How to Drastically Cut Living Costs

How to Drastically Cut Expenses in Today's Economy

There’s little doubt in anyone’s mind, whether you are at the gas pump or at the grocery store, that we are in a whole new world financially this year.  The world is changing, right before our eyes and as consumers, we are being pressed to make some difficult choices.  If you are feeling financial pressure today, take heart, you’re not alone.  There’s plenty of hope as we look at how to drastically cut living costs!

We’re in new territory, economically speaking.  Inflation is at its highest rate in decades.  Gasoline is over $4.00 in most places ($4.39 in my Ohio town today) and rising.  People can’t afford to even drive to work!

When the price of fuel rises, so does everything else, like food.  It’s more expensive than ever to feed our families right now.

Many of us need to make some serious decisions in order to keep a roof over our heads and feed our families.  I’m talking about what may seem like drastic measures to cut your living costs, but that’s the reality of it.  

I want you to know that my husband and I have made many of these tough lifestyle decisions over our 30-year marriage.  We were in over $100K worth of debt and did whatever was necessary to get out.  I’ve been where you’re at.  You won’t always be here, things are going to improve.

How to Pay off $100K Worth of Debt

When life is lived in more simple terms, you’ll find it’s easier to pay for.  Lower those expectations, whatever they are, and begin to develop gratitude for the basics: a roof over your head, a bed to sleep in, food to eat, and love in your home.   

How to Drastically Cut Living Costs

I also want to take you back to a simpler time in our history, a time when we grew some of our own food, took care of our health needs, and were more content with what we had.  

Our grandparents kept cash in the cookie jar for bills and expenses.  They stopped spending when the cash was gone.  

The first way to drastically cut your expenses is to start using cash again.

cash evelope system

Return to the Cash System

The digital economy has caused most of us to lose touch with our money.  We don’t carry cash anymore, we just swipe our cards mindlessly.

If one card doesn’t work, we just try another card.

We were in over $100K of debt when we first got married, and we knew that we needed “major surgery”, as we humorously described it, if we were going to have a chance of paying off this debt and getting our finances under control.

Using cash in this day and age may seem somewhat archaic, and it is.  

However, using cash will do two things:  

First, it will completely change how you spend your money and give you new accountability.

Second, you will regain complete control over the means you do have and make better decisions overall.  


What Does a Cash System Look Like Today?

I can hear you now…”Get real, Kelly, you can’t pay bills in cash anymore!”.

Hear me out.

Fixed bills like your rent/mortgage and utilities are usually paid online, continue with that as it makes the most sense and you probably don’t have a choice anyway.

What I’m talking about is creating a cash envelope system with your variable expenses:

  • Food
  • Clothing
  • Entertainment
  • Eating out
  • Personal care/make-up/haircuts
  • Christmas
  • Birthdays

These are the categories that we can make the most improvement in cutting our living costs!

These categories must have their own cash envelopes that are funded when you get paid.  You will decide ahead of time how much you can afford to spend in each category, based on your current situation.

Let’s say you bring in $4,000 a month in income.  Your fixed expenses are as follows:

Rent $1000

Electric $150

Water $50

Trash $35

Daycare/School expenses $500

Car payment $250

Gas $300 

Credit card $200

Total:  $2,485

Your total income is $4000 – $2,485 = $1,515 left

Now, take the $1,515 and fund your envelopes for your variable expenses.  Make a separate envelope for each category and put the cash in them.  That might look like this…

  • Food $1000 (or $250 week)
  • Clothing $50
  • Entertainment $100
  • Eating out $100
  • Investing
  • Personal care/make-up/Haircuts $75
  • Christmas $50 (Accumulated all year)
  • Birthdays $50 (Accumulated all year)
  • Car Repair (tune-ups, tires, etc.) $50
  • Home Repair (appliances, roof, plumbing, etc.) $40

Your money has all been accounted for and therefore, no other spending can be done.  When you need money for groceries, you take it directly from your envelope and put any change back in.  Write what you spend on the front of the envelope and keep track of your expenses.

You might be asking what happens if your grocery bill is more than you brought with you once you’re at the register.

You put something back.  Period.

Bring a calculator and keep track of what you put in your cart.  I did this for many years and you can do it as well.

By using the envelope system, every single dollar will be accounted for!

Another option for your grocery budget would be to purchase a gift card in the amount of your grocery budget from the store you shop from.  Use only the card for grocery shopping.


Say you want to eat out. 

Do you have any money in your “Eating Out” envelope?  If you do, then remember that’s all you have for eating out this month.  You can spend it all at once or you can divide it up over the course of the month.  However, once it’s gone, it’s gone until next month.

This is how you will treat every category.

Some categories will roll over every month until needed.  Christmas and birthdays will keep accumulating until needed.  Once again, you need to limit your spending to what you’ve saved.


Forecasting repairs and maintenance on cars and homes is a must to cut living costs.  Many a budget has been thrown off the rails because of unexpected expenses and repairs that had to be dealt with.

Repairs and maintenance should be expected and saved for. 


Of course, you’re going to need new tires every few years.  

Of course, your roof or furnace will need to be replaced at the end of its life.


These expenses shouldn’t surprise anyone, they should be planned for and funded.

The cash system will make a world of difference in your finances, cut living costs and help you to take control of those difficult budget issues!


home sweet home door mat

Cut Housing Expenses

Our homes are our safe place, our sanctuary, so to speak.  We want to feel comfortable at home, and enjoy all of the benefits that help us relax at the end of a long day.

Yet, most people don’t truly realize what their home is costing them every month. 

Housing expenses encompass more than just the mortgage payment.  While you may be able to comfortably pay your mortgage right now, there are other questions that need to be asked if you want to drastically cut your expenses. 

Perhaps you were a two-income family when you purchased your home, but now you only have one income coming in.  

After you add up your mortgage, property taxes, insurance and interest, your payment should be no more than 30% of your gross income, less if possible.   

Lenders will qualify you for a loan up to 30% of your pre-tax income for your principal only (they get paid on the loan amount, remember that!).  However, there’s a big difference between what the bank will qualify you for and what you can really afford!

If you own a home currently and are significantly out of that range, there are things that you can do.


Become a multi-generational home – Many cultures do this as a matter of tradition, and it makes a lot of sense!  Having grandparents or grown children live with you can be a win/win for everyone if the relationships are healthy.   Sharing the chores as well as the expenses can make life easier for everyone, even if it’s just a temporary situation.

Refinance – Mortgage rates are still the lowest they’ve been in years, here’s a mortgage calculator to see how much you could save.

Rent a room out – Renting a room to a single, elderly or generally quiet person can really offset your mortgage, especially if you’re close to getting behind on payments.  All “do-diligence” is necessary but this could be a feasible option.

Airbnb – This is another way to make your homework for you and less of a commitment than a full lease.  If you have an extra room or an attic area that you could fix up suitably, consider putting travelers up for a night or two.

Store a Boat or RV – If you have some room in your garage or another outbuilding that you don’t use, you might want to consider storing a boat or an RV for a few months out of the year for some extra income.  Check with your homeowner’s insurance agent to make sure that would be covered.

Ditch Lawn Care – If you need to drastically cut your expenses, and you’re paying for someone to treat or mow your lawn, you need to cancel that immediately.  Have one of your kids mow.

Cancel Trash Pick-up – Do you have a friend or family member who owns a business with a dumpster?  You could ask them if they would mind if you brought your trash once or twice a month.  You could also burn your trash if you’re allowed to do that where you live.

Maintain Your Home – Fix that leak when it’s small, caulk your bathroom when it needs it, and seal coat your driveway when it begins to crack.  Take care of problems when they start, it’s a lot cheaper than waiting for a crisis. (See Envelope System above!)

46 Frugal and Sustainable Living Tips


Property Taxes 

Property taxes vary tremendously, depending upon what part of the country you live in or even what part of your city you reside in.  Careful consideration should be given not only to the property taxes when buying a house, but the history of tax levies in the area.  Will those property taxes continue to rise unreasonably? 

When we purchased our farm 11 years ago, we looked closely at the property taxes.  Why?

Here’s the thing…

We don’t like to have a mortgage.  When we had one, we worked very hard to pay it off as soon as possible.  

But guess what you can never pay off?  Property taxes.  They never go away!

We chose a property that was within about 6 houses of another county that would have almost doubled our property taxes…for the same type of property!

If you’re in a high property tax area, you might want to consider moving.  Taxes never go down, they only increase.


Apply for CAUV – “Current Agriculture Use Value” is a program in Ohio that allows for a property tax reduction when the property or part of the property is used for agriculture.  There’s paperwork involved and an inspector came out to our property, but we were able to save about 30% off of our tax bill.  Each state has its own regulations, but it’s worth checking into.


reduce your utility bills


Saving on utilities can be done in several different ways.

Whether you’re talking about electricity, natural gas, propane or water, it’s all a matter of using less, right?

Use less, pay less.

If you want to drastically reduce your utility bills, you’re going to need to track your usage.


Read Your Meter

Let’s begin by getting friendly with your electric meter.  Begin tracking your usage, every single day, at about the same time.  When my kids were leaving the house in the morning, I just stepped outside and read my meter.  I found it handy to keep the daily readings on a “note” on my iPhone.  However, you can write it down on paper if you wish.

Pay particular attention to spikes in your usage, this usually happens on weekends when everyone is home.

Re-train family members to turn lights off, unplug curling irons, take shorter showers (use a timer!), use power strips for electronics and stop letting the faucet run.

If you heat with propane, keep track of how much you’re using between fill-ups.  Track your water usage as well, it’s on your bill.

This may seem like a lot of work, but I found it to be a fun challenge!  These steps will make a notable difference in your utility bills!



What a shame to pay for heat and air conditioning, only to have it seep out of the cracks around your windows and doors.  Take the time to caulk and install weather stripping, it’s not expensive and will make you more comfortable.

Attic insulation will make a huge difference in your overall comfort and heating bill!  You may have to save for it by using the envelope system (please don’t finance it) but if you plan to stay in your home, insulation is a good investment. 


Think “Off-Grid”

Before you turn on the stove, which requires 220 volts of electricity, why not consider an off-grid way of cooking your meal tonight?  Do you have a fire pit?  Could you cook over charcoal?

I like to use my solar oven, especially in the summer, so that I don’t use electricity and I don’t heat the house up.  You can easily make a DIY solar oven, check on YouTube.

Another way to cook outside is with a rocket stove, again, an easy DIY project.

save money on utility bills by using clothesline

Use a Clothesline

For about $60, you can put up a clothesline and start saving!  I have two clotheslines that I use for just about everything!  Your dryer is a huge energy hog, plus it’s hard on your clothing.  I save about 25% off my electric bill in the summer when I hang out my laundry, that’s real money!

46 Frugal and Sustainable Living Tips

home expenses how to reduce


Do you live in an older home that’s turning out to be a “money pit”?

I’ve lived in those kinds of homes.

Sure, all homes need upkeep and maintenance, but then there are some houses that are just in continual crisis mode.  When you are constantly spending time and money on your home, but are struggling financially, you might want to consider “cutting your losses”.

Even if your home started out as a “labor of love”, but it’s not working out anymore, it’s ok to punt and change strategy.

17 Money-Saving Tips for Around Your House


How to Cut Living Costs: Food

I consider myself to be somewhat of an expert when it comes to eating healthy, but cheap at the same time.

We’ve raised 9 children, all on one income.  Over the years, I’ve cooked from scratch from inexpensive staples at the grocery, the items that never have coupons.  I have found that coupons cause me to spend more money, as I search for an item that I wouldn’t otherwise buy.

However, I definitely shop sales and loo

k for the best deals on the foods we normally eat.  I check the weekly grocery ads online and only venture out if I find a great deal that’s worth the gas.

Shopping bulk at stores like Costco and Sam’s can help you to cut living costs, if you do your homework and know the unit prices.


Cook From Scratch

It’s no secret that processed food costs significantly more than food made from scratch.  It takes a little planning to cook from scratch, but I found that “batch cooking” allowed me to get a lot of food cooked in a short period of time.  This allowed me to portion out several meals and freeze them for a later time.

Batch-baking can be done by doubling or tripling recipes that your family loves and then freezing them.  When my kids were little, they would eat an entire batch of cookies by the end of the day.  I finally started to double and triple my recipes, then put a couple of batches away in the freezer.

When you make a casserole for dinner, double or triple the recipe and freeze the extra.

When you make a pot of soup, can the leftovers or better yet, make extra to can!

53+ Canning Meals in Jars Recipes

18 Cheapest Foods to Shop for When You’re Broke


diy household cleaners

Cut Living Costs by Making Homemade DIY Cleaners

I can hardly believe the prices of cleaning supplies at the grocery store!  Not only are most of them toxic, but they are also completely unnecessary!  I clean my entire house with vinegar, baking soda and dish soap.  The amount of money that I save by not buying cleaning products is huge!

The next time you look at a bottle of $8 spray cleaner at the grocery store, ask yourself how much food you could buy for that $8!  I like to equate things to gallons of milk, so I could buy 4 gallons of milk instead of that bottle of toxic cleaner.

At the end of the day, wouldn’t you rather use your food dollars for food???  You can cut your living costs easily by skipping expensive cleaning products.

Make Your Own DIY Cleaners at Home


Make DIY Laundry Detergent

Have you seen the prices of laundry detergent???  Good grief!  It’s so easy and cheap to make!  You’ll save $10-12 a week from just not buying detergent!

Make Your Own Laundry Detergent


urban vegetable garden

Cut Living Costs by Growing Something to Eat

Food can be very simple to grow and I want to encourage you to grow something that you can eat this year!

Container gardens are easy to start and seeds are cheap!  You can even ask gardening friends for starters from their berry plants!

Growing some of your own food, especially fresh fruit and vegetables, is a great way to cut living costs.

Urban Homesteading for Beginners

How to Start an Easy Vegetable Container Garden

How to Grow Sprouts at Home on Your Counter

How to Grow Your Own Tea in a Container

How to Grow a Salad Bowl Container Garden


cut the cost of driving

Reduce Transportation Costs

Cars cost more money to own and operate than people realize.   AAA estimates that in 2021 it cost $9666 to own and operate a car.

One car.  

Most families have at least two cars, that’s close to $20K a year to drive.  That would pay for a year of college.

If you are in financial dire straits, you might want to get down to one car, at least for a while.

The decision to own a car is personal, everyone’s needs are different.  But at the end of the day, I think given the increasing price of gas, it makes sense to ask yourself if you could do without.

Urban dwellers have the unique opportunity to use public transportation, which I would take advantage of as well!

  1.  Reconsider Your Insurance Coverage – Perhaps you could increase your deductible a bit to cut living costs .  If your car is older, do you really need full coverage?  Talk to your insurance agent about how to lower your insurance bill.
  2.  Drive Your Car Until the Wheels Fall Off – We’ve kept cars well into the 250,000 miles range!  If you take care of them with regular maintenance, you can make a good car last a very long time.  Pay them off and keep them!


how to cut cell phone costs

Reduce Your Cell Phone Bills

One significant way to cut your living expenses is to pare down your cell bills.  You should be able to reduce your cell phone bill with all of the alternatives out there today!  Check the competition and see which providers work best in your area.

Best Cheap Cell Phone Plans for 2022


Reduce Entertainment Costs

Americans entertain themselves in a number of ways…

But if you find yourself in a financial pinch, then the entertainment category will have to be trimmed.

Streaming services can be replaced with a Roku box, saving hundreds.  Get an antenna for your TV, you’ll be amazed at how many channels you can get for free!

Break out the board games and have a family game night.

Take walks.  Look at old family albums.

Catch a free concert in the park.

There are a lot of ways to entertain yourself for free!


Use Garage Sales and Thrift Stores to Cut Living Costs

When we were trying to get out of debt, I purchased just about everything we needed by garage saling and thrift-store shopping.

I kept a list all winter long of things that I thought the household needed.  I also took a full inventory of all of the children’s clothes, then created a detailed list of what they needed, as well.

I kept my list with me at all times.  All of our needs were filled every year using this method!  You have to be patient and deliberate.


I still garage sale on occasion to fill needs we might have to cut living expenses.  It’s simply not necessary to buy new items when perfectly good, gently used things can be bought for pennies on the dollar!


cut holiday expenses

Cut Living Costs for Christmas and Birthdays

Christmas and birthdays tend to trip people up because they have trouble setting boundaries.

Few of us enjoy saying “No” to people that we love, but when you need to drastically cut living costs, you’re going to have to learn how.

Christmas expectations were a huge problem for us and our budget.  Our extended families put a huge financial burden on us that we just couldn’t afford anymore.  We had “the talk” in July, when no one is emotional about the holidays, and simply told them that we weren’t going to be able to buy any gifts except for our children.

It went over like a lead balloon.

But that’s ok.  They don’t pay our bills.

Rather than buy gifts, I made special baskets (that I bought garage saling) for our loved ones filled with things like baked goods or handmade items.

Birthdays are the same way.  Once again, other people’s expectations will derail your financial goals.  You’re going to have to sit down and make decisions about how much you really want to spend!

When we were trying to get out of debt and money was extremely tight, we made our kid’s birthdays fun by getting creative and looking for cheap ideas on Pinterest.  

How to Simplify the Holidays

113 Homemade Christmas Gifts from the Kitchen


Teach Your Children How to Manage Money

As you make changes in your financial situation, make sure you’re teaching your children about how to manage money.  Most of us don’t learn much about how to manage our finances growing up.  Wouldn’t we all be in a better place if we did??

It doesn’t take long for young children to turn into young adults, it’s so important as parents to teach our kids contentment, the difference between needs and wants and how to cut living costs in their own lives.

What would you add to this list?  Let us know in the comments below!



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