Personal Finance

How Saving $10/day Turns Into a Mercedes Benz

“Look everywhere you can to cut a little bit from your expenses. It will all add up to a meaningful sum” Suze Orman

In my first article, I wrote about tracking expenses and creating a custom tailored spreadsheet. After tracking my expenses very closely in 2013-14, I decided to approach budgeting in a different way since I now have a good understanding of how I spend money and already made improvements. I will still track tax deductible expenses and major items, but in 2015, I will focus instead on tracking money saved by being frugal, smart, and patient. On top of that, I will intentionally allocate these monthly savings toward debt reduction and then calculate the interest savings to prove to myself – and you – how saving can accelerate our financial goals.

Since most of my big ticket expense are fixed costs like mortgage, insurance, and student loans repayments, my focus will be on variable costs like food, entertainment, and traveling.

Coffee and Lunch – Brown Bag It

Although the Starbucks Via instant coffee works well, I learned that there’s a single serve Keurig machine at work, so I started to use that recently. A box of 18 count single serve Green Mountain decaf blend costs about $8.99, which comes out to just over 50 cents / serving. At the cafeteria, a cup of Joes costs $1.95/cup, so I am saving $1.45/cup. I’ve been packing lunch 3-4x / week for the past year. Since lunches at work typically cost $8-10/day, I estimate I save $5-7 each time I brownbag it. If I make my own coffee and lunch each day, I can save $7-9. For my savings calculation, I’ll use $8 as the daily savings on coffee and lunch.

Eating out 

I typically eat out for lunch and dinner on Saturday and lunch on Sunday because I’m out and about and driving home for lunch isn’t convenient. Two small changes I will make to cut down on eating out is (1) Don’t leave home until I’ve had lunch at home on Saturday; and (2) For dinner on Saturday, order takeout from a fast casual place that does not require tipping. In addition to saving on tips with the takeout, I will likely save on alcohol too. I usually have a beer or glass of wine when I eat out, and by drinking at home instead, I save $5-10 easily. I estimate that these two small changes will save me $20 each week.


I already “cut the cord” by ditching cable TV a year and a half ago, so I can’t claim that as a new savings. Instead, I will talk about things like movies, books, shows, etc. I go to the movies once a month; going forward, I will aim to watch the matinee show whenever I can and count the difference between the matinee and full price as the savings. I also decided to ditch newspapers and magazines, which I can mostly get free outline, at work, or in coffee shops, so there’s no point of subscribing to them.

Traveling / Trips

This is an area with plenty of room for improvement for me. In 2014, I spent over $11,000, and with the exception of a few weeks, most of the trips were not for fun. In the past two years, I visited my family in my home town frequently due to family members’ health issues. Hopefully, I will be able to visit less frequently in 2015 as their situations have improved. The distance between my home and hometown is a little less than 400 miles; generally, if I’m going to be there 3 days or more, I drive, and anything shorter, I fly. Staying with family / friends is less convenient in my case, so I often stay in hotels or in private residences (AirBnB). In 2015, I’m going to be more creative with these trips. Also, for some trips, I will book flights month in advance to save on airfare. Anticipating an out of country trip and a few trans-US trips, I signed up for a few mileage reward credit cards that should result in a few free flights. So overall, I hope to reduce my traveling expenses a bit in 2015.

Car Expenses

With gas nearing $2/gallon nationwide, driving expenses have dropped a lot in recent months. I’ve been considering converting my standard bike into an electric bike to save on gas, but haven’t made the switch yet. One thing I will do to save gas is not drive to my gym (about 6 miles from work) as often. By working out at the onsite work gym (which is smaller and have fewer machines) 1-2x a week, I can save 2-3 gallons of gas / month. That’s not much, but I’ll add it to the total savings anyway. I also found a new car wash place I’m going to try out. I was paying about $27/wash (a really good wash). Although I can save by washing it myself, I try to be very thorough and it typically takes me 2-3 hours to do a really good job, and that’s too much time for me.

Paying Down Debt

With the money saved, I plan to pay down debt, mainly student loans from grad school. Although I could have paid down the debt much sooner, the interest rates are so low that I never bothered to accelerate the pay down. Now that I have several mortgages, I’ve decided to pay down the student loans because its interest are not tax deductible. In future postings, I plan to update you on my progress.

How Small Savings Turned Into a Mercedes Benz

So what does a Mercedes Benz have anything to do with this blog? A lot! A former colleague was extremely frugal. He brought his lunch to work every day. Instead of parking nearby for $7 like everyone else, he’d park it faraway and walk 10-15 minutes but pay only $3. He worked at the same place for over 10 years. Assuming he saved $10/day for 10 years, he saved at least $24,000. Assuming he invested $2400/year for 10 years at 7%, he would have accumulated $33,159 in 10 years. Well, a few years ago, this guy decided to splurge and got himself a base model Mercedes Benz for under $28,000 (yes, he negotiated a good deal). Remembering his frugal ways, I did the math exercise above and told him that his consistent savings for the past 10 years resulted in a “free” Mercedes. His frugality netted him a nice little luxury car that impressed his girlfriend enough that she eventually married him.

Now, that’s a happy ending for you.

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1 Comment

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