Millions of Millennials are strapped with outrageous student loan debts and low-paying jobs: a toxic combination that can quickly lead to financial ruin.
While you can't do much about your student loan debt, you can do one thing: Lower your fixed expenses. The first step to doing this is to analyze your expenses.
Every budget is comprised of two different types of expenses: variable and fixed.
Variable expenses represent spending decisions you make on a daily basis, like eating fast food, going bowling, buying a ticket to a football game or a new purse.
They're variable because they fluctuate from month to month, and can be difficult to account for in a budget.
Fixed expenses are the ones that stay the same on a monthly basis. They include things like rent or mortgage, insurance, cable, cell phone service and daycare. Fixed expenses are necessary expenses, but the necessity of them is often exaggerated.
When people are trying to save money or reallocate funds, most of them begin by looking at variable expenses. However, variable expenses are tough to eliminate because they require a daily commitment to being frugal and savvy.
Since fixed expenses account for the majority of your monthly budget, there's ample opportunity to save in this area.
Here are seven ways to reduce your fixed expenses:
1. Downsize your mortgage or rent.
Your largest expense is more than likely your mortgage or rent payment. It may seem impossible to adjust this payment, but there are options if you're willing to be flexible.
As a rule of thumb, you'll commonly hear financial advisors tell you it's OK to spend as much as 30 percent of your monthly income on housing. In certain areas of the country – where real estate is expensive – this is a good guide.
But if you live in an area where there's ample real estate and lower prices, you should really be spending closer to 20 or 25 percent.
If you're currently spending more than 25 or 30 percent of your monthly income on housing, it's time to reevaluate.
If you own a home and pay a monthly mortgage, you have two primary options: You can either refinance your home – which will extend your mortgage in terms of payment years, but lower your monthly payment – or you can move.
For renters, there isn't as much flexibility.
You can either sublet and let a roommate split your payment (assuming the landlord allows this), or you can move into a cheaper place at the end of your lease agreement. If you're going to do the latter, remember there are expenses associated with moving.
Generally speaking, a move is only profitable if you'll be saving more than $75 per month on rent.
2. Compare auto insurance prices.
How much are you spending on car insurance each month? If you can't answer this question without hunting down a statement, something's wrong.
What most people don't realize is it's possible to lower your monthly premium.
Of course, things like driving records, age, location and credit score do come into play. However, there are other car insurance hacks you can explore in order to find better rates.
The very first thing you can do is downsize your car. The smaller and less expensive your vehicle is, the less it costs to insure.
The second thing to do is use a price comparison site that will actually give you quotes side-by-side in your area. There are always smaller insurance companies willing to give customers deals.
The third tip is to add a note in your calendar to re-evaluate your policy every six months.
Rates change quickly, and your driving record, age and other factors may allow you to shave a few dollars off your monthly premium from time to time.
3. Cut the cord.
If you still pay for cable, you're essentially a Millennial dinosaur.
Seriously: How many of your friends actually pay for cable these days? Probably not many. So, why are you spending $100 to $200 per month on internet and cable packages?
Nobody expects you to go without watching TV shows or sports, but you can use services like Netflix, Amazon Prime, HBO Go, Hulu and Sling TV to watch your shows at a fraction of the price.
4. Increase your health insurance deductible.
Health insurance is obviously a huge expense for people who aren't covered under their employer's plan.
While this may seem like a fixed expense not to be messed with, there are techniques you can use to save considerable amounts of money.
There's a direct correlation between your monthly premium and deductible. If your deductible is low, your monthly premium will be high. If your deductible is high, your monthly premium will be low.
Understand this inverse relationship. Consider your health situation and how much you visit the doctor and use various medications.
If you only went to the doctor once last year and maintained a reasonably healthy lifestyle, you may want to take a gamble and get a higher deductible.
You can easily shave a couple of hundred dollars off your monthly bill this way.
5. Cancel your gym membership.
Think about what you use the gym for. Are you lifting weights and using specific machinery, or are you just jogging around the indoor track?
Are you attending classes, or are you doing a self-directed workout?
While there's a discipline and accountability aspect of going to the gym, the reality is that most people can get the same workout without attending the gym.
For example, let's say you pay $40 per month for your gym membership and spend all your time on the treadmill. That's nearly $500 per year to use a treadmill.
You could purchase a treadmill and break even in a few months, or you could run outside.
Bam! You just discovered an extra $40 to be saved or reallocated each month.
6. Renegotiate your cell phone plan.
Your cell phone plan isn't something you can totally cut from your budget, but you can reduce it.
With all the competition in the cell phone industry, prices are being slashed. Companies are looking for any way possible to steal customers away from competitors.
The first tip is to study your bill and look for features you aren't using or don't need. You may be able to immediately eliminate $10 or $15 right off the bat.
If there isn't much flexibility and you feel like you're with the wrong provider, then shop around. Use comparison sites and see what different companies offer.
Then, visit these companies in person and speak with a person on staff. Describe what other companies are offering, and ask how they can counter it.
7. Explore new childcare options.
If you're paying for childcare, you know how costly it can be.
My first suggestion is to look into cheaper alternatives in your area. Prices can fluctuate rather significantly from one facility to the next.
The second option is to look into a nanny-share arrangement where you and a friend, co-worker or family member can share the expenses of a nanny.
Or if you have parents or grandparents in the area, maybe they can watch your children for a couple of days per week.
Not all of these techniques will help you. But while you can't save in every area, you should be able to find at least one or two fixed expenses to be trimmed (or even eliminated).
By saving a couple of hundred dollars per month, you can end up with $1,200 or more in savings by the end of one full calendar year.
This may not seem like a lot of money to some people, but for those of us who've been living paycheck to paycheck for years, having a cushion like that can relieve a ton of stress and put us on the road to financial freedom.