I believe that for most people, cutting expenses is the most important key to reaching financial goals as quickly as possible. Basically, the idea is to make the difference between what you earn and what you spend as large as possible in order to put the difference towards your goals (paying off debt, buying a house, saving for retirement, whatever floats your boat…) There are two ways to do that: you can either increase the amount you earn, or you can decrease the amount you spend. Both will have the same effect in terms of increasing the amount you have to put towards your goals. But I believe that decreasing expenses is easier and can be done faster (immediate gratification is always nice).
If you’re looking to cut expenses, here are my favorite ideas – things that have worked for us:
- Drive an old car. (or take this a step further and ride a bike instead of having a car) My car is 19 years old, my husband’s is 20. They are both going strong. We bought my car from the original owner in 2003, and paid $2300. We have only had to do a couple of minor repairs on it over the years. BONUS: driving an old car means that you can just purchase liability auto insurance. The savings we get from not having comp/collision on our cars allows us to purchase far more than the state minimums in terms of liability insurance. I’d rather be well covered in that regard.
- Find the least expensive housing that meets your needs, rather than the best/most expensive house that will fit into your budget. If your house payment is 40 or 50% of your income, it doesn’t leave a lot of wiggle room for other things.
- Don’t shop as a form of entertainment. Anytime that spending money is involved, make sure it’s with a clear purpose.
- Cook from scratch. There are millions of recipes out there in cyberspace. Anyone can cook, it just takes a little faith in yourself and a few google searches.
- Challenge yourself to find everything you need secondhand. The list of things that we buy new is extremely short (underwear, socks, consumables… that’s pretty much it) Thrift stores, yard sales, and Craigs List are great resources. Use them! But only if you actually need something. The rule about shopping as a form of entertainment applies here too.
- If you have kids, don’t believe all the hype about everything that you “must have” for them. They really don’t need much. Provide food, health insurance, shelter, discipline, exercise, and love, and things will work out just fine.
I’ve been reading several websites lately that are devoted to the idea of living with as little “stuff” as possible, and focusing on experiences rather than things. Obviously I have no desire to live with only what will fit in a backpack, since we’re focused right now on our goal of growing most of our own food (shovels don’t fit in backpacks). But I have found myself very inspired to get rid of stuff, not purchase anything else (which helps to keep expenses down), and generally lead a clutter-free, simple life. Check out these sites and see if you find any inspiration:
I have always been a pretty frugal person. But I’m finding myself drawn towards the ideal of having only what we need and the things that truly bring us joy. I find that the tenets of minimalism go along nicely with my own efforts at keeping our expenses as low as possible in order to reach our financial goals as quickly as possible. Hopefully you’ll find some inspiration here too.
Financialbondage says
19 years? wow that’s an old car…. I hope I can keep mine that long…. I don’t ever want a car payment ever again.
Kay says
We do most of these too! And are looking for a house that fits within our means. the main criteria is the gardening space.
Ben says
I also have a 19 year old truck and i LOVE It. Its great. My wife keeps bugging me to get a new one but i don’t need or want a new one.
Great post. I especially like the part about shopping for entertainment. It seems like people forgot how to go out and have fun and have replaced it with go out and walk around a mall.
Great tips thank you
Ben…
Sam says
Thanks for linking to my site! I’m glad that it has been a source of inspiration to you and I hope you found some useful information while you were there. Feel free to contact me with any questions or comments at any time!
Ben Cote says
Thanks again for this blog. It inspired me to write a post about my old truck on my site: http://www.trulysimple.com/
Ben…
Tom says
Cutting expenses is a lot of fun. One thing that helps me a lot, which kind of ties in with cooking your own food, is making my own coffee and taking it with me in a flask. So much cheaper than buying a lunchtime latte.
Betsy (Eco-novice) says
Great post. I agree with housing and cooking, but I grew up with clunkers, so reliability is worth paying a bit more for a car, to me. I still believe in buying used (since cars lose a ton of value in the first year), but new-ish.
Debbie says
Sum 5 + 6?
Anyway, I’m new here. Just found you through Penniless Parenting. This is a great post. We do all of what you listed without even thinking about it, but a lot of people could benefit from that short, sweet list.
I love the layout, too, btw.
Frugal Babe says
Kay, the main criteria when we bought our house was yard space. We wanted a large sunny area, and this house was perfect. The backyard was a vast expanse of weeds when we moved in – a blank canvas! By moving 60 miles outside the city (although we’re still very close to another big town) we were able to buy a house with a 3/4 acre yard for the same price that we sold our old house with it’s 0.08 acre yard. Good luck!
Betsy, I should note that neither of our cars have ever let us down. The muffler did come loose on mine once, and I had to tie it back up with a rag (all that I had in the car at the time) in order to make it home. But we have never been stranded on the side of the road. Over the years, we’ve spent less than $1000 total on repairs for both of our cars, including oil changes, a new windshield, new alternator, new spark plug leads, etc.
Debbie, The math question is a spam catcher. Obviously you passed, since your comment posted :) And thanks!
Betsy (Eco-novice) says
I’d like to know what kind of car you have! That’s a great track record. I’ve had good luck with Toyotas.
P.S. Just posted a giveaway and review for Eco-nomical Baby Guide. Since your on Green Baby Guide’s blogroll — I thought you might be interested.
http://eco-novice.blogspot.com/2010/05/giveaway-and-book-review-eco-nomical.html
I also agree with smaller house/ bigger yard. Less to clean!
Frugal Babe says
Betsy, I have a 1991 Honda Civic wagon, and my husband has a 1990 Audi Quattro (the precursor to the A4). Thanks for the link to the giveaway – I’ll go check it out.
Do Away With Debt says
I have never learnt to drive so my bicycle and my legs are my main mode of transport. On longer journeys I use good old public transport.
Cooking yourself saves loads of money but can also take a lot of your time, I have learnt some quick easy dishes I can prepare fairly fast rather than opting for a takeaway.
I also agree that smaller houses are cheaper, less energy to heat or keep cool and less energy spent cleaning.
Miss Rose says
THANK YOU for sharing your wisdom!
Blessings for living it –
(Now I feel I ought to get rid of one of my three garden trowels…)
:) Miss Rose
rosebark.blogspot.com
Abbie says
I do many of these, but do catch myself “thrifting” as entertainment! And maybe it’s less expensive than “shopping” but still often is money I didn’t really need/want to spend for things I don’t need/love!
Bankruptcy Ben says
The shopping for entertainment thing is great. Though your points made me feel very much like a hypocrite, I have a reasonably new truck, have a mortgage that’s more than 50% of my income and I’m doing it up at the moment. I hate it when I catch myself not living up to the morals I believe.
Jamison says
Your last point is the best one… My mom was the youngest of 8. She grew up in a a 4 room house. Literally 4 rooms. 10 people. There was a living room and two bed rooms and a “kitchen” though that just meant an icebox and a stove. There was an outhouse, no running water (they got water from a well) they grew most of their food, killed pigs and chickens for food, you name it, they lived the rough life. To boot, mom’s dad died when she was 12. And guess what? Every photo I see of my mom as a kid she is smiling, even while working in the fields, her and her sisters are playful and having fun. An orange was possibly the best gift they ever got for Christmas. Now, having 2 kids, I see how easily children find joy in life. We buy our son very few toys, and his imagination is endless and as a result EVERYTHING is a toy. He once cried because I threw a stick in the firepit. It was sitting in a group of other sticks, but the stick I put in the fire was his “Fishing pole” that he had been playing with for weeks…
Jamison says
Oh, and to add to the car conversation… We only buy Hondas. My first honda was a 1988 Accord LXi. got 300,000 miles on it, and sold it for $1,000 … didnt sell it because it stopped running, sold it to upgrade. Now we have a 2003 accord (125K+ miles on it) and a 2004 Odyssey (116K+ miles on it.)
The Accord’s back right door wont unlock or lock automatically… the Odysseys windshield wipers wont turn off after you turn them on unless you turn the van off. Those are the extent of our issues with them… and of course they are paid off :)
See my fun little video about me paying off ALL my debt :) http://www.youtube.com/watch?v=5jJC0VWF3ao
Tiffany says
I’m guilty of shopping for entertainment. It’s theraputic for me! *sigh