The Fastest Way to Cut Your Expenses

Do you want to reduce your expenses and save a little more each month? Oh, what's that? You don't want to create a budget? Dr. Drew's Lifechanger and Financial Adviser Robert Pagliarini says budgets take forever to create, and nobody sticks to them.

My PERK System is easy (dare I say fun?) and most people I work with have been able to reduce their expenses by several hundred dollars a month in about 20 minutes. Enough talking. Let's light this candle. The PERK System has just two steps:

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Step 1

List all of your expenses and add them together. Include recurring monthly expenses (e.g., rent), as well as those that occur less frequently (e.g., auto insurance).

Step 2

Now the fun part! Next to each expense write either P for Postpone, E for Eliminate, R for Reduce, or K for Keep:

Postpone - These are expenses that you can put off for awhile. For example, a house remodel project, vacation, or new car purchase.

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Eliminate - These are expenses you can completely eliminate such as a gym membership you never use, premium cable channels you never watch, or newspapers you're subscribed to but never read.

Reduce - Any expense you are willing to cut back on qualifies for Reduce. For example, if you go out to lunch every day at work but are open to bringing a lunch twice a week, mark the expense Reduce. In this case, you are reducing the frequency of the expense. Likewise, you could continue to go out to lunch every day, but go to less expensive restaurants. Both situations reduce your expense.

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Keep - Many fixed expenses such as rent, insurance, and food are necessary and should be marked Keep.

Now recalculate your revised expenses. Voila! It should be less than when you started.

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If you really want to be smart, instead of just focusing on your expenses, you can also focus on your income. Think about it. If your expenses stay the same but you're able to boost your income by $100 or $200 a month, all of this extra money can be saved. If you'd like to learn how to convert your hobbies and passions into extra income, as well as other financial tips, check out how to increase your income. Good luck!

Watch Lifechanger/Financial Advisor Robert Pagliarini give Harry, an unemployed freeloader, easy steps to get money and move out on his own!

For more life-changing information watch Dr. Drew's Lifechangers every day at 3 and 3:30 PM on the CW. Find out what channel it's on in your area.

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