For those who have read my early retirement plan, you know that I am more inclined to increasing income rather than saving more. However, after reading through some of the early retirement blogs such as Mr Money Moustache, I realise that having a more frugal lifestyle is not that bad.

At first, when I heard that I need to live in frugal ways, my thoughts ran into images of me staying at home and only eating leftovers. However, as I read more and more early retirement blogs, I realised that it is beyond that. Living in frugal ways means exercising more creativity in terms of using your money as well as learning to appreciate that the best things in life is actually free. Things such as spending more time with family, chilling out with friends, appreciating nature etc all cost very little money. The only thing that needs expenses is traveling and good food. Even that, I am sure I can think of ways to let me enjoy these activities without spending too much.

So, I took a long look at my expenses and realised they are actually quite messy. In my article on how much I need for early retirement, I published some numbers. Looking back on these, I realised I missed all the miscellaneous expenses that were actually quite substantial. I also think I need finer details to know where I am spending excessively. So, this is a relook at my monthly expenses:

• Housing mortage: SGD2,600 (SGD1,000 paid by wife)
• Condo maintenance: SGD400
• Money to parents: SGD700
• Electricity and water bills: SGD170
• Internet and phone bills: SGD80
• Taxes: SGD115
• Food (normal): SGD400
• Haircut: SGD30
• Public Transport: SGD160
• Car: SGD900
• Grocery: SGD50 (my wife pays most of it)
• Entertainment: SGD50 (mostly movies)
• Restaurants: SGD400

Total expenses: SGD6,065

Monthly salary cannot cover monthly expenses

The biggest problem for me right now is that my takehome is only SGD3,500 because I work in a startup for stock options, rather than money. This creates a big problem. I have an income deflicit of SGD SGD2,555. Luckily, I can use my cpf to pay SGD1,000 for the mortgage but that still leaves me with a gap of SGD1,555.

Currently, I am using my online income to filled this gap but what if my online income disappears? Then I will be in a super bad shape. This is why I need to find ways to trim down my monthly spending so that my monthly income can cover it.

How to save more each month

Looking through the items, most of them are fixed such as parents allowance, taxes, condo maintenance, mortgage etc. Some other items that can potentially be reduced included the car loan, food and utilities bills.

Saving money option one: find a new job

Find a new job. That is the most easy way out. If I can get a job that has a take home pay of SGD5,000, my total expenses will be covered.

Saving money option two: sell the car

The biggest expense is the car. If I sell it, it will a SGD900 reduction in expenses. Coupled with SGD400 reduction in food and restaurant expenses, I can easily reduce the SGD1,555 deficit. However, the tough thing is that my wife is used to driving the car to and from work. Selling it would be a big inconvenience for her. Really shows how sometimes, the most logical choice might be the hardest to make.

Saving one option three: cut all unnecessary expenses

For option 3, I will keep the car but reduced more expenses in other areas. For food and restaurant expenses, I will try to reduce by SGD500 instead of SGD400, as shown below:

• Food (normal): SGD400 , SGD100
• Restaurants: SGD400 , SGD200

How about doing all three options

Of course, the best choice is to combine all three options and have a net savings of SGD1,700. Saving this amount over a 10 years period will yield a SGD250,000 savings, assuming a 4% investment return. That amount is sufficient to pay for the down payment for a mickey house condo unit in District 9. Assuming a 20 year loan of SGD650,000 at 1% interest rate for the condo, the mortgage will be around SGD2,900. With a monthly rental of SGD4000, I can earn SGD1,000 in passive income just by executing the plan above.

So, will I do it? Probably not. I might be able to cut down my food and beverage expenses but selling the car and getting a new job will need major discussions with my wife.

This, in a nutshell, is why so many of us failed at growing our wealth. We incurred heavy expenses and we are not decisive in executing what is right for us.