Getting Out of Debt: Slash Your Monthly Budget

If you are currently deep in debt, and unable to significantly increase your income to help pay off your debt, you may want to consider chopping away on the other side of debt freedom equation – your monthly expenses.

The only way to free up more cash to put towards debt is to increase your income or reduce your spending. Doing both is the ultimate way to increase cash flow, but unless you have a ready-made second job or your boss is up for offering large amounts of overtime, chances are expenses are the side of the equation with which you have the most control.

Here are a few things we’ve done to eliminate and reduce expenses. Remember, the more radical you get towards saving money every month, the more money you’ll have to pay off debts, and the faster you will reach debt freedom.

5 Steps for Immediately Slashing Your Monthly Budget

1. Cancel all non-essential subscriptions. You might not think little things like the gym membership, Netflix and XM subscriptions, cable, etc. amount to much, but they do add up. Consider a basic $50 cable television subscription sets you back $600 a year.

2. Shop for cheaper premiums on all forms of insurance. Contact insurance providers and shop homeowners, auto, and any other type of insurance you currently pay (renter’s insurance, RV insurance, etc.). It may help to slightly increase your deductibles, assuming you have a solid emergency fund in place.

3. Get rid of useless or luxury services. For purposed of radically slashing your budget, I consider things like lawn care, the exterminator and home telephone service as “useless or luxury.” Sure, they serve a purpose, but can easily be replaced with do-it-yourself work, and in the case of a home phone, another produce – like your cell phone.

4. Cut cell phone service to minimum plan. Speaking of cell phones, it is absolutely obscene what some people pay each month for the ability to play Angry Birds and check email on a cell phone. Unless you can justify it as a business expense, I’d cancel everything but a very basic plan with a very basic, but high-quality, cell phone.

5. Reduce your monthly utility usage. Utilities often represent the highest budget category for most families, after rent or mortgage. And the highest utility payment is often surrounded by energy use: air conditioners/heaters, hot water heaters, appliances, etc.

Bump up (or down) your thermostat a few degrees so your air or heat works less. Consider lowering your hot water heater temperature so it doesn’t have to work as hard to heat water. Unplug appliances and electronics when not in use as they typically drain power while in “standby” mode.

Now for the most important part. With whatever amount you save each month, be sure to apply it to your debts in whatever order of payoff you choose (debt snowball plan, etc.). Do not simply spend your new-found cash, or you will continue to push out your debt freedom even farther.

Be sure to check out the rest of our series, How to Get Out of Credit Card Debt

This post was featured in the Carnival of Personal Finance at


  1. Those are all great ideas! I think most people’s grocery and/or eating out categories off a lot of areas where you can cut back too. We had no idea how much money we were spending on food until we sat down one day and totaled it up. We were wasting a ton of money!!

    • No kidding – our recent grocery store trips have been ridiculously high, made worse by the run up in food prices over the last couple years. I distinctly remember buying things for $1.99 and $2.99 just a few months ago that are now well over $3 and $4. But having said that, there are still areas where we can cut back to offset the increase in prices.

      Thanks for leaving comments here, Mary! Hope you’ll help me spread the word so we can have more discussion here.

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