As someone who’s been tracking his spending every single month for years on end, I’ve noticed a few expenses consistently stick out like sore thumbs.
And since times are tough right now for everyone, I thought I’d highlight those areas, and then show some truly extremely ways to slash those costs to the bone.
But first, a warning:
Kind of like the overweight doctor who smokes, I don’t exactly practice any of this advice, but I can still admit it’d certainly help!
If you’re in the mood for serious savings, no matter the (non-monetary) cost – here they are!
1. Move to a no-income tax state.
Here’s the biggest expense that you probably don’t realize you’re playing.
I mean, here in Minnesota, if you earn a $50,000 a year salary, you’ll be giving 7.05% of your last dollar over to the state.
If your spouse does too, that’s about $7,000 per year, or $580 a month.
Yes, this is a simplified example to prove a point…
So, here’s a more real example that should drive it home for yours truly: The Money Wizard household’s state income tax payment is larger than our mortgage!
By contrast, there’s nine states that don’t charge you for the privilege of working there: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.
Sure, moving ain’t easy. But that’s some serious savings!
*To be fair, income tax is just one factor in how much a state costs. That’s why I calculated exactly how much it costs to live in every state for 30 years.
2. Downsize your house.
Okay, I realize moving across the country might be as extreme as it gets.
So here’s a compromise:
Get rid of that extra square footage.
Most home owners don’t regularly use 75% of their house’s square footage, and since 1950, the average home size has increased from 983 square feet to 2,675 square feet.
(More info on that in my article about home prices.)
And considering that housing expenses are THE number 1 expense for the average spender, this is the most obvious place to start saving the most money.
Want to get truly extreme with it?
Live in a house boat for a couple hundred bucks a month, or live in a van for even less.
3. Don’t drink alcohol.
Every month when I tally up my own spending, I’m shocked at how much my drinking habit costs me.
I pretty much only drink during social events (ironically, this is more expensive) but here’s an example from the first net worth update of 2022:
- Trip to a distillery: $31
- Trip to a brewery: $35
- Ubers for the previously mentioned trips: $37
- A bar visit for two before dinner: $60
- Drinks at dinner: $24
- A separate night of drinking with friends: $75
- Total cost of drinking for just one month: $262
I wish I could say that was an outlier, but if I’m being honest, this happens more months than not.
If I was sober as a bird, that’s a several-hundred dollar per month expense that I could save. Or at least cut down significantly, since even the fanciest bars have nonalcoholic options for about half-price.
4. Go camping.
I spend a fortune on vacations, especially hotel rooms.
Even a two-day ski trip this winter, staying in a budget motel, ran me nearly $200 a night
But here’s a vacation idea as old as the good U.S. of A.
Sure, the initial investment in the gear could cost you a pretty penny. But once you’ve got that tent and sleeping bag, you’re in business!
Campsites cost just dollars a day. Even better, the act of camping encourages free activities like hiking, campfires, and lounging with friends and family!
And if you’re doing it right, you’ll replace those hundred-dollar traveling steakhouse dinners with $1 hot dogs and 75 cent ‘smores around the fire.
5. Become a workaholic.
Probably not ideal, but you can’t argue its effectiveness in building wealth!
Most of the highest income people I know are accidentally the most frugal, too.
They’re too busy working to spend their money!
- Was The Shoe Dog blowing hundreds of dollars a night at the club or sporting events while he was building Nike? Nope, he was too busy flying to Japan to haggle with shoe manufacturers.
- Is Warren Buffett spending his fortune traveling the world in old age? Nope, he’s too obsessed with reading books and researching his next company to buy.
- Even my own friends who are doctors, lawyers, and startup employees are usually too busy working 80 hour weeks to spend their remaining time doing anything except eating and sleeping.
Sure, there’s something to be said for balance being the key to a happy life, but I did promise that these tips would be extreme!
6. Go vegetarian.
Food is one of The Big 3 Expenses, and pound for pound, there’s one food that consistently costs more than any other.
Look, I love a tender steak as much as the next guy, and it’ll be a hard sell before I ever give up meat completely, but I can’t help but admit that even just cutting down my carnivore habits has saved some serious cash at the grocery store.
I mean, have you looked at the price of beef lately?
And since this article is all about taking things to the extreme, the logical conclusion to this tip would mean going entirely vegetarian. Need I remind you that beans cost just pennies!?
7. Sell your car.
Transportation makes up 18 percent of the average budget, and there’s one surefire way to slash that cost to the bone:
Ditch the car.
Allow me to introduce exhibit A to the courtroom:
- Cost of a brand new fully loaded Toyota RAV4, the best selling SUV in America last year: $26,535
- Cost of ongoing insurance: at least $100 per month
- Cost of ongoing maintenance: at least $500 per year
- Cost of typical gasoline: almost $2,000 per year
- Cost of a comparable road bicycle: $900
- Cost of a bus pass: $75 per month
- Cost of walking: $0.
8. Kick it old school with a flip phone.
Do they even still sell these?
I have no idea, but I do know that the average iPhone now costs more than a car.
I know, I know… I can hear you typing from your touch screens as we speak:
“But the iPhone is a necessity!”
I mean, just 10 years ago only 1/3 of adults owned a smartphone.
Have our needs changed that much since then?
I’m not sure. But I do know you could save some serious cash if you decided not to buy a $999 iPhone 14 pro with with a $65/month unlimited starter plan.
Thoughts on extreme money savings?
Do you have any other extreme money savings tips?
A word of warning: they’re more fun to brainstorm than put into practice.
I live in a state with low income taxes, and it nickel-and-dimes us to death. High sales taxes, high gas taxes, fees for everything (registering a new luxury car is insanely expensive), property taxes, and on and on. Before moving to Texas or Florida because “no income tax”, at least check out property taxes.
Yes, I live in Texas.. and property taxes are high. But, it is well worth the quality of life. Besides, you make up the difference in property taxes with lower gas prices.
Also, I’ve found from visiting liberal states, just about everything cost more! And we don’t have as many Ultra Liberals to deal with.
Yes, the total cost of living in a state must be considered. The total tax burden. Also other variables. Property insurance costs in Florida, especially in coastal areas, has really inflated. I know of some in cheaper housing that just decided to self insure. I live in TX, the property tax here isn’t cheap. Also the services you receive for the taxes you pay. Are you a big user of these services (libraries, community centers, senior centers, community pools, etc.). Lots to consider.
Eric Meyers says
The question is are you actually using any of those things because most people haven’t stepped foot in a library, community center, ect. Agreed that those things may be better in high tax states, but I’ve in lived in Pittsburgh and also SoCal. The library in both locations offered enough that I didn’t notice a difference.
Brandon V. says
From my personal experience, a number of these aren’t that extreme.
I’ve lived in Florida my whole life, so that one was easy. We could get into the pros and cons of living in Florida (pro – no snow to shovel, con – risk of hurricanes), but overall, I’m very happy here.
After the pandemic started, my husband and I bought a 665 sq ft one bedroom condo on the beach as a “weekend vacation home” and decided a year later to sell our primary residence at the height of the market to downsize to the condo. Greatest decision as we are so happy living at the beach with the fresh ocean air, beautiful view, and a condo that can be cleaned in less than an hour.
Also, because we both work from home, and the condo only came with 1 garage space, we sold my car, and we haven’t missed it one bit. This would have been tougher had one or both of us had to drive to work regularly, but right now that’s not the case. A nice savings on gas, insurance, registration, and maintenance.
Finally, we became vegetarians a number a years ago just for health reasons, and yes, it’s not only less expensive to buy beans, rice, and such, but we feel healthier. And that’s worth even more than the money. It does help that we both like to cook and every night make wonderful healthy and flavorful meals.
As for the alcohol……..haha.
9. Move back home and live with your parents. Best savings hack ever!
J. Money says
I would totally do that if my wife would let me 🙂
In a few years she might let you. I know.
I have been kicking it old-school with an old slider text phone for the last 12 years and I just today got a text from my provider that they’re shutting down my service cause they’re removing 3G 🙁
Dave McIntyre says
Item 1. News flash! There is no free lunch. The roads don’t build themselves. Add up sales tax and all the other fees and the states bunch up into the messy middle. See https://wallethub.com/edu/states-with-highest-lowest-tax-burden/20494. If you are paying far less than others, you are getting less than others.
I’d have to disagree w/ the idea that if you are paying low income tax, you’re getting less than others. It’s not black and white like that. I’ve lived in enough states including CA to see that. Maybe the sales taxes are higher, but how much are you spending that it makes that much of a dent.
Here’s another ‘extreme’ example that I practice:
Pay as absolutely little for insurance as possible.
First, don’t ever do this unless you have some financial wiggle room like a cash fund or a HELOC. Second, if you have a mortgage, you’ll have to have homeowners, and if you have a car, you’ll have to have liability. And health insurance through your employer may be a good enough deal to make sense.
But you can increase deductibles, reduce maximum payouts, and get the premiums as low as possible. Buy a used car with cash and you can straight up skip the comprehensive and collision insurance. For health insurance, I love my high-deductible plan coupled with an HSA. So how does skipping insurance save you money? Won’t you end up worse off when misfortune strikes?
Well, last I checked, my insurance companies don’t run charities. They make money off me. This means on average, my insurance-covered-incidents cost lest for me to cover than I end up paying in insurance. And because I drive little, take care of my home responsibly, try to maintain my health etc… I am confident that when I do pay insurance I am really subsidizing a lot of other people’s behavior. So as much as possible I just skip the insurance.
Some people gain peace of mind by paying ahead of times to cover things that *might* happen. I gain peace of mind by building my financial independence faster so that I can take care of my needs without relying on the (predatory) insurance industry.
Vivian Lo says
Wow, great perspective on insurance. Thanks for sharing, Steve!
Buy used stuff !! Minimize food outings (or food to go) to once a month or none at all. No Starbucks either. Pay cash at gas stations.
Tex Ginsburg says
Learn to cook! Compared to dining out – even compared to “cheap” fast food – dining at home or packing a lunch for work or an outing is way cheaper. The same goes for packaged or convenience foods. I personally save a fortune by cooking in quantity, and freezing meal size portions for later.
Plus, there is the health benefit. Do you really know what is in the food that somebody else prepared. Restaurant and packaged foods are made for flavor and to be habit forming. Now that restaurants are publishing calorie counts we see that the same dish prepared at home has way fewer calories – and zero flavor enhancing “additives”. Also there is huge money savings in being healthy.