If you feel as if you are falling deeper and deeper into a financial hole it doesn’t take a crystal ball to figure out the problem. You’re spending too much money. If you don’t believe us, take out a piece of paper or your eTablet and write down all your spending for the past 30 days. If you have a problem remembering all of them, get out your credit card statements or your checkbook. Next, add everything up and compare it to your earnings. There, see, you’re spending more than you earn. And if you don’t do something about this, your financial problems are only going to get worse. So, what can you do? Here are six ways you could slash your spending.
Consolidate your debts
When you analyze your finances do you find you have multiple debts– especially credit card debts? If this is the case you should consolidate them so that you’ll have just one payment to make a month that should be much lower than the sum of the payments you’re currently making. One way to do this is with a debt consolidation loan. If you can qualify for an unsecured loan, meaning that you don’t have to offer any asset as collateral, you should have a much lower interest rate than those on your credit cards as well as a lower monthly payment. This will simplify your financial life because you’ll need to make only one payment a month instead of the multiple payments you’re now making. If you’re unable to get an unsecured loan you might try for a balance transfer where you transfer the balances on your high interest credit cards to one with a lower interest rate. You might be able to get one of those 0% interest balance transfer cards and pay no interest for anywhere from 12 to 18 months, which could shrink your monthly payment dramatically. There is also consumer credit counseling where a debt counselor would help you develop a debt management plan designed to get your finances back on track. While not all these options are for everyone there are circumstances where at least one of them could help.
If you haven’t checked the interest rate on your mortgage recently, now might be a good time to do so. Mortgage interest rates are at nearly all time lows. Refinancing is where you get a new loan with new terms. This will change the length of your loan as you’ll be resetting it back to zero but this should help you get a better interest rate, which will mean a lower monthly payment. Go online to a refinance calculator and compare what your current mortgage monthly payments are vs. what a new, refinanced monthly payment would be to see how much you could save. You might be surprised at the difference. We know of people that have saved $300 or more a month by refinancing. However, it’s important to remember that in order to get a good interest rate you need to have a good credit score. You can get yours on sites such as CreditKarma.com, CreditSesame.com and www.myfico.com. Credit scores typically range from 300 to 850. If you want to get the best possible interest rate when you refinance, you will probably need to have a score of 750 or above.
Energy costs can be especially a problem these days as costs continue to increase as do the number of electronic devices we have in our homes. This can make it a good idea to take some environmentally friendly actions to slash you expenses and do something nice for mother Earth. You can get especially good savings by changing to energy efficient solutions such as compact florescent lights, timers, power strips and programmable thermostats. You should also consider air sealing your house – especially if it’s an older one– and do unplug your devices when they are not in use.
Revisit your insurance premiums
There’s no question but that you need insurance to protect yourself against the unexpected but there’s no reason to overpay for it. This can leave you vulnerable in another way and that’s to financial problems. If you haven’t shopped around for your homeowner’s, health, auto and life insurance recently you need to do so. Websites such as Esurance, NerdWallet, Selectquote and Intelliquote make it easy to compare insurance premiums from many different insurers. It’s just good to check your insurance options from time to time to make sure you’re getting the coverage you need at the best possible price.
Quit eating out
Ordering in or eating out can seem like a real timesaver. However, the cost of this is far from minimal. You could cut your food bill by cooking your meals at home and by packing lunches to work. If you would like to cut your spending even more, make meals in bulk and then freeze them for future use. You will also spend significantly less money if you buy store-brand or generic products in place of name brand items. And, of course, you could save even more if you start a garden and grow your own fruits and vegetables.
Thrift shopping can help you slash expenses by thousands of dollars a year. Vintage clothing, cell phones, furniture, computers, kitchen appliances – just about everything you can name can be purchased second hand on sites such as Craigslist, eBay and Etsy. There are probably second-hand stores near where you live as well as thrift stores run by nonprofit organizations like ARC (Association for Retarded Citizens) and Goodwill. Before you turn up your nose at the idea of shopping in a thrift store, go check one out. You might be surprised at the items you find and their prices. Sometimes people just need to get rid of stuff that’s in good shape because they’re downsizing, no longer have room for it and choose to donate it. We know of one young man that essentially furnished his living room out of a Goodwill Store and the furniture was in such good shape you’d never know where it came from.
Another area where you should definitely buy used is an automobile. You may have heard that a new car loses a chunk of its value the minute you drive it off the dealer’s lot and it’s true. In fact, the website Trusted Choice estimates that it drops 11% in value. This means if you buy a new car for $31,252 it’s worth only $27,814 the minute you get home. One year later, thanks to depreciation, it will be worth $23,523 and two years later that $31,22 car will be worth just $16,867. Now, for the good news. If you were to buy that car when it’s two years old and pay just $16,867, you’ll have saved $14,385 and will be driving a really great car that once sold for more than $31,000! To put this another way, that other guy’s loss is now your gain.
Buying used cars makes even more sense today thanks to leasing. You’ve undoubtedly seen those ads where new cars can be leased for $225 a month or even less. Where do you suppose those cars go when their leases are up? They go to auto auctions where used car dealers buy and resell them. If you shop carefully, you should be able to pick up one of these cars at a real bargain and drive home with one that’s only a couple of years old and is fully loaded.