73 Ways To Live Thrifty And Reduce Your Expenses
My wife and I bought our current house in 2012. We we moved in, and after all the costs we owed half a million dollars. Sheesh! Things were going fine, but then we decided to try and pay off the mortgage as quick as we could. We invented what we called "year of thrift". We decided to spend a year cutting our expenses as low as we could and putting as much money into our mortgage as we could. The year went so well and we got so good at living on the smell of an oily rag that we decided to keep it going until we paid off our mortgage. We are in about year 3 now and the items on this page detail many of the things we have done to cut our expenses.
One of the most important points we decided with year of thrift is that it wasn't year of nothing. The idea was to still obtain the things we wanted, but, do it for free if possible, and if not possible, do it in the cheapest way possible. I don't think we will live this way after the mortgage is paid off but it will get us there quicker.
1) Your Mortgage, Banking and Insurance
1.1) Reduce Your Mortgage - If I spend $20 a week or $1,000 a year on coffee, cigarettes, lunch or whatever, it doesn't seem like a big deal. However, if I reduce my spending by $20 a week and keep the $1,000 in my mortgage I save $40 in the first year in interest. By the end of the second year I save $40 + $80 = $120. By the end of the third year I have saved $120 + $120 = $240. By the end of the fourth year I have saved $240 + $160 = $400. By the end of the fifth year I have saved $400 + $200 = $600. By the end of the sixth year I have saved $600 + $220 = $820. By the end of the seventh year I have saved $820 + $260 = $1,080. By the end of the eighth year I have saved $1,080 + $300 = $1,380. By the end of the ninth year I have saved $1,320 + $340 = $1,660. Finally, by the end of the tenth year I have saved $1,660 + $380 = $2,040. Once you hit the ten year mark you are saving over $400 per year in interest. You will reduce your interest bill by nearly $6,000 over the next ten years. So, over twenty years you have saved $20,000 and reduced your interest payments by $8,000. That means a small change in lifestyle has knocked $28,000 off your mortgage over 20 years.
1.2) Shop Around For A Better Mortgage Interest Rate - I went to the commonwealth bank. They asked me if I wanted to refinance my mortgage. I said yes and they offered me an interest rate of 3.9%. My home loan was with NAB so I called them. I told them what Commonwealth had offered me and they matched it. This one phone call saved me about $2,600 in interest per year.
1.3) Reduce Your Insurance - We were paying a fortune for comprehensive car insurance. Because our cars aren't worth much we dropped the comprehensive insurance to third party only. This has saved about $600 a year for two cars.
1.4) Know The Free Stuff You Get From Private Health - I get a free pair of glasses and a free scale and clean each year with my private health cover. I make sure I get them.
1.5) Negotiate With Your Private Health Insurer - If you are 23 do you need cover for heart attacks and hip replacements? Make sure you are not paying for cover you don't need.
2) Regular Expenses
Reducing your regular expenses will have the most impact on your budget. If you save $60 a week by dumping the cleaner, why not set up a weekly auto debit for $60 and send that saving straight to your mortgage.
2.1) Get Rid Of As Many Regular Expenses As You Can - Do you really need Foxtel? Do you really need that extra phone? Do you really need alarm monitoring? Cut the regular expenses and save.
2.2) Dump The Cleaner - It is a wonderful thing to have a cleaner. But, it is easy to drop $60 a week or $3,000 a year on one. Is it really worth 4% to 5% of your after tax salary to have a cleaner? Why not reduce your cleaner to fortnightly, get them in for a spring clean 4 times a year or just do without until the mortgage is gone.
2.3) Make Your Lunch - I used to buy lunch every day. A sandwich and a coffee would set me back about $9. $9 a work day is $45 a week or about $2,160 per year. Taking your lunch and keeping the extra money in the bank is reducing your interest payments by $86.40 per year.
2.4) Quit Smoking - In Australia it is not difficult to pay $27+ for a packet of cigarettes. I don't smoke but if I did smoke three packets of cigarettes per week I would save $81 per week or $4,212 per year. If you put this money on your mortgage you would save about $168 per year in interest. Over twenty years that is $3,360.
2.5) Set An Entertainment Budget - We have two kids and while one of them is with the grandparents on a Monday night, the other three of us go out for dinner. We set an entertainment budget of $30 per week or $1,560 per year. We go to the local Hawker Malaysian restaurant and eat like kings for about $28. If we went to a standard restaurant we would easily spend $28 each. We eat well and save $3,120 per year. Because we save this money we also save $124.80 in mortgage interest per year.
3) Food and Drink
3.1) Change Your Coffee - This is a tall ask for many but get rid of the 2 coffees a day at $7-$9 and replace them with instant, plunger or bags to cut costs. At the moment, Shell petrol stations sell nice coffee for 80c. Much cheaper.
3.2) Shop Late For Food - At the end of the day the supermarkets discount their food. A great idea is to pickup discounted meat and freeze it. We regularly buy meat at 50% of the normal price because it is close to expiry.
3.3) Take Food With You - When you go out for the day with the kids, food can cost a small fortune. Be lame like us and take fruit, sandwiches etc. and if you are super lame like us take a thermos. You will save a packet and the kids will eat healthier.
3.4) Eat At Home - Restaurants cost a fortune. Eat at home.
3.5) Eat More Rice And Pasta - Rice and pasta is cheap. Eat more of it.
3.6) Eat Less Meat - Meat is expensive. Eat less of it.
3.7) Buy Cheaper Booze - It is very easy to spend $20 on a bottle of wine. Drop the pretence and drink $9.95 wine. If you are brave, find a bottle under $5.
3.8) Eat All Your Vegetables - We don't throw any food out. At the end of the week we cook a stir fry and use up all our limp vegetables.
3.9) Don't Sign Up To Dinner Services - Avoid the ease of Lite 'n' Easy, Dinner Twist or Uber Eats.
4.1) Don't Replace Your Light Bulbs - These days, long life light bulbs cost a lot to buy. If a light goes in one of your rooms and you have more than one light then live with less light. This way you use less electricity and you delay the purchase of a new globe. If you have a mortgage, every dollar you delay spending saves you fours cents per year.
4.2) Know How Your Electricity Bill Works - Do you get cheaper electricity at different times of the day? If you do, then adjust the way you use electricity to take advantage of off peak times.
4.3) Consider Solar Panels - You have to be careful and buy wisely but you can save a lot on your bills over the lifetime of the panels.
4.4) Lose The Dryer - We have two drying racks in the laundry. This way we can avoid using the clothes dryer except in an emergency.
5.1) Don't Upgrade Your Phone - When you get the latest phone you often have to go on a higher plan or make a payment for your phone. Keep your existing phone, negotiate with your telco to lower your plan and save as much as you can.
5.2) Shop Around For Cheaper Internet - The NBN promises a lot. One thing it doesn't promise is cheaper prices. I have shopped around and the $50 I spend per month on adsl 2+ internet is a pretty good deal.
6.1) Give Your Kids Pocket Money - Our kids ask us to buy them things every time we go out. If we gave in to every request we would be up for thousands. We give our kids $1 per year of age pocket money per week. When we go out we say "if you want to buy anything then you will need to take your pocket money". This gets them motivated to learn about money and maths, they have to count, read numbers and calculate change. The best part for our budget is that there is a limit to what they can spend each week. We save and the kids learn to budget as well.
6.2) Spend Less On Your Kids - Kids need to run, they need parks and playgrounds. Take the kids to the beach, it is free, and you can take a packed lunch.
6.3) Get Season Passes - We have season passes to the Zoo, the Maritime Museum and Scitech. As a result we always have something to do with the kids and it doesn't cost money each time we go. Instead of paying an entry fee each weekend we go to one of our season pass places and pad it out with other free events. Remember to take food and drinks with you or those savings soon vanish.
6.4) Set A Budget For Events - Tomorrow we are going to the Royal Show with the kids. We have pre-bought the tickets saving $25. We are taking a packed lunch saving $1,000,000 and we have told the kids they have $30 each and anything they want to do comes out of that $30.
6.5) Do Vacation Swimming At the Beach - Our state government offers swimming lessons for almost nothing. If you book them at the beach you don't have to pay for pool entry.
6.6) Join Clubs - It is much cheaper to do Surf Lifesaving than it is to pay for swimming lessons.
7) Home and DIY
7.1) Do It Yourself - Do you need a tradesperson to fix your paving or paint a wall? Can you do it yourself and save.
7.2) Pay For Renovations With Cash - We wanted to get our kitchen renovated. Ours is old and ugly. Let's say the renovation will cost $30,000. Our current interest rate is 4%. This means drawing on our mortgage to pay for the reno will cost us $1,200 a year in interest. If it takes 20 years to pay off our mortgage our $30,000 kitchen will actually cost $30,000 + (20 x $1,200) = $54,000.
7.3) Mow Your Own Lawn - You can save $40 every 3 weeks if you mow your own lawn. Borrow a neighbour's lawnmower and mow both lawns and save.
7.4) Dye Your Own Hair - My wife used to pay $120 to get her hair dyed at the hairdresser. I would always complain because they never dyed the roots properly. For $12 she started dying her own hair. She now does it more often, saves a fortune and gets a better result.
8.1) Keep Your Crappy Car - We own our cars outright, but, they are not pretty. One of our cars in particular smells, the paint is faded and bubbles and the resale value is close to $0. The thing is that it runs like a dream and never breaks down. We know that to buy a new car means that we need to take $15,000 to $30,000AUD out of our home loan to buy the car. At our 4% interest rate, this is $600 to $1,200AUD that we will need to pay every year in extra interest on our mortgage in addition to repaying the purchase price of the vehicle. As a result, we are keeping our crappy cars until they either die, or they need repairs that cost more than $1,500. Right now they cost us no more than petrol and servicing and we would still have to pay this for a new car. The other thing, is that once you have taken the money out of your mortgage, people tend not to pay it back and so you end up paying the interest on your car for the lifetime of your mortgage. This means that you could pay $36,000 in extra interest on a $30,000 car over 30 years. That is right, your $30,000 car actually cost you $66,000.
8.2) Fill Up On The Right Day - There are always cheap and expensive petrol days during the week. Find out the cheap days and fill up. In most places it is a Monday but in WA you can check Fuel Watch
9) Garden and Pool
9.1) Get Free Mulch - Tree loppers have a hard time getting rid of their loppings. It costs them money to take them to the tip. If you need lots of free mulch, ask a tree lopper to drop off a load for free.
9.2) Get Free Horse Manure - Chicken, cow and sheep poo costs money. Horse manure is free. If you need to spruce up your garden, get a load of free horse manure.
9.3) Turn Your Pool Pump Down - Over winter I turn my pool pump down instead of 8 hours. This saves about $50 a week in electricity.
10.1) Have Cheap Holidays - Go camping, go down south in the car, do a house swap. There are many cheap ways to get away.
10.2) Do Lots Of Research - Read every deals website around. You can save a small fortune.
10.3) Know What Insurance Your Credit Card Offers - We are about to go on a holiday and we know that our credit card provides excelent travel insurance. This saved us about $500. It just took me 30 minutes of effort to ring the insurance company and make 100% certain we were covered.
11.1) Pay HECS Upfront - You get a big discount if you pay your HECS up front.
11.2) Consider Alternatives to Training Courses - Not always, but there can be other ways to get trained for a job. Consider doing work experience instead of a training course. It is free, gets your foot in the door and you might get offered a job.
12.1) Use Outdoor Gyms - A gym membership will set you back $500 to $1,500 per year. Find one of the outdoor gyms the council provides, workout and save.
12.2) Don't Buy A Treadmill - Treadmills are expensive and most people don't use them for more than a week. Go for a walk. It is free and much better for you than a treadmill.
12.3) Go for a Walk - It is free, you meet the neighbours and very good for you.
13) Live Cheaper
13.1) Go Op Shopping - My wife goes to the op shop every week. She will regularly buy a new, or almost new dress for $7 that would have cost her $100 to $300 in a shop. Kids toys are very cheap, but you save a fortune on books. A book that will cost $40 new is often $1 at the op shop.
13.2) Live With Ugly Things That Work - We have a rusted old pedestal fan. It is not pretty but we bought it 10 years ago for $14 and it works a treat. When it is hot we turn it on and it keeps us just as cool as a pretty fan.
13.3) Beg And Borrow - Before the year of thrift, if I needed to drill a hole in a wall I would go to Bunnings and spend $50 and buy a drill. The drill would rust in my shed, and the next time I needed a drill it wouldn't work and I would pay another $50 for a new drill. I heard once that the average domestic drill gets used for 12 minutes in its lifetime. Now if I need a drill, I borrow one from a neighbour. This gets me talking to my neighbours and saves me money. Every time I need a wheelbarrow, a drill, a pump or whatever I try and borrow one. My contribution is that I own a trailer that other people borrow from me.
13.4) Water Down Your Hand Soap - If you buy pump pack soap, fill them up with water when they are about half empty. You won't notice the difference. Keep the empty bottle when you have finished, next time you buy hand soap, decant half of the new one and top up both bottles with water.
13.5) Cut Your Hair Less Often - When I get a haircut I ask for the shortest possible blade. This way I get at least 3 to 4 months out of a haircut. My wife gets a trim twice a year for $30 a time. We save hundreds this way.
13.6) Don't Buy Things - Take pride in not spending money. Go out with an empty wallet and come back the same way.
13.7) Delay Expenses - Remember, every dollar you spend costs you 4c per year in extra interest on your mortgage. Do you want to buy new outdoor furniture for $1,000? First of all, buy it second hand and save a packet, also wait a year and save $40 in interest.
13.8) Buy Second Hand - Before you buy something, check if you can get it second hand on Gum Tree. You will save a bomb. Make sure your haggle as well. Text or email and offer them a cheaper price. 90% of the time they will say yes.
13.9) Do Things At Work - Need to print a document or use software. Do it at work rather than paying for software you will use once.
13.10) Buy In Bulk - When you go shopping, keep an eye out for bargains. If deodorant is on special then buy 20 of them and store them away until needed.
13.11) Find Things For Free - The desk I am using right now to type this was obtained free on Gum Tree.
13.12) Go Out On Verge Collection Day - You can often pick up things you need for free from verge collection.
13.13) Always Haggle - Before you buy anything, ask for a cheaper price. This works every time at Harvey Norman, The Good Guys etc. Haggle and if they say no, then leave and come back another day or shop elsewhere.
13.14) Pad Out The Good Stuff - If you love sushi then get a small amount of sushi and buy plain steamed rice. This means you still eat the good stuff but you fill up on cheaper food.
13.15) Shop In The Outer Suburbs - I have noticed that many items for sale are much cheaper the further you get from the CBD. Shop as far away from the CBD as you can.
13.16) Repair Things - I have a $20 broom that is in good condition except for the fact the head snapped off. I am going to get a screw, my 12 minute drill and repair it instead of buying a new one.
13.17) Read Online Reviews - Other people have bought everything. Read online reviews so that you can buy the cheapest best quality thing you need.
13.18) Repurpose Things - I use a water spray bottle with my iron to iron my shirts (my iron is 15 years old as well). When they break, I would in the past have bought a for-purpose spray bottle for around $7. Now, when a Spray and Wipe bottle is empty, I clean it out and use that.
13.19) Ask For It For Your Birthday - When you want something you can avoid paying for it yourself. Drop a hint and ask for it for your birthday to avoid paying for it.
13.20) Go Without - Do you really need it? If not live without it.
13.21) Keep Broken Things - One of the draws in my bedroom cupboard is broken. I have put the draw on top of the cupboard. I have the same amount of storage but haven't had to shell out $500 to $2000 for a new cupboard.
13.22) Go To The Library - Don't buy a book you will read once. Go to the library and borrow books and DVDs. Why not use the internet while you are there.
13.23) Keep old parts - We are about to buy a new vacuum cleaner. We are going to keep the hose and heads. These always break and need replacing. We will put the old ones on the new vacuum and when they break, we can get the new ones out of the cupboard.
13.24) Go to lost and found sales - Sports centres and swimming pools etc. sell all their lost property once a year. You can get some great bargains.
13.25) Buy Nothing Page - Sign up to your local Facebook buy nothing page for your suburb.