Bare Bones Budget: Cut Costs & Reclaim Your Financial Freedom

This is the most crucial – and often the most challenging – step in cutting costs. Be brutally honest with yourself. In previous articles, we might have asked whether a daily latte was a need or a want? With a bare bones budget, the latte is eliminated entirely. We asked whether premium cable is essential or if you can get by with streaming services? With a bare bones budget, all paid options are typically eliminated. Your local library often has free rentals of the latest releases to keep you entertained! Remember, this is a temporary measure. You’re not eliminating these things forever; it’s just until you regain your financial footing.

Now it’s time to build your bare bones budget. Using a spreadsheet or budgeting app, list all of your truly essential expenses. This includes things like housing, utilities, food, and transportation. The goal here is to ensure this total is less than your income.

If your essential expenses currently exceed your income, you’ll need to make some tough but necessary cuts. Even within these “needs” categories, look for ways to reduce costs. Can you lower your grocery bill by meal planning and couponing? How about reducing your energy consumption by unplugging electronics or adjusting thermostat settings? For your cell phone plan, visit your wireless provider and talk to a customer service representative about opportunities to cut costs. Every little bit helps!

If debt repayment is a significant portion of your budget, contacting your lenders is crucial. If you’re struggling to meet your financial obligations, Coverdale recommends open and honest communication with creditors. “Reach out to those creditors and let them know early on what’s going on,” he advises. “You might be surprised that there are some things they can do.”

Explain your financial hardship and explore options such as forbearance, payment plans, or interest-only payments. Many creditors are willing to work with you during challenging times, especially if you’re proactive and communicative.

Beyond communication, actively managing your debt is key. Limit your credit card use, focus on paying down the highest interest rate cards, explore consolidating your debt with low-interest rate options, and crucially, avoid predatory and pay-day lenders at all costs. As we discussed in our “Financial Crisis Strategies” article, effective communication is vital, and understanding your options and rights can make a significant difference in how you manage debt during a crisis.

If your essential expenses still exceed your income, you may need to find ways to increase your income, even temporarily. This could include a part-time job, freelance work, selling unused items (as mentioned in our “Smart Saving” article), or exploring government assistance programs. Sometimes, even small amounts of extra income can make a significant difference in a bare bones budget.

Regularly monitor your spending to ensure you’re staying within your bare bones budget. This isn’t a one-and-done task; it’s an ongoing process. As your financial situation improves, you can gradually reintroduce some of your “wants” back into your budget. The “Envelope Budgeting” system, as detailed in our dedicated article, can be a helpful tool for staying on track and managing your cash flow.

Living on a bare bones budget is challenging, and it’s vital to acknowledge your progress. Celebrate your successes and milestones without spending money! Recognizing your achievements, no matter how small, can help keep you motivated and reinforce positive habits during financial hardship.

Once you’ve stabilized your finances and your bare bones budget is holding steady, make building an emergency fund your top priority. As our “Emergency Fund” article explains, having even a small emergency fund can prevent you from needing to resort to such a drastic budget in the future. It provides a vital cushion against unexpected challenges.

Remember, you are absolutely not alone in navigating financial hardship. While creating a bare bones budget is a powerful and necessary step, sometimes the challenges can feel overwhelming, and that’s okay.

Beyond professional resources, remember the power of community. Sharing your budgeting goals with trusted friends or family members can create an invaluable support system that encourages you to stay on track. If you’re comfortable, consider joining online communities or forums with similar financial goals. These spaces often provide additional support, accountability, and a wealth of shared experiences and practical tips from others navigating similar paths.

Additionally, there are many organizations designed to help individuals facing severe financial strain. If you’re struggling with financial stress or need assistance that extends beyond your ability to cut costs within a bare bones budget, reach out to trusted non-profits and community services that specialize in financial counseling, debt management, or emergency assistance. The most important step is always to seek help early; there are resources available to support you through these difficult times.