This Guy Managed To Cut $1,000 From His Household Expenses In 10 Weeks

Donna Terek/Courtesy of The Detroit NewsIn March 2005, Brian O'Connor was a self-proclaimed "unemployed, stay-at-home, freelancing, job-hunting Dad who needed a break."

Although it would mean going from a two-income to a one-income home, he and his wife decided to sell their Florida home and move to Detroit for O'Connor's next big break - a job in newspapers.

"I'd made the kind of shrewd money move that defines any good personal finance writer: a massive, idiotic, potentially life-ruining financial blunder," O'Connor writes in his forthcoming book, "The $1,000 Challenge," which is due out next month.

Shortly after their move, the bottom fell out. The housing market tanked; O'Connor's newspaper was sold and was cutting staff left and right; and he and his wife found out their son would need special speech therapy lessons that their insurer wouldn't dream of covering.

It was time to buckle down. After a heart-to-heart with a personal finance advisor, O'Connor decided to shave $1,000 off his family's monthly budget in just 10 weeks - lowering one of his 10 largest household expenses by $100 each week. It was no easy task, let alone for a single-income family trying to scrape by in Detroit of all places. Against all odds, they succeeded.

We spoke with O'Connor about what it was like to take on a such a massive challenge.

Business Insider: You started this challenge during the height of the financial crisis and in arguably one of the hardest-hit cities in the country. That can't have been easy.

Brian O'Connor: It was a challenge. I actually thought I wouldn't make it. Detroit really was kind of ground zero for the financial crisis. Michigan as a whole had already been in trouble for several years. We just never came back from the recession before this last big one. [Writing about personal finance for the Detroit News], I'd already had a lot of experience writing personal finance advice, but you just start thinking, how much of this stuff is actually helping anybody? There are people who are losing their jobs not through any fault of their own and they need a lot of different advice.

BI: What was the toughest expense to cut?

BO: Housing. It was just crazy. I started out week-one trying to refinance my mortgage and get an appraisal. It took nearly two and a half months because lenders had by that time started a new appraisal process [after the housing crisis]. People were just not used to it. The guy who appraised my house didn't really know my neighborhood.

BI: You made big headway with your cable bill with just one phone call, taking it from $225 a month to $145. Were utilities easy to cut?

BO: Everything I wrote has been done so they were all real savings. The easiest and most long-term savings have been cable and phone bills. Once I called and negotiated it was pretty much immediate, plus I got a huge gift card for changing plans. Other charges were rebated. That has been a terrific and permanent reduction to my budget.

"The $1,000 Challenge"Here's how much O'Connor managed to shave from his family's budget in 10 weeks.

BO: I thought I could cut my car category easily and I couldn't find anything practically. It's difficult when you've got a home and a car. You can't really get out of your home or car payment.

BI: What did your wife think about you sharing your family's finances with the public?

BO: I wouldn't say the process was always frictionless, but she was a pretty good sport about it. We've been married 20-plus years so I kinda know where the financial landmines are with my wife and I tried to accommodate her. The key to this is you have to really create an alternate personality for the people you write about. I call her "Mrs. Funny Money" in my columns and that goes a long way to keeping the peace.

BI: It's been a couple years since you ended the challenge. Have you had any setbacks since then?

BO: We've backslid on our menu-planning and grocery shopping budget. We have to get back to doing that because that's a sustained savings. You need to make that an ongoing process and a habit. It's not always that hard to save money; it's just a whole lot easier not to save it. My wife works three days a week and her two days off are filled with stuff for our son. We'll be scrambling for a week until we get back on a grocery program.

BI: You still managed to go on trips like one to your high school reunion and pay for your son to go to camp. Was that in your budget?

BO: Extras like vacations I've been able to cover with money from freelancing. So that's a more responsible way to handle it. We haven't had money to spend on things like getting certain things done around our house. Doors need replacing, furniture needs to be updated. Every Christmas we still can't believe we're getting the same sofa cleaned.

BI: What's your go-to method for keeping track of your budget?

BO: I've been using Quicken since [before it had a version] number. It's becoming kind of a maddening creation now - pretty bloated. For me, the way I'm tracking most of my expenses is that certain things just went to cash immediately, like our spending money, our entertainment money, our babysitter cash. That helps a lot. When you have two people with debit cards and checkbooks and you have a modern suburban existence you've got a lot of moving parts in your budget to track. It's easier to just take out cash every payday and say OK, this money goes to this and then not having to worry about tracking those little transactions all the time.

BI: What's the main takeaway you want people to get from your book?

BO: I think it's the idea that we should get away from this idea of perfectionism. If you're needing one less dollar this month than you did the month before the you're making progress. It's gotta be an ongoing thing. Once you become conscious of where your money is going, then it becomes easier to want to start to put together some kind of systematic way to go about it.