cash:)

  11. Kimberly says:

    Great list and I’ll add prepaid cell phone carriers to that list. While I was preparing to graduate last year, I realized I was putting out more than $110 a month on my cell phone bill and my budget couldn’t handle it. So I decided to switch to Net10 prepaid and the savings have been huge – more than $70 a month back in my pocket. Over the next two years, I should be saving more than $1,600 with Net10 and I don’t have to worry about contracts or hidden fees. Net10 is totally about savings and flexiblity in terms of plans and phones – phones range as low as $29 and top out at $79 and you can buy minutes as you go or pay month to month. Not to mention while I’m shopping at Target or Walmart, I can actually buy my phone and minutes or re-charge mintues directly from the phone itself. If you’ve ever been skeptical about prepaid, Net10 will make you a believer.

  12. Let it be said that living below your means is a cornerstone to a more solid future.

    Though I recently adapted that generating income is a compliment to cutting expenses. You can only go so far with the latter. But people go TOO far with the former. At least when it comes to spending it… Leaving no assets to their name. It’s a scary little dichotomy when I think about it.

    Hopefully you can secure some good assets with a good downsizing like that, eh?

  13. […] Downsizing To Save Hundreds Per Month & Reduce Needed Income […]

  14. shaun says:

    I recently cancelled cable. Saves $100 per month. I thought I’d be the weird guy without cable for the longest time but it was actually fine. I have an antenna that gets normal channels real well in my area I don’t watch as much TV now and actually get more done in my daily life now that it’s gone and don’t miss it one bit. Since I work a couple consulting gigs where they’ll pay me hourly for pretty much anytime I work this little change will net me thousands this year.