Two Dogs


Life can be so darn tough.

I know it, you know it.

Take your finances. You want them to be great. You really do. But they aren't perfect. Trying to be perfect is a killer.

Sometimes it's good to just be better than the average person. With your finances, you don't have to be Warren Buffett, you can be satisfied being somewhere between the average person and what the personal finance experts recommend.

For example, did you know that three expense categories make up almost two-thirds of the average American's spending? Housing, transportation and food account for 63% of the total, according to the Bureau of Labor Statistics.

chart displaying average american spending

Rather than looking at every penny you spend, why not look at these three categories and determine if you are doing better than the average American.

NOTE: If you're a subscriber to my blog you would have received a bonus with this post of a spreadsheet that will do the calculations described in this post. Sign up today so you don't miss any of the freebies.

Home Sweet Home - or is it?

Housing is by far the biggest category for a person's expenses. The average American spends 34% of their net pay for housing, which includes mortgage, rent, taxes, insurance, repairs, maintenance, utilities and furniture.

On the low side, Dave Ramsey recommends you spend 25% of net pay for housing. So there's a lot of room for the average American to improve here.


This can be a difficult expense to do much about if you own your home or just signed a lease. Costs for commissions, closing and moving can eat up your savings. But this is great information to know for when you do move.

Here's a list of ideas on how to save money:

  • Smaller Home/Apartment - I don't have anything to back this up, but there seems to be a trend towards smaller houses. If you look on for the area you are interested in, they will give you the cost per square foot. Different parts of the country will have various rates but you can use this as a gauge to see how much you'd save if you went from 2500 square feet to 1800 square feet. If the average cost per square foot is $125 you should save about $87,500 ((2500 - 1800) x $125) on your purchase.
  • Re-purpose rooms - How many people use a living room or dining room anymore? I don't. Our dining room is now an office. If I was to look for a new home I wouldn't need one with an office I could use the dining room. I vision builders no longer offering these rooms and instead making kitchens and family rooms larger or offering a home office in place. If you do re-purpose these rooms you could use a smaller home.
  • Fewer bedrooms - The standard has been four bedrooms, but check out the price difference between three and four bedrooms. In my neighborhood, an extra bedroom costs about $50,000 more. When I was a kid, my parents crammed four of us into one bedroom. Did I want my own room? Yes. Did I come out of my youth with psychological trauma? Well, maybe.
  • More Affordable Town - For this option you have to weigh things like school ratings, amenities, commuting distance...If you don't have kids or work from home these factors might not matter to you. Instead, save a bundle and pick a cheaper town.
  • Fewer Features - I had to have a house with a fireplace. I paid more for it. How often do we use it? Maybe twice a year. Would I miss it? Nope. What else do people pay premiums for; finished basements, pools, granite counters, fenced yard, remodels. Only you can decide if these features are worth it to you or if you can forego and save some scratch.
  • Move closer to work and sell a car - Could you move closer to work and walk, ride a bike, take public transportation or car pool? If so, weigh the savings on transportation with any extra cost of moving closer.
  • Move to another state of country - Wow this one could be drastic. I can work from home. So, I'm looking at moving to another state where I could buy an equivalent home for a cheaper price, and save thousands on real estate taxes, insurance and income taxes. Theoretically, I could move to a different country and save even more, but the thought of being ten to twenty hours away by plane if I needed to be somewhere here in the U.S. nixes that option. But if you're young and single or retired, the beach lifestyle could be very affordable.
  • Buy a duplex or tri-level and rent out the other units - I know someone who bought a duplex as an investment for about the same price as their home. Had they wanted to, they could have lived in one unit and rented the second one, resulting in cutting their housing costs in half, not to mention developing the valuable skill of being a landlord.
  • Rent out a room on AirBnb - If you live in a touristy area you could rent out a spare room to travelers. I know someone who rents their whole home and if someone rents it for a week they go live with their parents for that time.

Are You Throwing Too Much Money At Your Transportation?

Although not a guarantee, generally you won't lose money on your house, but you will likely lose money when you buy a car. Cars are a depreciating asset, meaning they start losing value the minute you buy them. So, it's important you don't overspend in this category.

The gap between what the average American (17%) and the recommended amount (12%) is not as large as found in housing, but there still is ample room to save money.

This category includes; loan or lease payments, insurance, gas, repairs, maintenance, licenses, fees, tolls, parking, and public transportation.

Here's some ideas to help you save some money here:

  • Buy a used, low-mileage car with a good quality rating and have it checked by a mechanic before you buy.
  • Drive your car for ten years, 200,000 miles, or until the repairs are more than it's worth.
  • ​Buy as inexpensive as you can. Ignore the pressure to keep up with friends, family, neighbors and co-workers. If your job requires you to travel, visit customers or you don't want to chance losing your job because you're late due to a car that won't start, then don't skimp too much.
  • ​Start shopping before you need the car and keep your eye out for that perfect deal, rebates, financing, low you can jump on it when you find it.
  • ​Research other expenses with the car like maintenance and insurance costs. I know someone who bought a beautiful new corvette. He could afford it. He couldn't afford the insurance and had to sell it for a loss. I was jealous for a while.
  • ​Sell your car if you have more than one and share rides with your spouse or roommates.
  • ​Use Uber or Lyft instead (assuming you don't need one often).
  • ​Move closer to work and weigh the costs of housing versus your transportation savings (gas, wear and tear). Also consider what your time is worth when you cut down your commute time.
  • ​Walk, ride a bike, motorcycle, scooter or use public transportation instead of a car.
  • Work from home or ask if you can work four ten hour days instead of five eight hour days.


Food, glorious food. I don't know about you but this is an area where I would splurge. I love good food.

The average American spends 14% of their income on food compared to a goal I'm suggesting of 10%.

Here's some thoughts on ways to save:

  • The average person spends about 40% of their food budget on eating out. Since eating out costs at least twice as much as eating in, cut the amount of time you eat out. Someone with income of $60,000 per year who spends the average 14% on food could save an estimated $840 per year by cutting their eating out rate from 40% to 20% (60,000 x 14% x 20% /2). Dump that in a Roth IRA, set it for 40 years, "BOOM" millionaire.
  • Stock up on items you buy all the time when they are on sale.
  • ​Eat more eggs and chicken. They are cheap. Costco sells a whole roasted chicken for $4.99.
  • ​Ever buy packages of strawberries for your smoothies and have them rot before you use them all? I did all the time. Now, I buy these frozen from costco and they make my shakes even thicker by being frozen.
  • ​Plan your meals out based on what is on sale, and what you have on hand, especially what you need to use up before it spoils.
  • ​Keep track of the prices of things you buy all the time and price compare among stores, plus you'll know a good deal when you see one.
  • ​Get a membership to Costco or Sam's Club.
  • ​Don't shop when you're hungry and avoid the impulse buys.
  • ​At restaurants, share meals, avoid expensive drinks and consider eating only appetizers, or going for late a lunch when prices are generally cheaper.
  • ​Buy cheaper meats and slow-cook them.
  • Shop one day at a time using a daily budget and only buy what you need for the next day. This way you can quickly run through the store and grab items that total your daily budget amount of say $15.


If you're sick of seeing meager results from your finances and have the burning desire to be better than the average person, take a good look at the information above.

You don't have to do everything all at once. Pick one area in one category to work on.

And believe me, the results can be impressive. Someone making $60,000 per year who finds 1% they can cut out of their expenses could dump that into savings. While $600 ($50 per month) may not seem like a lot, that can grow to over $300K in forty years.

Just begin where you are, scale your efforts as you see results.

The sooner you get started, the sooner it'll take off.

NOTE: If you become one of my subscribers, I send you both the link to new posts when I write them and frequently (like today) I also give you a companion pdf or spreadsheet to go with the post. 

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