If you’re trying to get out of debt, the first instinct is often to cut back. But slashing your spending doesn’t have to mean saying no to everything you enjoy: You simply need to optimize your purchases.
In this guide, you’ll learn how to find hidden money in your existing expenses without resorting to further leaning out your spending.
Optimization Isn’t About Sacrifice
You don’t have to live off beans and rice or give up your favorite streaming service. You just need to stop paying for things that don’t serve your needs in the short- or long-term. But what should stay and what can go?
Start With an Audit
Most people don’t know where their money is really going. An audit accounts for every last dollar you’ve spent in a given period. For your purposes, look at the last month or two of spending and compile anything that’s:
- Auto-renewing
- Repetitive or duplicated (like multiple streaming apps)
- Forgotten (subscriptions you haven’t used in weeks)
With those facts in hand, think about what you need to keep, and what can go. Cancel or pause anything that doesn’t bring real value.
Get What You’re Already Paying For, For Less
You don’t need to cancel a service to save money — sometimes all it takes is a phone call. Negotiation is worth your time for:
- Internet & Phone Plans
- Car or Home Insurance
- Medical Bills
There are third-party services that do the negotiation for you, but do your due diligence before hiring them. People with recurring medical expenses might find value in a patient advocate, as their job is to make the healthcare system work better for you.
Find Savings in Big Bills
The biggest expenditures usually fall under housing, transportation and food. These are the places where even small changes can add up fast.
How to Save on Housing
- Negotiate your rent at renewal time, especially if you’re a long-term tenant.
- Find a roommate or rent out a spare room if your space allows it.
- Seal drafty windows and switch to energy-efficient bulbs to cut utility costs.
Transportation
- Switch to usage-based car insurance if you don’t drive much.
- Bike, use public transit or carpool to eliminate or reduce gas costs.
- Stay on top of maintenance to avoid big repairs later.
Groceries
- Meal plan once a week. It’s quick and cuts down waste.
- Buy staples in bulk. Things like rice, beans, pasta and frozen vegetables are typically cheaper when bought in larger quantities.
- Use grocery rebate apps like Ibotta or Fetch for small cash back wins.
Beware of Lifestyle Creep
It’s a common trap: You get a raise, and somehow it doesn’t really make a difference for your savings or debts. That’s lifestyle creep. Your income goes up, and your expenses quietly rise along with it.
Identifying the drivers of lifestyle creep can be complicated, but start by asking yourself:
- What did I buy in the last 90 days that added zero value to my life?
- If I lost my job today, what expenses would I cut immediately?
This only works if you’re honest with yourself, but the pain is worth it: You’ll find places where you can scale back without missing a thing.
Protect the Cash You Recover
So you’ve found all the missing money. But without a job, it’ll slip right back into your spending. Your next task is to set yourself up for success:
- Create a separate account. Set up a separate savings or checking account where all savings from cuts automatically get transferred.
- Make a rule: Every time you lower a bill or cancel something, transfer the monthly amount to this account.
- Use milestone goals. For example: “Every $100 saved = one extra credit card payment.”
Done all this and still feeling like you’re in over your head? If you’re trying to pay off multiple debts and need more breathing room, debt consolidation might help you get a lower monthly payment or simplify your plan.
Don’t Spend Less — Spend Better
Guilt about what you buy isn’t a fun experience. And these tips can go a long way to protect you from feeling bad about getting that occasional coffee.
You’re not making cuts to suffer — you’re getting more control over where your money goes.