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Right now, desperation is setting in and the need to know how to drastically cut expenses is critical.
But, you don't know where to start.
Thinking about even learning how to drastically cut expenses seems painful before you even start making changes.
You love your life the way it is, but deep down you know that you can't afford how you are spending money.
The key is the amount of money you can save by learning how to drastically cut expenses.
Saving $5 doesn't like a big deal.
But, saving $500 will get you to listen up.
What if you could save over $3,500 per month?
How about over $40,000 in one year?
Now, that you are reading intensely. Let's learn how you can shave off at least $1000 this month by learning how to drastically cut expenses!
Reasons to Drastically Cut Expenses
Everyone is on a different money journey and each of us are on different steps towards financial freedom. Your desire to drastically cut your budget is real and the time is now.
1. Ends Don't Meet
If you are spending more money than you make, then it is time to drastically cut expenses.
You will eventually hit a breaking point when your extra spending has caused debt that will overwhelm you more than just starting to trim expenses now.
Drastic changes to your budget would be best. But, it will be hard since everything seems so important.
If you're not ready to make drastic changes, then learn how to make ends meet now.
2. Get Out of Debt
Typically, the top reason people start to drastically cut expenses is to pay off debt. They are done with the cash flow killer (AKA debt) holding them back from living the life they want to live.
In order to get out of debt, spending habits need to change.
And the best way to start is by making some drastic changes to your budget. Plus you can make your pay off date sooner. Check this out to see yours!
And one of the benefits by going on a spending freeze when paying off debt, you may realize that certain expenses weren't worth it. That is what happened with us!
3. Save for Something Big
When it is time to save for something big, it is common to start analyzing spending on every single purchase.
That is okay because saving up for this big thing is more important to you!
Every single penny saved is one step closer to your money goal.
4. FIRE Movement
The FIRE movement is all about finding financial independence and retiring early. Many of the people on the FIRE journey will drastically cut expenses to do it.
The goal is to save at least 50% of income.
That is quite a lofty goal for the low and middle class worker. Saving 50% of income means making extreme sacrifices to make it happen.
For higher income earners, it is about choosing a lifestyle that is well below their means.
Related Reading: How to Live Below Your Means and Love Life
Some people are just plain competitive. They enjoy a challenge.
They have accepted to the challenge to drastically cut expenses and live on a bare bone budget.
And, that is awesome!
For me, personally, I love a challenge! Each month, I challenge myself to stay under our allocated grocery spending. When remodeling, each purchase was a challenge to stay under my estimated cost.
A challenge provides motivation because sometimes it is hard to live with less and others are okay when you explain your reasonings with your challenge.
6. Just Because
Why learn how to drastically cut expenses?
Just because you want to. No other reason.
And that is 100% okay.
How To Drastically Cut Expenses
1. Rent House Space
Everything in this area deals with sharing your home space with others. It may be uncomfortable for many people to do. But, it is one of the fastest ways to drastically cut expenses and make money at the same time.
Find a Roommate –
Locate an awesome roommate and your expenses are cut in half. Find two awesome roommates and your expenses are cut by two-thirds.
Added up over the course of a year or couple of years, a roommate situation can add up to many thousands of dollars.
Monthly Savings: $500+
Rent Garage Space –
Garage spaces are a hot commodity! Ask anyone living in a big city. Even people in suburbs and smaller communities are willing to pay for garage space to house their toys.
Monthly Savings: $50+
Rent a Room –
This is becoming more and more common. You may not be willing to bring on a roommate, but you have an extra room to rent.
This could be a monthly renter or through AirBnB sites.
Monthly Savings: $500+
2. Sell Car
The car you drive is typically worth $7,000 and maybe upwards of $30,000. Each day that passes it depreciates in value. That means you are losing money each and every day.
Plus the costs to maintain a car would be eliminated as well.
Even if you have a car loan, your monthly car payment would go away. If you owe more on your car loan than the car is worth, then figure out the difference. Next, take that difference and divide how much paid in car payments. That is the number of months to be free from the car loan and associated debt.
Believe me, this is one I constantly consider is to sell our 2nd car. All of our activities are fairly close by as in walking or biking distance. But, with our winters, I can't convince everyone in the house the same thing.
Instant Cash Available: Value of Car
Monthly Savings: $300 +
Monthly Savings with a Car Loan: $900+
3. Spending Freeze
The spending freeze I did I absolutely hated it. Why? Absolutely everything major seemed to break and needed replacement. I wasn't willing to live without a locking sliding glass door.
Over time, I have learned the a spending freeze is an ultimate way to drastically cut expenses. Especially if cutting expenses or learning to budget or being frugal has never happened!
A spending freeze is a great time to uncover spending habits and start making better associations with spending money.
Pick a few categories to cut spending. Or try not to spend any money beyond food and shelter. Choose a time frame. And stop spending money!
Learn how to make your spending freeze successful!
Monthly Savings: $300+
4. Cut Cable
This can be a hot topic – cut the cable cord or not.
When choosing to cut cable, the savings exceed over a thousand dollars a year.
Pick up one of these streaming devices. Just be careful that subscription don't add up to your old cable bill.
Still in a contract? Then, ask to pause cable services. This typically can be done for 3 months at a time.
At the very minimum, call the cable provider and ask for a discount. The last time I did this I received a $60 credit each month for the next 12 months. For our household, we spend nothing on entertainment and going out (true story). So, our $65 bill is the cheapest way to watch sports and keep everyone happy.
Monthly Savings: $100+
5. Drop the Cell Phone Plan
You want me drop my cell phone plan.
Guess what? That device is pricey. Plus the monthly payments can be skyrocket high!
If you have some technical skills, you can hook up a google voice phone number and still get calls on the go (at least over wifi).
Here are cheaper alternatives to find cell phone services
Just remember, you are trying to drastically cut expenses. Shaving $20 a month off your bill could pay your monthly debt payments over the course of a year.
Instant Savings of a New Phone: $300-1000
Monthly Savings: $75 +
6. Stop Eating Out
Eating out is expensive. Convenient. Yet, very expensive!
You need to learn to eat at home. Plus packs snacks and drinks to get you through your day.
This is one of the hardest areas for many people to change because they don't want others to know they need to drastically cut expenses. It is embarrassing to bring a lunch to work and your co-workers are headed out for lunch ($10-15 potential savings). Or saying no to happy hour when you really want to connect with your fiends after a long week ($20-50 potential savings).
However, you are more important and will be less stressed by having that money go to something else rather than eating out. And here are some meal planning 101 strategies to help you be successful.
In the long run, you won't regret saying no. Maybe you can spin the situation and have others jump on your money savings wagon.
Monthly Savings: $250-2000 +
7. Shave 50% off your Grocery Budget
Oh my! My jaw drops when I hear what people spend on groceries! The amounts are astronomical! Plus most of society wastes too much food.
It is possible to save money on groceries and still eat healthy food.
Stop wasting food. Or I prefer to say, “look at the dollar bills thrown away in the trash can!”
Many people can drastically cut expenses by paying closer attention by how they buy food and what food is bought.
Monthly Savings: $250-500+
Way to Lower Food Budget:
- 20 Simple Ways on How to Save Money on Groceries
- 53 Items Not to Buy at the Grocery Store
- Meal Planning 101 (plus save money each week)
- How to Stay on Budget with Food Allergies or Preferences
- Best Kitchen Gadgets Under $20 For Healthy Eating
8. Stay Away from Societal Pressures
The pressure in society is to spend – spend – spend.
The comparison trap is real! (and can be quite vicious if sucked in)
For me, the one thing that got me through societal pressures is to remember the awful debt statistics. More and more people go into debt to keep up this appearance of a life. Personally, that isn't worth the stress and anxiety that comes with it.
There is truth behind the saying that you become like those around you. Are those people closest to you helping or hurting you financially?
Think about ways you can change.
Instant Savings of a Lifestyle Upgrade: $5,000-300,000+
That vacation I have to go on with everyone to buying that brand new car to buying the dream home in the perfect neighborhood.
Monthly Savings: $350-750+
Helpful Blog Posts:
- Avoid the Trap of Lifestyle Creep and Reach Financial Freedom
- How to Live Below Your Means and Love Life
- The Vicious Cycle- Learn How to Stop Spending Money Now
9. Free Fun
Who says that having fun must come at a price? Seriously, consider that last statement.
When was the last time you have a bunch of fun?
Too many times it is hanging out with friends, going to a park, or exploring nature. All free activities!
Having fun doesn't have to come at a price!
Yes, I will admit, many of my fun memories did have a cost. But, we could afford that higher cost because we checked out free fun!
Monthly Savings: unlimited savings here (probably at least $200-500)
10. Wait to Buy
Seriously, this one has saved me thousands of dollars.
Wait at least 24 hours to buy something you weren't planning on.
You probably have heard of “sleep on it” before making a final decision. But, you typically use that saying for big ticket items like buying a house or a car or choosing a school.
When drastically cutting expenses, when we say “wait to buy,” this specifically targets making impulse purchases. Those pesky $5-50 purchases that add up quickly!!
If you are managing money with someone, then have a dollar amount you are allowed to spend without discussing with the other party. It could be $100 or $300.
This is one of my personal favorite money saving tip. After the 24 hours, that awesome deal doesn't sound as good as it did before, I am too lazy to go back to the store, or I moved on and realized I truly didn't need it (as bad as I was trying to convince myself 24 hours priors).
Monthly Savings: $500-950+
Total Potential Savings when Drastically Cutting Expenses
This is where you can realize the full potential of learning how to drastically cut expenses.
It is one thing to spend $5.
It is a completely different thing to spend $5 every single week.
That adds up to $260 over the course of a year.
And that is just a small example of why drastically cutting your expenses can be a game-changer in your personal finances.
Below learn how you can save over $40,000 per year by drastically cutting your expenses.
More Money Saving Tips:
- The Vicious Cycle- Learn How to Stop Spending Money Now
- 12 Things I Quit Buying to Save Money
- What I Refuse To Give Up To Save Money
- 175+ Simple and Easy Frugal Living Tips to Save Money
- What is the Best Cheap Foods to Buy When Broke?