How to Radically Reduce Your Expenses So You Can Change Your Life

(Psst: The FTC wants me to remind you that this website contains affiliate links. That means if you make a purchase from a link you click on, I might receive a small commission. This does not increase the price you’ll pay for that item nor does it decrease the awesomeness of the item. ~ Daisy)

How often do you hear people talk about how they would live their dreams if they only had a bit more money? People always dream about…

  • quitting the jobs they hate
  • starting a business
  • moving to a remote cabin in the woods
  • staying home with the kids
  • traveling the world
  • being completely debt-free
  • having a little homestead and raising their own food
  • living in an RV and roaming the country

…but they often feel that these things are financially unreachable. Instead of doing it, they sigh and decide it’s completely unreachable.

Do you do this yourself? If you have unrealized dreams and goals, then maybe it’s time to take a good hard look at your finances and enact a sweeping plan to radically reduce your expenses.

The question isn’t really, “Can you do this?”

The question is, “What are you willing to change to do this?”

Regardless of the changes you want to make in your life, it either costs you money or freedom from financial worry. You have to be willing to make changes, and the level to which you are willing to change your lifestyle reflects the level of your motivation. Few people ever achieved a lofty goal by doing exactly what they had been doing and without making a few sacrifices.

Redefining necessities

Most people would be surprised at the changes that can be made when they rethink the definition of the word “necessities”.

When you make a dramatic change it isn’t reasonable or rational to expect this to happen easily. If it was easy, everyone would be doing it. You’ll face financial stress when changing your life, and if you want to be somewhat immune to this, you need to perform a financial makeover to pare your monthly output to the bare minimum.

Does this sound kind of grim?  It’s not – decreasing your monthly output provides you with the safety net you need to make your dreams come true.   Maybe it’s time to free yourself from a cycle that keeps you enslaved: you have high expenses so you work extra hours so you don’t have time to do things for yourself so you pay someone to do them so you work more hours…you get the idea.

Do you want to change how your life looks right now? Then you have to change how your life looks right now.

If your finances are out of control, the best possible reality check is a stark look at what necessities really are.  It is not necessary to life for each member of the family to have an iPhone, daily lunches out, a vehicle in both stalls of your two-car garage, or for your children to all have separate bedrooms.  People in Venezuela and Greece will tell you, as they scramble for food, basic over the counter medications like aspirin, and shelter, that “necessities” are those things essential to life:

  • Water
  • Food (and the ability to cook it)
  • Medicine and medical care
  • Basic hygiene supplies
  • Shelter (including sanitation, lights, heat)

Absolutely everything above those basic necessities is a luxury.

So, by this definition, what luxuries do you have?

Some are more important than others, based on your lifestyle, and might be considered secondary necessities.   You might require transportation, work clothing, a computer and an internet connection, electrical appliances, a cell phone – you are the only person who can define which are these are luxuries and which are secondary necessities. It’s essential to be truly honest with yourself and separate “wants” and “I really enjoy having this” and “the kids will complain without it” from “needs”

For example, I am a blogger who spends a lot of time online.  Without an internet connection and a laptop, I have no work.  For me to make a living, therefore, my computer and monthly internet bill are necessities.  However, because I work from home, a fashionable work wardrobe is not important to me.  I can wear jeans and a t-shirt to work every single day (or if I’m being honest, yoga pants and a hoodie), and it won’t affect my career at all.  If you have to go out to a job in customer service or making sales face-to-face, for example, then perhaps my necessities would be less important to you than a good-looking career wardrobe.

My Radical Economic Makeover

About ten years ago, I began to see the writing on the wall for my own personal finances. I’m a single mom and my former husband was deceased, which meant there was no child support coming in.  So as far as raising those children, I was the only game in town.  I realized that the industry I had been working in for many years was very shaky (automotive) and that I’d better get my financial house in order.

I began to cut expenses as quickly as possible.  I was making a very good income and our lifestyle had “improved” with each pay raise and promotion.  Although these changes were not incredibly popular with the kiddos, I made them ruthlessly.  I made the following adjustments:

  • Cut cable and home phone
  • Began providing a limited budget to the kids for school clothes, winter coats, and holiday gifts. If something “better” was wanted, the difference had to be earned
  • Made the kids do extra chores for privileges like field trips, vacations, and houseguests
  • Began cooking entirely from scratch and limiting meals out to birthdays or long trips
  • Began gardening, preserving bulk foods, and shopping through mail-order sources

Within a few months, my prediction was right – I got downsized.  Things got pretty bad. We lost our home, our car, and pretty much everything. (I wrote about this dark period of time in more detail in my book, Lifestyles of the Flat Broke and Resilient. You can get a copy here for free.)

But with loss came freedom.

When I lost my everything, though, I suddenly had the freedom to make an even more dramatic change. I had said my whole life that I was “going to be a writer” but up until that point, I had nothing to show for it. I was fortunate and picked up some freelance jobs pretty shortly, including one recurring gig, but I realized that I couldn’t make ends meet with what I was making, at least not in my then-location in an expensive city.

So, I began a search for a less expensive place to live. My oldest daughter was graduating from high school and heading off to college, which meant that I had the freedom to go anywhere with a reliable connection to the internet.   Within a few months, we’d located a very distant, very remote little cabin in the North Woods of Ontario, Canada.  We sold a bunch of stuff and then packed up the rest. My youngest daughter and I moved 7 hours north to the boondocks, a move that saved over $2000 per month when compared to city life. This gave me the opportunity to give the writer’s life a real chance while still paying for my daughter’s college expenses. Had I stayed in the city, I wouldn’t have been able to stick it out because building a business takes time.

During this time, I continued with freelance gigs, landed a great job writing for an online publication, and started my own website. By being willing to make radical changes, I was able to radically change my situation.

Get a Picture of Where You Are, Right Now

I realize that the changes I made are not changes that will work for everybody.  You have to work within your own limitations – and we all have them. I’m not suggesting the changes are a whole lot of fun either.  Imagine being a city girl and suddenly living in a cabin in the forest with only a wood stove for heat, a tentative grasp on electricity, and black bears for neighbors. While it was an adventure I’ll never regret, it was certainly a culture shock.

Adjusting your own situation requires a brutal analysis of your expenditures.  If you can’t get your partner or spouse on board, it can be all but impossible to do a complete overhaul.  Kids will complain loudly, however, they have to deal with it. Remember, YOU are the parent.

Print off your bank account statements for the past 3 months.  On a piece of paper, track where your money is going. List the following

  • Rent/Mortgage
  • Utilities
  • Car payments
  • Vehicle operating expenses (fuel, repairs)
  • Insurances
  • Credit card and other debt payments
  • Home phone
  • Cell phone
  • Cable/Satellite
  • Internet
  • Extracurricular activities for the kids
  • Extracurricular activities for the adults
  • Dining out
  • Drive-thru coffee
  • Groceries
  • School expenses
  • Clothing
  • Recreational spending
  • Gifts
  • Miscellaneous (anything that doesn’t fall into the above categories gets it’s own category or goes here)

Don’t say to yourself, “Well, I usually don’t spend $400 on clothing so that isn’t realistic.”  If you spent it, then it’s realistic.  You are averaging together three months, which should account for those less common expenses.  Brutal honesty isn’t fun, but it’s vital for this exercise. Any cash you withdrew should go into the miscellaneous spending category unless you still have it on hand. (Here’s a more detailed look at auditing your budget.)

So….what do you see when you look at your piece of paper with your average monthly expenditures for the past two months?  Are there any surprises?  Did you actually realize how much you’ve been spending?

It can’t continue like this if you want to make changes.  Step one is to see where you can cut the easy things out right now from the above expenditures.  Can you reduce your grocery bill?  Slash meals out?  Budget more carefully for gift-giving and school clothes? Cut your fixed expenses?

You can. But will you?

Then begin to radically reduce your expenses.

Step two – this is where the brutal cuts come in.  What can you change about your life?  Where can you reduce expenditures by several hundred dollars monthly? Or several thousand dollars? This is the point at which most people say, “I can’t.”  Most people don’t want to move to a smaller house, get an old car, or go without premium cable.  But this is where you can truly dig in and change your life.

This is the point at which most people say, “I can’t.”  Most people don’t want to move to a smaller house, get an old car, or go without premium cable.  But this is where you can truly dig in and truly change your life. Let me be completely blunt: if your dreams aren’t worth roughing it for a few years, you don’t want them that badly.

The extra money you save by making these changes can be put toward rapidly paying off any debt you have incurred. This article explains how to pay off debt quickly using the snowball method.

As I said before, everyone’s situation is different.  You may be locked into a mortgage on a huge house in a market that won’t even cover the balance of what you owe.  It could be the same with your vehicle.  Explore all of your options, though, because sometimes paying a few thousand dollars to get out from under it could be worthwhile.

Some people could have reached the point where they must begin to default on payments.  That too, is a personal choice. (If you are in a situation in which you absolutely cannot pay your bills, this article can help you.) I’m not recommending that you blow off your obligations.  (However, do consider the fact that large banks get bailed out by the government, and everyday people do not.)  Before making decisions like that, be sure to discover all of the potential ramifications, such as repossessions, garnishing of bank accounts, and ruined credit.

Here are 14 radical changes we made.

Here are some cuts to consider if you really truly want to change your life. All of them may not work for you, but some of them probably will, if you are willing to be ruthless.

  1. Move to a smaller house.  Contrary to what they may tell you, no child ever died because he or she had to share a room with a sibling.
  2. Relocate to a small town.  Is it worthwhile to commute to a job in the city from a smaller, less expensive location? This can give you the added opportunity to homestead, garden, and provide for many of your own needs if you like doing things like that.
  3. Get rid of your late model year vehicle.  Look for a decent used vehicle that you can purchase with cash.
  4. Cut back to one vehicle or even no vehicles.  Sometimes public transit and your own two feet can provide all of the transportation you really need at a fraction of the price of owning a vehicle.  This varies by location.
  5. Stop using credit cards.  This goes for any type of lending system that requires you to pay interest.  Stop accumulating debt.
  6. Don’t eat out.  Limit meals out to no more than once a month or special occasions.  Dining out, even at a fast food place, is at minimum 4 times more expensive than the same meal prepared from scratch at home. (And far less healthy!)
  7. Look for free or low-cost entertainment.  Consider a family YMCA or community center membership instead of gymnastics clubs or private tennis lessons if you need to enroll your kids in some activities. Go hiking, have picnics, explore parks, go to the library, and find out what’s offered for free in your home town. Learn to enjoy productive hobbies like canning, carving, and knitting. Switch from cable to Netflix, Amazon Prime, or Hulu.
  8. Use the envelope method to budget for shopping trips.  For back-to-school shopping or Christmas shopping, decide how much you want to spend.  Put that money in an envelope.  As you shop, place each receipt in the envelope.  When the money is gone, it’s gone.  If there’s something else your child desperately wants, then they need to decide what item they’d like to take back to get it.  Be firm and stick to your guns.  This has the added benefit of teaching your children to budget.
  9. Reduce your monthly payments by cutting things like cable, cell phones, home phones, and/or gym memberships.  Look at every single monthly payment that comes out of your bank account and slash relentlessly. If family members rebel, they can earn the money themselves to keep these privileges. If it isn’t worth enough for the kids to work for it, why should they expect YOU to work for it?
  10. Shop using the stockpile method.  Shop only the sales and simply replenish your stockpile. (Here are all of my very best tips for building a healthful pantry on a tight budget.) The food you keep on hand can help you through unexpected financial crunches.
  11. Eat leftovers.  Have you ever stopped to think about how much food you throw out every month?  You can often provide a few “freebies” every month by carefully repurposing your leftovers. We get at least one “free” meal each week by saving the tiny portions that many people would throw out.
  12. Stay home.  By spending more time at home, you will spend less money.  You won’t be grabbing a bottle of water, going through the drive-thru for lunch, or putting fuel in the car.  Learn to treasure your time at home with loved ones – it’s worth more than money.
  13. Repair instead of replacing. Repairing things is a lost art and we live in a society of planned obsolescence. But with the right skills, you can make everything last just a little bit longer, and in turn, save a fortune in replacement costs.
  14. Embrace the DIY lifestyle. Of course, we can’t do everything for ourselves, but we can learn to do the things that we once paid others to do for us. Things like home repairs, lawn care, manicures, hair color, pet grooming…the list could go on and on. Usually, to purchase the tools you need to do something right will cost you approximately one to two times the cost of having it done for you. Then, you can carry on DIYing to infinity.

This is not a comprehensive list – when you look at your personal expenditures, other ideas will present themselves. You have the ability to change your life if you want it badly enough.

Why Now?

Why now? Why not.

It doesn’t seem like the economy is getting better or like economic tensions and the supply chain are settling down. You aren’t getting any younger. Most likely, a hundred thousand dollars isn’t going to magically drop into your lap to make your goals possible. Do you want to be one of those people who put off their dreams until they’re too old to enjoy them? Do you want to spend your days just complaining about your lot in life or do you want to live the life you dreamed of?

I spend a lot of time with would-be entrepreneurs and homesteaders, and I can nearly always tell who will make it and who won’t.

  • People who only sort of want it make excuses.
  • People who really want it make it happen.

They don’t let anything get in their way. If they have to eat food from the “last day of sale” bin at the grocery store, they do it. If they have to live in a basement apartment, they do it. If they have to move to a place with a cheaper cost of living, they do it. They focus on their goals with a single-minded purpose and they make the sacrifices that are necessary to change their lives.

Your life won’t be “normal.”  Your friends and family probably won’t understand. But we live in a system designed to enslave us and to break out of that system is practically unthinkable to those who are content to live paycheck to paycheck in a home they can barely afford eating restaurant food because they’re too tired to cook. This isn’t to say that everyone with a 9-5 job is unhappy and barely getting by – some folks are very content with what they do and they keep their spending within their means. But most people are stretched so thin that eventually, something is going to break.

If you aren’t happy and you want to make a change, then you have to make changes to the way you live and spend your money. Whatever your goal is – a homestead, a business, staying home with the kids, traveling – it has to be considered in every decision you make and with every dime you spend.

If you want to keep living the life you’re living, then keep doing what you’re doing. But, if you want to live a radically different life then it’s time to make radical changes.

How to Radically Reduce Your Expenses So You Can Change Your Life
Picture of Daisy Luther

Daisy Luther

Daisy Luther is an author and blogger. She's the single mom of two daughters and credits extreme frugality and a good sense of humor for her debt-free lifestyle. She is the author of numerous books, the editor of, and is the founder of a small digital publishing company in the emergency preparedness niche.

4 thoughts on “How to Radically Reduce Your Expenses So You Can Change Your Life”

  1. I cut cable years ago and don’t miss it. For years I have had Netflix, but there was not much I want to see any more, so that is gone. I do have Hulu without adds, and I watch Tubi and YouTube, both free on my TV.

    I find that being retired I need zero new clothes. It helps immensely to take good care of them, and I mend a lot. An aside: both of my go-to stores for clothing have closed, and I admit I spent money I did not need on binge shopping. I use Walmart for underwear, and as I buy good shoes I will probably never have to buy any more.
    I rarely eat out, and when I do, I go to two locally owned restaurants that serve good plain food.

    I do not budget, but I cash a $400 check on the first of each month. I allow $100 a week for gas, food, and needs like pharmaceuticals. I have two bank accounts: one for savings and one for house bills such as water, electric, and repairs. I only pay around $300 for all my fixed bills including my internet. If I want to take a trip, I use that account. If I cannot afford it, I do not go.

    Probably the number one thing I have done for my financial well-being is to cancel my Amazon account. No more click and buy! No more huge credit card bills!

    Plan out your menus for the week and do not deviate from your grocery list.

    Do not ever compare yourself to someone else. The mailman told me once that more overdue bills were delivered to “wealthier” neighborhoods than solid middle class homes. You do not know how much people who have the newest stuff owe on that stuff. And it is all just stuff!

  2. I have been living in one of three vans since 1985 (with the exception of the truck sleepers I lived in for 50 months of longhaul) and my lifestyle is based on continually decreasing my cost of living instead of trying (against all odds) to increase my income. My total income is now $1088 a month in Social Security and inflation is making my previous manic saving impossible. It is always better to reduce your cost and standard of living before a decreasing income forces the issue.

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