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31 Days To Fix Your Finances, Day 9: Cleaning Up Your Expenses
The Simple Dollar offers a month-long plan for fixing your finances. All you need is an open mind and an hour each day.
Now that you’ve built a list of your non-work expenses, you’ve probably realized that you do spend a lot of money on frivolous things. Don’t worry, I’m not going to say “STOP BUYING FRIVOLOUS THINGS!” Everyone knows that frivolous expenses are the things that eat away at your long-term plans – and everyone keeps buying them anyway.
Instead, you should evaluate the areas where you feel comfortable cutting down. In some ways, it is like a diet: if you diet too strongly, it won’t be long before you’re laying prostrate on the couch, Sara Lee poundcake in one hand and a 20 ounce bottle of Mountain Dew in the other. Instead, dieting works when you make little choices throughout the day, like not super sizing a meal or choosing to take the stairs.
Let’s get started. Take out that list of expenses that you made yesterday along with a blank sheet of paper. What you’re going to do is go through the entire list and think about each item a little bit, then note how much you think you can save per week on that item.
Here’s what you do. Copy the first item to the new piece of paper, then close your eyes for one minute and think about that item. Do you spend too much on it? Is there a way you could easily cut down on that expense without really feeling the crunch? Could you eliminate or drastically reduce that expense without feeling too bad about it? Keep in mind why you’re doing this – you’re trying to find money with which you can chase your dreams.
Here are ten quick suggestions about how to cut various kinds of expenses with minimal impact; if you want more, spend some time hanging around The Simple Dollar and you’ll find plenty.
- Conserve energy by installing energy efficient items like CFLs, programmable thermostats, and intelligent power strips.
- Buy fewer books by spending more time at your local library. Whenever I have a bad desire to go to the bookstore, I just consciously go to the library instead almost all of the time.
- Buy less music by listening to music in your collection that you’ve never spent the time to appreciate. Instead of buying a new CD, find an older one that you only listened to once or twice and put away.
- Buy fewer clothes by selecting items that go well with much of the rest of your wardrobe. A modular wardrobe creates the appearance of a lot of clothes without the need for a large clothing bill.
- Eat out less by buying a good cookbook that starts out at a beginner’s level and stocking your kitchen well.
- Reduce insurance by calling your insurance carrier and looking at raising your deductible.
- Reduce your credit card payments by calling your credit card company and requesting a reduction in your interest rate.
- Reduce your bank fees by looking into no-fee or low-fee options at your bank – or at other banks.
- Reduce your cable bill by eliminating unwatched premium channels or looking at other basic package options – or even consider eliminating it altogether.
- Reduce your car payments by ending the leasing cycle and buying late model used cars instead.
For each item that you decide you can effectively reduce the cost of, estimate realistically how much you might save in a year doing this. Estimate your savings low; you’re always better off with flexibility.
Once you’ve done these estimates, rewrite your overall cost list with the spending reductions calculated in, then divide each element by 52 to see how much that is per week. You should see a decent reduction in your living expenses. What will that translate into? More money that you can spend on your dreams – and fewer years until you get there.
Tomorrow, we’ll see how much time we’ve saved – and what that means for the bigger picture.
Ready? Let’s continue on to the next day.