6 Ways to Drastically Cut Expenses in your Budget
How to Drastically Cut Expenses
Right now we are experiencing inflation at rates that we haven’t seen in decades. Mind you, I could rant all day about how this inflation isn’t necessary–but that corporations are not willing to absorb increased costs and decreased profits. But you didn’t come here for a political rant.
My family and I have experienced job loss. We have experienced family and medical situations that required us to tighten our belts. And, living frugal is in my DNA, having been raised by a Depression-era grandmother. So first, you got this! Let’s get going on how you can drastically cut your expenses.
Remember, you’re looking for drastic. So if I list something, you might say “she’s nuts!” But hey, drastic. Desperate times call for desperate measures.
Look for Ways to Earn Money
I feel the need to also say this: Cutting expenses is effective and often necessary. But also consider what you can do to bring in more money. Women in particular are often given the advice to “think small” when it comes to money and budgeting. I encourage you to dream big and think big.
Cutting expenses may be what you need right now to get out of a bind. An unexpected emergency, a job loss or some other crisis. But cutting down on Starbucks is not the way to achieve financial independence and we need to stop telling women that’s all it takes for a better life.
What are your Biggest Expenses?
To make drastic cuts in your expenses, you have to know what your largest expenses are. This is why the traditional advice of “do your nails at home instead of a salon” and “give up your lattes” is garbage.
For most women, nails and Starbucks are nowhere near our largest expenses.
- Child Care
- Student Loans/Debt
Those are the big ones as far as household budgets. Take a look at each one and see how you can reduce the amount.
Remember, you came here looking for drastic. Drastic may mean selling your house and getting a smaller one or renting.
The real estate market is hot right now and selling your home for an extreme profit might be tempting. But remember, you still need a place to live. And if your selling price is inflated, the buying price for the home you get will also be inflated. I know some of my neighbors are just floored by what homes in my neighborhood are selling for (sometimes 2-3x what we paid for them) and are tempted to call a realtor.
But, if we want to stay in this community or school district, any home that we purchase is also going to have a huge price tag.
Unless you can move from a very competitive market with inflated prices, to a community with a much lower cost of living, this idea may not be as fruitful as it seems. If you can combine households with someone (a relative, friend, etc.) then this may be an option.
I have addressed the other big expenses–debt, child care, etc., later on in this article.
Ways to Drastically Cut Expenses
As many folks will tell you, you have to get real about your expenses. To get started, for one month, track every single cent that you spend. Save receipts. Put a little notepad in your bag or use an app. You have to know where your money is going if you want to stop the flow.
Cut the Cable Cord, Possible Savings $100-$200 per month: Are you still paying for cable or satellite TV? Thanks to services like Hulu, Sling, Netflix, Dish On Demand, PlayStation Vue, and many others, you can watch the TV shows you love and live TV for a fraction of what you’re paying now.
Why would you continue to pay $150 a month or more for channels you don’t even watch when you could be paying closer to $25 per month and still watching the channels you love? We have the Disney+ bundle ($13/month) and Netflix ($17/month). I know households that pay $200/month for cable. Read also: Cutting the Cable Cord, What’s it really like to live without cable TV?
Re-evaluate your Cell Plan-What are you currently paying for your phone and data plan? Is your plan unlimited? Companies now offer unlimited phone, text, and data for around $35 to $45 per month. If you haven’t made the switch, it’s time. Check out the less expensive companies in your area to see how much you could save. You can also take a good hard look at your plan and see what’s necessary.
My 12-year-old doesn’t have a data plan, so he can only text or call unless he is at a place with free wifi. And you know what? That’s fine for a 7th grader. My plan is $80/month (without any monthly payment on a phone) with monthly plan and service fees. My husband’s plan-$30/month. I think it’s time for me to switch!
Look at Your Credit Cards-Do you have credit card debt? Have you always paid your bills on time? Call each creditor and keep pushing until you get your interest rate lowered by five-percent. You may have to ask to speak to a manager to make this happen. Point out what a good customer you are. If the companies refuse to work with you, and you can swing it, switch to a card that offers zero percent interest for 12 to 18 months.
The key is to make sure you can pay off the balance within that time. This can save you hundreds to thousands of dollars in interest. Side note: be very leery of debt consolidation services and similar companies. Many of them prey on people in precarious situations and you end up paying more.
Your Insurance Plans-It may take a little bit of work but shopping around for a new insurance provider could save you some serious cash. Some insurance experts even recommend that you do this once a year. Many insurance companies will give lower rates to new customers. Another suggestion is to call your current company and tell them that you’re thinking of switching to a company with lower rates.
You’ll be amazed at how much money you could save by spending a few minutes online or on the phone. Review every aspect of every plan you have–medical, renter’s, homeowners, auto–and determine if that particular part of the plan is necessary.
Rent out a Room-This doesn’t have to be as crazy as it sounds. I’m not suggesting you find some stranger on the subway and offer them a place to live. But maybe you do know of someone–a coworker, a friend’s adult child, one of your kid’s friends, a friend going through a divorce.
Daycare Co-op-Many times a family’s largest expense is child care. Ok, time to get creative. Think of your monthly/weekly fee that you’re paying now, and how you could change that. Can you change your work schedule so that the child’s other parent or a relative can watch the child on weekends?
Can you build up a co-op with a friend, cousin, coworker…where you change up your work schedules and spend your days off watching each other’s kids? Are there child care programs in your area that offer scholarships or reduced fees?
Every Month a No Spend Month-Challenge yourself for 90 days, no spending. I mean it! Food, essential bills…and then THAT’S IT. Quit drinking alcohol. Pause before every single purchase you make and say, “Do I need this?”
You don’t necessarily have to give up the things you love to save money. There are many simple things that can save you thousands per year. For example, if you drop cable TV and were paying $150 per month, you could save up to $500-$1500 year. That’s nothing to sneeze at. The same goes for your cell phone. If you’re paying $95 a month and switch to a company for $35 per month, you’ll end up saving $720 a year.
Reevaluate Every Expense
As I stated above, you should collect a month’s worth of expenses and see where every cent is going. From there, decide what you can cut. Decide what is working for you and what isn’t.
For example, Amazon Prime might seem like an indulgence. However, how much will you save on gas and expenses, maybe freeing up your time?? if you can have things shipped to your home rather than go out for them.
More Ideas to Save Money
There are many other little things that you can do to cut expenses. Sure, it’s a little thing here and there, but a little can add to a lot.