If cash is tight and you're struggling to get by, cutting your
monthly budget even further may feel darn near impossible. But
according to Brian O'Connor, author of the new book, "The $1,000
Challenge: How One Family Slashed Its Budget Without Moving Under a
Bridge or Living on Government Cheese," you'd be surprised by the
amount of money you can save simply by taking a closer look at your
"No matter how much money you think you don't have, you still
have a lot of choices," says O'Connor, a personal finance columnist
at the Detroit News.
In 2009, O'Connor tried cutting his own middle-class budget by
$1,000 per month and found that, in many cases, it was easier than
he expected to trim some of his everyday expenses. "I was amazed at
how much of this was pretty painless," he says. "Once I got
started, it wasn't all that hard and agonizing. I just had to keep
Over the course of 10 weeks, O'Connor tried shaving a minimum of
$100 from 10 of his biggest monthly expenses, including food,
housing, transportation, childcare and entertainment. Some weeks,
he could barely squeeze more than $40 from his spending. Other
weeks, he managed to save hundreds of dollars on fixed expenses,
such as Internet and cable, simply by switching around the services
he was using.
By the end of the experiment, O'Connor was able to cut just over
$1,000 from his monthly spending, despite having failed to meet
some of his weekly goals. He says he eventually learned that you
don't have to be perfect to successfully shrink your budget. You
just have to do it.
"You're going to have months where you do really well and months
where you maybe don't do as well and you just have to look at your
results and try to make them better," says O'Connor. "Don't sit
down and create a beautiful, color-coded Excel spreadsheet and
spend a month digging out every bill and receipt from the last year
to create a perfect budget," he adds. "Just start cutting your
spending and freeing up cash for whatever your goal is right then."
Eventually, you'll find that you have access to more money than you
think. "My rule is start small. Start now. Don't be perfect."
CreditCards.com caught up with O'Connor and talked with him
about his new book, which chronicles the 10 weeks he spent digging
through his monthly expenses.
Q: When you first started the experiment, you and your wife were
already pretty careful spenders, weren't you?
A: For most things we were, but as I went through it, I found
that I had been sloppy about some things. And it was embarrassing
some of the dumb spending that I found, where I had just sort of
gone, "Oh well, that's not important, that's not a lot of
Q: What were some of the most embarrassing moments for you?
A: The most embarrassing was the old unused email account in my
miscellaneous spending. That was $25 a month, and I hadn't even
opened the account in years. And you know, when I started to add
that up -- it was $25 a month times the cost of three years -- I
was just like, "That's a really nice dinner out somewhere. That's
two months of speech therapy." And I was literally getting nothing
for the money. I could have just been burning it and getting more
use out of it. So that kind of stuff was really embarrassing.
Because you look at it and you might miss it on the credit card
bill or whatever. Or think, "It's only $25." But then when you add
it up over how many months you've let that stupid little charge
ride, you're like, "Yeah, $300 a year. I could find another use for
Q: Automatic payments, like the email account, were a big drain
for you. What did you learn when you started trying to weed out
those recurring charges?
A: The one thing that I learned, which I think keeps a lot of
people from dealing with that stuff, is that it was very easy to
cancel everything. You know, my first thought was, "Ugh, they're
going to really hassle me. They're going to have to send me a form,
and I'm going to have to mail it, and they're going to make me wait
six weeks and keep charging me and then they'll cancel it. Then
I'll have to call and follow up and yell at people." And really, I
think the email account was ... a phone call. Almost all of them
were going to a website or one phone call. So it was like, "Oh! And
it's not even as hard as you thought it was, so you didn't even
have that excuse, you big dummy."
Q: You chose 10 categories to try to trim by $100 per month.
What was the hardest category for you to rein in?
A: The first category was my automotive spending -- and that
was, I think, about $40 of savings -- because our cars were paid
off. We already had a good deal on insurance. We found a good
garage that was doing maintenance at a reasonable rate. And, of
course, housing is the same way if your insurance is under control.
You don't really control your property taxes. Unless you can
refinance a purchase, you're pretty much just stuck with what
you're spending on the house or the car itself, in terms of things
So those are things where people really need to be careful ahead
of time. Because once you're locked in, you're kind of locked in.
With a car, a lot of people don't realize that you can often
refinance a car payment at a credit union, which is usually a big
plus if you've got a high interest deal on a loan or you bought the
car at a "Buy Here, Pay Here" kind of joint. I've written columns
on people who have saved a lot of money refinancing their auto
loans through a credit union. It wasn't a problem for me because my
cars were paid off, so with that, it was mostly switching around
when I drove my wife's high-mileage car to save on gas. That was
the big savings there. With the house, we couldn't refinance
because it was underwater. So all we could turn to there was
setting up an ongoing maintenance account.
Q: What were some of the easiest things for you to tackle?
A: Utilities. I loved the utilities. You can't save a lot on
your water bill in most cases -- unless maybe you've got a home
that's backed up to a canal. But things like cable, Internet,
cellphone -- all those things are incredibly competitive. The
people who have your business want to keep it. The people who don't
have your business want to get it. And they're introducing all
kinds of new plans and options, and so if you haven't re-priced
that stuff in two years, you're probably losing money. You know,
that was the easiest savings of the whole thing. It was about $140
a month. I spent about 90 minutes on the phone and I got another
$600 either in temporary price reductions [or other promotions] and
that included a $200 gift card.
Q: What's the best thing you learned by the end of your $1,000
A: I learned that you have to tell your money where to go. It's
not that hard to get yourself in financial shape. The problem is
that it's so much easier to let yourself get out of shape. I told
somebody, "The day I see an ad on prime time TV for having 13 weeks
of living expenses in an emergency fund, that's the day I will eat
a copy of my own book." Because the ads that you see are for this
wonderful credit card that lets you go to the Caribbean because you
get all these frequent flier points. Yeah, you get all these
frequent flier points because you're charging a couple thousand
dollars a year on stuff that you then have to pay interest on.
People just get busy, and they're hassled, and everybody thinks
finances are a big hassle. And the bills come and you just pay the
bills and you do what you have to do and you try to make it work
out at the end of the month. And, you know, that's probably how
most people cope. And you're not really putting yourself in charge
of where your money goes.
Q: If someone were to follow in your footsteps and try their own
$1,000 challenge, what's the first thing they should do (besides
pick up your book)?
A: It's funny that you mention this because on Jan. 5, we
started the $1,000 challenge at AOL.com. [You can check out the
$1,000 challenge -- a series of columns and reader challenges -- at
]. We're going to do it for 10 weeks and do 10 categories and
invite people to play along at home.
Q: Is this something people can start at anytime?
A: That's the plan. The stuff is all there and people can drop
in to the process at any point. Or if people just say, "Holy cow,
I'm spending an awful lot on utilities," and they just want to go
look at utilities -- which will be the second week of the challenge
-- they can do that. So, we're making it sort of bite-sized, and
that's how people should do this sort of thing. Start with one
category. Just get last month's credit card bill or bank statement.
Go through it and say, "Are we automatically renewing the Cat Fancy
subscription even though Fluffy died two years ago?" or "What's
this $15 charge on the cellphone bill? Oh, it's that mobile data
thing from the vacation." Just do it. Just take it one step at a
time and don't be perfect.
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