Recently I was thinking of ways of paying my debts faster than the methods I have shared here in this post “How To Pay Debt Fast“. After thinking about it more deeply I didn’t find any other methods without paying more which was quite obvious in the end.
The math is simple, to pay debt faster you have to pay more in less time than your initial debt plan to pay it totally back. What do I mean by this? I mean simply that if you have let’s say a debt that you initially plan to pay in 15 years. The only way to pay it faster is to pay more each month than your initial monthly payment or amortize your debt within big chunks.
This inspired me to do something that I didn’t expect and it turned out to be an extremely useful personal finance habit or action to take. Let me introduce you a habit to what I like to call “Budget clean-up“
What is Budget Clean-up?
Budget clean-up is a method where you basically check your current personal finance status by taking a look at your budget and see what expenses are eating your budget that are not necessary to have. This includes all unnecessary services, subscriptions, insurance, and other kind of recurring billing expenses.
How to Do Budget Clean-up?
In order to do a budget clean-up the first thing you need to understand is “what you need is not the same as what you want“. If you didn’t understand that statement, please read it again because it’s important to understand.
That taught me a big lesson. The reason why it is important to understand that statement is because budget clean-up is based on that. That’s why we need to check what unnecessary expenses you have currently and remove them.
This habit is good to take and done at least once a year and even better once each quarter.
It’s very easy for us to emotionally buy things based on what we want and not what we need. To amplify this even more, do this subconsciously with many services, subscriptions, and other expenses that you don’t really need and you have more expenses to pay and less money in your pocket that could be used for more important things, like food, clothing, or even investing it to build your wealth.
That’s exactly what happened to me, buying subconsciously over months various services, subscriptions, and other stuff that I was not in need of.
So now you might ask, how to do this budget clean-up? Well, it’s quite simple.
- If you have a budget, check your monthly budget and see if there are any expenses that you can remove. To determine whether you need it or not, ask yourself a question “If I remove this expense will it make my living more difficult or not?”, “Do I really need it or not?”. If you answered both questions with “No”, then that’s an expense you can remove.
- Go to that service, subscription, or whatever it is, and cancel it immediately.
- To make things more interesting, create the following table in Excel or even in your journal or on paper:
| Name | Initial $/month | Initial $/year | New $/month | New $/year |
| Expense 1 | $50 | $600 | 0 | 0 |
| Expense …. | $25 | $300 | $10 | $120 |
| Total | $75 | $900 | $10 | $120 |
Difference: $10 – $75 = -$65/month, $120 – $900 = $780/year
In above example this mean that you are now saving each month $65 and every year $780.
The reason why that kind of table is interesting to create is because with that table you could list all expenses you have cut or at least reduced and get an overall picture of how much you are now saving each month and how much that would make on a yearly basis.
I can guarantee you that it will surprise you, especially if you have a big list of unnecessary expenses.
My Results on Budget Clean-up?
Let me show you my results. So after I checked my monthly budget I had so many unnecessary services, subscriptions, and even one insurance that I was not in need of. Here’s my list:
| Name | Initial $/month | Initial $/year | New $/month | New $/year |
| X service | $12 | $144 | $4,40 | $52.80 |
| Amazon Prime | $6.60 | $79.20 | 0 | 0 |
| Dispney+ | $9.80 | $117.60 | 0 | 0 |
| Travel Insurance | $14 | $168 | 0 | 0 |
| Biopharma tool | $31.7 | $380 | 0 | 0 |
| Keyword research tool | $6 | $72 | 0 | 0 |
| Medium | $6 | $72 | 0 | 0 |
| Stock market tool | $3.80 | $45.60 | 0 | 0 |
| Total | $89.90 | $1078.80 | $4.40 | $52.80 |
Difference: $4.40 – $89.90 = -$85.50/month, $52.80 – $1078.80 = -$1026/year
That means that I am able to save each month $85.50 and each year $1026, just by removing those services.
Conclusion
I hope you got much value from this post and take that as an habit. I am at least very happy to see that with simple budge clean-up like that you can really save money and use it for something better or build your wealth with it.
What do you think about this habit? Are you planning to implement it in your case? If yes, how much you would save on monthly and yearly basis? I would be definitely interested in knowing. You can answer to those questions if you choose to in the comment section below.
