From debt free to bill free

[CJ]

We've been totally debt free for some time now, but bill free is another story entirely. Home insurance, car insurance, life insurance, health insurance... those alone cost over $1000 a month, probably closer to $2000. Then there are utilities, groceries, repair bills, maintenance, TAXES... the list is never ending.

I've come to the conclusion that the cost of ownership is very expensive. I keep looking back to when I was younger and very poor on how we got by on so little... I think it's because we owned nothing!

So, once you have no debt, how do you reduce your bills to next to nothing? Health insurance is no longer a choice, but since we own our home and vehicles outright, I suppose those could be dropped... but not sure I'd want to.

We have internet access and 2 cell phones, no landline or cable/satellite TV. We use Straight Talk for the cells, much cheaper.

We bought 70 acres last spring on which we plan to build our retirement home and farm on again, after having sold our sheep farm 9 years ago (due to hubby's job), and that will help once it's up and running on food costs, but most of the bills don't go away.

I'd love to hear ideas on elminating as many as possible. We go back and forth on solar, but I'm just not sure it's optimal. We do plan to build the house to stay as cool as possible (central AR) and will heat with wood.

[Kristinemomof3]

No advice, I make sure we have good insurance coverage, replacing things can be expensive, and really it's not that much more a month. Living is expensive!

[fordy]

................Vehicle ins. companies use several factors , including your driving record to justify increasing your premiums ! Works out nicely for them while they're screwing the customer . , fordy

[SJSFarm]

I agree. All I could add is check on your insurances, call around for quotes. I listen to Dave Ramsey - I'd suggest you check out his website, lots of great info there. He recommends Zander insurance. They use several companies.

No offense intended, but it appears you don't have a budget. Since you stated the bills could be anywhere from $1000-2000/mo. Gather everything together, old bills, checkbook, statements, and receipts. Find out where every penny is going.

If you do this, you may find your money is going places you didn't notice- spending too much cash on "miscellaneous" things.

Again check out Ramsey's site, he has great ideas and tools to use.

[blooba]

Actually, by the looks of it insurance is your biggest expense. Sounds to me your over insured.

How much money do you have saved in the bank? What insurance can you drop or reduce? Don't drop the insurance if you cannot afford to easily replace things but insurance companies are there to make a profit. What you pay outweighs the risk, you just have to be able too replace it (not many people can just write a check for a new house)

Raise your vehicle deductible to $1000(or sometimes even $2000 is possible) if you can spend that thousand without thinking twice. Health insurance is still a choice, you would just have to pay the tax if you didnt have it, which is only one or 2 months premiums. Can you drop your regular health insurance and just carry a plan that covers massive hospital bills?

My advice is find a GOOD insurance agent and they will go over your insurnace, and see where your over paying and explain your situation and what you can afford to replace/deductibles. My agent is one of these rare ones and I love him.

[Alice In TX/MO]

We have the same problem. Debt free, but the insurance cost is staggering. Already have reduced life insurance, etc. Have to have health insurance. No options there.

Need to get the electricity bills down next. We already heat with wood. Summer AC bills are over $200/month here in Texas.

[quietintheland]

Hello CJ,

I'm not sure on eliminating things, but you might be able to trim things.

When it comes to insurance, you have to shop around. I recently shopped around for car insurance - the same exact policy, different companies quoted me between $25/month up to $42/month. Let's deal with each of the insurances:

1. Life insurance. Rule of thumb: 5 times your current yearly income. Go with term life instead of whole life - it is much less expensive. If you are older, totally out of debt, and your s/o would not rely on your income, you could forego life insurance and set aside a large amount of money to pay for your burial.

2. Car insurance. Drive old cars that you could afford to replace for cash; then only carry liability on the vehicle.

3. House insurance. The larger the house, the more difficult to replace components (especially historical) of that house, the further you are away from a fire station, the higher your rates will go. Build small. Have a high deductible. Ours is $5000 - we pay $525/year. If I dropped that down to $1000, our rates would go up to about $900/year. What you are seeking to insurance against are catastrophic losses.

4. Health insurance. Choose a high deductible, major medical/catastrophic plan. For our family of 3, we were able to secure a plan from Humana for $200/month. It did have a $10,000 deductible, but after the $10,000 it paid 100%. If you are a Christian, you could check out a health sharing plan such as Medishare or Samaritan's Purse which works similar to insurance at often times lower rates.

Other bills you mentioned:

Taxes: Can't help you there - except if you think your assessment is too high, you can order a professional appraisal, and if it is lower than your tax assessment, you can try to fight it.

Internet: Use it only on your smartphone, or go to the library. Obviously not an option if you operate a business that relies on the internet at home.

For further tips (and a funny story), you might want to do an internet search for the book "Possum Living".

I'm sure with a little bit of comparative shopping, you can chop at least 20% off your current bills.

Let us know how it goes.

QuietInTheLand

[CJ]

We already have very high deductibles on insurance, $10k on medical, $2k on autos, $5k on the house. We keep $500k life (Term) on each of us, mine is not very expensive but hubby's is.

I will look into a major medical only health insurance policy, that's a good idea. And I will shop around for better rates on all of it this year. Our truck is the biggie, it's an F450 and most insurance companies won't touch it as anything other than a commercial vehicle. DH is a contract engineer and we spend a fair amount of time living in our 5th wheel (which we pull with the truck) and it's also used to haul our tractor. We long ago found we made more money when working on the road this with with per diem than renting a motel or apartment, as we don't mind finding out of the way place that cater to contractors to park in, which are usually pretty cheap.

Our vehicles are all pretty new, as we hope to keep them for many years and maybe only have to replace one once more.

I think when we retire (about 10 years out), we'll probably have to drop insurance that isn't required by law.

We're trying to buy everything now and have it all paid for so that when we retire, we only have living expenses. But they seem pretty daunting! I think I'll look up "Possum Living"

[fordy]

Originally Posted by CJ

We already have very high deductibles on insurance, $10k on medical, $2k on autos, $5k on the house. We keep $500k life (Term) on each of us, mine is not very expensive but hubby's is.

I will look into a major medical only health insurance policy, that's a good idea. And I will shop around for better rates on all of it this year. Our truck is the biggie, it's an F450 and most insurance companies won't touch it as anything other than a commercial vehicle. DH is a contract engineer and we spend a fair amount of time living in our 5th wheel (which we pull with the truck) and it's also used to haul our tractor. We long ago found we made more money when working on the road this with with per diem than renting a motel or apartment, as we don't mind finding out of the way place that cater to contractors to park in, which are usually pretty cheap.

Our vehicles are all pretty new, as we hope to keep them for many years and maybe only have to replace one once more.

I think when we retire (about 10 years out), we'll probably have to drop insurance that isn't required by law.

We're trying to buy everything now and have it all paid for so that when we retire, we only have living expenses. But they seem pretty daunting! I think I'll look up "Possum Living"

................Do you have 'full timers' RV type Ins. on your truck and trailer ? If not , I'd look into those lines with Progressive and maybe some other carriers . , fordy

[quietintheland]

CJ,

Here's a link to the free version of the book:

http://web.archive.org/web/200706302...ssumliving.htm

No need to pay $10 for it

QuietInTheLand

PS: By providing this link, I don't endorse all views of the author.

[clovis]

Congrats on your debt free living!!!!

Have you been to see your homeowners insurance agent? Sit down with the agent and say "the insurance bill is killing us", and see what they say.

I'm not advocating that you change a thing in your policy, but sometimes a discussion with an agent will highlight some areas that are costing you the most.

[CJ]

We used to carry a fulltimers policy on the truck and RV, but we don't now as we drop the insurance on the RV when we're not on the road as it just sits parked at the house.

Thanks for the possum living linke!

I shop for all of our insurance online. The rates I've been quoted locally are MUCH higher, IF they'll even cover us. I was unable to get our truck insured locally unless it was rated commercial, but Geico covers it as a leisure truck (still expensive).

We've also tossed around when we get older, we might just sell everything and find a cheaper country to live off the equity on.

[Molly Mckee]

If you got a F350 diesel couldn't it pull everything you needed to pull, and give you more options with insurance ?

[CJ]

No, the 350 isn't enough truck to pull our RV. Well... it's "within" specs... just barely. Not worth the risk of overloading.

[motdaugrnds]

Since you said your move will be about 10 years from now, you might want to start re-arranging your assets. The less you "appear" to have, the less your expenditures will be later. I'm saying this because so many who live just barely above the poverty line are NOT elgible for any type of deductions and/or aid, though they are often the ones who need it the most. (It is the middle man who is footing the bill for most everything in the USA; and those who work the hardest only to manage to stay just above poverty suffer the most.) Now if you are sure your monthly income will more than compensate for expenditures, you can disregard the above statement.

EXAMPLE: The older/smaller your house, the less the taxes..as well as heating/ac. The older your car, the less the insurance, etc. You need to do a little research as to what may apply to what you will want to keep upon your move. (If you keep enough "hidden" assets to replace what you lose, you're the better for it.)

Now i know some will give me flack for stating all this; but I am one who has lived just above the poverty line ever since I started taking care of my mother; and her assets were actually below poverty. There was no way we could have survived if I hadn't arranged our living situation the way I did. Yes, debt free is a must; so is keeping "extras" to a minimum. Then adding a large garden and livestock for meat, we have managed fine.

[Callieslamb]

I think the only way to live without bills is to stop living. There will always be bills to pay. Though you can lower the amount of the bill, you really can't eliminate all of them. I have no desire to live without a phone or internet access. That's how I keep track of my family. I'll keep paying those bills until there is no electricity or Internet.

[vanet]

I know some of what I say is contraversial. Here is what we did. At a very young age, I read a book titled The richest man in Babylon. It basically boiled down if you wanted to be well off, then pay yourself first. I never wanted to be rich, but I did want to be independant. So in our early 20s instead of paying for life insurance and health insurance and car insurance (back then it wasnt mandatory) we started putting the money into precious metals, mostly silver and some gold. We did this because we knew it would always be valuable. As time has gone on (we are 50 now) we have never touched our account. We bought our property and paid it off, then we set about finding a way to get everything we needed from sources that didnt cost money. We built our house over ten years out of pocket while we lived in a cheap mobile home on the property. We built it to work passively and activley with solar. We dug a well and hooked it up to solar as well. Now we had everything we needed in case we had to, we could survive. We have been raising 90% of all our food needs for many years. All this time we were working and living well below our means so we could do all we wanted and still save. The next things to replace was fuel. As it got more and more expensive, we realized that as long as we relied on fossil fuel we could never be independant. So i bought an electric golf cart and put solor panels on it. Now we had transportaion to and from town that cost us nothing plus I put an inverter on it so we could drive it anywhere on the property and plug in electric tools. Great, but still not enough. We couldnt haul a stock trailer or go on trips. So I did some reasearch and found out that older diesel engines will run on any kind of combustable oils. So I sold my truck and bought an 89 ford Diesel. At first the plan was to get waste vegetable oil from restraunts but in our area there just arnt enough that change there oil regularly enough to make it work. So I went around to all the local mechanics to see what they were doing with there waste motor oil. Some where paying to have it hauled away, some were burning it, and some unfortunatly were burying it or just dumping it out. So I set up to come and get it from many of them as often as they needed. Now I had all the fuel I would need. I bought 3 large fuel tanks used, for next to nothing, and set up a triple filter system to get the oil clean enough to burn with out wearing out the motors. That pretty much brings us up to today. We are 95% independant of this entire sociaty. Our business is doing ok considering the economy, so we still make a pretty decent wage. But we can live on less than $600 a month, and if things got really bad we could exist pretty much forever on nothing. Before you all jump up and down, about what about this or that. I will tell you it would mean giving up a lot of conveniances. But we could do it. Even right now all though we could live on $600 we dont. We make plenty because of our lifestyle, that we can go 2 or 3 times a year on trips, we buy Avacados, pecans, citrus etc that we cant grow . BUT If we had to, giving all that up wouldnt be so hard. So it boils down to how bad do you want it. If you are willing to scrimp and save and sacrifice. If you will disapline yourself to save every dime you can and not touch it. If you will learn to build and fix anything you need too. If you are willing to go without insurance as your savings allow you to. Then you Can get rid of bills.

About the insurance what we did worked for us, because we started when we were kids. We didnt have anything so we didnt need to insure much.We have chosen to drive older vehicles that we can fix everything oursealves, so even if we couldnt self-insure we would only need the minimum. An older person would have to put more away and cancel or reduce insurances as they could cover it.

Keep in mind though, medical costs are a lot less if you are paying cash, and if it really scares you, you cant catastrophe insurance for very little as long as you can cover the small stuff.

I know this is brief without a lot of detail, but if anyone is interested, PM me and I can fill in the details. Good luck getting rid of some of those bills.

[TnAndy]

Originally Posted by Callieslamb

I think the only way to live without bills is to stop living. There will always be bills to pay. Though you can lower the amount of the bill, you really can't eliminate all of them. I have no desire to live without a phone or internet access. That's how I keep track of my family. I'll keep paying those bills until there is no electricity or Internet.

Yeah, that IS the bottom line I think.

We've done what we can to reduce them:

1. No water/sewer bill, both private systems. ( BUT when something goes wrong, YOU are the water/sewer repairman )

2. Pay 15/mo for trash pickup, they furnish the cart. Could take it to the county dumpster station for "free", but my guess is gas would run more than 15/mo for 4-5 trips/mo.

3. Internet, we basically get free. Neighbor of mine wanted to use my tower ( which wasn't free ), so he pays for a cable connection and the radios to beam it into him and us.

4. Don't have a cell. Landline runs 35/mo. Use calling card @ 5 cents/min for the very few LD calls we make.

5. Electric: Installed solar, no bill in the last year, plus they returned $329 to us at end of 2012. Solar install AIN'T cheap, but prices HAVE come down a lot in the last few years. What you're REALLY doing with solar is pre-paying your electric bill for about 20 years, and locking in the rate. Takes about 15,000 to take the average house off a bill....more if you use a lot.

6. Use DISH for TV. 55/mo, but worth it to us. Outside 'free' antennae good for about 2 1/2 channels.

7. Food, we raise a lot of our own. I'm honestly not sure you come out much ahead money wise by the time you factor in everything you put into it, but I AM sure you gain experience in growing and preserving that may be priceless at some point down the road.....not to mention the self satisfaction of doing it, and I suspect far better food.

8. Insurances: Carry only liability on vehicles. $1000 deductible on home ( highest our company will go....I asked ), no life insurance ( self insured at this point ), health insurance about 500/mo.

9. Property taxes: Put our place in "greenbelt" designation, cut taxes some....best we can do. They aren't that bad anyway.

[Maura]

We also built our house. Instead of having a separate garage, we put in a shallow frost free foundation (cheaper than traditional because it is shallow). One foundation for both the house and garage, and the garage is heated with (obviously) easy access. The garage is 2 1/2 cars, plus two rooms, his (music and business) and hers (quilting/crafts). The upstairs is the living area. Fantastic view. Another way we are saving money is the heat system we have. We have infloor radiant heat, which we were able to put in ourselves. In the lower level (garage) the tubing is in the concrete. When the subfloor upstairs was put in, we put the 2nd level tubing under the subfloor, working from the garage before the ceiling was drywalled. We have a really good hot water heater and no furnace, no ductwork to collect mold and dust, no hot or cold spots. We also put in thick insulation under the siding, more than contractors put in. When the electricity goes out, the pump doesn't work, but the house will stay reasonably warm for days (you may not need this where you live). During the summer you can push cool water through the tubes and keep the house cool this way.

We put in windows made for Canadian winters, but Anderson, Pella, or other midgrade window would probably work for you. But, you can get less expensive windows. Do some research on that.

Make sure your hallways are full size. It makes the house feel more luxurious, and if you are ever on crutches you will appreciate it. Same with the stairs. Four foot wide stairs feel comfortable and you can add a lift if you ever have to. Easy ride stairs will need an extra step, but well worth it as you age but aren't yet ready for the lift.

We use propane and last year purchased a 1,000 gallon tank. It will pay for itself in another couple of years.

Since we are retiring soon we recently checked out health insurance. Obamacare is going to mean we will have health insurance instead of going without until Medicare kicks in. This year we opened a health savings plan which is going to save us money.

[City Bound]

I think you can reduce bills but not live without them.

Wood buring stove, no heating bill each month in winter but you have a wood bill if you cannot find wood for free.

Catch rain water so you ether reduce your water bill or have no bill at all.

Use a prepaid cell phone so you do no have a monthly bill or time and features that you do not need or use.

Share the cost o internet with some family, friends, and neighbors. You can all chip in and share the security code for the wifi.

Drive less, go out less, stay at home more, wear second hand clothes, eat less meat, garden, dump cable tv, build your own cofin from pine to reduce your funeral costs when you die....

Just some ideas how to reduce the bills.