Cutting expenses is never a bad idea. Whether you are in debt or not, having extra money to save, invest, or pay off loans will always give you increased peace of mind and help reduce stress. It’s one thing, though, to cut back on a daily Starbucks, and it’s another thing to actually make a difference with how much you save. So how do you drastically cut expenses? Let’s find out.
Nearly 80% of Americans are living paycheck to paycheck. The majority of us have no choice but to cut back expenses if we want to save for retirement, contribute to an IRA, or pay back outstanding loans. Sometimes it can feel as though there is no way off the hamster wheel of monthly bills and credit card debt. But once you give in to that type of thinking, you have no chance of breaking the cycle. Luckily, you can put an end to this vicious cycle of expenses if you take a moment to make a plan and follow it.
Drastically cutting expenses can lead to a down payment on a new house, getting out of high-interest debt, or retiring early. There are not many people out there who couldn’t use a few extra hundred dollars in their pocket each month. The need is there, but is your motivation lacking? Think about your life with fewer expenses, no debt, a new car, or early retirement. Once you imagine how your life can change, then you can start to motivate yourself to not only lower expenses, but to drastically cut expenses.
Motivation is the first step towards drastically cutting your expenses. If you are not motivated, none of the following ideas will be sustainable. The second step you should take is to track your money with a budgeting app. There are many different free apps available that you can use to track where each of your hard-earned dollars is going every month. Being able to visualize your expenses is extremely helpful for budgeting and saving money.
Drastically Cut Expenses Right Now
Here are seven way to put extra cash in your pocket each month:
1. Cut Your Cell Phone Bill
You probably are not too keen on completely getting rid of your cell phone, but if you are, there are ways to get around not having a phone. You can use Skype or another video chat service such as Google Hangouts to make phone calls. You can also use Google Hangouts to send text messages to friends without relying on a cell phone bill. If you have an Apple computer or laptop, you can use iMessage for free in place of text messages.
Whatever device you currently have, there are free ways to get around having to pay an expensive bill. But let’s say you have no interest in completely getting rid of your cell phone. Take a moment to go over your current plan and look at what you are paying for and if you really need it. Cell phone companies are always competing with each other, which produces more cost-effective plans for the customer. Take a look at some provider alternatives. You might be able to save a significant amount of money each month.
2. Sell Your Car
If you have a partner and you both have cars, consider dropping down to one car for the two of you. You can recoup a quick chunk of change by selling your car, and by doing so, you will drastically cut down on annual expenses. By getting rid of a car, you save on maintenance costs, gas, car washes, and car insurance.
You may not have a need for a car at all. Consider if you can bike or walk to work and use ride-sharing services when you want to go out. A car is one of the largest expenses you will have in your life, both upfront and every day that you own it. Your car depreciates in value with every mile that you drive. If you can live without a car, you can put a lot of extra cash back in your pocket each month.
3. Stop Eating Out
Cutting down on takeout or sit-down dinners on the town is one of the most frequently cited tips to cut expenses. This is not to suggest that you cut out date nights or treating yourself to a quick, quality meal. But if you can cut back on those types of meals, you can likely save hundreds of dollars each month, depending on how often you eat out.
4. Be More Efficient with Food
The average American throws away 40% of the food they buy. Buying groceries and making your own meals is a great way to cut back on expensive takeout. But it is completely pointless if you are going to throw away nearly half the food you buy.
Instead of hopping on Grubhub or DoorDash and ordering your go-to meal, take a look at your fridge and pantry. Be creative. There is likely a meal waiting to be made with the food you already have.
5. Cut Cable
Cutting the cord is one of the most popular ways to reduce expenses. If you have cable, you are probably well-aware of the large bill you have to pay each month. With a streaming service, you can likely pay $50 or less for all of the channels you currently watch. And if you want to get crazy, try only subscribing to a service such as Netflix. You might be surprised at how quickly you will forget about your old cable service.
6. Cancel Subscriptions
Subscriptions are often impulse purchases that go unused – for example, that gym membership you swore you were going to take advantage this time around. Luckily, it’s never been easier to get rid of unused expenses. There are now apps that will do all the work for you. Check one out and have fun counting how much money you will save each month.
Living expenses, such as rent, a mortgage, or property taxes, are often the largest burdens we have to pay each month. While moving is always a hassle, you could save hundreds of dollars in living expenses each month if you can find a way to downsize.