The Rock Bottom Budget™ My Guide to Eliminating Expenses and Changing Your Lifestyle

In 2010 I had just moved to the Chicago area and my finances were a mess.  I had credit card debt, student loans, a car loan, and a personal loan to my parents.  Add up all of that madness and I had over $100,000 in debt.  I had just started working full-time and while I was happy to receive a job offer, it was not a well-paying job.  Honestly, I would have taken anything they offered, they had me right where they wanted me.  So the table was set, over $100,000 in debt and  a low-paying job, I was ready to crawl in my bed and take a nap till it all went away.  That’s not how life works and it’s certainly not how your finances work.

Over the last 5 years I have eliminated almost every last cent of my debt, I’m finishing up the personal loan to my parents by the end of the year.  One of the best things I did with my finances over time was create what I call the Rock Bottom Budget™.  The simple concept behind the Rocket Bottom Budget (RBB) is to eliminate and reduce expenses until you don’t think it’s possible to lower your expenses any further.

One of the best moves I have made financially was selling my debt filled Mercedes Benz.  This was one of my first big steps in my RBB.  Here are the numbers to show the difference this made in my very own budget.

  • Car Payment-$327.93
  • Car Insurance-~$100
  • Gas-~$100
  • Maintenance~$100

The numbers are approximate, but they are as real as the air we live and breathe.  I will repeat this over and over again, eliminating or reducing your car expenses could be one of the biggest savings in anyone’s budget.  Take this excerpt from the Wall Street Journal article:

If you’re driving 15,000 miles a year—not uncommon for an American worker—in a midsize sedan such as a Toyota Camry or Ford Fusion, you’ll spend more than $760 a month on average, or $9,150 a year, on gas, maintenance, tires, full-coverage insurance, license and registration costs, depreciation and finance charges.

wsj car

Using my numbers of ~$600 was almost an understatement compared to the average American driver.  I sold my Mercedes Benz in 2010 and with that the fixed expense that most of us expect to take with us forever.  In 2011-2015 I have had zero car expense*, for simple math sake let’s take the full 5 years or 60 months at $600 per month, that number is $36,000!!!!

See what using the Rock Bottom Budget can do!

I am going to entertain an argument for a second on eliminating the car expense.  Many people look at their car and categorize this as a “need”.  If you want to make a huge difference in your budget your car needs to part of your Rock Bottom Budget.

I need my car for work, school, drive the kids, safety, etc

Do you want to have debt your entire life?  Of course not, that would make a psychopath.  While it’s great to eliminate debts entirely, it’s also great for the RBB to reduce your fixed expense to a smaller amount.  If you have a $20,000 car, why not sell it and buy a $10,000 car.  Have a $10,000 car; why not sell it for a $2,000 car. By doing either one of the suggestions you are cutting your payment in half.   Just by reducing your car in value you have reduced your car expense greatly. I understand not everyone can sell their car and take the train to work, but if you want your debt gone bad enough, you will make it happen.  Those on the path to financial independence know I believe in the 10% rule, I preach the same to those in debt.

Band Aid Approach

Now I chose to change my lifestyle immediately and go with a rip the band-aid off approach because I was so sick of living a life financially that I couldn’t afford.

The next step for me was eliminating my credit card debt.  Back then I had thousands of dollars looming over my head.  Some of this was from living beyond my means and some from working part-time and living full-time while I convinced Mrs. Even Steven what a “catch” I was.   With credit cards one of the most important parts about eliminating credit card debt is to change your behavior.  It is one of the few debts that can actually increase while you are paying it off.

When eliminating any expense with the Rock Bottom Budget, I highly suggest making a goal and making it a big goal.  An example of setting a big goal came with my student loans, found in my article on Budgets are Sexy.

When you set your goal, set a goal that you WANT, not a goal that you think you can do – Go Big. Making $200 payments each month might be what you think you afford, but it is not setting you up to Go Big. Saying I want to pay off my student loans in 12 months – over $2,000/mo! – is Going Big.

Setting a goal tells you where you are today, and where you plan to go tomorrow. Without one, you are wandering the road of life with a backpack full of debt, and each step gets heavier and heavier with no end in sight.

The Rock Bottom Budget is all about making big changes, so why wouldn’t we make big goals to pay off our debt.  Each debt that you can eliminate is a debt that you can say goodbye to forever.  Just reading that has to make you feel great!  Expenses that are gone forever bring you closer to your own RBB, but not every expense can be eliminated entirely.


A light should be coming on and it’s just the beginning.

Reducing “Fixed Expenses”

Eliminating each debt or minimum payment is the key to the Rock Bottom Budget.  But there are some expenses that you simply cannot or do not want to eliminate, your cell phone is a prime example.  For me, not long ago my cell phone bill was $80 per month.  I was with Verizon and this was the basic plan needed to have an iPhone which included talk, text, and data.  I paid $80 every single month, that’s not even including if I used too many minutes, sent to many texts, or used too much data, all of which I had to pay extra for.  As I looked over all of my expenses, I thought that my budget had hit Rock Bottom, but when I read about a cellular service called Republic Wireless, I knew it the next step in my Rock Bottom Budget.

I was able to buy a phone (approximately $300) and pay $10 per month plus tax to have unlimited calling and text, but also be able to use data when Wi-Fi was available.  I made the switch and after my break-even point with the initial purchase of the phone, approximately 6 months, I had hit my new Rock Bottom Budget, cutting my cell phone bill from $80 to $10, that’s a $70 difference and ⅛ of what my cell phone bill was with Verizon.  While my wireless preference is Republic Wireless, there are countless wireless programs that you can find that offer discounted rates, do your research and make the switch to save that money.

I’m a believer that you can reduce any “fixed expense”.  I use quotation marks because I think people assume that many of the items in their budgets are fixed expenses.  I could have assumed my cell phone bill was a fixed cost and grumbled about paying $80 month.  Grumbling about paying $80 per month will not stop you from paying $80 month.  Calling up Verizon and asking for a cheaper phone plan, switching to a new concept like using your phone for just calling people, and researching the competition, these are things that help reduce those “fixed expenses”.  Here are a few examples to take a look at in your budget:

Reach Your Limit

There are limits to any budget.  While we decided to eat out less and grocery shop more, this is one part of the budget that will not go any lower, it has officially hit our Rock Bottom Budget number, this will happen.  There are things that you simply cannot give up and there are things that cannot be reduced any further.  This could be your preference or it might not be physically possible.  For example, I have reduced my eating out budge to $20 per week.  I certainly could eliminate it all together, but I would hate it, that’s just my preference.  I’ve taken my stand and decided that I value getting out of the office for a coffee or having a Friday lunch with co-workers more than I do saving $20.    That doesn’t mean in your case you should sit back and use this as an excuse every time something could be cut back.  The Rock Bottom Budget is meant to eliminate debt and reduce costs along the way.  If you don’t challenge everything, you are left to be ordinary.  The whole idea of getting out of debt is to be extra ordinary.  Nobody wants to get out of debt so they can go get another car loan or add to their credit card debt.  The Rock Bottom Budget is for the extraordinary.  When it all comes down to it, you have to decide how bad you really want it.

Making big changes to your budget that can make all the difference, but even challenging your small budget items can have an impact.  Using the Rock Bottom Budget has had such an impact on my finances; it’s about eliminating expenses and changing your lifestyle.  That’s the key to everything.  As the Even Steven Money household works to eliminate debt, a new Rock Bottom Budget is born.

I’m sure many of you use a budget, but have you ever considered using the Rock Bottom Budget?  Are you getting rid of fixed costs forever?  Have you challenged a “fixed expense” or made a lifestyle change for the better of your budget?  Have a question about your budget or ways to reduce your expenses, feel free to Contact Me, happy to help.


22 Responses to “The Rock Bottom Budget™ My Guide to Eliminating Expenses and Changing Your Lifestyle

  • We didn’t have much in the way of non-mortgage debt to contend with, but we certainly went through a very similar progression that you did with cutting expenses. We’re at the point that we are comfortable with for the time being.

    One thing that we don’t want to do is move into our early retirement lifestyle already at the rock bottom of our budget, because that leaves me nowhere to go if things do get tight for whatever reason. That little bit of a safety net we believe to be a worthwhile part of our budget.

    Budgeting really is easy once you get rolling with it. And some people don’t even need a budget to live frugally. To each their own as long as it works! 🙂
    Steve @ Think Save Retire recently posted…The awesomeness of not being importantMy Profile

    • EvenStevenMoney
      2 years ago

      Yeah I usually differ from the financial independence community in this regard, I had a load of debt 5 years ago, but cutting out expenses until you reach your RBB or at the very least your comfort level is important.

      I can see your point of not being able to cut any items from the budget for safety. I counter with a large buffer in this case, so any shifts in expenses are accounted for(cash, taxable investments, HSA, etc).

      • It’s very true that having a large enough buffer essentially enables your rock bottom budget. I guess this ultimately comes down to your comfort level and your general outlook towards expenditures post-retirement. I think there is a LOT of good that can come from the RBB concept. 🙂
        Steve @ Think Save Retire recently posted…The awesomeness of not being importantMy Profile

  • Your estimate and the magazine regarding monthly cost of having a decent car is spot on. I keep track of my expense for owning an Audi and a Toyota and they fall between $960-$681 per month. Read at this page for details,

    I am also in the process or reducing my expense so that I can see what the minimum I will need per month, so I can figure how much I should be making a month and what my magic number shall be for early retirement. Excellent article.

    • EvenStevenMoney
      2 years ago

      Getting down to a Rock Bottom Budget can really help with financial independence. It certainly gives you something to reach for with your goals.

  • Having an idea of what your RBB is, even if that’s not your actual budget, can be helpful in emergencies. If you lose your job and have to implement this emergency plan, it’s good to know what you can cut and to what extent so you can get to your leanest meanest budget. So for folks who aren’t looking to slash everything, it’s good to know where your RBB is just in case.
    Jim Wang recently posted…How to Build an Opportunity FundMy Profile

    • EvenStevenMoney
      2 years ago

      That’s a great point Jim, while it’s great to have a full-time income, nothing is forever and life happens. If you know what your RBB is, then you can cut back to “make it”. I like the different perspective.

  • I love this concept. We think of the rock bottom budget as our “reduction budget,” meaning the budget we’d fall back to if bad things happen. If we both got laid off before reaching early retirement. If we had a series of bad market years. If some unforeseen disaster took a chunk out of our nest egg. But for now, we think it’s important to be at least one level above rock bottom, so that we still have some things in there that are unnecessary but add joy, like travel and the occasional concert. As for the regular expenses like cell phones and utilities — by all means, yes! Optimize them! Such good advice.
    Our Next Life recently posted…Why Married Early Retirees Should See Our Marriages As Our Most Important InvestmentsMy Profile

    • EvenStevenMoney
      2 years ago

      Sounds like you have the Rock Bottom Budget all set and ready. It allows flexibility to create a budget that can weather a storm, whether it’s a stock market dip or a getting laid off. My FI day relies on eliminating debts, whether it was my student loans or my mortgage, so the RBB is key in my situation. Optimize, good word for it all.

  • Life style inflation can creep up on you so it always good to baseline your budget periodically. Using your rock bottom budget method is a good way to see how far you’ve wandered and how much you can trim.

    • EvenStevenMoney
      2 years ago

      I had a small amount of lifestyle inflation creep in, since my last personal debt is almost finished it only took me a month to snap out of it because I want that thing gone. We all tend to wander a little from time to time, concentrating on your RBB can get you back into focus.

  • Love your term “Rock Bottom Budget” — it’s so crucial to know what that is and keep your expenses as low as possible, especially when climbing out of debt.
    Melanie @ Dear Debt recently posted…What People Don’t Tell You About Making More MoneyMy Profile

    • EvenStevenMoney
      2 years ago

      Could not agree more, this is and has been essential for me to get out of debt.

  • Great post! I especially loved the part where you talk about fixed expenses. Many fixed expenses can still be lowered and I think a lot of people forget about that.
    Cat@BudgetBlonde recently posted…4 Ways to Know if Working From Home Is Right For YouMy Profile

    • EvenStevenMoney
      2 years ago

      Thanks Cat! I think people really look at their budgets sometimes and see only fixed expenses, like nothing can be changed. It’s really a matter of wantign to change your lifestyle by reaching that new Rock Bottom Budget.

  • Pretty awesome that you are on track to retire early pretty soon when you had all that debt hanging over you just 5 years ago. It shows that you can get out from debt and get on the right finance course by making changes to your life. I’m with Steve in that we’ve always been frugal and probably don’t have much that we can cut to get to our RBB…of course there is no doubt some fat that can be cut out though. But the RBB concept is an important one because I see people in debt emergencies who should (stealing phrase from MMM) act like their hair is on fire and cut to their RBB yet they still keep expensive cable tv, eat out often and other luxuries while claiming that they can’t cut out anything from their budget.
    Andrew@LivingRichCheaply recently posted…Life Insurance and Credit Card Debt Discussion with Co-WorkersMy Profile

    • EvenStevenMoney
      2 years ago

      I think many people look at their expenses and think that they are set, whether they have expensive cable or the newest iPhone. I think so many people could make a Rock Bottom Budget happen, but excuses get in the way. We all have our comfort zone, but sometimes eliminating comfort can help change your financial life.

  • Okay, this Rock Bottom Budget is a nice concept and I can see its usefulness for sure. I think for me anyway, it comes down to lifestyle choices. I just can’t seem to picture life without a car. Is it just me?

    But maybe that’s what it takes to retire early…giving up the very comforts that we’ve become so accustomed to.

    Laura Beth

    • EvenStevenMoney
      2 years ago

      Big actions get big results. I chose to sell my car because I live in a city with a great transportation system and I don’t mind taking a few extra minutes to travel. I decided that $600 worth of car was not equally valuable to what I was getting in return.

      I don’t think getting rid of your car is a must, but I do think reducing your payment or stepping down to a lower valued car while paying off debt is a smart move. “Just by reducing your car in value you have reduced your car expense greatly”.

      If you ask the FI community I think you will get a different answer than giving up the comforts we are accustomed to. In fact many consider those comforts as waste. Based on numbers, I know for a fact myself, Mr. 1500 days, Frugalwoods, or Go Curry Cracker could be rolling around in a brand new Range Rover. For us we consider it a waste, we value our time and freedom more than having a fancy car.

  • I have to agree with you on always being able to reduce “fixed expenses”. A lot of people panic when they hear the word budget and think they are going to have to stop spending money. The point of a budget is to reduce costs on things you don’t care for so that you can spend more on the things you really like! It’s all about what exactly your personal goals are and what is important to you.
    Debt Hater recently posted…Frugal Tip: GeocachingMy Profile

    • EvenStevenMoney
      2 years ago

      Those fixed expenses just another debt myth:)

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