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:
- 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?