Top 10 ways to cut spending

financial independence

Lets do it…

A reader asked for a top 10 list of cost savings for escapees. So here are my top 10 “big wins” for cutting spending.

This is only a brief introduction – each merits a deeper dive, so I’ll return to them in future posts.

1. Debt interest

This is the big black hole for most people. Mortgages are usually the big one for the middle class. Car finance, credit cards, student debt and payday loans are even worse – more expensive ways of funding unproductive consumption or rapidly depreciating assets.

Other than interest on rental properties for landlords, you should be aiming for debt interest to be zero in your budget as soon as you can.  Make things easier for yourself by avoiding the trap of borrowing to buy the biggest house you can…that won’t make you happy.

2. Fund management fees

Most companies in the financial services industry are not your friend. The same goes for financial advisers. Paying more than 0.40% per annum for fund management is unnecessary. Plenty of people who don’t consider themselves rich are flushing away £10,000 – £30,000 a year on (hidden) fund management and adviser fees. There is only one word you need to know when looking for fund providers and that word is Vanguard.

Do not treat your pension or ISA (or 401k / IRA) as a black box that you dare not open the lid on. We need to look inside and take control. If you don’t know what fees you are paying, that’s a clue you are being had. Like Warren Buffett says: if you are at a poker table and you don’t know who the patsy is, then its probably you.

3. Cars

Here are some simple don’ts adopted by most millionaires*. Don’t ever buy a car on finance. Don’t buy new cars. Don’t buy based on the badge, buy on the facts. Don’t signal to the guy in the salesroom that you are trying to buy social status. He can sense this, the same way that sharks smell blood in the water.

Don’t care what others in your street buy. The more they spend, the poorer they are and vice versa. There is a great Texan phrase for false status signalling: “Big Hat, No Cattle”.

Can you drop from 2+ cars to 1? Why not?

Don’t drag around an extra ton of metal to increase your petrol costs. You wouldn’t fill the boot of your car with bricks to make it heavier and slower. So why the fuck would you buy an SUV?

Reduce your mileage – walk or cycle instead (see below). For unavoidable driving, you should be getting 50 – 60 miles to the gallon just by owning a car that is not sold to clowns with yellow and orange paintwork, a comedy horn and doors that fall off when you open them.

4. Second homes

If I wanted a great way to double my cost base (and stress), I’d buy a second home. That would multiply by 2x all expenditures, form filling, admin and shit going wrong.

Buying novelty napkin rings for one house is a waste of time, buying for two is a self-inflicted wound. You are allowed to own a second house only if it works as a business – in other words, you rent it out and the expected return on capital (net of costs) beats that available from the equity market.

Why tie yourself to one place to go on holiday? Free your mind and free up your capital. Allow optionality into your life. Holiday homes are like cars, horses, boats etc – never buy if you can borrow or rent for lower or equivalent cost.

5. Alcohol and other drugs

The Escape Artist enjoys a drink as much as the next man. Truth be told, I enjoy several drinks…and probably more than the next man. But in the last year, I have cut right back, drinking once a week. The effects have been startling. Alchohol is a powerful depressant. I feel much better and am now a far cheaper date.

Alcohol is also a spending multiplier.   Its not the cost of a few beers or some wine from the supermarket – that’s harmless enough. The danger is when you are in a fancy bar, disorientated by loud music, flashing lights and peer pressure. If you’re as dumb as I was for the first 20 years of my drinking “career”, you will pay almost any price for that (pointless) extra round of drinks. Then the cab fares, the curries and the hangover cures the next day. I have no idea how much I’ve spent on alcohol over my lifetime (hey, I was drunk) but I’m sure it’s a scary number.

I won’t spend much time on other drugs. Everyone knows cigarettes give you cancer…its interesting how little impact that knowledge has on actual behaviour.

6. Magazines and other marketing spam

Financial Independence

The Book of Dreams

Glossy magazines, catalogues, junk mail, marketing emails, advertisements, offer coupons…these are all nothing more than want generators.

The comedian Bill Bailey has a great phrase for the Argos catalogue…he refers to it as “The Book of Dreams”. Adopt a zero tolerance policy. Opt out from junk mail lists and unsubscribe from all marketing emails. Purge this shit from your life and the cost savings will flow automatically.

7. Holidays

Avoiding peak periods (not being tied to a job helps) will save you big money. Avoiding peak locations and getting off the beaten track will do the same.  Renting your house out while you’re away means you can make money overall while you are on holiday – check out AirBNB.

Driving (rather than flying) short haul can save you several thousand pounds. Flying has a great image for a shitty product. Flying scheduled is like catching a bus, just with better PR and more attractive staff.

Holidays are a bit like day release from prison. It’s a bit better than your regular cell but that electronic tag (smartphone / blackberry) is an annoying reminder that its not a real solution. Is it really worth spending excessive money that keeps you in the Prison Camp for longer? When you have escaped, every day is a holiday.

8. Private school fees

If you are thinking about private education in the UK, you are probably going to pay for that out of income taxed at 42 / 47%. They spend that money on state school places which you don’t take up. If you send your kids to private school you’re paying an enormous cost….twice….for what?

Refocus on the end objective. If you don’t want your children to struggle financially, why not save the school fees and instead invest the money in equity index funds or a rental property – compounded over their lifetime this will likely deliver them more financial security than any uplift from getting into a “better” college (whatever that means). The old way of better school = better job = financial security is dying.

If your objective is for your children to have the best education, then save the £250,000 per child and spend more time with them. You could explain the stuff on this blog to them yourself. Some things are best in-sourced.

9. Entertainment costs

Have you got Sky or cable TV?  Do you buy new DVDs?

WTF? Are 70 terrestrial channels, laden with free TV and films, not enough for you? It’s not just the subscription cost. Its the sucking away of your life that comes from sitting passively in front of the TV for so long. We’ve only got so much time and so much mental capacity. Spending money to watch X Factor style shite, interspersed with adverts for more shite, is not a winning strategy.

Why not replace buying new books with walking to your local library? If you have to buy, buy used.

Replace passive, paid for entertainment with interesting stuff from real life. If there’s nothing good on terrestrial TV, that’s probably your God’s way of telling you to go do something useful.

10. Food & Exercise

I’ve combined food and exercise because the same underlying evolutionary principles apply. I recommend getting your food and exercise as naturally, as low tech and as low cost as possible.  Arthur de Vany is my guru here.

Ditch the expensive leisure club subscription that prisoners think bolsters their social status.  Driving to a gym then running indoors on a mechanical treadmill is ridiculous, as unnatural as beagles smoking cigarettes in a laboratory. The dumbest money I ever spent was buying a new pro-standard rowing machine with digital screen etc. I bought it for £1,500… injured my back on it, then sold it after a month for a hefty loss.

Walk. Sprint. Get a basketball or a football and play with your kids or your friends. Integrate exercise into your life. Cycle to work – the motivation is much easier when coupled with getting somewhere you need to go.

Processed food makes you fat and you pay extra for this dubious privilege – eating naturally is the solution.

What did I miss?


*see book: The Millionaire Next Door


  1. Great article, point 10 is so true

  2. 1) Tax
    2) Replacing broken things. Learn to repair them yourself.
    3) Fireworks. Watch others burn their money. Double fun.

  3. Fireworks are interesting….yes, its money up in smoke for a fleeting pleasure….but The Escape Artist still loves fireworks.

    Buying your own fireworks offers a poor distribution of potential pay-offs. If things go well, they are a bit disappointing compared to a public display. If things go badly, you might set your dog on fire. Fireworks provide an example of positive externalities and something that is more effectively provided on a group basis rather than acquired as a private good in isolation from your fellow man.

  4. paullypips · · Reply

    Excellent article and blog, I found it from a link at Monevator.

    I also recommend Mr Money Mustache (US) and Ermine’s Simple living in Suffolk.

    We are finally getting a decent FI momentum in the UK, please keep up the good work.

    I believe that Argos was described by Bill Bailey as the “Laminated Book of Dreams”, it’s still hilarious, see here:

  5. There’s also a cognitive bias that makes us focus on the big ticket items far more than the apparently trivial things that we do every day or week. Take boiling a kettle; if you regularly boil 1 or 1.5 litres of water when you’re only making a 250ml mug of tea then over a year that’s a significant cost. Smoking is another example, a single cigarette is a trivial expense but over a year it’s massive. You’ve mentioned alcohol. I was staggered the first time I worked out what my annual spend was!

  6. arcyallen · · Reply

    It appears the link is now officially spam! Either that or my antivirus isn’t nearly strong enough…

  7. Richard · · Reply

    Good article. I’m working my way through the whole site after hearing a recommendation from the chap from the Pop-Up Business School when he was on the Mad Fientist podcast, so I’m well behind.

    DVD’s are one of my extravagances. I am a big film lover. However, my library has been growing at a normal rate but a lower cost via Pound Shop discs recently. Much better value!

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