Cutting costs

If you're noticing I'm posting a little early this week; it is because my second child is due any day, and I didn't want to get very far off my usual weekly posting.

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I've read alot of frugality blogs, books and online yahoo/msn articles about trying to save money or get out of debt. Many of them or those commenting on them suggest drastic measures. "One of you should quit your job." "Move into a studio apartment." "Form a daycare commune" "Grow your own vegetables." "Get rid of your cellphone plan, go prepaid."

I am willing to discuss those issues that some people would recommend to trim the fat off our budget.

Suggestion #1: quit your job, stop daycare, and go down to one car.
Yes, that is theoretically possible, except those expenses added together are not even close to my salary. If we got rid of our family car, which we currently lease because we keep growing, we would save $190 a month and $100 on gas. Our daycare expense is about $700/month and will probably be in the range of $1200 when we have two kids in daycare.  That comes out to $1490 versus my $5000/month salary.  This does not consider the hassle factor of trying to get places while my husband is at work. We also go to a private home daycare which provides food and diapers, absorbing some of those costs as well. If I went half time, I would lose my disability, sick time, paid maternity leave, and 401k match.

Suggestion #2: Get rid of your unlimited data/phone plan and internet.
So this expense is a combined total of 160 a month for two cell phones and the lowest level of internet available. We have to have unlimited minutes and data because Hubby JD's job requires it. They also give him a salary reimbursement of $60/month on the phone. As a hospital employee, our plan also gets a 12% discount.  Even more, we are on a payment plan for the phone equipment, which will end in a little over a year so our price will go down more. Since we don't have cable, we will watch a few shows online and do probably 3-4 hours of work/blogging weekly on the computer, making the internet worthwhile. Without a home phone, we do not have long distance charges either.

Suggestion #3: Stop using frivolous services like house cleaning, dry cleaning, and the gym.
If we stopped getting out apartment cleaned twice a week, we could save $100/month. However, I work 50 hours a week and Hubby JD works 45 hours a week. The exhaustion and toll of being a resident and law student in a messy house put a strain on our marriage before we started using her 2.5 years ago.  Our cleaning lady comes when we aren't home, has a flexible schedule, isn't bothered by our dogs, and brings her own cleaning supplies. Hubby JD gets his 20 shirts professionally laundered and pressed once a month for $35-50. I'm not sure where in my free time I would be able to fit this in, either. Our gym is $88 for the whole family and provides free babysitting. Unlike some people, we use the gym 4-5 times a week, each of us, even at 9 months pregnant. This investment pays for itself in babysitting per month. I treat the gym like rent for a non existent extra room in our apartment for our imaginary home gym.

Suggestion #4: Move to a smaller apartment and cut your rent down.
I'm really not sure how much smaller we can safely go and have not plans on finding out. Our current apartment is 850 square feet and will soon have 4 people and 2 dogs in it. It lacks closets so we had to convert the 2nd 9 x 10 bedroom into a walk-in closet. This is also the place where our 11 month old sleeps in his pack and play. We do not even have the space for a crib, which we didn't purchase. The area we live in is about a dollar per square foot and, due to proximity to Hubby JD's work and religious community, moving to a different area is not an option. No, we also don't have our own yard space to grow a garden in my free time either. We will be talking about our next rental decision in a future post.

Suggestion #5: Hire a nanny
We are not at critical number of child mass to make that work, even part time. I am anticipating a full year of two child daycare to cost a total of $14,400.  Add in the cost of gas, we might get up to $15,500. It is likely we'll have to have 4 kids to reach critical child mass to pay for one, particularly if you want someone reputable. Hubby JD also gets some FSA dependent care pre tax money that goes into this which does help a little.

Suggestion #6: Use all coupons and big box stores
This is not that helpful for several reasons. We don't get a paper, the items we buy generally are generic and not couponable, and our apartment is too small to make the membership worthwhile for bulk store purchases. Remember, we have next to zero dining out expenses for a reason. Daycare provides Child1's daytime food and both of us brown bag it to work. I discovered Hubby JD was occasionally buying 1 or 2 soft drinks per week out of a vending machine. He is not allowed to do that anymore and now has his own 24 pack of soft drinks under his desk bought in bulk.

Suggestion #7: Bike to work. (Thank you Mr. Money Mustache's blog, http://www.mrmoneymustache.com/, for this one)
We live in the midway point between the two hospitals at which I work, each is 15 minutes away. We trade off who takes Child1 to daycare depending on our work schedules. We are only 1 mile from Hubby JD's office, but, between sharing the daycare drive and his need for professional clothing to look professional, he'll drive the one mile. (He once attempted the bike thing and let's just highlight the failure of biking in heavy traffic wearing a 3 piece suit) We often trade cars during the day to get the one with the carseat to daycare, but my commute from one hospital passes his office and his trip to daycare passes my other hospital, thus minimizing gas.


Suggestion #8: Stop saving for retirement and liquidate your 401k savings
This idea has always struck me as a bad idea. Your 401k is pretax; mine has employer match of 4%. If we stopped contributing, I expect we'll be taxed at about 25-30%, which removes alot of its benefit for paying off loans. Both the hubby and I will have to retire some day and we have this on autosavings. It's very much a 'rob the future' to pay for the present situation. We're still paying a huge amount into our loans and able to save for retirement.

I know this was a post discussing what I 'won't' do, but I think it is important to discuss which decisions were made and how they came about. Everyone is entitled to an opinion of what constitutes a sacrifice and what does not.  Everyone has a level of sacrifice they are willing or not willing to make. Now you know mine.

Next post: Breastfeeding Part 2: opportunity costs