Reducing Your Outgoings

If you're looking to cut down your spending, your budget will be divided into three areas:

1. Fixed Spending

These are fixed costs, and you will be able to do little to reduce them.

Mortgage payments or rent
Property tax
Childcare costs (if they are used to enable you to work and so earn more to repay what you owe)

2. Essential Spending

There are items on which you must spend something, but not necessarily the amount that you are currently spending.

Cash

You should be able to make big savings by cutting down the amount of cash you take out. Cash is often used for impulse purchases: a cup of coffee, a magazine, a lottery ticket - all things that are not essential.

Clothes

Some spending on clothes can be classed as essential, particularly clothes for your children. But you should not expect to spend too much on new clothes when you are in financial trouble - and certainly not for yourself.

Food

Before you go shopping, make a grocery list and stick to it, unless you see food that's substationally reduced. Try to buy fresh produce from markets rather than supermarkets if possible, as it's almost always cheaper. Also, consider cooking in batches - cooking large amounts of food and freezing it is much more cost effective both in terms of buying the ingredients and the energy used to cook the food.

Insurance

You may be able to make massive savings on household and auto insurance by shopping around.

Telephone

Cut out unnecessary calls, and make vital ones shorter. Consider whether the cell phone is really essential - if it is, would you be better switching to a pay-as-you-go plan?

Transport

You may need to ask yourself if a vehicle is essential, or can you manage to get to work by public transport? Vehicle costs are high, not only in gas, but also in registration costs, possible loan costs, insurance and servicing, so if you can do without a vehicle altogether, you may be able to save thousands. Unless you can prove that you have no other means of getting to work, a creditor will need a lot of convincing that money to run a vehicle should be classed as essential spending.

Utility Bills

You will be surprised how much you can save by turning off the lights when you are not in a room and switching off the television at the plug rather than leaving it on standby. Turning down the heating by just one degree can save you almost 10% on your heating bill. And you'll be helping save the planet too!