How I Cut My Expenses By $1,928 Per Month

Since I started my journey towards financial independence and early retirement last year (and this blog shortly after), I have managed to save $1,928 each month by making significant changes to how I spend and think about money.

I have managed to increase my savings rate (the share of my take-home income that I put into savings) from 5% to more than 50% in one year.

In this post, I will not go into small tips and tricks on how to save money, but I will deal with some of the bigger mindset shifts you should make to cut your expenses.

Keep in mind that I live in Denmark, so the actual dollar amount of $1,928 is slightly different from what you will be able to save since the tax rate, cost of living etc. is probably different from where you live.

1. Don’t ever go shopping

Many people go shopping alone or with friends for entertainment, for ”treating themselves” or to simply see whether they need something. Do you ever walk into a shop(ping center) without knowing exactly what you need? Then you have a problem, or at least might have a chance to cut your expenses.

My advice is to never go shopping. Seriously. If you need something, wait 30 days and evaluate whether you still need it. If you still need it, then you should of course go and buy it.

If you are buying food, plan what you will need for the next week before going to the supermarket. If you need new clothes, only go directly to the stores looking for the clothes that you really need and do not have a substitute for… and for all other things, consider looking at might post on why you don’t need things.

I managed to cut 20% (!) of my expenses by not going shopping and buying the latest fashion clothes, electronics, expensive coffees/juices etc.

2. Avoid debt

I used to be in debt myself, so trust me on this one. You should avoid debt always. This is one of the most important tips I can give. I recently wrote a whole post dedicated to why you don’t need debt (and some debt you might need).

In short, debt is the ‘present you’ borrowing money from the ‘future you’ – and let’s be honest, future you will not be better able to pay than you are now. By putting yourself in debt, you are throwing money out of the window every month.

My advice is to never take on debt and pay for everything in cash. If you must take on debt, then make sure to make the maximum payments every month and do everything you can to pay it off. If you decide to take on debt, you should never carry more than one credit card, pay off everything as quickly as possible and remember to shop around for the best loans or credit cards with the largest benefits at the lowest price.

If you have bad credit, then it should be your first priority to do something about it (!!) and not take on more debt, but if you are in an emergency (I mean like a life or death emergency) there’s still money to save by choosing credit cards wisely.

Obviously, you should never take on debt to do any convenience purchases (clothes, furniture, electronics etc.), but you may do it in an emergency month to have shelter and food on the table (and remember, you can do many things to save on shelter and food too!).

I managed to cut 10% of my expenses by not paying interest every month. Money that I am now saving and investing, so instead of paying money, the money is now working for me and growing every month – and the psychological feeling of being debt free beats everything.

3. Buy quality

I know, I know. I have told you not to buy things and to cut your expenses, and now I’ll tell you to spend a bit more on the things that you then end up buying. Confused? I understand.

In my experience, it is always better to spend money on a few quality items instead of many items of bad quality. They last longer and your total lifetime costs for the item will be lower.

I always consider the depreciation cost (see this post for a detailed description on depreciation) for all items when I make a purchase. For example, I would rather buy a high quality winter jacket that lasts minimum 10 years for $500 than buying a low quality winter jacket that lasts a season for $100. Why? Because the yearly cost will be $50 for the high quality jacket and $100 for the low quality jacket.

In the example above, I have not even considered what I might be able to sell the high quality jacket and low quality jacket for. In my experience, quality items sell for more than low quality items relative to their purchase prices. This makes the yearly costs of the high quality jacket – and depreciation – even lower relative to the low quality jacket.

… and just to be sure; when I say ‘high quality’, I do not mean excessively priced fashion goods that might good quality, but comes at a gazillion times the cost compared to cheaper brands that might also have good quality items.

Making the mindset shift to buy quality items and think about yearly costs can save you a lot of money!

4. Compare prices, ask for discounts and shop sales

Before buying something, I always compare prices online – even if I intend to buy the item in a physical store. Price comparison websites that aggregate many different shops’ prices are excellent for this.

I always ask for a discount if I am buying larger things such as a piece of clothing or electronics (i.e. not for smaller things such as groceries). A lot of people feel do not feel comfortable with asking for discounts, but I have never had a bad experience doing it and most often I get good discounts and save money.

In my experience, there’s three things you can do to secure a good discount in a store (also online if you don’t mind mailing, chatting or calling the customer service):

  1. If you are buying more items, it is usually easier to get a good discount, so try to group your purchases both in time and place
  2. If you are in a smaller shop where the owner himself/herself is behind the counter, it is usually easier to get a good discount compared to a large chain store
  3. If you have done your research prior to visiting the store (e.g. found an item cheaper online), chances are that the stores will at least give you the item for the same price as their online competitors

Lastly, I try to limit all my purchases to the large annual sales. Usually, the big sales are before summer and after Christmas, but I have found that it varies locally – and of course there’s Black Friday.

If you monitor prices over time on items you need, you will also know when something is being sold at a good discount and when it is not – don’t necessarily be fooled by the word ‘sale’.

I have always wondered why people do not buy things on sale – you might be six months or one year late on the latest fashion clothes/furniture or the newest iPhone, but you will often save 50% or more.

Lastly, consider whether you can buy your things in second-hand stores, garage sales or flea markets – here you can often save 90% or more and find a lot of golden nuggets!

I am saving a lot of money by not paying the recommended retail price (RRP) for any item – and you should never do that either!

 5. Do it yourself

I am by no means a skilled handyman (yet!), but I have found out that it can be a good financial investment (and a great pleasure!) to do things yourself.

I have recently implemented a new rule in my life; Before I buy a service to build or repair something, I must try myself first.

My bicycle recently needed a new stabilizer and previously I would have sent it directly to the bicycle mechanic that would have fixed it for $40. This time, I bought a new stabilizer online for $20, looked at a few YouTube videos and installed it myself. The same thing goes for shirts that need new buttons, for installing new lamps in your apartment etc. Remember, there’s always a YouTube video out there explaining how to do things.

I recommended that you always take good care of your things and maintain them regularly – and that you try to repair things yourself before getting professionals to do it (unless it can be dangerous or illegal to do it yourself, then always hire a professional!).

In terms of building things yourself, I believe that the mass production in our industrialized world sometimes makes it hard to compete on cost for building things yourself – although there are definitely cases where it is possible. The internet is booming with good DIY projects that can serve as good inspiration.

Every time you do things yourself rather than hire professionals, you do not only save money, you also learn something new – and become even better at doing things in the future. Adding to this, it is always a much bigger satisfaction to have done something yourself afterwards than to get others to do it.

You know best

Remember that what I have mentioned above are general mindset shifts that I have used to save $1,928 per month. I know for a fact that many of them work for me, but remember that it might not be the things that will work for you.

We are all different and we spend our money differently, so I urge you to try out the five things above, but also to experiment yourself to find out what works best for you.

A good place to start is to evaluate which large expense categories you have (you can make a budget like me), and see where you have the biggest potential in reducing expenses.

Do you have any tips to cut expenses? Which mindset shifts have you had to make to be successful in saving more money?