I know what you are saying, "I've poured over my budget and there isn't anything else left to cut." Maybe you just haven't thought outside the box.
People often rule out drastic cost cutting that could amount to substantial savings every month. That doesn't mean it will be painless, but by realigning the idea of needs and wants, you can easily eliminate unnecessary expenses that can help you get ahead. Here are five extreme cuts that can yieldserious savings:
1. Downgrade Your Mobile Phone Account.
You would think that the world wasn't able to function before iPhone, Android or Blackberry and yet everyone seemed to do just fine. Sure it is convenient, but do you really need to access email at all times 24 hours a day? Downgrading your cell phone plan can save you from $30 to $50 a month on data charges. It isn't too hard to just use a smart phone in a free Wi-Fi zone.
Additionally, save yourself the cost of constant phone upgrades as the newer and better models come out every year. Cell phone companies often give you a phone for free by resigning a two-year contract.
A website called Bill Shrink can analyze your cell phone plan to determine if there are other carriers that may provide the same service for cheaper. While you are there, check out ways to save money on other bills you pay every month.
Annual Savings: Up to $600.
2. Cut Landlines.
With the abundance of cell phones, you would have thought that landlines would be irrelevant by now, but a surprising amount of people still have both. Why double pay? Consolidate your phone calls exclusively to a cell phone can save $30 to $50 per month.
It might not seem like that huge of a sum, but apply that to debt -- or invest it every month -- and see the small sum go to work for you. Putting aside $30 a month for five years in an investment that yields 6% will be worth $2,151.11.
If you really need a phone number besides your cell phone or want to communicate from another phone at home, consider using Internet phone services like Google Voice or Skype.
Annual Savings: Up to $600.
3. Move.
Housing is likely the biggest expense in everyone's budget, so you're not alone if you feel like you're paying a fortune in your monthly rent. The answer might be to downgrade or relocate. Sure, moving is a pain and relocation can be expensive, but the temporary discomfort could really pay off.
This may be a tougher option for homeowners who have to deal with the current real estate market. But for renters, even moving to a different neighborhood in your own city or town can cut your rent by more than $100 per month.
For example, renting a one bedroom apartment in downtown Austin (where InvestingAnswers is headquartered) can cost between $1,500 and $3,000. But a one-bedroom apartment in a suburban neighborhood a few miles from downtown can cost between $550 and $1,000.
Annual Savings: Anywhere from $6,000 to $12,000, depending on your move.
4. Grow Your Own Food.
Fresh, healthy fruits and vegetables aren't cheap, so it is tempting to buy low-cost junk food to save money when the budget is tight. However, planting a garden is an edifying and delicious way to save money. Maintaining a garden is a fraction of the cost of buying fresh fruits and vegetables.
From tomatoes and cucumbers to spices like basil or rosemary, the effort expended to produce food on your own can pay big health and expense benefits.
One Connecticut woman saved more than $300 in 2011 by growing her own vegetable garden. It cost her around $200 in startup costs, but the following years, she only spent about $20-$50 in maintenance.
Annual Savings: Around $100 in your first year.
5. Buy Used.
It can be a real temptation to run out and buy new clothes or home decorations, especially when they're on sale. Yet, these are a sure way to bust your budget. Want a sure way to avoid them? Don't buy them. In fact, for a year, don't buy any new clothes or home goods. If you really need something, stick to used items only.
By forcing yourself to only purchase things second-hand, you will only spend when you really need something. There are plenty of places to pick up high quality secondhand items such as Craigslist, eBay and old-fashioned garage sales. Garage sales can be a great source for great deals since motivated homeowners want their stuff sold that same day and are willing to bargain on prices.
Anyone concerned with brands and fashion trends can look to consignment shops and stylish "recycled fashion" chain stores, like Buffalo Exchange, for clothes and accessories you'd find at the mall. A pair of women's jeans from the popular chain store Express can cost around $70, but you can snag an already broken-in pair from Buffalo Exchange for $15, depending on their condition. No need to wash 10 times for that soft, vintage feel!
Annual Savings: $500, depending on your shopping habits.
The Investing Answer: Sometimes, to get ahead financially, it takes bold moves. Extreme cost cutting can be hard at first, but the change in lifestyle can be a refreshing way to jumpstart healthy financial habits and help you save for long-term goals like early retirement and exotic vacations.
- By Brian Reed
149 comments