3 Things To Consider If You Can’t Cut Any More Expenses, According to Ramit Sethi
Written by
John Schmoll
Edited by
Amber Barkley
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Living paycheck-to-paycheck is a stress many Americans face. For those thinking they can’t cut any more from their budgets, it can be trying to make ends meet. In a recent newsletter, finance expert Ramit Sethi shared the story of a man who had cut everything and didn’t know what else to do.
Here are three things Sethi recommended considering in that situation. Next, learn more about the useless expenses you should cut from your budget.
Identify Savings Possibilities in Your Fixed Costs
Sethi pointed out that, in the particular case in the newsletter, fixed costs were extremely high at 84% of income. This is a good place for anyone to look for more places to cut expenses, even if your costs are already lower than Sethi’s example.
Analyze your budget to identify fixed expenses. These are bills you know you have to pay each month. Common examples include:
- Utilities
- Auto insurance
- Phone plans
You can save up to 10% annually on air conditioning and heating costs by turning your thermostat back seven to 10 degrees for eight hours a day, according to the U.S. Department of Energy. This might seem insignificant, but it claws back some savings. Or, you can inquire to see if a utility provider offers a level payment plan that reduces pricing.
Comparison shop your auto insurance and phone plan rates, as you may be overpaying. Americans can often find savings on auto insurance by paying semi-annually vs. monthly. Additionally, moving to a no-contract cell provider can typically reap decent savings with little impact in coverage or reliability.
Make a Plan for Expiring Temporary Costs
The budget in Sethi’s newsletter included car payments and childcare costs: both fixed, but both temporary.
Some fixed costs will no longer be an expense in the next year or two. Determine when these costs will expire — like paying off your car or student loans or your child growing old enough to leave daycare and start school — and make a plan for how you’re going to funnel that cash to other needs, Sethi recommended.
The average new car payment, for example, was $754 at the end of 2024, according to Edmunds. The average monthly payment for a used car was $533. Avoid replacing your car once it’s paid off, Sethi wrote. Instead, drive it as long as you can and shift the payment to other areas of your budget or pad your emergency fund.
Follow a similar philosophy with other temporary costs that will go away in the not-too-distant future.
Look for Ways To Increase Your Income
The man in Sethi’s example was working to build his business, and Sethi recommended he focus on that to increase his income. You may not have a business to build, but if you can’t cut more expenses, increasing your income is the next step in improving your financial situation.
A growing number of Americans are taking on second jobs. About 5.3% of the workforce over age 20 had second jobs in 2024, according to the U.S. Bureau of Labor Statistics. For Americans struggling to make ends meet, increasing income is an excellent consideration when in need.
Ask your employer if you can work extra hours or take on additional assignments for more pay. If that’s not an option, a side hustle can be a good alternative. However, it’s best to have a goal in mind with these additional funds. You can divert the earnings towards debt, build savings or pay for needs. While additional work is tiring, increasing income is a great way to reach goals.
Budgets can be fraught with problems when your income doesn’t keep up. It’s best to take a clear and honest look at your budget, as it’s likely you can find opportunities for saving. Get a budget back on track by looking for small wins that can snowball into big changes.
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