How often do you hear, “I’m broke,” from people who have reasonable jobs, wear good clothes, and drive amazing cars? It drives me crazy. When having one of these discussions, I learned that the complainer and his 4-person family ate out 5 nights a week!
When you save for deliberate purchases, you’re happier about where your money is going. Learning how to save and how to reduce your expenses are two fundamental skills that lead to financial security and freedom. Here are a few things that helped me drastically reduce my budget.
1. Make a Budget
Question everything on your budget. How can you reduce your utility consumption? Do you really need a home phone and a cell phone? When saving to buy a house, I whittled every expense down as far as possible. I haven’t had cable in years because I’m happy watching television off of the internet. Internet wasn’t an expense I was willing to relinquish. You can find endless lists online if you’re short on ideas. Here are a few other ways I reduced my expenses.
- Plan out your breakfasts, lunches, and dinners for each day until the next pay day. Then, make a grocery list with only the ingredients you need.
- Abandon name brands and shop at discount grocers like Aldi for higher savings.
- Turn off all lights when you leave a room, and use natural sunlight to your benefit.
- Pay your bills with gift cards that you purchase a Kroger. Kroger awards 2x extra fuel points when you buy gift cards. It’s inconvenient, but you could save a dollar per gallon of gas!
2. Pay Your Bills on Time
If you haven’t been doing this, you’re not ready to buy a house. Build a lifestyle of responsible spending before jumping into large purchases like real estate. Not only will this help your credit, it will save you hundreds of dollars in late fees and charges—which could be deposited into savings!
3. Look at Your Debt
Look closely at the kind of debt that you have. Are you just making minimum payments? If so, paying down on debt could save you more money in the future. It will also free up your Credit Debt Ratio, which will help you qualify for a house.
Question your interest rates too. I spent almost an hour on the phone with my credit card company being transferred around until I had successfully gotten a lower interest rate. If someone tells you no, respond with, “OK, I understand that you may not be able to say yes. Can you transfer me to someone who can?” It doesn’t hurt to ask.
4. Negotiate Everything
I just learned this one recently, and now I can’t stop. You would be surprised how much you can haggle. It doesn’t hurt to try. In the last 6 months, I’ve successfully negotiated the cost of CD’s at the store, car repairs at the dealership, oil changes at Jiffy Lube, and service costs at Verizon Wireless. It doesn’t hurt to ask.
What expense reducing strategies have the biggest impact on your budget?
