How to Cut Spending Drastically
Whether you’re hoping to save more or just need to trim your household budget, finding ways to reduce your spending is essential.
But sometimes, small cuts just aren’t enough.
When you need to make a big dent in your budget, you’ll need to get creative!
Consider these tips and tricks to learn how to drastically cut your expenses.
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Reasons to Cut Your Expenses
Before you take the time to start cutting your budget, it’s important to know the reasoning behind the drastic changes.
Take a minute to think about your own situation to help you understand why you want to make spending cuts.
These common issues are often the reason behind drastic budget cuts:
Balancing Your Budget
One of the biggest issues many households face is an unbalanced budget.
That means you’re spending more than you make.
If that’s an issue for your family, cutting your expenses is essential to keep you out of debt.
Finding ways to make drastic cuts to your expenses will not only help you avoid added debt, but it can also give you a chance to find money to start saving.
Get Out of Debt
If you’ve been living above your means for a while, you may have racked up some debt.
The best way to work your way out of that debt is to change your spending habits.
In order to find money in your budget to pay off your debt, you’ll need to find areas to make drastic cuts.
That means you’ll need to take a good hard look at your expenses to find places to make some big changes.
Has your family dealt with a job loss recently?
If you’ve lost an income, finding ways to cut your expenses until you can find another job is essential.
Making drastic cuts to your spending can help you find a way to balance your budget on a limited income, ensuring you don’t add to your debt while you’re out of work.
Saving for a Big Expense
Whether you’re expecting a new baby, want to start building up a college fund, or just want to purchase a new house, saving for a big expense is a great way to avoid debt.
But that means you’ll need to analyze your budget to ensure you have money to set aside for savings.
Taking a look at your spending habits can help you find places to make cuts, allowing you to redirect that money into your savings account.
Do you dream of retiring early?
Taking control of your finances now can allow you to reach your retirement goals early.
Some aggressive savers even aim to set aside 50 percent of their income each month!
To make this kind of commitment, you’ll need to find ways to make a few sacrifices and drastically cut your expenses.
How to Do a Spending Freeze
A spending freeze is one of the best ways to help you understand which expenses are essential and which ones you can do without.
But if you’ve never done a spending freeze, you’re probably wondering where to start.
A spending freeze is a set amount of time where you spend no money.
While your regular, essential bills, like housing, insurance, and medical payments are still made, you’ll need to stop spending money on everything else.
The purpose of a spending freeze is two-fold:
- It will help you save some extra money during the set time frame
- It will help you determine where you’re spending excessively
If you’re interested in using this money-saving tactic, try following these simple steps to implement a spending freeze today:
Pick a time frame
The amount of time you choose for your spending freeze is up to you – there’s no set time that works best.
You can stop spending for a week, two weeks, or a month. But two weeks seems to be a great option, especially if you’re a beginner.
That amount of time gives you the chance to really examine your day-to-day spending without taking the chance of not completing the challenge.
Decide on your spending categories
Once you have a time frame decided on, it’s time to examine your budget to see where you won’t be able to stop spending.
In addition to your essential expenses, like your mortgage payment and utility bills, you could also consider allowing spending in other budget categories.
If your kitchen is bare, it’s probably not a good idea to include groceries in your spending freeze, for example.
But if you have a well-stocked kitchen, including grocery spending in your freeze could help you save a ton of money.
Don’t spend money
Once you start your spending freeze, don’t spend money.
To avoid temptation, try making it more difficult to spend by leaving your money and credit cards at home when you leave the house or putting a hold on your credit card accounts.
Only keep a small amount of cash on hand for emergency use to avoid unnecessary spending.
Tell your friends and family
Letting your loved ones know about your spending freeze will allow you to have a support system and will give you some accountability.
And when your friends and family know about the freeze, it will be easier to say “no” if they ask you to go out to do something that costs money.
Have a plan for the money you save
Knowing what you’ll do with the extra money you save during your spending freeze can provide you with some incentive for completing the challenge.
You could put that extra money in your savings or retirement account, pay down your debt, or save it for an emergency.
How to Drastically Cut Your Expenses
Cutting your expenses is one of the best ways to create a balanced budget and allow yourself to set aside money for the future.
But making drastic cuts to your budget won’t be easy. In addition to making some big spending changes, you’ll also need to think about ways you can change your lifestyle to become more frugal.
Try these tips for making big cuts to your budget.
Create a Budget
While it may be obvious to some people, creating a budget is one of the best ways to cut your expenses.
How are you supposed to reduce your expenses if you don’t even know how much you’re spending?
If you don’t have a monthly budget set up for your family, this should be the first step in examining your expenses.
To create a budget, start by calculating your monthly income.
Then, take a look at your past bank statements and credit card statements to determine how much you’re spending.
Break those expenses into different categories to help you understand your spending habits.
Once you understand where your money is going each month, you can start to find ways to trim your spending and cut your expenses.
If you’re looking for a done-for-you budget, here’s an extensive budget on a spreadsheet that took me weeks to put together.
Pay Off Your Debt
Think about how much money you spend on your debt every month.
What if you didn’t have to make those regular payments?
Paying off your debt will not only allow you to free up money for other things, but it will also save you money in the long run.
The faster you pay off your debt, the less interest you’ll pay.
Check the statements of all your debt sources to see how much money you owe on each account. After that, determine which account you’ll pay off first.
There are a couple of different methods you can use to pay down your debt, like:
- Paying off the account with the smallest balance first to get a quick win.
- Paying off the account with the highest interest rate first to save on interest over time.
No matter which method you choose, try paying as much money as you can toward the account you select until it’s paid off.
After that, put that additional money toward the next account on your list. Continue this method until all your debt is paid off.
Sell a Car
Does your family have more than one car?
Selling a car is a great way to cut your spending.
There are a variety of expenses that come along with car ownership, which means that you can make cuts to several different budgeting categories if you become a one-car family.
When selling your car, you can save on:
1) Car payments If you still owe money on your car, selling the vehicle will allow you to eliminate a car payment.
2) Fuel costs Eliminating one of your cars will also reduce the amount of money you spend on gas each month.
3) Insurance Becoming a one car family can also save you money on your car insurance. Discuss your insurance options with your agent to see how much you can save if you sell a car.
4) Maintenance and upkeep, like oil changes and repairs After selling a car, you’ll only be responsible for maintaining one vehicle, which means less money spent on regular oil changes and repairs if the car breaks down.
Depending on the area in which you live, it may also be possible to sell all your family’s vehicles to save even more.
If you have public transportation available or live within walking distance of work and other activities, there is no need to hold on to the expense of a car.
Cancel Your Cell Phone Plan
I know that having a cell phone is pretty essential these days, so there’s probably no way you can get rid of your cell phone bill entirely.
But being stuck in a contract with a major carrier could be costing you much more than you need to be paying.
In addition to making payments on your phone, you’re probably also paying for insurance and other fees just to be able to use the carrier’s network.
But using a basic cell phone and signing up for a pay-as-you-go plan can help you drastically cut your cell phone expenses.
These plans allow you to purchase a phone from the company or use a cell phone you already have. After that, simply pay for a prepaid card to be able to use your phone.
Companies like Straight Talk or Republic Wireless offer a variety of plans, ranging from budget-friendly by-the-minute plans to all-inclusive data plans that are much cheaper than any plans offered by the larger wireless carriers.
Eliminate Cable and Streaming Services
Did you know you can watch all the major television networks for free with an antenna?
That means you don’t need to pay for cable or streaming services to have access to a variety of great channels.
Start by eliminating your cable or satellite bill for the biggest impact.
But if you’ve already taken that step, it’s time to start trimming back your streaming services.
While many of those services range from a meager $5 to $10 a month, if you have multiple services, those small charges can start to add up.
Take a look at all the streaming services you’re signed up for to see how much you’re actually spending on television each year.
Disconnecting all of those streaming services is a simple way to reduce your monthly expenses.
Quit Eating Out
Going out to eat isn’t just convenient, it’s also fun!
But enjoying lunch or dinner out can quickly get expensive, too.
That means you can make a drastic impact on your spending if you stop eating out. And that doesn’t just mean going out for dinner.
Think about the different ways you enjoy food outside your home, like:
1) Going out for lunch Instead of going out during your lunch hour or ordering delivery, bring your lunch to work with you to save money each day.
2) Grabbing coffee Make your own coffee at home and bring it with you when you leave for work instead of stopping on your way to grab a coffee.
3) Going through the drive through Avoid taking a trip through the drive through for a quick lunch or dinner and instead find some quick and easy meals you can make in a few minutes.
4) Drinks at the convenience store Pay for your gas at the pump and avoid going into the gas station to grab a quick drink or snack. Instead, use a reusable water bottle to ensure you always have a drink on hand.
5) Going out for drinks Make your own cocktails at home instead of going to a bar or club to save money.
As you’re taking a look at your monthly spending, take the time to go through your food and entertainment expenses line by line.
Write down the amount you spent each time you went out for food or drinks, then add all those expenses up to see just how much money you can save by eating at home instead.
Cut Your Grocery Expenses
Food expenses can take up a big chunk of your monthly budget, which means it’s a great place to start cutting.
And there are a variety of ways you can easily cut your grocery spending if you have the time and patience to start trimming.
Try these simple methods for cutting your grocery spending:
1) Start meal planning Planning your meals before you go shopping is one of the best ways to reduce your grocery spending.
Taking the time to decide what meals you’ll be cooking for each meal of the day will help you create a grocery list for your shopping trip. Simply stick to that list to avoid overspending.
2) Use a list In addition to planning your meals, it’s also important to use a list as you’re shopping.
When you head to the grocery store prepared, you’re less likely to make impulse purchases or buy something you already have at home. If something isn’t on your list, avoid making the purchase.
3) Shop your kitchen Before heading to the grocery store, check your pantry, refrigerator, and freezer to see what ingredients you have on hand.
After that, you can come up with recipes that use ingredients you already have in your kitchen to avoid buying more groceries.
4) Reduce your waste Finding ways to reduce your food waste will help you make the most of the food you purchase.
Make sure to package up leftovers and enjoy them for lunch. And try to organize your kitchen to help you make use of ingredients before they expire or go bad.
5) Combine sales with coupons Before shopping, always check your grocery store’s sales to ensure you’re not overspending on the food you’re buying.
Use the sales to help you plan your menu for the week. And you can use coupons in combination with the sales to help you save even more.
6) Total your bill as you shop Use the calculator on your phone to tally up what you’re spending so you won’t be surprised when you checkout.
Taking a minute to add up each item you place in your cart can help you stay on budget and help keep you from overspending on your grocery trip.
7) Pick up your order If impulse purchases are an issue for you, try ordering your groceries online and picking them up at the store instead.
You’ll be able to order exactly what you need without the temptation of purchasing unneeded items as you shop in the store’s aisles.
How much of your monthly budget is dedicated to housing expenses?
If a significant amount of money goes to paying for and maintaining your home each month, it may be time to consider downsizing to a smaller home.
If your lease is almost up or you’re able to sell your home, finding a new living situation is a great way to help you save money.
A smaller home can allow you to save on:
1) Rent or mortgage The biggest impact downsizing can have is the amount of money you’re spending each month on rent or a mortgage. A smaller home will likely result in reduced monthly payments on the home itself.
2) Taxes If you’re planning on purchasing a smaller house, you’ll probably also see a reduction in your real estate taxes each year.
3) Insurance Smaller homes often cost less to insure, which allows you to save even more money when you downsize.
4) Utilities From heating your home in the winter to cooling your home in the summer, your monthly utility bills will likely be reduced when you’re living in a smaller house.
5) Household supplies Living in a small house means you’ll have less room for stuff, helping you cut back on spending money on unneeded things, like decorations, toys, and furniture.
Move in with Family
Another great way to drastically cut your living expenses is to move in with family.
If you have a family member with extra space in their home, discuss different ways the living situation could work, including rent payments and utility bills.
Moving in with family can help you cut your expenses in a big way, from reducing or eliminating your household expenses to helping you spend less in other areas of your budget, like groceries.
Try to DIY
Hiring people to do things for you is a great way to save you time, but it can also add up to be a big expense if you aren’t careful.
Think about the different services you pay extra for that you could do yourself at home. Try cutting these expenses from your budget and doing them yourself instead:
1) Beauty services From dying your own hair to doing your own manicure, taking a DIY approach to your beauty routine could save you a ton of money over time.
2) Lawncare Do you hire someone to maintain your yard? Mowing your own grass and trimming your own hedges can save you some money each month.
3) Kid’s activities and lessons How much money are you paying for someone to teach your child outside of school?
Taking a few minutes to talk to your kids about the activities they’re involved in could help you save some money.
If your kids aren’t interested in the activities, you could drop them completely.
Or you could try looking for educational courses and videos online your kids could use instead of private lessons.
4) Home maintenance Maintaining your house could be a big task, but there are a variety of jobs you could probably do yourself instead of hiring someone to do it for you. Think about your skills and abilities to determine whether or not you can DIY the project to save yourself some money.
5) Plant a garden Instead of purchasing fresh produce from the store, try growing your own. You can save some money at the grocery store and get some free exercise, too.
Cutting back on your monthly expenses should also include taking a hard look at all your monthly bills.
Take a look at your past bank statements to see where your money is going each month. Highlight each recurring bill to determine how much you’re spending on a regular basis.
Determine which of these bills you can eliminate to help cut your regular expenses.
Think about extra payments that aren’t absolutely necessary, like:
- Gym memberships
- Cable or satellite bill
- Magazine subscriptions
- Subscription boxes
- Streaming services
- Extra cell phones
Find a Roommate
Inviting a roommate into your home is a great way to make some drastic cuts to your household expenses.
A roommate can help you share expenses, including rent and utilities.
Take a look at your budget to see what expenses you could share with a roommate to help you cut back on your spending.
A roommate can help you save on:
- Rent or mortgage payments
- Electricity and gas
- Cable and/or streaming services
In addition to helping you save on basic household expenses, you could also share other expenses with your roommate, like food costs.
Take the time to discuss what bills you’ll share when you come to a rental agreement to make sure it’s clear what bills each of you are responsible for.
Related Articles For How To Drastically Cut Expenses:
- No Buy Challenge Guide: The Complete Guide on How to Not Spend Money
- What I Quit Buying to Save Money Everyday
- 11 Easy Grocery Shopping Tips to Save Money
- How to Stop Buying Things (and Take Control of Your Finances)
- Grocery List on a Budget for 2