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How to drastically cut expenses and keep your sanity

how to drastically cut expenses

Consumers can learn how to drastically cut expenses by creating a weekly or monthly budget, setting financial goals, and by regularly reviewing and regulating their spending habits. 
Stressing out while trying to cut your expenses to the bone? Keeping up with bills, expenses, and recurring payments can feel daunting and cause unwanted stress for even the most organized people. Thankfully, if you are tired of being broke all the time, there are steps you can take to improve your personal financial situation. 

The experts at CreditNinja have your back with all the info you need on how to drastically cut household expenses, save money, and more without overwhelming stress! 

Quick Insights and Strategies for Saving Money

CategoryStrategyPotential SavingsAdditional Tips
TransportationCarpooling or public transit. VariesReduces fuel costs and wear on personal vehicle. 
UtilitiesInstall water-saving fixtures.5 – 10% on water bill. Low-flow showerheads and faucets.
Food and DiningMeal prepping. 20 – 30% on food bill. Reduces eating out and impulse purchases.
ShoppingBuy second-hand. 50 – 75% off retail. Especially effective for clothing and electronics.
EntertainmentUse free online resources. 100% on subscriptions. Libraries, free streaming services, open-air events.
Health and Fitness Outdoor exercise or free fitness apps. Gym membership costs. Libraries, free streaming services, open-air events.
InsuranceBundle insurance policies. 5 – 25% on premiums. Libraries, free streaming services, open-air events.
BankingSwitch to no-fee bank accounts. Bank fees. Libraries, free streaming services, open-air events.
Debt ManagementTransfer high-interest debt. Interest costs. Libraries, free streaming services, open-air events.
EducationApply for scholarships and grants. Tuition costs. Libraries, free streaming services, open-air events.
Home MaintenanceDIY home repairs and maintenance. Professional fees. Libraries, free streaming services, open-air events.
Energy EfficiencyUpgrade to smart home devices. 10 – 20% on energy bill. Libraries, free streaming services, open-air events.
TravelOff-season travel. 20 – 50% on travel costs. Cheaper flights and accommodations.
Disclaimer: The information provided in the above chart is intended for general informational purposes only. Actual savings may vary depending on individual circumstances, location, and specific market conditions. The strategies suggested are not guaranteed to result in savings and should be considered as part of a broader personal financial strategy. Users are advised to conduct their own research and, where necessary, consult with financial professionals before making significant financial decisions based on these suggestions. This chart does not constitute financial advice.

Top Tips for Saving Money on Monthly Expenses 

Want to learn more about how to drastically cut expenses? Try these helpful tips and utilize your monthly income to best serve your financial needs! 

Track Your Money Saving and Spending Habits 

One of the most critical steps to take when you want to save money on monthly payments is to get a clear picture of your spending habits and budgeting needs. Then, you can take a closer look at how you spend your funds and find ways to help you with saving money. Suppose you find yourself without enough money to take care of monthly expenses. In that case, tracking spending habits might reveal habits you can break to cut expenses. 

Review Your Subscriptions and Recurring Payments 

Another tip for cutting everyday expenses is to cut out any unnecessary subscriptions or recurring monthly payments. Entertainment costs like streaming services can be a major hindrance when trying to cut monthly expenses. According to Forbes, nearly 50% of people are paying for streaming services they don’t use.1 Or, perhaps you have a cell phone plan or gym membership you don’t utilize. 

At this point, you would want to ask yourself if the monthly cost of your subscription or membership is really worth it; chances are, probably not. By canceling your unused gym membership or streaming service subscription, you can reduce expenses without making any significant adjustments to your everyday life.

Create a Household Budget 

Create a list of all your household expenses and living expenses you are responsible for every month. From there, you can create a budget and get a better idea of how much money you need for your core expenses. 

Here are a few examples of what may be on your household budget list. 

  • Health insurance 
  • Car insurance / auto insurance 
  • Monthly mortgage payment or rent payment
  • Electric and gas bills 
  • Utility bills
  • Cable bills 
  • Cell phone service bill 
  • Other monthly bills
  • Transportation costs 
  • Student loans (if applicable)
  • Life insurance (if applicable)
  • Any additional recurring living costs

You may also want to consider adding in seasonal costs, so you can plan and save money on holiday shopping. Once you have a clear idea of your monthly budget, you can start looking for ways to begin drastically cutting expenses. Find ways you can be better at cutting household expenses. For example, you can often talk to your auto insurance provider and see what they can do to lessen your plan’s cost. If you are a responsible driver, you may be able to take advantage of benefits that could save you money on your insurance! 

Cut Household Expenses

Cutting household expenses is perhaps one of the most impactful ways to cut expenses. There are so many different ways to go about saving more money on everyday expenses when it comes to your home. For example, switching to energy-efficient light bulbs can help cut household expenses and allow you to save on utility costs. Washing your clothes in cold water only can cut expenses and help you save on energy costs. We spend a good amount of our annual income on housing costs, so learning how to cut expenses in this area is essential to reduce expenses overall. 

Try a No-Spend Challenge To Save Money

If you have poor financial habits like excessive shopping online, doing a no-spend challenge could be the perfect way to rectify those bad spending habits. No-spend, or money-saving challenges like trying to save $1,000 in 30 days, can help reign in any unnecessary spending when you are looking to cut expenses. 

Freeze Your Credit Cards

A way to drastically cut your expenses and start saving money is to freeze your credit cards. Sometimes, saving money or doing a no-spend challenge can be difficult. Stressful days can make it tempting to cave in on your goals and make unnecessary purchases in an effort to make yourself feel better. But, when you don’t even have the option to spend on your credit card at all, you will be forced to find other ways to cope. Freezing your credit cards might be the hard push you need to force yourself to avoid unnecessary shopping. 

What Are Other Ways I Can Save Money? 

Need more tips on how to save money and cut expenses? No problem! Here are a few more ways you can easily work on cutting expenses in a stress-free manner. 

Cook at Home

Eating takeout every night instead of meal planning and cooking at home can end up costing hundreds or even thousands of dollars over time. By cooking at home, you can remove the everyday expense of purchasing food from restaurants and turn it into a once-in-a-while manageable grocery bill.

When you purchase healthy foods at the grocery store and eat only what you have in your home, you can reduce expenses on food costs and improve your overall health and wellness.

Use Cash Only 

Is your primary source of spending money a debit or credit card? If so, switching to only using cash might be a way you can drastically cut your expenses and save money. With digital currency, it’s challenging to visualize how much or how often we spend, which can lead to spending more money than we originally intended. By using cash all the time, you can clearly visualize how much money you’re spending because you have to physically take out your money to spend it. 

When spending funds isn’t as easy as a simple click or swipe, we have more time to think about our purchases before the transaction is complete. You may find that this extra time is all it takes to stop you from spending money that would hinder your goal of drastically cutting expenses. 

Get a Part-Time Job and Save Money 

Getting a part-time job is another way to easily earn more money to cover everyday expenses. Also, depending on the type of part-time job you get, there are extra perks you may be able to take advantage of. For example, if you work at a grocery store, you may use an employee discount to save money on food costs. 

While getting a second job is a surefire way to put extra money in your bank account, make sure you set aside enough time for yourself personally. Earning extra money isn’t always worth it if the process leaves you feeling drained or exhausted. 

Focus on Your Debt

Learning how to manage money can be a huge help when you want to drastically cut living expenses. There are ways you can manage your personal finances to help you save money and reach your financial goals. For example, paying more than your minimum amount due on student loans, auto loans, and more can reduce the impact of interest rates on your overall balances. By paying a bit more on your monthly payment, you can save more money in the future. As a bonus, reducing or consolidating debt can help improve a bad credit score over time! 

Save For The Future

While learning to drastically cut household expenses can help you save money in the long run, it is also important to specifically set money aside just to save it. Setting up a savings account or a more involved investment account is a great way to set yourself up for success in the future. If you ever go through an unexpected financial emergency, it brings great peace of mind to know you have your own funding to fall back on. 

Talk To a Financial Advisor 

Suppose you are serious about getting help and learning about how to drastically cut expenses. In that case, a finance expert may be able to accommodate your needs. Free and paid personal finance options are available online to help people get the info they need to drastically cut expenses and save as much money as possible. If you can’t afford a personal finance advisor, you can always take advantage of free blogs, videos, and more to help get your finances back on track. 

What Are Other Funding Options to Get Extra Money? 

Need extra cash now? If you don’t have time to wait, here are a few options that can help you out when you need money right away. 

Loans

If you find yourself in need of immediate funding, options like online installment loans might be wise to consider. When you don’t have time to cut expenses and save money, personal loans are available to help meet your financial needs quickly and efficiently. Depending on factors like your credit and financial history, you could get approved for hundreds or even thousands of dollars in just a few hours or less. 

Credit Cards 

What if you don’t know exactly how much money you need to cover your upcoming expenses? In that case, a credit card may be the financial solution for you. Credit cards offer a revolving credit option that allows borrowers access to funding whenever they need it. Also, interest rates on a credit card are only applied to the funds the card owner uses. However, be careful how often you apply for new credit cards. If you apply for too many in a short amount of time, you may see a dip in your credit score. 

Dipping Into Your Savings 

If you have drastically cut expenses but still find yourself in need of money to pay your bills, you may want to turn to your savings account if you have one. By using your own money to cover expenses, you’ll save on expenses like interest payments or origination fees that come with loans and credit cards. 

FAQ: Drastically Cutting Expenses

How can I reduce my credit card debt effectively?

To reduce credit card debt, consider consolidating your debts with a lower interest rate loan, a balance transfer credit card, or a debt consolidation loan. Additionally, prioritize paying off cards with the highest interest rates first and avoid accruing more debt.

What is private mortgage insurance (PMI) and how can I eliminate it to cut costs?

Private mortgage insurance is required for home loans with less than a 20% down payment. You can eliminate PMI by paying down your mortgage to reach 20% equity in your home, thus reducing your monthly expenses.

Are there strategies to cut costs on groceries without compromising on nutrition?

To save on groceries, plan meals around sales and seasonal produce, buy in bulk, use coupons, and avoid pre-packaged foods. Opt for store brands over name brands for further savings.

How can a nonprofit credit counseling agency help me manage my finances better?

A nonprofit credit counseling agency can provide free or low-cost advice on budgeting, debt management, and financial planning. They can help negotiate with creditors and create a manageable debt repayment plan.

What are some effective ways to reduce my spending on entertainment?

To save on entertainment, consider free or low-cost activities like hiking, community events, or movie nights at home. Cancel unused subscriptions and take advantage of discounts and loyalty programs.

Can I negotiate my homeowners insurance to lower my expenses?

Yes, you can potentially lower your homeowners insurance costs by shopping around for better rates, increasing your deductible, and asking about discounts for home improvements or security systems.

What are some tips for reducing my car payment?

To reduce car payments, consider refinancing your auto loan for a lower interest rate or longer term. Alternatively, trade down to a less expensive vehicle or buy a reliable used car instead of a new one.

How can I save on my cell phone bill?

To save on your cell phone bill, consider switching to a less expensive plan, using Wi-Fi whenever possible, and avoiding international roaming charges. Also, consider prepaid plans or family plans for better deals.

What are some overlooked areas where I can cut expenses in my daily life?

Look for savings in small daily expenses like coffee, lunches out, or impulse buys. Also, review recurring charges for services you don’t use often, like gym memberships or streaming services.

How can I avoid overspending when I need to spend money on essentials?

To avoid overspending on essentials, create a strict shopping list and stick to it. Compare prices, use cashback apps, and avoid shopping when you’re emotional or hungry.

What are the benefits of using cash over cards for daily expenses?

Using cash can help you visualize and control your spending more effectively. It prevents overspending and helps you stick to a budget since you can only spend what you physically have.

How can I manage utility bills more effectively to cut costs?

To manage utility bills, use energy-efficient appliances, fix leaks, insulate your home, and be mindful of your water and electricity usage. Programmable thermostats can also help save on heating and cooling.

What should I consider before taking out a loan to cover expenses?

Before taking out a loan, assess the necessity of the expense, compare interest rates and terms from different lenders, and ensure you have a repayment plan. Avoid loans for non-essential expenses and consider alternatives like saving up or cutting other costs first.

A Word From CreditNinja About Cutting Costs and Saving Money 

CreditNinja is dedicated to equipping consumers with helpful information for all types of financial situations. Now that you know a bit more about how to drastically cut expenses, you can begin to apply what you’ve learned to your own family budget and improve your money management skills. Want to learn more about handling your finances and curating wise spending habits? Be sure to check out the CreditNinja dojo for hundreds of free resources, educational articles, financial tools, and more! 

References:
1. New Forbes Survey | Forbes
2. How to Cut Expenses | Debt.org

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