Spending Reduction Series: Groceries

Welcome to the second installment of the Thriftyskate spending reduction series. This episode’s focus is on groceries. The 2015 expenses showed groceries as the 2nd highest recurring category of where our money went.

That's an expensive potato!
That’s an expensive potato!

I thought there could surely be some savings in this category. If we’re spending thousands of dollars to feed ourselves there’s probably some form of inefficiency along the way. Continue reading “Spending Reduction Series: Groceries”


Spending Reduction Series: Bills & Utilities – Car Insurance

Ever since I ran the 2015 numbers for the Thriftyskate household spending, I’ve wanted to methodically attack the different budget areas. It’s easy to say, “Cut the budget!”, but where to start? How much to cut? What if spending actually goes up?

That’s why I, Mr. Thriftyskate, am starting a series of posts exploring the methods and tools I use to make actual spending cuts. I will focus on real budget items, present actionable information, and report actual results.


I want the best return on my time investment. I want a large spending reduction with minimal effort. I want results and I want them now.

Target acquired
Target acquired

Based on those wants, what’s the best way to get there? My approach uses a targeted method to identify the easiest and largest budget items to attack. Continue reading “Spending Reduction Series: Bills & Utilities – Car Insurance”


2016 January Spending

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After publishing our prior year’s spending we thought it appropriate to continue with our monthly expenses going forward.


January was a fairly expensive month for the Thriftyskates due to $973.44 in non-recurring or annually-recurring expenses. Recurring expenses were about average, although we hope to cut the lunch at work category down this month.

Recurring expenses:

Mortgage and Rent: $2,818.25

Babysitter and Daycare: $950

Bills & Utilities: $279.31

Shopping: $110.51 (includes diapers for Miniskate and other miscellaneous household goods)

Gas & Fuel: $27.61

Entertainment: $7.99

Roth IRA: $916.74

Groceries: $287.98

Lunch at work: $98.93 (lots of room for improvement here)

Restaurants: $23.82

Gifts & Donations: $235.95 (higher than normal due to belated Christmas gifts)

Gym membership: $29.99

Dry cleaning: $22.65

Total recurring: $5,809.73


Non-recurring expenses:

Professional expenses: $380 (annual fee for professional license)

AAA membership annual member fee: $73

Amazon Prime Annual Membership fee: $106.92

Service & Parts: $145.75 (replacement battery for Mrs. Thriftyskate’s car)

Thriftyskate website: $137.52

Copies of Miniskate’s birth certificate: $56

Total non-recurring: $973.44

Grand Total: $6,783.17


There you have it. With about 8.5% of 2016 over, the Thriftyskates have spent almost 9.7% of our projection. As noted there were a few non-recurring expenses that added up so with those over, we should start to get back in line with spending over the next few months.


2015 Expenses and 2016 Budget

I ran the Thriftyskate 2015 spending report and was shocked: $89,875….Are we not as frugal as we thought? A closer look at the numbers, however, made me feel better about our spending habits and highlighted where we can do better.


This was the first time the Thriftyskate household has added up a year’s worth of expenses and graphed the results. I’m glad we did so for two reasons.


First, it gives us a visual representation of the areas where we spend the most money. Second, it acts as a planning tool for the following year.

Vilfredo would be proud
Vilfredo would be proud

On the left is a graph of the different spending categories (blue bars) with a cumulative total (red line). You will see why I added the cumulative line in a moment.


On the right is the data table.


No surprise, but our largest expense was housing, accounting for 38.5% of our total spending. This includes the mortgage, taxes and homeowner’s insurance.


The next largest, and notable, category was student loans. In 2015 we spent $15,540 to finish paying off Mr. Thriftyskate’s student loans. It was a large accomplishment, one that we had been targeting very heavily since 2014.


The last big expense in 2015 was a used car for $9300. We recently posted about the decision process for buying a used car. This was a cash purchase so no recurring payments for the MiEV.


The remaining categories should be about the same in 2016 except for daycare which will be much higher since she only spent 3 months in daycare in 2015.


Because I’m interested, take out the housing and daycare expenses from the 2016 budget and it comes to a fairly thrifty $24,900. Not too bad, but certainly room for improvement. In particular, shopping (which did include a lot of Miniskate related purchases in 2015) and eating out are areas where we plan to spend less in 2016.


So why have a cumulative line? Being the mindful engineer, Mr. Thriftyskate used the Pareto principle to determine where most of our money is going. The Pareto principle, also referred to as the 80-20 rule states that roughly 80% of the effects come from 20% of the causes. The purpose of using the Pareto principle applied to our finances is to show 80% of the money that is spent on 20% of the “stuff”.


Sure enough, approximately 80% of the money is being spent on only 6 of the 18 categories. Okay, so it isn’t 20%, more like 33%, but it’s close.


Thinking in terms of the Pareto principle is helpful because, in order to have the largest impact to reduce expenses in 2016, we need to know where the bulk of our attention should be focused. This isn’t to say we’re ignoring the other 20%. Rather, it helps highlight the largest spending areas.


Since we know some of the 2015 expenses are changing, let’s look at the projected 2016 expenses to see where “about 80%” of our money is going and how we can affect change in our spending habits.

A look ahead
A look ahead

Again, as expected, housing is the top of the list. You’ll notice a small difference between 2015 and 2016. This was due to a change in the amount being set aside for the real estate tax escrow account.*


Daycare expenses, even though expected, are still a bit of a shock. We’re a double-income household and it just doesn’t make financial sense to abandon one of our jobs to save on this expense.


The other two categories rounding out the “80%” are bills/utilities and groceries. Well, look at that. 4 out of 15 categories make up the 80%. Pretty darn close again on that 20% of the stuff costing us 80% of the budget.


Despite the 80-20 statement I made above, we will be targeting most of our spending categories for reduction anyways. But, still acting in the spirit of it, a lot of attention will be on those top expenses.


Now you may be thinking, “How can you reduce a fixed expense like a mortgage?”


Great question. It’s one we hope to address in the short-to-mid-term future. We love where we live, but it is extremely expensive to own or rent a home here. [Getting closer to that $24,900 number I mentioned earlier sure would be nice!]


As for the other top expenses I think there are some real opportunities to reduce our spending. I’ll go over these approaches in future posts.


There was one last observation I made while reviewing the Pareto graph. Our spending falls into three distinct categories that correlate with the relative amount of money spent.


  • One-time, long-lasting decisions (ex: house, car, etc.)
  • Recurring expenses that are typically automatic (ex. utilities, groceries, gifts, etc.)
  • One-time, short-term decisions that in aggregate end up as noticeable expenses (ex. home improvement, personal care, etc.)


Notice a trend of where these appear in the chart?

Stepping up my chart game
Stepping up my chart game

Yep, those one-time decisions have a huge impact on the budget. Better make sure they’re good decisions! And the little decisions, like getting a fancy haircut or sipping a daily coffee? Those can add up quickly if you’re not careful.


Now that we understand where our money is going, we can tackle spending reduction using different methods.


  • Large, one-time expenses: Long-term planning with detailed financial calculations.
  • Recurring expenses: Systematically evaluate if these expenses are truly needs, if so, investigate alternatives.
  • Small, accumulating expenses: Remain vigilant in everyday spending habits. Monitor with short-term review periods (monthly).


There you have it. The Thriftyskate 2016 budget with a plan of action to tackle our different spending areas throughout the year. Stay tuned for the various methods we use to calculate more efficient uses of our money!


*Longer version: There was a slight hiccup for the Thirftyskates early in 2015 where the county tax assessor was sending the tax bill to the mortgage company. However, it was only a tax bill based on the previous owner’s assessed value. At the same time, the tax man sent a separate supplemental tax bill straight to us, for the remaining assessed value based on our purchase price. This was because we had recently purchased the house and the county tax office hadn’t fully caught up with the correct billing cycles. For those less familiar with real estate taxes in California, when we purchased the house that re-set the assessed value. The previous owners had more or less locked in their assessed value from when they purchased some 20+ years ago.