8 Extreme Ways to Cut Costs and Save Money

The economy feels a bit under pressure right now. Even as a high-income earner, I am reaching my limit on how far I can stretch a dollar. As a family of four, the expenses add up quickly. With interest rates at historical highs and the cost of living rising, all while we combat inflation, it can seem overwhelming! If individuals who make six figures are feeling the heat, then one can assume the majority of the world is as well. Many of us are already implementing common sense personal finance strategies. If your not, then you need to start here. What else can one do? How can one survive, if not thrive, in these uncertain circumstances? If you are like me, you sometimes entertain the idea of extreme financial moves. If we exhaust all other penny-pinching strategies, sometimes all that remains is the ‘Hail Mary’ approach to finance. Here are 8 extreme ways to cut costs and save money. 

1. Downsize your home or move.

We have all thought about it. True, sometimes we need the space. However, in my experience, it is human nature always to assume the grass is greener… If we could get one more bedroom. Perhaps if we could redo the garage or build a carriage home, our home unhappiness would be solved, right? This is an endless cycle of want that is rarely sated. It’s the American way. However, if we are honest with ourselves, there is a widening gap between what we want and what we need.  

You don’t need the McMansion

Let’s say it. Though you may feel entitled to your dream home as a physician who has worked hard, delayed your gratification, and sacrificed… you don’t need it. In all honesty, you need a reasonably priced home in a ‘good enough’ neighborhood. It should have a functional kitchen, room for you and your children (if you have any), utilities, and amenities nearby. This may sound quite absurd by today’s standards, but as physicians, one needs to understand that most of the world lives on less than you do. If you lived like the average middle-class household as a physician, you would easily be financially independent in 10 years.  

So no, you don’t need the McMansion. If the economy goes into a recession, downsizing to a more reasonable home may be the extreme intervention your finances need. Further, it will likely place you in a residence surrounded by homes of equivocal expense, thus lessening the ‘lifestyle creep’ so often associated with expense neighborhoods. 

Geoarbitrage

Geoarbitrage is another extreme example of lifestyle modifications that can significantly impact your savings. It is a strategy individuals employ to leverage the difference in cost of living and income across different geographic regions. In the context of personal finance, it involves relocating to a new location with a lower cost of living while maintaining or increasing one’s income. This allows individuals to stretch their financial resources further and achieve a higher quality of life.  

Simply put; you move to a new location with a lower cost of living and couple this with taking a higher or equal paying job to maximize your income. An example would be a physician working in a high-cost-of-living urban area to a more affordable rural destination where housing, healthcare, and other expenses are significantly lower. By doing so, they can allocate more money towards savings, investments, and debt repayment, ultimately accelerating their goal of financial independence.  

For those who already feel ‘settled’ in our careers and communities, the idea of moving can be daunting. However, for those wishing to implement extreme measures to accelerate their path to FIRE, implementing a geoarbitrage strategy or downsizing can boost their finances. The first of our 8 extreme ways to cut costs and save money is all about location.  

2. Keep a strict budget.

The next stop on our list of the 8 extreme ways to cut costs and save money involves sticking to our budget. Admit it, though you may have a budget you utilize to manage your financial household; how true to that budget are you? Do you ever ‘splurge’ a little? Do you ever get a bonus or realize you have a bit of money left over, and you ‘treat yourself?’ That is not wrong, but if you want to implement extreme measures to cut costs and save money, sometimes making your budget ironclad may be necessary.

Your budget is your limit

I advocate heavily for an honest and transparent budget, so much so that I provide a free Excel spreadsheet to anyone who signs up for our newsletter. Having a simple and transparent budget is critical to anyone’s financial success. This is not strictly for physicians; it applies to anyone looking to get their ‘house in order.’

However, the buck doesn’t stop after one makes their budget. Half the battle is staying true to the budgetary parameters you set for yourself. This is much easier said than done. We all spend in excess from time to time. We deserve it, right? I worked so hard. Yes, a positive incentive with a purchase can be nice. We should be rewarded for our healthy financial habits. Yet, for the sake of this article, if you are feeling economic pressures in your day-to-day life, then it is time to do away with the ‘excess.’  

Stick to your budget. Don’t go a penny over if you can avoid it. So, what does one do if they genuinely can’t stick to their budget?

3. Only use cash.

If you struggle to stay within the confines of the budget you created for yourself… then it is time to implement the third measure in our list of the 8 extreme ways to cut costs and save money. This is not for the faint of heart. Only. Use. Cash.  

Yes, you read that correctly. If your credit card continues burning a hole in your pocket, it is time to throw it away. You have proven that you cannot operate within the monetary confines you set for yourself, and now it requires an extreme intervention to fix your finances.   

Using only cash is, well, exactly like it sounds. Keep an amount of money on hand, and pay for everything (literally everything) in cash. Sometimes, the physical act of handing over hard-earned cash is enough to make someone re-evaluate their spending. 

If you don’t have it, you can’t spend it

This is the main reason why credit cards can decimate individuals’ finances. We have created an economic culture where you can have the things you want, even if you don’t have the money to afford them. This has become so normalized that, as a society, it is seen as entirely normal to purchase items you don’t have the money for. This is ludicrous! The idea of credit is excellent, but that is only for individuals who can appropriately handle that expense. The only safe way to purchase on credit is if you have the same cash on hand or in your banking accounts. This way, you can pay it off immediately without it accruing interest. Maximize rewards and minimize interest.  

Budgeting is a no-brainer. It takes initiative to create an accurate, comprehensive, and honest budget. However, it takes extreme dedication to rigidly stick to your budget. If drastic changes are needed to fix your finances, then possibly paying for everything in cash will help you better reach financial homeostasis.  

4. Sell the car and carpool.

Oh, you thought I would stop at home downsizing? No way! Excluding student loans, homes and cars are likely individuals’ largest purchases. We already dedicated a portion of this post to downsizing. Why not apply this same principle to your vehicle? 

At its core, an automobile is strictly to help us get from A to B. Most of us spend the majority of our drive times in a reasonably small radius. According to a research study from the Bureau of Transportation Statistics that focused on the number of daily trips taken in the United States. In 2021, 52% of all trips, including all modes of transportation, were less than three miles, with 28% of those trips less than one mile. Think about that! More than half of our daily commutes are less than three miles away. Do you need an expensive car to make these incredibly short commutes? No. No you don’t.

Stop financing and leasing

Stop financing or leasing your vehicles. For that matter, stop buying new cars. Purchase a safe, used, cheap vehicle that will get you to your job and back. If you already have an expensive car or are making regular car payments, it is time to implement an extreme measure. Sell the costly vehicle, buy a ‘beater,’ save the difference. If you are financing the car, getting rid of the regular monthly payments will make your finances go much further. Though you may feel you deserve the Porche or that a luxury car fits the status of a doctor… nobody cares. If you need to implement extreme measures to fix your finances, ditching the expensive car should be a no-brainer.  

5. Cut out recurring payments.

The first thing that comes to mind when I write about recurring payments is streaming services. Over the past decade, we have seen a shift in entertainment from cable to streaming. As such, more and more companies are utilizing recurring payment strategies to drive revenue. The other day, I discovered I was automatically enrolled in a monthly Wi-Fi service for our family car. I had no idea! These recurring expenses are everywhere.

I challenge the reader, however, to go beyond strictly streaming expenses. If you sit down and review your bank or credit card statements, I assure you there will be expenses you forgot about or are “too small” to bother with. These constant, monthly, or annual fees still chip away at your income. Let me name a few to consider canceling:

• Streaming services you infrequently use
• Phone apps with recurring expenses
• Computer software memberships
• Language learning apps with regular expenses
• Non-essential car services
• Delivery memberships
• Data storage memberships
• Physical gym memberships
• Virtual exercise memberships
• Unnecessary add-ons to your cellphone plans

Cut the cord

As you can see above, a laundry list of services is associated with recurring expenses. As these services creep into our lives, so do they slowly and methodically siphon our money. Do yourself a favor and sit down and review each and every expense. Many items listed above are no longer necessary or underutilized and can quickly be canceled. Cut the cord!

6. Cut out expensive activities.

Hobbies are a necessary part of life. As I watched my father retire with little to occupy his time, I realized firsthand the need for a hobby. We all need something to pull us away from medicine. Be it exercising, sports, leisure, cooking, whatever. There are indeed an endless amount of ways to occupy our time. As such, that means there are plenty of inexpensive ways to occupy time, too. Do not feel that just because you are a high-income earner, you must pick and choose hobbies that showcase your net worth. Pursuing less costly interests is essential if you are looking for extreme ways to cut costs and save money.

Expensive hobbies

Before I go any further, let me confess… I am guilty of this one. Boating is my one vice. Our family owns a boat and keeps it housed at a marina. This has become one of my most costly monthly expenses (aside from my children’s preschool fees). I felt it would be wrong to write about this and not acknowledge that I, too, am only human. Do as I say, not as I do, right? However, if our family were truly feeling financial pressure, we would sell the boat and rid ourselves of the marina fees, no question. It is a luxury, not a necessity. However, overwhelmingly, the remainder of my hobbies include working out at our neighborhood clubhouse to avoid gym membership fees. We also bike regularly. Our hobbies are relatively cheap between cooking, exercising, and spending time outside.

Expensive vacations

The last luxury to touch on would be vacationing. Most individuals I interact with prioritize vacationing. I don’t mean strictly taking time off from your job. I mean utilizing this time away from your busy clinical career to travel. Again, guilty as charged. My wife and I love to travel as well. One of our goals is to make sure our children are well traveled.

We often fantasize about when our kids are old enough to plan trips on their own, learning the skills necessary to coordinate transportation, dining, and lodging. If they work to harness these skills, we will be happy to foot the bill. However, just because you plan to travel does not mean you have to obliterate your finances. There are domestic trips that can scratch the same itch. Further, if you spend little time in your hotel, why prioritize a 5-star location when plenty of other places are ‘good enough’ and won’t break the bank?  

7. Stop eating out.

Even as I write this section, I cringe a little bit. I live in a coastal city. Our restaurant scene is strong. My wife and I love to eat out. But let’s face it, it can get expensive. If you make this a regular habit, it can leak into your daily life. Next thing you know, you are using delivery services more regularly. You may find a fast food option that is relatively healthy. 

This mentality is a slippery slope and can take a toll on your finances. It may not seem like it, but the expenses add up. There are gasoline costs to get to and from the restaurant, or cab fees. The food itself is a significant expense. Further, there is the need to leave a reasonable tip. These trips involve the consumption of alcohol, which always carries a somewhat high cost. The list goes on…

Avoid the high-end restaurants

There are still ways to eat out with a regular cadence and not break the bank. For starters, avoid the upper echelon of restaurants. Again, I am not telling you not to enjoy the finer things… but if you are looking for extreme measures to fix your finances, maybe the expensive restaurants can take a hike. There are other reasonably priced options you can eat at.. Avoid alcohol while at the restaurant and consume it when you get home. This spares you the risk of drinking and driving and also spares your wallet. Suppose you go out once a week; maybe back it off to once or twice a month. These are subtle changes that can impact your expenses.  

Meal prep

If the plan is to save money by avoiding expensive restaurants, then let’s go further and meal prep. This is not a novel concept, but it can save you money. You are already spending so much time and money at Costco, why not plan your bulk purchases to optimize the amount of meals you can produce? Make extra, freeze them, and pull them out later when you and your spouse can’t decide whose turn to cook.   

8. Optimize your debt payments

The final measure on our list of the 8 extreme ways to cut costs and save money involves your approach to debt. Overwhelmingly, I am addressing student loan debt here. If you have high-interest credit card debt, you need to prioritize paying that off as quickly as possible. However, for physicians and other high-income earners carrying large amounts of student loans, there are some approaches to consider when it comes to cutting costs and saving money. 

Make the minimum payment only

First, you must decide if you are already enrolled or planning to pursue Public Student Loan Forgiveness (PSLF). Though the United States Supreme Court over-ruled recent executive loan forgiveness, there are still great avenues to have your loans forgiven. If you are one of the many individuals entertaining the idea of PSLF, your first step should be to determine if you are eligible. If you are, there are very few scenarios where you should not pursue PSLF. This is helpful because if you are enrolled in a certified repayment plan for PSLF, like the new SAVE plan, then this allows you to make the minimum payment necessary while still working towards loan forgiveness.

For some borrowers, your annual income may be so low that your payment is zero! That zero dollar fee still counts as time contributed toward loan forgiveness! These minimum payments can also go a long way in saving money during economic hardships. If you want to learn more about PSLF, SAVE plan, and more, check out the resources listed below. Also, always consider hiring a financial professional to assist you in navigating these decisions.  

Additional resources for PSLF

Information on PSLF from studentaid.gov

SAVE Repayment Plan Offers Lower Monthly Loan Payments from studentaid.gov

White Coat Investor Podcast transcript regarding SAVE payment plan for PSLF

Refinance your debt

OK, this next section is strictly for individuals not pursuing PSLF. If you don’t know if you should pursue PSLF, you need to get more information or seek professional advice before refinancing your student loans. 

However, if you are like me and chose to refinance your debt to a private lender for a lower interest rate, this this path may help you lower your monthly payment. For individuals who already carry private debt or previously consolidated/refinanced with a private lender, you always have the option of refinancing again! Shop around and see if anyone can offer you a lower interest rate. If so, refinancing can lower your monthly payments and save you money.  

Pay your debt off faster

The last aspect of managing student loans during economic extremes is to consider paying off your debt lighting fast. If you, hypothetically, implement all the measures I mentioned above and are living substantially below your means, you may have the means to eliminate your debt rapidly. This post is primarily focused on cutting costs to focus on saving money. However, debt constantly works to eat away at your income through unyielding interest. As such, one way to free up a portion of your income (if you are not enrolled in PSLF) is to rapidly eliminate your debt. The sooner you do, the sooner you free that portion of your income. This can significantly impact your ability to save, invest, diversify, and grow your wealth in the long term.  

Take home points

Desperate times call for desperate measures. Though I do not recommend these extreme measures to anyone, they may be helpful for individuals needing to make radical changes to ‘stay afloat.’ These extremes may also need to be considered during an economic recession. As in medicine, it is good practice to have a backup plan. This is no different when it comes to personal finances. If you need to change your finances significantly, consider these 8 extreme ways to cut costs and save money. As always…

Stay motivated!

The Motivated M.D.

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