Bare Bones Budget: What to Cut First When Income Drops to Zero

Two days after my colleague Sarah got laid off, she sat down with a spreadsheet and her bank statements, trying to figure out how long her savings would last. The answer was depressing: three months if she kept spending like she had a job. Maybe four if she "cut back a little."

Cutting back a little wasn't going to cut it. She needed to cut deep, fast, and in the right order. Because here's what nobody tells you about suddenly losing your income: not all expenses are created equal.

Some costs you can eliminate immediately with zero consequences. Others you can reduce. And some—the ones people always suggest cutting first—are actually the last things you should touch.

This isn't a feel-good article about "treating yourself to lattes because you deserve it." This is a survival guide for when your income drops to zero and you need to make your money last as long as possible.

Here's what Sarah learned (and what I've watched dozens of colleagues navigate), category by category, in order of what to cut first.

Tier 1: Cut Immediately (This Week)

These are expenses that provide minimal value and can be eliminated with a few clicks. Cancel them now, not next month.

Subscription Services You Forgot You Had

Pull up your bank and credit card statements for the last three months. Look for recurring charges. You'll find subscriptions you completely forgot about.

Potential savings: $100-300/month

When Sarah's friend Emma did this exercise, she found she was paying for three streaming services she hadn't watched in months, a meal kit subscription she kept meaning to cancel, and a premium Spotify account she could easily replace with the free version. Total: $147/month in cuts that took 20 minutes.

Memberships and Recurring Fees

Gym memberships, Amazon Prime, Costco memberships, professional associations—anything that auto-renews needs to be evaluated.

Gym memberships: Cancel your $50-80/month gym and switch to free YouTube workout videos or running outside. You can rejoin when you're employed again.

Potential savings: $50-150/month

Convenience Services

These are services that make life easier but aren't essential:

• Food delivery apps: DoorDash, Uber Eats, Postmates fees add up to $50-200/month
• Laundry/dry cleaning services: Do it yourself for now
• Car washes: Wash your own car or skip it entirely
• Lawn care/cleaning services: DIY time

Potential savings: $100-400/month

Tier 2: Reduce Significantly (This Month)

These expenses you can't eliminate entirely, but you can slash them dramatically with some effort and discipline.

Food: Your Biggest Variable Expense

This is where most people have the most room to cut. The average American spends $250-400/month on groceries and another $200-300/month eating out. When you're unemployed, those numbers need to come way down.

Is this fun? No. Is it sustainable for a few months while you get back on your feet? Absolutely.

Potential savings: $200-400/month

Transportation: Drive Less, Spend Less

If you're unemployed, you're not commuting. That's one immediate cut. But you can go further:

Potential savings: $100-200/month

Utilities: Small Cuts Add Up

You can't eliminate utilities, but you can reduce them:

• Internet: Call and threaten to cancel. They'll usually offer a discount to keep you (saves $20-40/month)
• Phone: Switch to a cheaper prepaid plan like Mint Mobile ($15-30/month vs. $60-100 with major carriers)
• Electricity/gas: Be aggressive about usage—lower heat, higher AC temp, unplug devices, shorter showers (saves $20-50/month)
• Cable TV: If you still have it, cancel immediately (saves $80-150/month)

Potential savings: $120-240/month

Personal Care and Shopping

This is painful but necessary. Everything non-essential gets paused:

Potential savings: $200-500/month

Tier 3: Last Resort Only (When Everything Else Is Exhausted)

These are the cuts people often suggest first, but they should actually be your last option because they can create bigger problems down the line.

What NOT to Cut (Unless Absolutely No Other Option)

What You Might Consider as Absolute Last Resort

If you've cut everything in Tier 1 and Tier 2, exhausted all unemployment benefits, and you're still running out of runway, only then consider:

• Moving to cheaper housing: Breaking a lease or moving back with family (has long-term implications)
• Selling assets: Car you don't absolutely need, furniture, electronics (one-time cash injection, can't be repeated)
• Temporarily stopping retirement contributions: If you have a job with 401k, pause contributions to increase take-home (but you lose employer match)
• Negotiating with creditors: Many will offer hardship programs with reduced payments (hurts credit, but better than defaulting)

These aren't in the standard "bare bones budget" because they involve major life changes or create future costs. They're crisis measures, not standard budget cuts.

Sarah's Real Numbers: How the Cuts Added Up

Remember Sarah from the beginning? Here's how her bare bones budget actually played out:

The Psychological Part Nobody Talks About

Living on a bare bones budget is not just financially hard—it's emotionally exhausting.

You'll watch your friends go out to dinner while you eat rice and beans at home. You'll skip social events because you can't afford the $20 cover charge. You'll feel guilty buying a $4 coffee even though you desperately want one.

This feeling is normal. And it's temporary.

Give Yourself a Tiny Budget for Sanity

Here's a contradiction to everything above, but it's important: budget $20-40/month for small pleasures.

This isn't permission to blow money you don't have. It's acknowledgment that living in extreme deprivation for months makes you miserable and can actually sabotage your job search.

Use this money for:

• One coffee shop visit per week to get out of the house
• A cheap happy hour with a friend so you don't become isolated
• A used book or small hobby supply that keeps you sane

The key is: plan for it. Don't impulse spend and feel guilty. Decide ahead of time what your "sanity spending" is and stick to that limit.

Track Everything (It Helps)

When money is tight, every dollar matters. Start tracking your spending daily.

You don't need fancy software. A notes app works. Just write down every purchase:

At the end of each week, add it up. Seeing the numbers in black and white helps you stay accountable and spot where you're leaking money.

Remember: This Is Temporary

A bare bones budget is not a lifestyle—it's a survival strategy.

You're not doing this forever. You're doing it for 3-6 months while you find your next job or figure out your next move. And then you get to ease back into normal spending.

The sacrifices you make now buy you time. Time to be selective about your next job instead of taking the first offer out of desperation. Time to retrain or pivot if you need to. Time to breathe.

That's worth a few months of rice and beans.

Final Thoughts: Cut Smart, Not Just Deep

When your income drops to zero, the instinct is to panic and slash everything. But not all cuts are equal.

Cut subscriptions you don't use. Cut convenience services. Cut entertainment spending. Cut restaurant meals and premium groceries.

But don't cut health insurance. Don't cut medications. Don't cut the internet you need to find a job. And don't cut your sanity completely.

The goal isn't to suffer—it's to strategically reduce expenses so your savings last longer and you have breathing room to find what's next.

Make a plan. Track your spending. Stick to it.

You can do hard things for a few months. And on the other side of this, you'll have a job again and this whole bare bones period will feel like a distant memory.

Until then: rice, beans, and resilience.