Financial struggles can often feel overwhelming and impossible to solve. There are people who really struggle to make ends meet because they just can’t seem to earn enough money to pay their monthly bills and keep food on the table.
Getting out of debt remains the most effective method for long-term financial stability and solvency, but what can you do when you can’t find any extra wiggle-room in your budget to begin throwing extra cash at those debts? Here’s a quick list of the most effective ways you can alter your monthly expenditures and see immediate results.
Top 5 Ways to Create Margin in Your Budget
1. Cut the Extras
One of the very first things you should cut from your monthly spending is anything related to entertainment. I’m not saying you shouldn’t have any fun at all, but the reality is that you’ve got to place your needs before your wants.
In 2014, the average cable television package cost $61.41, and was projected to continue rising about 6% year over year. That means the average TV package likely costs about $65 in mid-2015.
There’s nothing wrong with having some entertainment, but there are so many alternatives available today. Think about how fast you could pay off your smallest debts if you threw an extra $65 at them each month. How far and how fast could you get ahead?
Other things you could consider cutting include faster internet and top-tier cell phone data plans. For instance, my family recently upgraded our internet because we were hitting our data cap, so it made sense for us to upgrade. However, we view that upgrade as a luxury not a necessity. Internet access is increasingly crucial in our society, but that doesn’t mean we need to pay for the best package for our home or mobile connectivity.
2. Stop Eating Out
The average fast food meal costs between $4 and $7, while the average cost of homemade food is typically less than half—$1.50 to $3 per person, per meal. Many working people enjoy the convenience fast food provides, and also enjoy the break that going out for lunch with coworkers in the middle of the work day affords.
I get it. Packing a sack lunch for work isn’t as fun, but it sure can save a ton of money. Let’s say you try really hard to stay on the low end of the fast food meal cost spectrum. You’re still spending around $80 per month if you eat out every workday.
On top of all this, many families like to go out to eat regularly. Even if you head out to a quick-serve joint, a family of five is going to average $25 to $40 per meal. If you go to a nicer restaurant, you’ll end up paying $50 or more, and that’s before leaving a decent tip.
Again, there’s nothing wrong with eating out, but plan for it in your budget. This means setting an absolute limit on how much you’ll allow yourself to spend on eating out each month, and prioritize how you’ll go about spending that money. Consider how far ahead of your debt you could get with an extra $80 or more each month.
3. Cash-Only Grocery Shopping
Since you’ll be making more meals at home and packing more lunches, that means you’ll be spending more time and money at the grocery store. It’s imperative that you get on a budget and plan your grocery spending wisely.
Many families have no idea how much they’re spending on groceries each month. The typical grocery shopper throws a list together based on family preferences, heads out to the store, then fills the cart with items on the list AND anything else that looks good too. Before you know it, this shopper has spent far more money than they intended.
The best way to control your grocery spending is to first make a list based on a meal plan for the week—even if it’s only a loose plan—and then set an absolute budget for the month’s grocery shopping. Once you’ve got this line item figured out, withdraw exactly that amount from the bank and stick it in an envelope.
This is your allotted grocery spending money for the month. When the money runs out, you’re done spending until next month. It may take you two or three months to figure out how much you should budget, but you’ll get there. This method feels harsh at first, but it forces you to make wiser spending choices and helps you determine the difference between wants and needs.
4. Sell Something
One of the most dramatic ways to break your budget free is to start selling some of your stuff. There are two facets to selling your stuff, one that brings temporary relief to your budget and another that can bring long-term benefits.
First, go through your house and get rid of anything and everything you don’t want, don’t use, or don’t need. Have a gigantic garage sale or list your stuff on Craigslist and Facebook groups. You can quickly unload everything from unused children’s clothing to furniture. Use any money you make to either beef up your starter emergency fund ($1,000) or throw every dime at your smallest debts.
Next, consider how you can get free of you car loans if you have them. Again, consider the difference between wants and needs. Yes, you probably need a vehicle to get to and from work and to transport your family, but do you need a $400 to $800 car payment each month?
What if you sold you car and bought a reliable used car with cash? Now we’re talking about huge money you might be able to put toward your debt each month. There’s absolutely no reason to saddle yourself with a $20k+ vehicle cost when you can find a working, safe vehicle for $2,000 to $3,000 cash.
5. Downsize Your Lifestyle
Finally, take yet another look at the difference between your wants and your needs. Are you making $36k per year but living a $50k lifestyle? Are you making $65k but living a $100k lifestyle?
There are so many things to consider here. Start with all the stuff on the list above and determine if you’re truly living not only within your means, but below your means. This is the only way to get ahead if you’re struggling to meet your monthly obligations or trying to dig your way out of debt.
In the final analysis, you may determine you need to take drastic action such as selling your house and downsizing. This should be a last resort, and is admittedly painful, but if you’re living a lifestyle beyond your means something has to break. It’s within your power to decide to break your habits and lower your lifestyle before you break your bank account.
I’m Jeff M. Miller, and I help ordinary people who are stuck in a rut change their behaviors so they can be extraordinary. I’m an entrepreneur who retired from my full-time job in my early 40s to work from home. I’m a financial counselor, life coach, graphic designer, and passionate believer in helping others improve their lives a little more each day.