While I was on my debt free climb, I picked up a lot of good financial habits that will stay with me for a lifetime. One of which is focusing on eliminating or reducing your largest expenses first.

I’m not talking about depriving yourself and taking out the joy in life. I’m talking about strategically analyzing your situation and finding creative ways to trim the largest amount of fat first before you give up your mocha latte at Starbucks and start clipping coupons.

I try to apply the Pareto Principle (80/20 rule) to multiple aspects of my life and especially in my finances. The gist of it is 80% of my expenses come from the largest 20% of my spending categories. In my case (after taxes) the three types that make up 80% of my expenses are:

  1. Housing
  2. Transportation/Car
  3. Food

Below I’ll review my tips to reduce or eliminate these large expenses without having to give up your love of life.

Reduce Housing Expenses

House Hacking

House hacking means you buy (or rent) a property and have roommates or tenants that you help pay for your housing expenses. Typical examples include purchasing a duplex and renting out one unit and living in the other, buying a house and renting out rooms while living in the same house (Airbnb or long-term), or splitting rent with multiple roommates.

All house hacking options can be great because housing is generally most peoples largest expense (usually 2x bigger than the next closest (after tax) expense). Owning property (and renting out rooms or units) is most powerful because it turns a liability into an income producing asset every month.

After six years of renting apartments (the majority of the time with roommates), I recently took the plunge and purchased my first home with the plan of renting out two bedrooms while living in the master. By renting out two rooms in my house, my mortgage payment will be under $300 per month.

I understand house hacking might not be for everyone, but if you are in the position to make it happen, it can be a robust solution to reduce your housing costs and build wealth.


My House (hack) build in progress

Other ways to save money on housing expenses

  • Downsize to smaller living space
  • Live in a cheaper cost of living area (more reasonable property taxes)
  • Shop for cheaper home or renters insurance every six months

Auto Expenses

Buying an Affordable Used Car

After I graduated college I was stuck with a $400 a month lease payment for a brand new Toyota Tacoma truck I leased with help from my parents co-signing. My monthly payment was taking up a significant amount of my monthly budget (not to mention the high gas costs), and I knew if I was serious about paying off my debt I needed to downgrade.

I remember one day after work, I saw an Executive at my company (who I had a lot of respect for) in the parking garage. He was driving a 1980s pickup truck. At that moment, I felt somewhat stupid being in my early 20s and driving a new vehicle. I thought this guy must make 5x my salary and if he doesn’t need a fancy car to get him from point A to point B, why would I?

After doing a lot of research, I finally sold my truck. I ended up buying a used 5-year-old Toyota and had put down 80% in cash. I had a small loan for a year at 1.65% interest. I paid off that loan over a year ago and haven’t had a car payment since.

Related post: My First Used Car Buying Experience

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Now, my auto cost has been slashed by 75% after making the change to a paid-off used car.

Living close to work

The majority of my recent car expense go to paying for gas. Living close to work (or working from home) will significantly help with gas costs.

By living close to work, you don’t waste your time sitting in traffic and reduce the likelihood of repairs.

I am still working on living close to my job as I currently have a 30min + daily commute and spend $80-$120 in gas each month.

Public transportation

By taking public transportation, like riding the city bus, can save you money and time. In my city, a monthly bus pass costs anywhere between $48 – $96 a month depending on your location. If you can deal with the bus schedules and multiple stops along your commute, riding public transportation is a great option.

DIY Auto Maintenance

Just learning how to change your oil, fluids, and air/cabin filters, rotating your tires, etc. can save you thousands over the years. All basic routine maintenance videos are available on YouTube, and once you do it a few times, you will know how to do it for life.

I always cringe when I see people paying to get their oil changed. They are paying $50+ for a regular oil change when I can buy the best synthetic oil for half the price and do the job myself in 20 minutes.

Invest a little time upfront learning and reap the compounding rewards over time.

Other ways to save money on Auto Expenses

  • Biking/Walking when you can
  • Carpooling
  • Shopping for cheaper auto insurance every six months

Food Expenses

Batch Cooking

I save money on food by meal prepping a few times during the week. Typically, my girlfriend and I batch cook that produces eight meals (4 meals each), 2-3 times per week.

We try to keep the batch cooking costs under $2 per person per meal. There are some great and healthy recipes we use from the ChooseFI vault that meet the $2 per person per meal rule.

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Meal Prep Sunday

Limit Eating Out

When you break down the costs of eating out, you quickly realize it’s really expensive (and most of the time not too healthy either). Comparing to batch cooking the cost of eating out is typically 5 to 10x the costs of batch cook.

Personally, I try to limit eating out to 1x per week. When I do go out, I try to pick places where I don’t need to be waited on to avoid extra costs for tipping.

Other ways to save money on food expenses

  • Drink water with meals eating out
  • Share entrees with another person
  • Shop at Costco for bulk items and ALDI (if you have one in your area) for cheaper produce
  • Buy groceries by unit price

Final Thoughts

By implementing the tips above to reduce housing, auto, and food costs you make the most significant dent in your expenses. Applying these tips can take a little bit of planning but in my opinion, won’t require any significant lifestyle changes.

Once you’re able to implement, you will be able to save hundreds of dollars each month. That money can now be used for paying off debt, savings/investing, or traveling. Compounding these changes over time can drastically change your life!

A little about the author


debt free climbGary graduated college overwhelmed by $55k in student loan debt. It took him 3.5 years to climb out of debt and officially became debt free in April 2017. Gary created DebtFreeClimb to share his story and help others in the process. He is passionate about helping people live intentionally, pay off their debt, build a side income, and travel the world. Check out his full story Here.