You can Always Cut More out of your Budget

by Sandy L on February 24, 2011

Sandy, my doppelganger over at Yes I’m Cheap just wrote a beautiful post on Growing Up Poor and Surviving. Her post definitely brought back similar memories, so instead of rehashing my own version, I suggest you head over and go read hers.  I remember living with 7 other people in our little apartment, wearing clothes from the thrift store and the big sighs my mom made when I grew out of something too quickly. There were no such things as going on vacation, eating out or recreational spending.  I was a little luckier than Sandy though because my mom never got permanently injured. She did lose a finger in her factory, but was able to go back to work after a short leave. There was always plenty of food that we were able to get from foraging and/or from her urban garden.

This leads me to my topic of today’s post.  One of the things I often read in comments of many people’s personal finance sites is a statement similar to this one:

“I’m stuck.  I’m already living a bare bones budget and I still can’t save.  I don’t know what else I can cut.” Sometimes it’s followed by “It’s easy to say you can save money when you earn more than I do. If I earned X, I would be just fine.”

There is a group of people that really think they’ve cut their spending as much as they can and they can go no further.  Well, I’m here to tell you, that if you’re truly income limited (ie, you can’t work because of a disability or can’t find a second job) you still can cut money out of your budget. Most of the time it’s not that people “CAN’T” do it but they choose not to because the next level of cuts requires a lot more effort or a noticeable lifestyle change .   I’m going to give you the immigrant’s inside scoop on what it’s really like living on a bare bones budget.  Many people would find some of these tactics extreme but if you’re one of those people who wonders how someone can come to this country with nothing and then end up doing pretty well, you’re going to be getting a little bit of the inside scoop today.

I’m going to take some of the biggest spending categories from this chart on  of “How Americans Spend their paychecks” from and elaborate.

Housing (34%)

Wow.  I can tell you that even in expensive cities most immigrants don’t come close to that number.  Do you want to know the reason why? It’s because we pack ourselves in tiny apartments like sardines and stay that way until we can afford to buy something bigger. Usually we buy a home with a huge down payment and sometimes we buy homes outright with cash.  In many developing countries credit isn’t readily available, so for many immigrants, going into debt to maintain a certain standard of living doesn’t even enter their stream of consciousness.

The other thing immigrants do is live in the crappiest and cheapest neighborhoods.  These are the places no one wants to live.   Are you scratching your head yet and wondering why immigrants don’t not care about their safety? Of course we care about safety but in many cases, the inner city neighborhoods we live in are a huge step up from the slums of our home countries.   When my mom moved to America in the 60’s, she still didn’t have indoor plumbing in Poland.  Only rich people had running water.  So, yes, when she moved to the slums of the city, she felt like she was rich, not poor.

My uncle’s first rental property was nestled in between a funeral home and the highway in a slummy part of town. Babci lived there for a little while and was convinced that ghosts from next door were visiting her at night.  My uncle also lived in one of the 6 units.  Due to his handyman skills and his rental income, it wasn’t long before he could upgrade to a better part of town.  He paid for all of it with cash money.  This guy had a grammar school education and was a roofer for a living.  Yet he amassed a small fortune in his lifetime.  Thanks to programs on TV that show couples in their 20’s buying $1/2MM homes, people think that this is the norm and there’s something wrong with them if they can’t do the same.

Repeat after me:  It’s okay to have a starter home if that’s all you can afford.  Over extending yourself on housing makes it very difficult to get ahead financially.  Housing is the single biggest expense most people have and it’s often the thing people refuse to compromise on.  Just because the rule of thumb says most people spend 1/3 of their salary on housing doesn’t mean you have to, especially if you want to get ahead.

Here’s what I suggest for those that need to cut deeper but don’t have the option to increase earnings:

  • If you value your privacy, then move into a smaller place.  I mean a lot smaller, so that it actually makes a dent in your rent or mortgage payment.
  • If you’re social, or work a lot and are never home, get a roommate or several.  Splitting bills is SO cool.  It’s so much nicer in the winter when that $200+ heating bill comes in and you get to split it 3 ways instead of paying it all from your own pocket.
  • Move to a less desirable part of town. Although this isn’t the best option, I’ve done it once and I could do it again if I needed to.
  • Move in with family – This is not always an option for everyone and is kind of like the room mate idea. I’d say this works well if the mover inner contributes in their own way and is not just mooching off of relatives.
  • Move to a cheaper city or town – I think this is much more common now than it used to be.

Transporation 15.6%

We didn’t always have a car.  Taking the bus everywhere was not fun but it can be done very economically.  I think many people think a car is a “must have” item.  Anywhere there is public transportation available, it’s actually a “nice to have item.”  Babci hated that my dad never let her get her license. She to this day comments on how nice it is to have a car to get from place to place in no time.  I love my car, but I don’t think I’d go into debt to have a nice one.

If you must have a car to get to work, try not to convince yourself that you need a new one. The last car I bought was 5 years old and it still felt like a new car to me, but without the price tag.

Entertainment + Other (vacations, etc) 15.5%

These are the list of things people often confuse as “must have’s” instead of “nice to have’s.”  Make sure you have your priorities in order before spending here:

  • Vacations
  • Cable
  • Internet (Don’t forget the Library) unless you need for your line of work
  • Extra Phones (May I suggest a pre-paid phone)
  • Pretty much all electronics (TV, DVD, Computers, Cameras, smart phones, etc)
  • Movies, Plays,Magazine and Newspaper Subscriptions, etc.
  • Buying Music, Books, Video Games, Toys
  • Cigarettes, Drugs, Gambling, Alcohol
  • Taking on New Pets
  • Soda + Junk Food
  • Gardening Stuff – Lawn Service, Pesticides, Mulch, Annuals
  • Children’s Activities – Sports, Dance Classes, Camp (Yes, I said it. This is not a popular one to cut but I’ll tell you a quick story as to why this is on my list. A woman my mom was renting to was behind on rent but in the same conversation started proudly telling me about her daughter’s dance recital and how she wanted her daughter to have the things she didn’t. Isn’t it more important to have a stable place to live vs getting evicted and running your family ragged moving from house to house every 6 months?)
  • Getting your nails done, coloring your hair, going to expensive salons (This may seem self explanatory, but the same lady above had a fancy manicure. No matter how good her nails looked, it wasn’t going to help her keep a roof over her head.)
  • Buying things new – You can buy just about anything used these days. Okay, you may not want to buy used underwear, but for the most part, clothing, furniture, household items, housewares, toys and books can all be bought for a fraction of the cost of it’s new counterpart.  In most cases, it’s worth the effort looking for a second hand item first before paying full price for a new one.

Now I’m not saying that you have to cut out all of these things to live a frugal lifestyle, but I don’t want people to think they’re trapped into a certain amount of spending because that’s the way they’ve always lived.  There is always room to cut deeper. Sometimes desperate circumstances require desperate actions, so don’t trap yourself into thinking you can’t live on less than a certain dollar amount per year.   One of the worst feelings is hopelessness and powerlessness.  You should never feel like you’ve done all you can do and are still fighting a losing battle. If you step outside of the box you’ve built your life around you may just find another way to reach your goals.

So in summary, if you’re struggling, you may need to remind yourself of the basics needed for survival. They are very simply:

  1. Nutritious Food
  2. Shelter
  3. Clothing
  4. Utilities
  5. A way to get back and forth from work and the grocery store
  6. Health Care

Did I miss any necessities or luxuries from my list?

{ 35 comments… read them below or add one }

Nicole February 24, 2011 at 9:33 AM

Great post! And yes, it drives me nuts how we have relatives whose children have to endure the fighting, the stress, the worry, the collections agencies etc. and yet get hundreds of dollars spent on them for birthdays and Christmas, and cable, and phones, and lots of electronics. I think the kids would prefer a bit more peace and security. But the parents don’t see which is a priority.


Sandy L February 24, 2011 at 5:10 PM

Nicole – how frustrating. Yeah, it’s a mental block with a lot of people. Electronics seem to be categorized as “needs” by a lot of folks these days. It’s especially weird if it’s a need for someone over 35 who grew up without a cell phone, dvd player and computer in their home.


Deidre February 24, 2011 at 9:43 AM

So true Sandy, so very true! I love your perspective on this issue!
2 years ago I decided to cut some expenses. I looked over my monthy expenditures and picked out the ones that I thought were ‘fluff’ items. One of the best decisions I made was to get rid of my directTV. This has saved me 250.00 per month with taxes. Some people wonder why my bill was 250.00 per month. In order to get the best savings, the cable/directTV companies rope you into having the premium package with is around 190 – 210 per month, then with FCC fees, taxes and local fees it totals to around 250.00 per month.

I do have a TV and watch movies when I want some entertainment, but do not have any cable, directTV or similar. Why? Because I can save over 3,000 per year (so thats 6000 and counting now…) and not have the commercials, negativity and similar junk. News, weather and other necessary information can just as easily be obtained on the internet, radio and newspapers.


Sandy L February 24, 2011 at 5:12 PM

Deidre – Wow $3000 is nothing to sneeze at. Great job cutting expenses. I think I could pretty easily live without cable but the rest of my family loves sports too much.


Jacq @ Single Mom Rich Mom February 24, 2011 at 10:46 AM

Well, loads of people are going to find out how to cut their budget I suppose when they retire on nothing more than social security. Necessity is the mother of invention.


Sandy L February 24, 2011 at 5:13 PM

Jacq – True. People learn to make do when they have to, but I’d rather cut now so I don’t have to worry later in life.


Niki February 24, 2011 at 11:40 AM

This is absolutely true. Even now when we have cut our spending down tremendously, I still find myself thinking about the stuff we buy that we don’t necessarily need.


Sandy L February 24, 2011 at 5:16 PM

Niki – yeah, well we do have more disposable income than most of the world, so we do have the ability to buy stuff we don’t need. That’s okay as long as it’s defined as a luxury and not a necessity.


Sandy @ yesiamcheap February 24, 2011 at 12:28 PM

I could kiss you! Thanks for mentioning my post.

I promise you were peeking into my window as we were growing up. This is what we did to escape poverty. You’ve laid it all out right here. There were 12 us in a 3 bedroom home when I grew up. That’s right, 12! Later on we packed in another 2. That’s just how it is. We had rabbit ear televisions because cable was for rich people. Our home was the one where we had a lawn in the front and the entire back yard was plowed for growing vegetables in the summer. We didn’t have camps, afterschool or any of that. Instead we had free vacation bible school at the church in the summer. You do the things that you HAVE to do in order to do the things that you WANT to do. That’s just it.


Sandy L February 24, 2011 at 5:29 PM

Sandy, I love your story because it shows that no matter how destitute you are, you can still dig yourself out of poverty if you’re willing to make the sacrifices to get there. Hurray for having such great role models to learn from. We both have an incredible amount of perspective that most people who grew up in middle class homes have never experienced. It’s an incredible gift. I always say perspective is hard to gain, but good to have.


retirebyforty February 24, 2011 at 1:36 PM

Hey, I want to share too. 😉
When we first moved to the US, 5 of us lived in one room for about a year or so. After that we moved to a 2 bedroom apartment and it was perfectly fine.
Transportation – we share one vehicle now and I take public transport to work about 50% of the time.
Discretionary spending – We don’t spend a lot of money here, but we do go on vacation, eat out once in a while, and go see shows. When I was growing up we rarely eat out. We did drive to all the national parks nearby. Vacation can be cheap too.


Sandy L February 24, 2011 at 5:30 PM

Rb40 – I don’t know an immigrant who hasn’t lived with a pile of people at one point or another. You are another great immigrant success story. Thanks for sharing.


Molly On Money February 24, 2011 at 8:06 PM

Such a great post! With my first husband we lived with 3 other relatives in a house and considered ourselves lucky compared to some of his relatives that lived in much closer quarters. He’s having financial problems and the first thing him and his wife did was rent out their extra bedrooms.
I think the thing I’ve learned is that it may not be my first choice to (for example) give up the cleaning lady but when it’s not a need. We do live in a country where we have so many luxuries we misinterpret them for needs.


Sandy L February 25, 2011 at 5:10 AM

Molly – I’ve always lived with people too. Even after my husband and I moved into our house, it was 3 bedrooms and we rented out a bedroom to a co-worker for a while. I don’t know. It just seemed wasteful to let space go unused.


Andrew @ 101 Centavos February 24, 2011 at 8:23 PM

Heh, good for you mentioning the kid’s activities, almost a holy grail of suburban life. Thousands of dollars (yes, thousands!) spent on pom-pom, dances, soccer, baseball, on and on ad nauseam. It definitely ain’t for everyone. Especially competitive sports. All that’s left after years of schlepping around in the minivan, are a couple of busted up knees and wasted Saturdays…


Sandy L February 25, 2011 at 5:18 AM

Andrew – Definitely. Around here hockey is big. People have told me it’s about $10,000/year for hockey if your kid is on a travel team because you have to pay for hotels and what not. Maybe that pays for itself if your kid gets an athletic scholarship, but for the majority of them, it’s as you said. I am supportive of my kids doing sports, but only if they want to.


Dr Dean February 26, 2011 at 6:45 AM

Great story, and a lesson for all who complain about not being able to get ahead! I am reminded of how blessed and lucky I have been.


Sandy L February 28, 2011 at 6:05 PM

Dr. Dean – me too. I had a much better childhood than my mom did and I’m always thankful of that vs seeing people who had more than me and getting jealous.


Barb Friedberg February 26, 2011 at 9:13 PM

Wonderful reminder of how much we take for granted in this country and how saving money is achievable for all!


Well Heeled Blog February 27, 2011 at 8:46 PM

I think that’s how my parents (who were 1st generation immigrants) lived as well. For a few years they both lived on my dad’s teaching assistanceship – which was meant for 1 person.


StackingCash February 28, 2011 at 12:35 AM

The housing aspect of Sandy’s post gives a great perspective about housing on your blog post 🙂 I do agree with much of this post. Lifestyle inflation is the bane of all us PF people.

a.k.a. StalkingCash 🙂


Everyday Tips February 28, 2011 at 8:35 AM

It is amazing what some people view as a ‘need’ is actually just a ‘want’. A friend of mine stresses herself out endlessly because she has no money because she pays for her daughter’s very expensive private college tuition. I told her to have her daughter take out some loans, but she won’t hear of it. I guess we are all different, because to me, that is a no-brainer. To her, paying tuition is her responsibility. Everyone has different priorities I guess, and it is hard to convince someone that their priorities are skewed.


Sandy L February 28, 2011 at 6:07 PM

Everyday Tips – most of the people I know who are crying the blues about money have been house poor…that and they have expensive cars. After paying for those two expenses, there is little left for everything else.


MutantSuperModel February 28, 2011 at 11:08 AM

My parents came over from Cuba in the 1960’s as children and under different circumstances. However, living below their means was just necessary. I’ve picked up some tricks from them but I always learn something new. I admire them a lot, I really do– especially my mom’s dad who never really learned to read but was a bona-fide hustler (in the good sense) always working and always taking advantage of any opportunity. He was extremely successful but lived modestly. I adored him and often think that all of this I’m going through, down-scaling in life and financially, is a sort of homage to him.


Sandy L February 28, 2011 at 6:09 PM

Mutant Supermodel – Cuba…cool. Your grandpa reminds me of the guy who upholstered my furniture. He was a ukranian immigrant and had 3 jobs. The guy would never turn away a job. His reliability was horrible as a result, but the guy was doing pretty well financially.


Jennifer Barry February 28, 2011 at 2:07 PM

Hi Sandy, thanks for a great list of items you can cut. Even if your finances are okay, it’s still a smart idea to know what you would cut if you had to. I know my husband and I could move into a smaller place and lose one of the cars. I also believe you should start with the big things and then cut smaller expenses. I know too many people who are cutting coupons but the real problem is they can’t afford their mortgage!


Sandy L February 28, 2011 at 6:11 PM

Jennifer – yeah, we had some big layoffs a couple of years ago and I did a little dry run beforehand to see how tough it would be. My self assessment was not good. I’m in a much better position now. Housing can really be a budget buster and the bigger the house the more expensive everything else is..taxes, cleaning, maintenance, upkeep. It stresses me out just thinking of it.


Little House February 28, 2011 at 2:22 PM

You definitely nailed the budget busters – rent or mortgage is number one for me. I don’t complain about how much I pay in rent and utilities (it eats up almost 50% of my budget) because I’m not willing to move quite yet. If I could convince my husband to move to a less expensive state, I’d be there in a heart beat. However, since that isn’t happening anytime soon, I’m just not going to complain. I’m not, no I’m definitely not…going…to….complain. There I said it.


Sandy L February 28, 2011 at 6:17 PM

Little House – yes, you have to compromise on some things for the one you love. It’s okay, he’s worth it and so is the location. It wouldn’t be so expensive if it wasn’t so darn awesome to live there.


Sandy @ yesiamcheap March 1, 2011 at 10:25 PM

I saw that this article was fetured on MSN Money! Big things for this blog. 🙂


Evan March 3, 2011 at 2:13 PM

Fantastic post! I HATE listening to people bitch about cash when they have an iphone, a gym membership and a leased car…all those things are fantastic but if you participate in any of them you shouldn’t complain about cashflow.


Sandy L March 4, 2011 at 2:40 AM

Evan – I didn’t even think about gym memberships. That should go onto the optional list too. I agree, it’s fine to have all those things and more if you can afford them.


Michael May 29, 2011 at 9:59 PM

What a great post. I was getting to the point where I thought I was ‘bare bone’ — but now I’ve got some trimming to do.
Your list of necessities is spot on.
My blog is about paying down my mortgage in 5 years, which requires a lot of sacrifice, but it keeps me focused on what’s important.
Food. Clothing. Shelter. Health. — All important. Most of the rest isn’t.
One of the most recent changes I made was getting rid of cable, since I can get most of that content for free online.
It’s been nearly a month. I don’t miss cable. And I surely don’t miss the $100/month bill!


Sandy L May 30, 2011 at 7:18 AM

Michael – I really think getting rid of cable is much easier now with Netflix on demand and the internet. You still get plenty of entertainment though other media outlets. Good Luck on the mortgage payoff. It does go fast when you’re focused on it.


I'll Buy Any Debt-Ridden Properties, Fast! February 13, 2012 at 4:17 AM

Hey Firstgenamerican,
This might be off topic, however, Every one seems to be looking for the best budgeting tips that they can use in their daily lives. Of course, what with the financial status of the entire globe going haywire, it’s only understandable why most of us are searching for ways to be able to have stable finances. Additionally, budgeting is a good way to go if you don’t like to see your hard-earned money to be spent recklessly. So, I have taken the chance to pick two budgeting tips for you to keep in mind when you are going to do anything that will need money.
– Paul @


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