Cutting Your Expenses
The second choice you have is to cut expenses. Cutting expenses is typically much easier. This is why many companies lay off people in difficult economic times. It’s much easier to layoff employees then selling more products/services.
Cutting expenses isn’t easy. This can become a problem especially if you have a family. If you decide to eliminate or reduce your cable TV bill, your spouse or children maybe upset by this. However, cutting your debt will call for drastic measures. The old adage, “if you keep doing what you have always done, you’ll get the same result”, holds true for debt reduction. You must cut expenses that will be a sacrifice.
The first thing to do is to look at your budget and determine “NEEDS” vs. “WANTS”. What must you have in order to live, versus, what you want? This is a good first step to start cutting things from your budget. You NEED a place to live, thus you NEED to pay your rent or mortgage. You WANT a smartphone, thus eliminating the monthly data plan can be cut.
Even for things you NEED, you may be able to reduce the cost. For example, having an apartment in the middle of the city that costs you $1,500 per month may cost you $1,000 in the suburbs. You NEED transportation but do you need a $40,000 BMW or would a $20,000 Toyota Camry do you just fine?
Cutting expenses can be temporary. You may decide to eliminate your cable TV for 1 year to save money. You may decide to watch TV via the Internet for free. After the year, you may evaluate to determine if you are in a better financial position to turn the cable TV back on.
Every expense on your budget must be scrutinized to determine if you can cut or eliminate it. You must be tough. You must be determined. You must be strong. Your ultimate goal is to reduce your debt as much as possible to hit your goals. If your goal is to pay off $10,000 in 24 months which requires you to save an additional $417 per month, then you cut your budget until you can reduce your expenses by $417 per month. You’ll be surprised that you can accomplish this task. It may seem daunting, but it’s doable.
Threaten Your Company to Reduce Expense
One technique to reducing your expenses is to threaten your telephone, Internet, cell phone, cable/satellite, etc. Tell them you are considering switching to their competitors and 9 times out of 10 they will bend over backwards to keep you as a customer. I’ve used this technique many times to reduce expenses. For example, I was able to reduce my telephone/Internet AT&T bill from about $90/month to $60/month by threatening to switch to their competitor.