I’ve been thinking about this post for a while after I noticed last week that I now only have two mandatory debt payments every month, down from a high of 7. While I didnt have a creative name for this, a comment from another yakezie member/future world ruler/all around hysterical guy was left on my monthly review post that gave it a good one. The “monthly nut” is the amount of expenses that you must pay every month – for most people, this includes rent/mortgage, food, heat, lights, water, trash, etc. The crappy part about most of these is that while some are semi-variable, most are not. If you own a house, you’re going to be paying x until the loan is paid off, unless you sell and move or refinance – neither of which are really feasible short term. Same goes with food, lights, heat and water – you can cut your use and therefore your cost (Though this may not be true with your water bill, examine your pricing structure to be sure), but you’re really not going to lower your heating bill by $200 per month just from switching to an automatic thermostat. If you are able to do that, then you’ve got some major issues in your house related to heat.
The other component in your monthly nut is your debt and other things that you have. This is credit card payments, car payments, cable tv, cell phone, hot tub or whatever. Usually, this section of the monthly nut is debt and you’re paying interest for the privilege to use it.
Back when I started getting out of debt, I had the following payments:
- Rent
- Water/Trash Bill
- Electricity Bill
- Cell Phone Bill
- Cable Tv/Internet Bill
- Credit Card 1
- Credit Card 2
- Credit Card 3
- Car Insurance
- Student Loan 1
- Student Loan 2
- Student Loan 3
- Truck Loan
All told, this was 13 different things that I had to pay for every month. Some, like rent, were to keep a roof over my head and there’s really no way of getting out of that (For the time being for me) while others were from things that I had previously bought. The expenses in this column ranged from ~400-20 bucks, with the most expensive being rent, and the least expensive being a minimum on one my credit card. All told 2 years ago (I dont have the exact numbers, but I can estimate) I had mandatory payments of almost 1900 every month that I had to pay.
Having mandatory expenses that high left little room for breathing (or anything fun) at the time, so cutting out the non-mandatory ones and making the mandatory ones as low as possible became quick priorities. To make this happen, I dropped tv and went to internet only, installed a programmable thermostat, did some work around the house when needed in exchange for lower rent that month. With the little extra I had left over, I started removing the minimum payment things from my life, starting with the credit cards.
I paid off 3 credit cards, bringing my monthly nut down to around 1750 or so, then focused on the student loans, and I’ve eliminated 2 of the 3 of those. All of this was done with extra cash on top of my monthly nut, and once something was eliminated from the monthly nut, it went back into paying down the others.
As it stands now, I’ve got a mandatory monthly expense of $1450, and plenty of spare cash to do whatever I want with every month, whether it’s pay off debt, save or do something else with.
Readers: What’s your monthly nut? Has it gone up or down over the past 2 years? What ways do you have to reduce the cost of the “Mandatory” monthly nut, such as heat, lights and rent/mortgage?
I would probably look at: Mortgage, 2-3 credit cards (pass throughs as they are paid off every month), Student Loan, Auto Insurance, cell phone, Electric, Gas, Cable, Water (every other month), Trash (every third month). Only two (mortgage and student loan) tie back to debt, so I think we’re in pretty good shape.
Beagle – that’s the thing about this. Some of these things you are just plain old stuck with with basically no way to lower the price. If you live in a metro area with trash service, you pay what they tell you to pay, and there’s basically no way around that.
My monthly nut is the rent, utilities, auto insurance, medical insurance (through work), my student loan payment, and credit card bills (which can go up or down depending on what I spend). If you exclude CC bills, our household monthly nut is under $2,000.
OOOOO – I totally forgot about that! My health insurance and other insurances are taken right out of my check, so I dont even see them. I still have to pay them though!
Thank fully I don’t have student loans. But my monthly nut includes paying off a monthly c.c. bill –if I have one, all my insurances, rent, and utilities. What is cool though is my retirement and investments are taken straight out of my paycheck. I love that I don’t have to worry about it. I would be bound to forget if it wasn’t automated.
That’s the really nice part about saving/investing, and I actually wrote an article about it and will put it up shortly – it’s easy to automate the good things (like savings) and painless too.
I am just a “reader/Commentor?!” Lol seriously I am glad I can inspire.
My monthly nut has been lowered tremendously since I started blogging and keeping myself accountable.
Left I have:
Mortgage
Utilities
Cell Phones
Student Loans
Not to say they aren’t all high as compared to some people around the country…just lower from where I started a couple years back.
Fine, I’ll change your status – and that’s not a bad monthly nut either.
I have been looking for ways to lower my ‘monthly nut’ for the last few years, although I didn’t know it was called that. Thanks for filling me in on my lack of knowledge.
My monthly nut consists of 5 things:
Mortgage
Sewer Bill
Electric Bill
Garbage Bill
Internet Bill
All but the mortgage are relatively low, and I’m looking at ways to get rid of the electric bill in coming years with solar and wind. We could probably burn our garbage since we are in the country (sort of), but just haven’t started yet. I think I may next year. So all told, I’m think our final monthly nut will consist of:
Sewer
Internet
Reduced Electric
My yearly/semi yearly nut includes:
Homeowners Insurance
Car Insurance
I pay for these in lump payments once or twice a year.
That is nice that you are in the county and can basically do whatever, I hope to do that soon
The monthly nut-good way to look at that basic outflow that has to happen every month.
Yea doc – I’m trying to get mine as low as possible. Maybe I can cancel trash service and just dump it in my neighbors bin!
Or make late night runs to the back of McDonalds…:)
Ouch! You had a lot of monthly obligations to start with.
I’m now down to
- mortgage
- internets
- food
- electricity
- property tax
- student loan
- cellphone (though I could cut that if I had to/wanted to)
I did have a lot of monthly obligations andrea – I’m glad that I cut them back. It makes things much easier now.
These days my monthly nut is made up mainly of of mortgage and transportation. There’s only so much that can be trimmed there, but by doing that my absolute mandatory expenses with a reasonable amount of food and transportation are down to about 1200 or so which isn’t horrible!
that’s pretty good FG – unfortunately, there’s always some place that you cant trim or that you would prefer not to trim – everyone’s gotta eat, right?
I like the term, monthly nut. For us, it’s about the same as everyone else, except we have no debt except the mortgage. I’d also characterize them as expenses that couldn’t be readily cut out in the event of a job loss. And even then, I think we’d get rid of the mortgage within six months. Just sell the house, and move out to the country.
That’s cool 101, nice to have the option to sell your house – i’m sure in some peoples case it wouldnt be quite that easy.
My mandatory expenses are the house utility bills like water, telephone, electricity, internet, cellphones, gasoline and gas. My monthly nut will be hard to meet when there is job loss. I guess we have to sell the house in the event and take up residence with my parents.
That’s a shame amy – mine would be hard to meet with a job loss too, but I’m trying to build up some reserves so I can float for a while if that does happen.
One of the best parts about paying off debt was seeing my list of monthly obligations shrink. I’m down to mortgage, utilities (includes cell phones), car payments (only 9 months left to go), husband’s student loan, gas, food, daycare, and YMCA membership. I look forward to the day when my list looks more like Evan’s (minus the student loans, of course).
It’s awesome, isnt it!
I am just amazed by the list of payables that you have demonstrated.. Get yourself a solar panel to cut that down significantly.. I really dont know why it is taking solar system so long to over take the regular electricity system? It;s great
Did you believe john ,i am student and take a Education Loan for my bachelor degree and i have no job to pay monthly installments.I dont understand “How to pay it”.