The Expense Crusher

“Let’s say twenty thousand bucks in the bank and no payment except the house. Does that feel pretty good? Let me help you. At that point you’re in the top ten percent of Americans financially. Wow, that’s how bad it sucks out there. “– Dave Ramsey

Step #1 – List your payments

Make a list and categorize all your monthly payments and repayments. Please do not include principal, interest, tax or insurance (P.I.T.I.) in the Household Expenses because they belong in the Financial Expenditures.

Financial Expenditures

Rent & Debt Payments
Tax Payments
Insurance Payments

Household Expenses

Home Payments (Not including Rent or P.I.T.I)
Auto Payment (Not Including (P.I.T.I.)
Shop Payments (Not Including (P.I.T.I)

Most Americans will notice that the financial expenditures are more than half of all monthly payments. We can reduce, neutralize and sometimes eliminate them. How much easier would that make your life?

A good resource to see the average American expenditures is the Consumer Expenditure Survey that is compiled every year by the Bureau of Labor Statistics or BLS.

Now that you have your expenditures listed and a good grasp on where your money goes, we can start to customize a plan to pay those expenditures.

Step #2 – Six Strategies to Reduce, Neutralize or Eliminate Payments.

Debt Elimination

Debt is the biggest hurdle, but you can eliminate it all.

Start by listing all of your debt, lowest balance first, in order to the largest balance. Pay minimum payments on all of the loans and add an additional amount to the lowest balance. Once that loan is paid off, roll the money you were using and add it to the next lowest balance. This continues until all debt is paid off.

The money you were using top pay off your debt, will be used to build your emergency fund. The emergency fund will help neutralize taxes and reduce insurance premiums.

*** (OWNERSHIP)*** Credit Unions are similar to banks but are owned by their members.

Tax Neutralization

Most households can benefit from online tax preparation software to help prepare and file taxes. Talking with a professional or self-educating yourself reduce After eliminating your debt, you can start neutralizing your taxes by purchasing US Government Treasuries direct from the US Government at Treasury Direct. Interest income from US Treasuries is paid from taxes and can be considered a return of your income tax payments.

Insurance Reduction

Retrieve your Social Security Statement to see what your estimated benefits cover. The acronym O.A.S.D.H.I. stands for Old Age, Survivors, Disability and Health Insurance. You and your employer pay for this with F.I.C.A. Payroll deductions every paycheck. Once knowing your estimated benefit amount you can supplement with additional coverage.
See if you qualify for Medicare, Medicaid, the Healthcare Marketplace or VA Benefits. Otherwise EHealthInsurance is a health insurance marketplace that might help in finding a plan that fits your needs.
The common types of insurance are Life, Health, Disability, Auto, Homeowners and Renters. There are others but that’s a good place to start.

Building your emergency fund which in itself is a method to ensure your future, to neutralize income taxes can double to self-insure and allow for higher deductibles which will lower your insurance premiums.

***(OWNERSHIP)*** Mutual insurance company policyholders own the insurance company.

The Gateway to Entrepreneurship

The second 50% of monthly spending for most American households are living expenditures. Here we will be introduced to entrepreneurship.

Home (Room Sharing)

Reduce, neutralize or even eliminate your housing expenditures. Just renting a room out has a big impact and can cut your housing expenses dramatically. It’s a win-win for the roommate also because they would be saving a tremendous amount over renting an apartment and all the bills that go along with it. Additionally, Airbnb and Vrbo a subsidiary of Expedia has revolutionized the short-term rental markets.

Auto (Ride Sharing)

Reduce, neutralize or even eliminate your transportation expenditures. The majority of this is Livery and Delivery, including companies like: Uber, Lyft, Instacart, Shipt, DoorDash, Amazon Flex and Walmart Spark. I wouldn’t look for this than to do much more than paying for you transportation expenses but it definitely can do that.

Shop (Profit Sharing)

Reduce or even eliminate your personal shopping expenditures by building passive income online. These affiliate programs are a little different from the room and ride sharing apps and encompass an entire ecosystem of sales, marketing and compensation structures including affiliate marketing, referral marketing and network marketing companies. Cashback credit cards and cashback online sites and apps may help plus memberships for wholesale BJ’s Wholesale, Costco, Sam’s Club and discount stores Amazon, Walmart and Target can also lower the burden.

What’s Next?

With the spending plan in place and expenditures categorized, it’s time to customize a strategy that will work for each individual. I’ve rented a room, drove for Uber and Lyft with each achieving what I expected them to. I didn’t work a job for three years and that was my objective. In full disclosure, I did have a fire in the condo and my car was totaled. Such is life and we have risk with everything we do… It’s just part of life and things we must get through. Maybe a story for a future blog post… lol

In hindsight, I could have positioned myself better. When you are renting property, you need to have enough cushion for repairs and the same goes for repairs for your vehicle when a driver. With Uber and Lyft, I believe they are better as part-time gigs, maybe before and after a part-time job. I did meet a driver that pays for his Tesla with one trip before work and one trip after every day plus a few hours on Saturday. That comes out to 50 trips a month, estimated $750/mo or $9,000/yr. I think that is the ideal solution when it comes to the ride sharing apps… just enough to pay all transportation expenditures. Removing that from the budget is a big deal.

On the affiliate side of things, I have tried different aspects dating back to the early 2000s, maybe late 90s and some worked while some didn’t. Cash back apps work, you won’t become wealthy doing them but they can be a part of the mix. I believe I earned $2,500 over a few years, most of which has been invested in other businesses, I call this seed capital and it is important.

I’ve always steered towards referral and network marketing because I felt if I have to do it all myself, I might as well get a job. There has to be that multiplier effect. I do wish I found WealthyAffiliate earlier in my journey, they would have saved me a lot of time researching and figuring things out, but then again, back than it was all new to everyone.

Mindset

Mindset is important, maybe the most important tool you bring to the game. This is a long journey that you can earn a substantial amount with. Things don’t always go as planned and you may need to continually test and make adjustments. That path must be continued, like Thomas Edison’s 1,000 attempts to invent the light bulb were 1,000 steps to his success and he changed the world.