How to Reduce Monthly Expenses

The best way to begin getting your debt under control is to reduce your monthly spending.  But I don't spend that much, you say?  Well, if you keep a record of every single expenditure you make for one month, you are going to be very surprised when you discover just how much you are wasting each month.  So, as painful as it is to do, we advise you to keep track of every penny you spend for at least two months. 

At the end of each month, divide up your expenditures in to categories and determine how much of your spending was unnecessary.  If you are like most people, you will find a significant amount of money is being spent on unnecessary items and luxuries. For example, a trip to the soda machine at work each day eats up $20.00 a month. That isn't a lot of money, but little purchases add up -- the dry cleaning, eating out at fast food restaurants, the cable bill, etc.  Many people discover they are spending anywhere from $300 to $800 on non-necessities. 

Use a small notebook to keep track of your expenditures.   Use budgeting software to keep track of your weekly spending or click here for a weekly expense sheet (print-out).

Two Types of Expenses

There are two types of expenses you face each month:  fixed and variable.  Examples of fixed expenses are your mortgage or housing payment, car loans, personal loans and anything else that cannot easily be changed or eliminated each month.  To alter a fixed expense would require refinancing your mortgage, car payment, selling off assets, etc.

Variable expenses include those that can be changed or eliminated entirely, such as food, clothing, entertainment, vacations, utilities, etc.  Since it is much easier to reduce variable expenses than it is to reduce fixed expenses, this is where you should start to cut back.

Get Rid of Unnecessary Expenses

Reducing variable expenses involves altering your habits or doing without.  For example, you can prepare meals from scratch instead of buying expensive take-out and prepared or frozen foods.  Eating out is by far the biggest needless expense most families have.  If you keep track of every penny you spend on fast food each month, you might realize that you are spending $300 or as much as $600 on fast food.  You could prepare meals at home for one-fourth the cost of eating out. 
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Raising your thermostat just two degrees will reduce your monthly air conditioning bill by 10 percent!  Use the links to calculators at right to determine how much you are spending on unnecessary services and items each month.  For example, the "periodic spending cost" will show you just how much you can save each month.

There is a large section of tips on saving money at this website that is definitely worth a read.  You can find out how to get free medications, how to get freebies from the stores you love, how to buy clothing at an 80 percent discount, and even how to save thousands on a funeral -- the list goes on and on.  We even included a section of ways you can earn money.  The section is entitled "Ways to Save Money".  You don't have to give up everything you love and live a dreary life to get out of debt, but you have to develop a plan of action and follow through.  You might have to give up your weekly manicures or adopt a low maintenance hairstyle so you require fewer trips to the hair salon, but you can still eat out at restaurants occasionally and save money. 

By cutting back on unnecessary expenses and luxuries, most people find they can free up hundreds each month that can be used to pay down your debt.  Your goal in doing this is to avoid bankruptcy, credit counseling services and possibly debt collection agencies and lawsuits somewhere down the road.  

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