A commenter in an earlier diary of mine, Personal Energy Independence: A Thought Experiment, had requested a diary on ways that one can substantially reduce expenses immediately and without any up-front investment, so this is my attempt to provide a thoughtful guide toward that end. I should note that this is not a substitute for professional financial counseling - I'm just someone who enjoys brainstorming, especially when it might help someone else. Some of these suggestions will appear obvious, but like all obvious things, for some people it may only be obvious in retrospect.
I. Debt servicing
For people in financial difficulty, this is often the most problematic and unproductive expense they face: Making payments on past expenses can be an incredibly frustrating bit of cosmic pettiness, because there is no tangible or even qualitative benefit beyond the glacially-slow reduction in the size of interest payments. And while you are in debt, it will always be a stone around your neck, gouging your paychecks and making your economic position more tenuous.
- Stop using credit cards.
Unless you are upper-middle income or above, credit cards are usually more trouble than they are worth for anything other than emergencies. They are too psychologically easy to use, their cumulative effect is too easy to miss until they become unmanageable, and they contribute nothing on balance unless you use them exclusively for emergencies or to help fund a business venture. To the degree that you are able, eliminate all credit card purchasing - you may be surprised how much money you save while feeling as though you are spending more.
- Higher-interest payments are a higher priority.
This may be common sense to some people, but I myself didn't realize it until I actually calculated it: No matter how big the absolute size of any given balance, the one bearing the highest interest rate is the one that must be the highest priority to save the maximum amount of money. If you have two or more debts, pay the minimum on the lower interest rate balances and the most you can afford on the highest interest rate, and you will save the most money.
Unfortunately, the more money you save, the less money your lenders get from you, meaning there are complex consequences for your credit score, so if you have the time and patience for such detailed planning you may want to investigate that independently or with a professional. Compromising your credit score, however, can be beneficial over the long term by burning the bridge behind you as you get out of debt - the point is not to produce an ever-deepening pool of available credit in which to drown yourself, but to become viable and independent.
- Fix your own credit limits.
The Credit CARD Act of 2009 - one of the earliest accomplishments of the Obama administration toward reining in the credit card industry - allows you to set a fixed credit limit that cannot be exceeded, and thus your card would simply be declined rather than incurring exorbitant overcharge fees. Such fees are more limited than before, thanks to the Act, but they are still damaging to anyone in a financially precarious position. Better to accept the mild embarrassment of having to put something back on the shelf than cut yet another chunk out of your future paychecks due to a simple mistake.
- Pay bills online.
Most lenders (not to mention utilities and other expenses) now prefer that you pay bills online, and provide minor incentives to do so in the form of waiving some small fees associated with paperwork. You don't even need to have a computer or internet access yourself - you can do it from a library.
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II. Monetary
- Use cash.
By "cash," I mean use actual, physical money as often as practical rather than checks or debit cards. Handling money increases psychological awareness of expense, which in my experience results in less wasteful spending and more thoughtful reflection on available options. As you make change and break into smaller denominations, routinely count how much you have - it will give you an intuitive, physical sense of your immediate position.
- Pick up coins on the ground.
I don't mean go out and look for coins - that would cost more in lost time than it's worth - but wherever you go, always be aware of the ground so that you can pick up any coins you see along the way. You would be surprised how much money litters the pavement in parking lots and sidewalks of commercial areas. The most common will, of course, be pennies, but people drop change of all denominations all the time.
Do an experiment just to see the potential: Wherever you go today, be keenly aware of the ground and see how much change you can collect on your daily routine. This won't be practical if you live in a rural area, but city-dwellers can make a small but possibly appreciable dent in their food expenses just by bothering to occasionally stoop and pick up a coin. And since you may also find a special coin worth more than its denomination, it's kind of like playing a slot machine for free.
Once you get used to being aware of the ground, you will occasionally find dollar bills or even higher denominations. I once found $150 just sitting on the sidewalk in a completely empty street - I thought it might be some kind of social experiment, and kept looking over my shoulder for someone with a camera to pop up and start quizzing me, but nothing happened.
- Do NOT use Coinstar.
The standard fee rate for Coinstar machines is 9.8% in the US, so you are basically giving away $10 for every $100 in coins you save. If you are on the lower end of the income scale, $10 is a lot of food to give away for the minor convenience of dumping coins into a machine instead of putting them in rolls. A bank roll can be used as currency or exchanged for it with no fee involved, so it is a superior option to Coinstar.
- Use an interest-bearing checking account.
Most such accounts assess fees or require minimum balances that make it a losing proposition for people who tend to be light in cash, but some do not - I have seen interest-bearing checking accounts over the years that can be worthwhile to the average person, so you should look for them. There are also savings / money market accounts that issue checks and allow a limited amount of periodic expenditures from them, so they can be used as effective checking accounts given a certain degree of planning. Savings / money market accounts have much higher interest rates than interest-bearing checking accounts, and most do not assess fees, so they may be more worthwhile despite the limitations. Accounts with ATM access are preferable, but be wary of the fine print in any case.
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III. Medical
- Eat well and sparingly.
Junk food is infamously cheap due to federal subsidies of corn leading to ubiquitous high fructose corn syrup, but two facts make healthy eating cheaper on balance: The first is that one has to eat a lot more junk food to get even passing nutritional content out of it, so you may actually be spending more in total to get the same benefit while also causing yourself costly health problems. The second is that you'll have a lot more energy, feel better, and probably be more clear-headed during your day, so you'll accomplish more with the same resources. Better health leads to fewer doctor visits, which aside from the money saved directly also yields lower health and life insurance premiums. One also tends to feel better mentally, which is worthwhile in itself.
- Do exercises that cost nothing.
Do you really need to pay $20 or $30 a month for a gym membership to exercise? Just go run, jog, or walk somewhere - treadmills are for people who need a carefully controlled workout, like athletes or people with medical complications that require constant monitoring. You can do pushups, sit-ups, stomach crunches, squat-thrusts, isometric exercises, stretches, and use common household objects with some heft to build muscle tone for free. This won't make you buff, but having more muscles than your body needs is expensive - it takes more calories to maintain them, so you end up having to eat more. Better to be stringy and lithe, with a fine-tuned metabolism.
- Brush and floss after every meal.
This is not a big deal, but the small additional expense will mean you practically never have to visit a dentist. Be sure to use a soft-bristled brush to avoid gum irritation.
- Meditate.
Whatever approach you take to this, it tends to improve mental and physical health, and may also improve relationships by making you calmer, more thoughtful, and more aware of yourself and other people. Financially, this is useful because it may obviate the need for professional mental health services for modest issues, and even for more serious ones may reduce how often they're needed. An improved demeanor and attitude may also make your employment or promotion prospects somewhat brighter.
- Take simple hygiene precautions.
Yet another common-sense principle people too often ignore: You can generally avoid paying for doctor visits due to infection, missed work beyond sick days, or potentially expensive medications by washing your hands thoroughly before touching food or utensils that will touch food, promptly dealing with minor cuts instead of ignoring them, and maintaining a clean living environment.
- Don't be an asshole.
This will somewhat reduce the likelihood of violent or accidental injury, particularly with respect to driving - which will also reduce costs from traffic tickets and auto insurance premiums.
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IV. Transportation
- Take the bus/train and walk or bike shorter distances.
Not only will you have improved health from investing more of your body's own power in moving around, but it's a lot cheaper and more sociable. People accustomed to driving everywhere may at first resent the close proximity of so many strangers when taking public transit, but I've found that one comes to feel a sense of connection to them even if one never speaks to them - they are "fellow travelers" in the most literal possible sense of the term.
One also comes to feel reconnected with nature and the reality of one's community when traveling in these ways - by foot and bicycle because you develop an intuitive sense of the environment; and on public transit because the community comes with you when you travel. There are some logistical adjustments required, such as shopping more often for smaller grocery loads, and large appliances will have to be delivered, but I have found these are not a big deal.
- Look into special programs.
Many cities provide free or reduced-price public transit to seniors, public employees, veterans, people with disabilities, college students, and other groups. You may be eligible for such programs, even if you do not appear to directly apply. There may also be applicable county, state, or federal programs that subsidize public transit expenses.
- If you drive, drive smart.
Walking, biking, and public transit may not be practical where you live, or you may need to maintain a high degree of flexibility for whatever reason. In that case, find out how to reduce your auto insurance premiums as far as you can: Trade in your car for one that is reliable, and yet utterly cheap to maintain and insure. Insurers often look at trivial factors like the color of the paintjob to judge your character as a driver, so find out what makes, models, and colors give the best possible signals without increasing cost.
But even with driving to work and more distant places, you may not need to drive everywhere - some places that you drive to now are probably within practical range of walking or biking, so you would want to think about that and consider what changes you could make to reduce gasoline expenditures and maintenance costs. Also investigate carpooling options for distant places you regularly drive to.
For truck and SUV owners, unless you actually need the extra hauling capacity or power, you shouldn't be driving one at all - get rid of it and drive something practical that is suited to how you use it. You will save on gas and maintenance, and be more environmentally responsible.
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V. Utilities
- Maximize use of daylight hours.
If you wake up at dawn, far less of your day will be at night, and therefore fewer hours will need artificial lighting.
- Unplug everything you are not immediately using.
This not only eliminates the problem of "vampire devices" that consume electricity even when they are not in use, but makes you more aware of and thoughtful about electricity consumption as you must plug something back in to use it.
- You don't need a refrigerator.
Believe it or not, that giant box in your kitchen is not necessary - a fact that is amazing given how much electricity we're willing to buy to keep it in operation. Refrigerators are useful, of course, but there is a circular behavior pattern involved in the belief that they're necessary - we mostly buy foods and beverages that need refrigeration because we have refrigerators. Instead, buy dry goods, canned food, and only enough fresh fruits and vegetables as you intend to eat that day, and only cook what you intend to eat immediately.
- An electric blanket is better than heating the whole house.
If you live in a cold climate, heating is not optional, but you do have a choice of how much to heat your living space. Better to sleep with an electric blanket and allow the house to be cold but not freezing than to heat up the entire room or house to a comfortable temperature. This also keeps the house less attractive to insects and rodents during the night, while saving a lot on electricity or heating fuel.
- Instead of AC, spray yourself with water mist.
This may not be practical if you live in a furnace climate like the Mojave desert, but most places have manageable summers. In most of the Western US, the air is usually dry enough that staying in shade and spraying yourself with water is enough to keep cool. Only in hot, humid areas like the Southeast is this not an option, since the humidity is too high for evorporative cooling to be useful. You can also reduce the heating of your house by putting reflective covers in Sun-facing windows, such as those used in car windshields to reduce heating in parking lots. If necessary, you could just use tinfoil, although it might look weird.
- Hang-dry clothes, take short showers, only flush #2.
Common-sense measures.
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VI. Purchases & Services
- Build & fix things yourself.
You probably have a decent set of general tools - screw drivers, wrenches, sewing thread, hammers, etc. - but if you're like most people, you almost never use them. Even if the shirt that gets torn only costs $5 to replace, it costs virtually nothing to sew the hole. Likewise, you probably have plenty of materials and furniture you don't use that can be scavenged or deconstructed for reuse as other things. Don't ever buy something you can build, replace something you can fix, or pay someone else to do something you can do practically and more cheaply yourself. If there is any specialized knowledge involved, there is always the library/internet, and you can ask others about borrowing tools you don't have.
- Buy things built to last.
This means things that are simple, efficient, robust, and most importantly, user-serviceable. To the extent practical, do not rely on disposable products - they are vastly more expensive over the long-term, not to mention environmentally irresponsible. Choose products that you would have a decent chance of fixing yourself rather than having to rely on expensive services. Avoid one-piece molded plastic furniture components that can too easily break, and that cannot be practically mended. Avoid rivets and oddly-shaped screws. Metal frames and standard screws/bolts are your friends. No paper plates, plastic knives/spoons/forks, paper napkins, disposable cups, disposable razors, etc.
- No TV.
No one needs a TV, let alone the exorbitant price of cable. Sell yours, or at least keep it unplugged and don't pay for a cable box.
- No water cooler.
This is the most insane expense of the American lifestyle. You already pay for a water supply, and in most cases it's exceedingly safe, but many people pay upwards of $500 a year to have someone else's tap water special-delivered in big bottles so they can use a specialty refrigerator system to deliver cool water out of a spigot. If you want extra-cold water, plug in your freezer at night and make ice cubes for the next day.
- Adopt a low-maintenance hairstyle & grooming habits.
Probably a bigger issue for women than men, but applies to both: If you rely on specialty haircare and skin products - i.e., more than shampoo and soap - then you are spending more than you practically need. Even shampoo is ultimately optional if you become truly desperate, but I will assume you want to remain presentable. If you're in dire straits financially, you shouldn't be spending a single dime more on your appearance than is necessary to stay or become employed. Ladies, it's not your makeup we're attracted to.
- Absolute cheapest consumable products.
Often this means generics, but sometimes brand-names are able to offer lower prices due to economies of scale and sale promotions.
- Buy in bulk, when practical.
Prices are generally lower for bulk items, and even lower if you can get them wholesale. Staples such as rice, wheat flour, corn flour, and such are standard products available in large quantities.
- Learn to cook.
I know how to operate an oven and follow directions, but I don't know how to cook - I wouldn't know how to make delicious, healthy meals out of cheap bulk materials. Making your own food in this way can be a lot cheaper than paying for microwave dinners that are 90% prepared by the time they're frozen. It can be cheaper even than cooking dry, retail stovetop dinners that come in boxes. Of course, you would want to focus on cooking with the tools and utensils you already have, rather than things that would require buying new equipment.
- Drink water.
Not soda, not wine, not beer, not fruit juice, not milk, not tea, not coffee, not energy drinks, not smoothies. Water. It's the only thing you ever need to drink. If you want fruit juice, eat fruit.
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VII. Miscellaneous
- Do favors for people.
Having people owe you is always useful, and can bring about free opportunities that would otherwise involve paying someone.
- Enter free drawings, sweepstakes, and contests.
If you don't mind your information being sold, go ahead and enter every credible, free drawing, sweepstakes, and contest you come across. You risk nothing other than being inundated with spam, and you might win something worthwhile - possibly even something significantly helpful.
- Do NOT play the lottery.
It's a chump's game. Just put a dollar in a jar instead of buying a ticket, and then at the end of the month pretend you won something by opening the jar. Or make up your own way of tricking your brain into thinking you won for just getting your own money back - because that's really all that happens if you get $50, $100 on a scratcher, and you are simply not going to win the jackpot, so don't bother.
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That's about all I can think of. Hopefully this was helpful.