Slashing The Budget – What Can Go?
Slashing the budget is one of the first tasks people usually tackle after they decide they want to get out out of debt. It is often a frustrating task, because of the stress of the debt and the lack of perspective on what is a need versus what is a want.
Let’s start by reiterating that getting out of debt is a marathon. It is not one decisions that gets you there, but a long series of decisions that continually build on one another that move you towards your goals. You need to make decisions that not only save you money, but also keep you running the race. If you totally deprive yourself to the point that you want to give up, you won’t every get out of debt.
With that said, the more you slash from the budget the faster you will be able to experience the benefits of getting out of debt. The faster you can sell the car that you are upside down in, or cancel the cable, or stop eating out 5 times a week, or depart with the junk you have been accumulating on credit cards the faster you can destroy your debt and start chasing your real financial dreams.
So how do you decide what is a need versus a want? A great place to start is by sorting through your bills and receipt and writing down all your monthly expenses and your gross monthly income. From there it is a lot easier to see the percentage of you income that guys to your house or car. Some items will immediately begin to jump out as unnecessary. Others you will need some nurturing to follow through on. Others may require you to build up some more financial discipline and perspective before you can execute. You can ask yourself questions like “what am I trying to accomplish by spending this money”. Questions like this help to make intentional decisions about money which is probably something that was missing up until that point. Intentionality is a major key to your financial journey.
It would be interesting if readers shared the things that they were willing to cut in order to help encourage other readers who are struggling with the same decisions.
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When I was most “neurotic” about getting out of debt…I got rid of my new car for a paid off (and free) nissan sentra (about 16 years old at the time). Wow that change alone saved me about $450 (or $500)/mo. It wasn’t just the payment. It was the insurance, and difference in gas mileage that were both helpful.
One of the things that I seem to struggle with is changing my cell phone plan.
It appears good (so far as plans go) but I really do not want to be paying $1200 per year to have two cell phones. Just seems like way too much money.
2000 minutes per month; two phones; unlimited text
Two things. I used to pay for a lawn mowing service. When I added up all the invoices after I’d been using it for about a year, I found I had spent NZD$1400. I stopped the service, bought myself a second-hand mower, and started doing it myself.
I also used to pay a company to rent me a 240 litre rubbish bin and empty it once a week. That cost $60 every quarter, and most of the time the bin was less maybe half full. Now I will buy pre-paid rubbish bags for a few dollars and actively work to minimise the rubbish I pay to discard.
@Jo – You cleared some nice space in the budget. Great job!