Sorting Out What’s Important From The Rest
When setting a financial goal, whether it is to pay off debt, save an emergency fund, save for another objective, or anything else that takes an extended timeline, changes in what you are currently doing, financially, will usually have to be made. Be it adjusting a budget, creating a budget in the first place, or simply figuring out what you take in and spend, a reallocation of your current funds is in order. But how to find the money to start working towards those goals? Here is my three step process to seriously looking at the big-picture items in my spending (generally recurring bills and other like items) and finding where I can squeeze a little extra to go elsewhere.
Try to reduce expenses without eliminating desired services
My first step is not to cut anything classified as a want and not a need, but generally try to reduce the costs of both wants and needs. This can be as simple as making a call to your telephone or cable or insurance company to insure that you have the best rate for the coverage that you desire (and are not paying for services you do not use) or as complex as refinancing a mortgage or other adjustable rate loan. Examine every recurring expense in your household and make sure that you are paying what the service is worth, not what you are being charged. Reductions here can keep your quality of life the same while increasing the flexibility of your budget.
Determine what remaining services are wanted vs needed
Maybe shaving some of the excess ff your already existing costs wasn’t enough to have the flexibility to meet the new goal. Once you’ve got the best prices available for the services you have, it is time to take a good look at what you want vs what you need. This is different for everyone. For some, our high-speed internet would be a want, but for us, it is a need since my spouse is required to have 24/7 internet access for his job. But there are definitely items in our budget that are a want vs a need. Figure out what in your list of expenses are a must, and what is a luxury.
Prioritize wants and act accordingly
I am not saying one should cut every “want” 100%, but prioritize. There are definitely things that are less painful to eliminate than others. Figure out what you can do without - you might after a few months wonder why you thought you needed it! As long as the goal you are trying to accomplish is more important to you than whatever you’re eliminating, the pain is worth the effort. Keep your eye on the prize!
Not everything needs to be cut to the bare bone to work towards a goal. But if you examine where you are, and where you want to be, it might be clearer than you think what things you’d rather give up so you can meet another, more important goal. Just don’t forget to keep having a little fun. Frugally. 
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April 4th, 2009 at 8:01 am
I am at a bare bones budget with nothing left to be cut. Yesterday, my 20 year old and I had an interesting discussion on being poor. How we are financially poor, but in other ways very rich. She is going to college paid for by financial aid and I have a M.Ed in education. We eat home prepared healthy meals and live in a small apartment with an amazing view of a nature park. We both have reliable cars, even though they are older models. We have good friends and family and live in a wonderfully progressive city. She has studied in Italy on a scholarship and we both travel often to places we love in the US. We have just about everything we need and some of what we want.
April 4th, 2009 at 10:11 am
I am in the process of trying to trim our expenses and budget even more to save for a new van..We are talking about going with a are bones budget for a few months to bulk up our savings.
April 4th, 2009 at 3:44 pm
For specific goals, it also may be possible to do short term “deprivation’, i.e., cut back to the really basic cable for x months; eat lots of peanut butter and jelly for a month; that kind of thing. Sometimes the loss of a “need” is tolerable for a short period of time when you have a really concrete goal: pay x bill, buy a specific item, that sort of thing. We can do without a lot for a short period of time!
Amy D. also used to talk about cutting back until it’s not tolerable, then inching up just until tolerable/acceptable is reached. She was referring to things like the amount of detergent you use, but the premise works for a lot of other things, again like cable. The only disadvantage is if you’d lose money having to restart something, such as a new start-up fee.
Thanks for the post!