Here are 5 ways to save big bucks from your budget. It is amazing how much you can save if you just ask!
Hello again my thrifty friends!
Last time we went over how to divide up your extra money at the end of each month and put it to work. But as promised today is focused on the “What extra money?” side of things for those of us who’ve done our budget and found that our expenses are higher than our income.
There is really nothing more depressing than sitting down, sorting out your budget and realizing that each week or each month is digging you deeper into a hole. So, how to save money?
Well let’s start with places we might be able to save big money!
5 Ways To Cut Big Bucks On Your Budget
Ahhh insurance, that pesky little monthly expense that basically feels like giving your money away for no good reason. Unfortunately in this day and age, is often the necessary, responsible, and legally required choice we must make. But the thing is, while you may not be able to eliminate it from your expenses altogether, you usually get to choose who you buy it from.
For my family we have car, health, renters and small business insurance that needs paying each month. But when we sat down to look at our budget and where we could save money it didn’t first occur to us that we might be paying way more than we needed to be.
My husband had been with his car and health insurance company for years and years and they occasionally gave him a little money off for customer loyalty or not having an accident, so I think it was just assumed that we were getting a good rate. But when we decided to do a little comparison shopping online we discovered that we were overpaying for our insurance. Not just a little either, A LOT! Like hundreds of dollars a month! Hundreds of dollars that could be going toward paying off debt or into savings or into our fun money! So if you have insurance I highly recommend that you shop around and see if you are really getting the best rate you can. Often all it takes to get a better rate is asking! Go figure!
When we contacted our current insurer with the lower quotes from other agencies they offered us a lower rate straight away to try and keep our business. Often you can get a better rate if you bundle your different insurances with one company, but not always so do your homework and don’t get suckered! Also, don’t stay with an insurer out of some misguided feeling of loyalty. They don’t really care about you, they care about your business and that’s where it ends. So, if your insurance agency can’t beat a competitors rates, then drop em! Break ups can be tough, but this one should be a no brainer.
Ok, so you’ve got debt, maybe credit cards, possibly student loans, maybe money you borrowed from a friend or relative. It’s time to get that stuff sorted!
Sit down and figure out EXACTLY how much debt you actually have. Most of us don’t even really know, but not keeping track of the numbers is probably part of what got you into debt in the first place so once again it’s time to put on our big girl shoes, face the music and dance!
Credit card debt is probably where you’re getting screwed the most! The interest rates are higher than most other debts and if you’re just making minimum payments you’ll probably be paying it off for years and end up paying 2-3 times as much as the original amount you borrow, which is, let’s face it, just plain stupid. But we’re not stupid! So we’re going to get on top of this asap!
If you have more than one credit card figure out what the interest rates are on each card. Where are you losing the most money? Some people like to try and pay off the debt with the lowest balance first to get it off their plate. Others like to start with the one with the highest interest rate. This bit is up to you, but for my money getting highest interest rate debts paid off first is a good way to go.
Again, this is a place where you can possibly save money just by asking. Credit card companies don’t want you to default or go bankrupt, because then they obviously don’t get their money back. So making it clear to them that if they can’t work with you to lower the rates to something you can afford they might end up getting nothing if you have to file for bankruptcy. Also, if it’s just a temporary cash flow problem, like a lost job or big unavoidable expense that’s thrown off your budget, a lot of them will give you a grace period of not paying until you can catch up.
Consolidating all of your debts into one could be another way to go. Perhaps you can transfer the balance of multiple debts to one card or bank loan that has a lower interest rate. Some might even give you a period of 6 months or 1 year of no interest for changing over, which could work well if it’s a debt you think you can pay off quickly.
Bank loans, if you can get them, will often come with a slightly lower interest rate, but also a fixed repayment plan of 3 or 5 or 7 years. This could be a good thing as well because unlike credit card debt that you could be paying off for 20 years, a repayment plan can help you to set an end date for when you will have the debt cleared and out of your life.
Student loans can often be paid over longer periods of time, have lower interest rates and better grace periods for paying them back so they might be lower down your list of debt priorities.
Personal loans are another story altogether. If you have borrowed money from friends or family it’s most likely an interest free loan, but that doesn’t mean it should fall to the bottom of your priorities. If the person your borrowed the money from doesn’t mind how long it takes you to pay them back then feel free to throw more of your money at things like credit cards and be grateful for their patience. If however they expect to be paid back within a specific or agreed upon time line make it a high priority to honor your commitment otherwise it could wreak havoc on your relationship with the lender, and relationships, unlike the money you borrowed are priceless!
A few more big expenses you can ditch would be re-evaluating your transport and living situation. Do you have a car that you don’t genuinely need? If so, get rid of it! If you are in a city where you can take public transport, ride a bike, or get a little electric scooter (you don’t often need insurance for those and they are awesome for a little run around).
If you can get rid of your car, or a second car you’ll earn a bit selling it as well as saving money on insurance and parking each month and registration each year.
If you are like me and need your car try and find ways to drive it less often. Whenever possible, walk, ride a bike, or take public transit. If you have to run errands in your car, try and group them together in the same part of town or use a GPS map to find the best route so you can at least save on gas.
The last biggie on my list for today is your living situation. Do you own or rent? Either way, ask yourself if you are paying too much? Can you refinance your mortgage to a lower rate? Are you in a house or apartment that is bigger than your actual needs? Sure it’s great to have a guest room and a garden, but would downsizing to a smaller apartment or house for a year or two that doesn’t have as many frills (dishwasher, air-conditioning, extra rooms) get you out of debt faster or help you to save for things you want?
This is where you need to find out where your priorities lie. Is your home your haven or just a place to keep your stuff and sleep when you’re not out and about doing other things? If you are a person that loves your home, spends lots of time there or work from there then that space may warrant more of your income. But if your house is just a glorified storage space for your things and you’d rather spend more time out doing things or going on vacations then maybe it’s time to downsize so you can shift some of your money to the things that are your real priorities.
Ooof this was a day of BIG money suckers, but next time I’ll address lots of the little money vampires in our day to day expenses that we might be able to cut back on or save money by doing things differently, so stay tuned for some of the little money savers I’ve found as of late that might be able to put your budget back on track.
For more on household budgeting, try one of these posts: