Trimming the big expenses

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Are you trying to save money? If so, it may be a frustrating exercise.

Regardless of how many coupons you use at the grocery store, you may feel like you’re not making significant progress.

Many people try to trim expenses by focusing on small costs. They’ll skip the $2 fountain Coke when they buy lunch at McDonald’s. They’ll trim their own hair rather than getting a $12 cut at the barbershop.

These are great moves. Small items definitely add up. But if you want to make a fast, substantial impact on your savings rate, focus on the biggest-ticket items.

Such expenses gobble up most of your take-home pay. Slashing those costs is the best way to significantly “move the needle” away from debt and toward savings.

Housing, transportation and food represented $32,484 in total annual expenses for the average U.S. household, according to 2012 data from the U.S. Bureau of Labor Statistics, the most recently available.

How can you trim your costs in these top three categories?


The average American household spent $16,887 on housing in 2012, according to the labor bureau, or BLS. This represented the largest expense for most families.

If you rent and are nearing the end of your lease, look for a low-cost apartment. That doesn’t necessarily mean moving farther away from your job, because then your transportation costs increase. Instead, look for a smaller apartment or one with fewer amenities.

For example, skip apartments that charge higher rents to help pay for on-site swimming pools or gym facilities. Then, use the money you save through a lower rental payment to build retirement savings.

If you own a home, try to refinance your home at today’s lower interest rates. In addition, make extra payments toward your mortgage to pay down the balance faster. Opt for a home insurance plan with a higher deductible, which will give you lower premiums. And consider renting out a spare bedroom for extra cash.


Transportation represented the second-largest expense, at $8,998 for the average U.S. household, BLS says.

If possible, live close to your workplace so you can minimize the length of your commute. This will help you save on gasoline, oil changes, and wear and tear on your car.

Also, try to live in a pedestrian-friendly area where you can walk to the nearest parks, playgrounds and grocery stores. That will cut your need to hop in the car for errands.


Food registered as the third-largest household expense, at $6,599, according to the BLS.

If you have a yard, grow some of your own vegetables, such as bell peppers, tomatoes and broccoli. If you live in an apartment without a yard, grow herbs on your windowsill, such as basil, mint or oregano.

Try to avoid packaged or processed foods, which are less healthy and more expensive than making meals from scratch.

Also, reduce your intake of soda. Instead, drink tap water to quench your thirst. It’s cheaper and better for you.

Paula Pant helps people ditch the cubicle, maximize their money and live on their own terms. She’s traveled to 30 countries, owns six rental units, and proudly hasn’t held a “day job” since 2008. Her blog, Afford Anything, is the gathering point for a tribe that refuses to say, “I can’t afford it.” Follow Paula on Twitter: @AffordAnything.