David or Goliath? Reducing Big Expenses VS Small Expenses

Guest Bio -picky-pinchers

Mrs. Picky Pincher is the money-saving maven and blogger at Picky Pinchers. She writes about living the good life while paying off $250,000 of debt.

(Lily Note: She’s a spunky cutie blogger and has the best foodporn around. If you don’t check her out then you’re a tumbleweed 😂)


The story of David and Goliath. Ahhh, it’s the time-tested story of the big guy versus the little guy. Goliath is a big dude who bullies people around, and David is an itty-bitty beanpole with a slingshot and one hell of an aim. Which would you find more threatening — the big dude who could crush you with one fist or the little guy with a projectile weapon? I think you’d see a good split of people afraid of either the big guy or the little guy.

This same approach can be applied to personal finance: should you reduce big expenses or smaller, recurring expenses?

Which is more deadly to your financial goals: your rent or your Blue Apron subscription?

I’ve read blogs that argue both sides of this equation. Some people say cutting big expenses, like your rent or mortgage, is more efficient. Others argue that cutting out smaller recurring expenses, like takeout or coffee, are the way to go. After being on my own debt freedom journey for two years, I can confidently say that you need to cut both large and small expenses to see a real difference in your budget.
The Latte Factor - Reducing Big Expenses vs Small Expenses

Cutting Small, Recurring Expenses

If you’ve Googled around the personal finance blogosphere, you’ve probably seen people talk about “The Latte Factor.” It’s the idea that you can save a ridiculous amount of money by forgoing little daily treats, like a morning cup of Starbucks. If you take a “Latte Factor” approach to expense-slashing, you would focus on cutting your small, recurring daily expenses to see a big savings at the end of the month. I love cutting small expenses first, honestly. It’s a wonderful baby step if you’re new to the world of FIRE and are looking for ways to save money without making too many big changes. There are a few approaches to slashing these small expenses, too.

Cut it out completely

If you like to drink a Red Bull or Monster energy drink in the morning, those little jolts of caffeine are costing you big time. The same goes for other daily vices, like smoking. In my opinion, the best way to cut down on these expenses is to eliminate them entirely. In my case, I eliminated my vending machine habit. I was addicted to my sweet, sweet 3 pm Dr. Pepper, but realized that it cost me $20 a month! I stopped going to the vending machine entirely, happy to save money and the extra calories.

Make it at home

One of my favorite ways to save on small expenses is to try a homemade equivalent. Why bother spending money for someone else to do or make something for you? Do it yo’self and save money without feeling deprived. I’ve started making my coffee exclusively at home, thanks to my $10 French press, which makes coffee that’s just as good as a Starbucks dark roast.
I have an insatiable sweet tooth and they know me by name at Baskin Robbins. But my obsession with all things sugar adds up pretty fast. I started baking sweets at home. I watched YouTube videos, Food Network, and even attended local baking classes to hone my craft. Now I bake fancypants macarons from scratch any time I want sweet stuff.
We also started brewing our own beer and wine, too. We used to spend nearly $150 a month on alcohol! Now that number is closer to $50, thanks to our DIY brew methods.

Try substitutions

Another way to cut small expenses is to find free or cheap substitutions. I used to love getting my nails done at the salon, but that set me back $50 a month. Ouch! Instead I used that $50 to buy a nice home manicure set from Amazon. Any time I want nice nails, I just do them myself and no one’s the wiser. I also found $5 press-on nails from the drug store that look like salon-quality nails!
If you’re a movie buff, going to catch the latest flick at the theatre can add up. We stopped going to the movies and started renting movies for free from our library. We don’t get to watch the latest stuff, mind you, but we’ve never felt deprived or lacking in our entertainment options.
Cutting small expenses is a great first step to saving money each month. Tackling your $20 to $50 monthly expenses really adds up over time and makes more room for paying off debt or building your savings. But guess what? Renting movies from the library and brewing your own coffee aren’t the only ways to cut costs.

Cutting Large Expenses

It’s scarier and sometimes harder to cut large expenses. But you know what? You can reap serious financial rewards if you’re able to reduce your large expenses. Sure, you can cut $50 off your budget each month by making your own coffee, but you can save $400/mo by moving to a cheaper part of town.
Large expenses include your rent or mortgage, car payment and operating costs, phone bill, insurance cable bill, and utilities. I used to think these costs were fixed and there was no negotiating them. But boy, was I wrong!

Cutting the big two: housing and transportation

Back in 2016, we were paying $1,300 a month in rent for our fancy apartment in a nice part of town. We also had a combined $750 in car payments. We had no savings, meager retirement contributions, and debt the size of Mount Rushmore. But looking at our big expenses was eye-opening. No wonder why we didn’t have any savings: our money was tied up in gigantic monthly payments. Yeowch!
I knew if we wanted to pay off our debt quickly, we had to take more drastic action than brewing our own beer. We moved to the other side of town and rented a $900 apartment, saving $400/mo right off the bat. We applied this extra savings to a big cash fund, which we eventually used to buy a truck in cash. Finally, we sold one vehicle that had a $450/mo payment, bringing our total monthly car cost to just $350. By making these big changes, we were able to save $850/mo.
That’s a LOOOOOT of money! We cut two huge expenses, which then made it easier to pay off our debt at the speed of light. Here we are, nearly two years later, and we’ve paid off $14,000 of credit card debt, bought a house, financed a $16,000 renovation in cash, and paid off $25,000 of student loans. Not bad, eh?

The key to cutting large expenses

I will say that cutting large expenses isn’t for the faint of heart. I would encourage you to start small before you go balls-to-the-wall with expense-cutting. Ease into your new lifestyle slowly so you won’t feel deprived or fall off the wagon. The biggest key to cutting large expenses is to have a growth mindset and to be open. I do many things today to save money that I previously thought were stupid or useless, like sewing my own handkerchiefs or walking to work. If I hadn’t been open to these new experiences, we wouldn’t have paid off our debt so quickly. We would still be panicking at the end of each month and desperately trying to scrimp together some savings.

The Bottom Line

Expense reduction is a crucial part of your financial journey, whether you’re paying off debt or you’re retiring early. I took an honest look at my life and I was able to remove expenses that worked against my goal to retire early. And you know what? Every dollar cut has been a blessing. When looking at your own expenses for savings, trim the fat from both big and small expenses. They add up.


Lily Note: I’m not trying to stir the pot in any direction but I do have two observations to add. #1) Big expenses by themselves are usually few and far in between. The top answers for cutting big expenses are a person’s residence, car and…something tells me the cost of childcare is pretty high on the list as well. After those are trimmed, there’s no singular giant leap in savings. You have now got a bucket of smaller expenses. #2) The small expenses are numerous. They’re sneaky as anything, feeds off habit and very often a recurring thing.

So in essence we’re dealing with two dudes here that have completely different modus operandi.

I’m wondering if the level of debt is a factor in how one should approach this. On Instagram, I observe my fellow debt freedomists under $20K in debt cut back “the latte factor” style without much urgency whereas freedomists with over $100K in debt (and naturally more urgency) try for the scorch Earth method – or in their hum – Gazette Intense.

We want to know: do you prefer to cut big or small expenses?

16 thoughts on “David or Goliath? Reducing Big Expenses VS Small Expenses”

  • These are great ways to cut expenses. I think if we’re really proactive about paying off debt and saving up for our future goals, we should tackle both small and large expenses. I myself love the substitution method because I do that on a regular basis to save money. It’s either DYI or cheaper alternatives.

    Mrs. Picky Pinchers, I follow your blog on a regular basis, so it’s great to see you here! ^.^
    Ms. Frugal Asian Finance recently posted…5 Downsides of Personal Finance Blogging

    • Why thank you, Ms. FAF! I adore Lily’s blog (it’s always an adventure!) and I’m so thrilled to be here. 🙂 I don’t think people consider substitution as much as we could, either. It’s all doom-and-gloom, like, “Oh, I can’t watch movies any more because I’m saving money. Wompity womp.” But finding free substitutes for the things we already love doing has been *awesome* for things like our entertainment budget.
      Mrs. Picky Pincher recently posted…Wait–So What Is Non-Consumerism?

  • I think whether you’re cutting housing or recurring food expenses, what you’re really talking about is changing a core lifestyle feature. City or suburb, meal planner or unpaid food critic. I personally think cutting the big stuff is more efficient. You only make the decision on where to live once every few years, but you have dinner every day. That said, if you build the systems around your small, recurring expenses that give you as few decision points as your big recurring ones, the small expense route can certainly work as well.

    • That’s a very good point! It comes down to making lifestyle adjustments. To some people, the big expenses like rent or transportation, seem like scarier changes. I was definitely a big ol’ chicken about moving apartments just to save money. I’m glad we at least eased into a cost-cutting mentality before the big switch. It would have been tough to embrace jumping in head-first, at least for me.
      Mrs. Picky Pincher recently posted…Wait–So What Is Non-Consumerism?

  • Mrs PP! 🙂

    I go back and forth on this. On one hand, the big stuff is CLEARLY a bigger impact by its nature. But like you said it’s difficult to tackle a lot of those. Our home, for example, was partly determined by financials but largely where you live is a non-financial decision; it’s emotional, so long as your finances can support it. We’re paying more than we “could” for a place to live, but it’s within our budget and we know what it means for our FIRE goals. We’re fine with that.

    The small stuff tends to sneak up on you. What’s ten bucks a month? But the thing is that that 10 bucks adds up when you have 4, 5, even more of those things. Every month.

    The medium sized stuff falls in this category too and it’s where we can trim a lot of fat for ourselves. We will be getting new phones next year. $1300 for two new phones, roughly. But doing so will allow us to drop our phone bills by almost $100/mo, so it pays for itself pretty quickly. We’re dropping our cable TV package in favor of SlingTV as well once we move. That’ll save more money.

    All in all those changes will net us about $160/month which we can use for saving and investing. Sure it’s no $500/mo that we might get from moving, but it has NO impact on our quality of life, and that’s something you can’t really put a number on.

    We’re keeping ourselves to one car for as long as we can and that’s been huge for us as well. I’m not MMM extreme with biking to work (couldn’t make it work out where we’re moving to anyway) but just going to one car saves us a ton on insurance, maintenance, gas, and the cost of the car itself!
    Dave @ Married with Money recently posted…Visualize Your Accounts Using a Money Map

    • I curse those darn small expenses. I’m currently guilty of dropping $5 – $10 here and there at the local thrift store. It’s tough to see that I spent $50 there by the end of the month! Sorry about the phone costs, but man, it’s so worth it if the switch helps you save monthly! We had to cough up like $650 to buy phones when we switched to Google Fi, but we only pay a quarter of what we used to pay in phone bills. And SlingTV is awesome, too! I’ve become more of a Hulu girl myself, but SlingTV is great if you want the experience of cable without the cable price. It’s an excellent substitution. 🙂

      I love that you’re a single-car household! We honestly could make a single car work now that I work remotely, but having a paid-off truck has some benefits. I’m not a fan of paying insurance at whatnot on a second car though. Grumble grumble.
      Mrs. Picky Pincher recently posted…Wait–So What Is Non-Consumerism?

  • I would have to agree with @The Luxe Strategist. Go big or go home! But why not cut everything. When we moved to China on an expat package with my American company we were able to cut almost all expenses. It’s really crazy what they will pay for when they try to make you move. Auto expense, $0. Housing expense including utilities, $325 / month. We cut all our expenses as much as possible and then see where else there is to trim the fat. Trying to retire at age 30 is hard, but the challenge is worth it for the freedom at the end.
    Justin @ Atypical Life recently posted…5 Revolutionary Budget Hacks to Save You Money

  • I think I do a mix of both – I elect to live with my parents when I’m in town, to cut on rental costs. And I also think ahead and pack whatever I can to try and avoid unexpected expenses. But my parents are always adamant that ‘every once in a while, you have to buy something nice for yourself’. If you’re only ever cutting expenses and living the bare minimum, it could get a bit depressing. But moderation is key, I think, and it also depends on what you find to be that ‘splurge’! I guess it’d just depend on the person?

    • I love the point you made about treating yourself. The key is balancing impulse buys with deliberate, planned treats. Or hell, I’ve just started treating myself in ways that are free (long baths, naps, walks, etc.). And why not use your money to buy nice things that won’t break on you (ie. decent clothing) instead of opting for the cheapest thing every time?
      Mrs. Picky Pincher recently posted…Wait–So What Is Non-Consumerism?

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