Household Budget Cuts that Help Reduce Debt


Before we eliminated more than $42,000 in debt, I would meet frugal folks and think: “How boring. I could never be that strict about money.”

Today, I am one of those frugal folks. After two and half years of trying, we are debt free and living on one income.  The good news is, if I can be happily frugal, so can you.

One of the most important steps toward financial freedom is knowing where your hard-earned cash is being spent. To do that, you need to:

1. Track every dollar.

Do you really know where every dollar is being spent? If not, I guarantee you are wasting money. That may seem like a bold statement, but believe me when I say that tracking your money will result in some amazing discoveries. Here are the categories we implemented to track our money:

  • Blog fees
  • Car insurance
  • Car maintenance
  • Cell phones/internet
  • Clothing
  • Dog boarding/vet
  • Eating out
  • Entertainment
  • Gas (cars)
  • Gas (heating)
  • Gifts
  • Groceries
  • Gym
  • Hair cuts
  • Medical
  • Mortgage
  • Instrument Rental
  • Netflix
  • Spending money & allowance
  • Vacations
  • Water bill

2. Cut expenses

Now that you know where your money is being spent, you can work on protecting it. Hold onto your money! We found ways to cut expenses in 18 of the most common budget categories. Here’s the long version:

Car insurance. Shop around and get a cheaper premium. Usually, combining home and auto insurance will result in a cheaper rate.

Car maintenance. Read your owner’s manual – you probably don’t need to get your oil changed every 3,000 miles. Newer cars can go anywhere from 5,000 to 10,000 miles between changes. I repeat: Check your manual.

Cell phones/internet. How many minutes are you using? Could you reduce your plan? Try reducing your talk-time for a month and see how you do. Call your sister using free night and weekend minutes, instead of during the day.

We added a land-line phone to drastically reduce cell phone usage.

Clothing. Only buy items when you truly need them. Wait for sales.

Dog boarding/vet. Buy discounted medications online and take your pet along for vacations (if possible).

Eating out. Clip coupons, set a cash allowance and don’t go over.

Entertainment. Again, clip coupons.

Gas (cars). Ride your bike, carpool and walk places when possible.

Gas (heating). Turn down your thermostat by one or two degrees. Put on extra layers to stay warm.

Gifts. Set spending limits for gifts. Stick to them.

Groceries. Create a weekly menu and only buy items you need. Shop after eating and not when you are hungry.

Gym. Cancel during the summer months and put the extra money toward vacations.

Hair cuts. Go longer between cuts. Look for deals.

Mortgage. Be aware of lower interest rates and refinance if appropriate.

Netflix. Get rid of cable and get Netflix.

Spending money & allowance. Set, set, set! Stick, stick, stick!

Vacations. Stay close to home. While you’re gone, plan ahead and make your own meals.

Water bill. Take shorter showers. Wash clothes in cold water.

Changing the way you shop and spend money isn’t easy. It takes time to shift bad habits and even frugal folks like me slip into unfortunate spending cycles.

Once you know where every dollar is being spent, you can make real progress toward financial freedom. You might even decide it’s hip to be one of those strict, frugal folks.

For more about how we got out of debt, buy my book – called The Hybrid Homemaker – and read my story of finding personal and financial freedom.

Spread the love on Facebook and Twitter.

Photo by Orin Zebest

Check out Arrows by Melissa Gorzelanczyk, coming January 2016 from Delacorte Press/Random House. Visit her author site here.


1 Jen April 1, 2010 at 7:53 pm

Melissa – you are so right on… it wasn’t until we started tracking our expenses that we understood why it felt like the money was disappearing.

Congratulations on paying off your debt!! I am very happy for you and Mr. Right. 😉

2 Melissa April 1, 2010 at 8:41 pm

@ Jen – Aw, you’re sweet. Its pretty eye opening to find out you spent over $300 just eating out … Thanks for taking the time out of your busy day to comment!

3 Julie April 2, 2010 at 10:31 am

Congratulations Melissa on achieving your financial goal!

You’ve talked alot about cleaning and simplifying. Don’t forget to take your gently used furnishings and clothes to a consignment store. It puts a little money in your pocket and helps your budget too! Plus, shopping consignment is a great way to decorate without spending a lot.

4 Melissa April 2, 2010 at 12:10 pm

@ Julie – Thanks for reminding me of this great tip! I still LOVE that huge mirror I bought from your store – I think I only paid $25 for a really large, unique piece.

5 Surabhi April 28, 2011 at 7:06 am


Indeed a good and very useful post. I came to your website for the first time today but I sure will stay on! I too need to mind my budget as it is getting over the head since sometime. Good tips.
Surabhi, India

6 Melissa April 28, 2011 at 8:42 am

Hi Surabhi,
Thanks for stopping by today. Definitely mind your budget – even now, we still have months where we need to take a step back and realign our priorities.

7 Christina April 28, 2011 at 1:03 pm

Hi Melissa, I found your blog about a week ago and I am very excited to work on reducing our debt so that when we have a child I can stay home. I was wondering if you have an excel template that you use to track your spending? If so, is that something that you’d be willing to share?
Thank you and congratulations on all of your milestones. You are an inspiration for me!

8 Melissa April 29, 2011 at 2:07 pm

Hi Christina,
I’m so happy for you and wish you the best attacking your debt.

We don’t track our spending. Instead, we use a cash only method for variables, such as groceries, haircuts, clothing, etc. We never use debit or credit for these types of purchases. Here is a site that can explain more.
I hope this helps! Let me know if you need anything else.

9 Alex G. April 28, 2011 at 4:47 pm

Thanks for not picking on coffeehouses!

10 Melissa April 29, 2011 at 2:05 pm

🙂 I love coffeehouses! They are very accommodating for writers – a great escape for me.

11 Linda Lee April 29, 2011 at 4:54 am

I got in the habit of eating out all the time when I was traveling for business. It’s funny how quickly one can become addicted to a spending pattern like that which then makes me feel financially dependent on the corporate gig that spawned the delusion that “I don’t cook” in the first place. It can be vicious cycle. The worst part is I was spending more money on food that was making me overweight and unhealthy!!

12 Melissa April 29, 2011 at 2:04 pm

Hi Linda,
I think that’s become almost a badge of honor for modern women – the “I don’t cook” ideal. I used to say the same thing, when the truth is, I enjoy cooking when I don’t feel stressed about the process. Now that I am at home, cooking can be a very pleasurable experience.
Have a blessed weekend!

13 Susan April 30, 2011 at 7:30 pm

Ha! I like the idea of frugal people being boring. I’ve found when we have too much disposable income, we’re boring. We’re not making conscious choices, we’re not making creative decisions, we’re not being true to ourselves. Whenever we’re more frugal, we’re inspired by how we can be creative to get more experience for less, are more connected and communicative, and usually just have more fun.

Of course, debt is always stressful, the real joy comes when you can be frugal by choice. Though often ‘by choice’ comes after having coming out on the other side of ‘no other choice’.

14 Melissa May 2, 2011 at 10:16 am

Hi Susan,
That’s a good point – first, we have no choice, then we make the choice ourselves. I just watched No Impact Man last night and it made me think about everything – how much money I spend each year on tissues. On the other hand, it just seems too gross to use cloth tissues. Some modern conveniences were invented for a very good reason!
Thanks for stopping by!

15 Lynn May 2, 2011 at 11:25 am

We cut out buying alcohol when we do go out to eat. I’d rather pay $4 for 2 sodas (or free water – I never hesitate to ask for a slice of lemon) and drink an $8 bottle of wine at home afterwards than spend $30 on the same bottle of wine at the restaurant.

16 Melissa May 2, 2011 at 1:11 pm

Great advice! Definitely saves on entertainment. Also, attend ladies night (hint hint).

17 Lynn May 2, 2011 at 5:16 pm

yes, free drinks for ladies is always a good deal!

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