In this post, let's talk about how to drastically cut expenses. There are two main ways to save more money every month. One way is to simply make more money, and another way is to reduce your monthly expenses.
I'm going to discuss how to drastically cut your household expenses, such as your cable bill, auto insurance, utilities, and more.
How to Drastically Cut Expenses?
Let's face it: Most of us have a lot of household expenses. Whether it's paying for the internet, our cell phones, auto insurance, credit card debt, or utility bills, our monthly expenses can really take a chunk of change out of our paycheck. If you're living paycheck to paycheck, it's even more important to reduce your monthly expenses.
Related Post: Crushing Debt With As Little As $20 Extra Per Month.
Here are some common things you might be paying too much for and how you can drastically cut your expenses. This will reduce monthly expenses, both short term, and long term.
1. Lower Your Cable TV/Internet Bill
You might be paying too much for cable and internet. Many companies open an introductory rate to new subscribers. It is often possible to get this rate after they have raised your rate to the standard rate.
In my case, I called up my ISP and told them I knew I was paying too much for internet service, citing the national average for my speed, and said I had been a loyal customer for seven years.
I told them that I was thinking of switching providers and asked if they could help me by lowering my monthly payment. I got transferred around a few times but then got my rate changed to the introductory rate ($30/less per month) for 24 months (total savings per year, $360)
The other way to cut spending is to drastically lower your expensive cable bill is by buying a compatible cable modem and a compatible cable box. Providers are required by law to provide a list of devices that work with their services.
You could be paying up to $10 per month per device that you rent from your ISP. So if you rent one cable box and one modem, you could be saving $20 per month right off the bat! If you buy your own equipment, you could save a lot of money in the long run.
2. Shop Around for Auto Insurance
When was the last time you shopped around for auto insurance quotes? If it's been a long time, consider comparing rates. I do so every couple of years and have switched insurance providers a few times. Another way you can reduce your monthly expenses is to shop around for car insurance.
It doesn't take long to compare quotes, and the savings are totally worth it. In 2019, I lowered our auto insurance premiums by about 25% by shopping around.
At The Zebra, you can compare prices of auto insurance plans in no time whatsoever. The amount of money you'll save could be hundreds per year.
Remember, your auto insurance company may not be giving you the best rate. And even if you're happy with them despite your rate, shopping around gives you leverage. Why should you spend more money than you have to?
If you know another company will give you a better rate, call your current company and see if they're willing to price match. That way, you can keep your current auto insurance company and still pay a lower premium.
3. Save Money On Your Mobile Phone
Another household expense that you can lower is your mobile phone bill, though most people don't realize this. Here are four ways to cut back on cell phone bills.
- If your phone is more than a year or two old, paying insurance on it doesn't make sense. That can save you around $10 a month, or $120 per year.
- Another cost that adds up is financing a new phone. When you're ready to replace your phone, get a phone that isn't cutting edge. A phone that's even a year old can cost hundreds less, which is a lot friendlier if you're on a strict monthly budget.
- If you're not using your cell phone plan to its fullest (talk, text, and data), use a less expensive plan. Using more basic plans can cut down on your bill by up to $30 or more per phone per month.
- Lastly, if your provider offers you a “free phone” in exchange for you staying with them, you're still paying for that phone via them charging you for an expensive plan. Don't stick with a phone company because they're giving you a “free” phone, because it's not free at all. Stick to low-cost plans and use your own phone whenever possible.
The next three I'm going to discuss are utilities and how you can drastically cut your expenses with them.
4. Lower Your Heating Bill
If you're looking for ways to budget and save, look no further than your heating bill, particularly if you live in a colder area. For heat, adjust the thermostat and wear a sweater when it's chilly inside.
We have a furnace for heat and cut our propane bill nearly in half by lowering the thermostat by 5 degrees. Considering it costs us $250ish per fill-up, filling up less often in the winter is great for our wallet.
A household expense like heat is often overlooked, but in the dead of winter, your heating bill can be costing you a ton. I know it was for us!
5. Cut Back On Electricity
For a monthly expense like electricity, turn off lights when you're not using them. Turn off your computer at night. Some people even unplug devices and appliances that they're not using. Over the course of a month, you could drop your electric bill by tens of dollars just by turning things off.
Some electric companies offer a fixed monthly payment based on your average annual consumption. This an excellent way to budget and save on your electric bill in the months where you would normally use more power.
My wife did this when we had electric heating. Our spring, summer, and fall electric bill were a tad higher each month, but our winter electric bill was much lower.
6. Use Less Water
Water bill too high? Some options include taking shorter showers, washing your dishes in the dishwasher instead of the sink, making sure your toilet is up to speed, and washing your car at the carwash instead of at home.
Saving on water every day will add up at the end of the year. It's quite possible to reduce your water bill by $50-$100 each year by cutting back on your usage. When it comes to reducing monthly expenses, $100 a year may not seem like a lot, but it all adds up.
7. Cancel Unused Subscriptions
This was a big one for me. Between the gym membership that I wasn't going to enough and various gaming-related (MMO subscriptions) and tech-related subscriptions and memberships, I was spending a lot that I didn't need to.
Review all of your monthly subscriptions and memberships and ask yourself if you truly need them. This is best done by reading over your bank and credit card statements. You're probably overspending on at least some of your subscriptions. Cancel them and save.
You could lower your monthly expenses by quite a bit if you really hammer out what you're not using anymore.
My wife and I just recently saved $1200 per year by canceling four subscriptions we weren't using anymore.
8. Use a Coupon App When Grocery Shopping
For example, when you go to the grocery store, you can buy store brand items, find coupons, or shop when items are on sale. Another tactic is always to make a shopping list and only buy what's on it, also known as meal planning. This prevents you from buying things you didn't specifically plan for.
A free app such as Ibotta will allow you to save money on groceries, and other commonly bought goods. Sign up for Ibotta for free and start saving.
9. Save With Public Transportation
When commuting, if public transportation is available, use it. Public transportation can save you a lot of money, plus it's much better for the environment (an added bonus!). You could also carpool to work and allow everyone to share the costs of a single vehicle (gas, tolls, etc.).
10. Switch Home Insurance Providers
Similar to switching car insurance providers, look around for a better rate on your homeowner's insurance. One place to look is Policy Genius. Here, you can compare different companies side-by-side.
11. Create a Budget
I've been talking about lowering living expenses, but I haven't mentioned simply creating a budget. Why does this help reduce your monthly expenses? By having all of your expenses in one location, that is, a budget, you can identify yet even more ways to save.
Related Post: Your Detailed Guide for Creating a Budget
An Automated Approach to Saving Money
I recently heard of a website called Trim. How this site works is pretty simple. You sign up and provide information about all of your reoccurring bills that it supports. Trim will then negotiate these bills with your providers for you, and you'll pay an annual service charge equal to about one-third of what Trim saves for its average customer.
This is a great automated way to save money on bills without the hassle of calling each company and dealing with people individually. My wife and I recently saved $1200 per year by using Trim.
Further Details On Reducing Living Expenses
Ramit Sethi, a NYTimes best selling author, wrote I Will Teach You To Be Rich, which goes into great detail on how to save money and better master your finances. Check out his book to get even more great ways to reduce your living expenses.
What to Do With the Saved Money
These examples generally focus on saving tens of dollars each. When added together, you could save several hundred dollars per month. If you're familiar with the “Save $5 a day” challenge, you've just done that and more. Now consider putting that money in a savings account or pay off debt.
Once you've started saving extra money, you can allocate that money elsewhere.
Don't have an emergency fund? Open up a bank account with a high interest rate and set some financial goals to buff up your emergency fund. What about a retirement fund? Open an IRA and start saving for retirement.
- Your Emergency Fund: Are You Saving Enough?
- If You Don't Have An IRA, You Could Be Missing Out For Retirement
Most importantly, though, you can reward yourself for kicking butt and saving money by drastically cutting expenses. Spend a night watching YouTube or reading a good book. If you've saved some extra cash on the side, go out and have something to eat with a friend, loved one, or family. We can't be frugal all the time.
Wrapping It Up
Reducing everyday expenses is one way of saving more money each month. With this extra money, you can get yourself out of debt faster, save for the future, or reward yourself with something now. By reducing monthly expenses now, you greatly increase your long-term savings.
What other ways to save on common monthly expenses have you found?