The New Necessities: Less is More

The following is a guest post from personal-finance expert Peter Dunn. He realized that he wanted to deal with money when he was in his sixth-grade math class. The teacher gave the class a stock-market project, and Pete was hooked. Pete hosts a popular radio show, “Skills Your Dad Never Taught You,” on WXNT Indianapolis (News Talk 1430) and appears regularly on FOX News and “Studio B with Shepard Smith.” Pete currently lives in Carmel, Indiana with his wife, Sarah, and his daughter, Olivia.  Pete’s second book, 60 Days to Change: A Daily How-To Guide with Actionable Tips for Improving Your Financial Life, is available in paperback for $14.95, at

Shelter, utilities, food. For hundreds of years, most people have found these to be necessary expenses and key categories of any budget. They know they must find a way to produce enough income to cover, at a bare minimum, these basics. Yet over time, this group of necessary expenses has continued to grow. And, as you might have guessed, it’s because the word “necessary” is subjective and relative.  This new, behemoth group of expenses is the “New Necessities” and now includes things such as mobile phone service, internet service, and cable or satellite tv. But are your New Necessities—and particularly your New Tech Necessities—keeping you in the red?

Controlling this type of expense is crucial to financial progress. As you hammer out a budget, you don’t necessarily need to scrap that category altogether, though. The most important tip? Make sure your usage matches your subscription plans. In my experience, most people overbuy and underuse these types of subscription plans—whether for mobile phones, internet, or cable/satellite. Here’s how to keep your costs in check: set aside an hour or two and call each one of your service providers to match up your usage with an appropriate plan. Doing this can easily save you hundreds of dollars per year.

Redefining your New Necessities requires taking a hard look at what you think you need but without which you can still survive and thrive. The fundamental questions to ask as you’re redefining are, “How much do I spend on this? And where can I cut back?” Do you really need the fastest Internet service available? What about those 400 satellite tv channels? You might not think eliminating or scaling back on services could save you that much—but once you start saving with a goal in mind, you’ve got a very powerful motivating force. With what you save by cutting your New Necessities list down to manageable size, you can contribute to your emergency fund, save for a vacation, or even sock away for college funds or retirement. It’s your decision: a year of the Handyman Channel—or a fund to someday start that handyman business you’ve always known you wanted to? Take a good, hard look at your monthly budget—and see where there’s room to save by dialing down.

What are your New Necessities? Where could you cut back if you had to—and what would you save for?

January Income – $1805.92

Here is a breakdown of my income for January.

Online Income




Stock Dividends






Ebay/Selling stuff


Bank Bonuses




January was a pretty good month for income. It was nice to see that I made almost as much from my alternative income sources as I did from my job. It will be difficult to match my alternative income total this month although I already know my online income will be up. As long as my income is a few hundred dollars more than my expenses I will be content.

January Expenses – $1148.74

Here is a breakdown of my expenses for January.



















My expenses were reasonable in January. If it weren’t for the purchase of a new laptop and printer they would have been under my goal of $1000 and I still didn’t miss that target by much.  There won’t be any large purchases in February and I expect my normal expenses to remain about the same so I should easily be under $1000 for expenses this month.

August Expenses – $1057.14

Here are my expenses for August.



















My expenses were reasonable this month. I would have been under $1000 but Chase raised the minimum payment on my debt from 2% to 5%. I might just go ahead and pay that off.  September expenses should be much lower.  I will be able to rent a room for $85 a month in Xela.  The cost of the plane tickets has been accounted for in earlier months so my only travel costs will be the bus to Xela and the taxi to the bus station and perhaps one night in a hotel.  My next post should be from Guatemala.

December Expenses- $707.55

Here is a breakdown of my expenses for December 2008.

Household $414.69
Transportation $27.18
Food $38.73
Entertainment $103.19
Debt/Education $90
Phone $33.76
Total $707.55

I’m quite happy with my expenses for December. This is the level I’d like my expenses to be at every month. They will be somewhat higher this month because I have to pay for my health insurance. My new health insurance is payable every six months rather than quarterly as my previous health insurance was. I’ve decided I’m going to list my pro-rated monthly expense for health insurance rather than list it as a lump sum expense every six months to give a more accurate view of my average monthly expenses. The food expense is for lunches out and snacks only, the rest of my food expense is included in either the entertainment or household expenses.

I’m also considering paying $600 to sign up for my school’s bar prep course. That will obviously cause a serious increase in my monthly expenses for this month. Bar registration fees and bar prep fees will raise my average monthly expenses for the first part of the year but the last part of the year I should have very low expenses. Hopefully those will offset each other and I’ll meet my goal of having less than $10,000 in expenses for the year.