Ten Ways to Trim Your Budget

Finance, Home & Family
on November 20, 2005

Let’s face it, we’d all like a little extra money. And while earning more often seems the solution, it’s easier and more likely to generate additional cash by changing spending habits. Here are 10 simple yet effective ways you can trim the fat from your budget and keep more money in your pocket:

Reduce “small” spending. Limit the hundreds of little purchases you make—candy bars, coffee, gum, lunches out, whatever. Instead set a weekly allowance for such extras. Saving $2 a day on snack breaks at work yields $500 a year.

Eliminate debt. Paying off a credit card charging 17 percent annual interest is equivalent to investing money with a before-tax, guaranteed return of almost 20 percent—a rate any investor would love. According to the Consumer Federation of America, more than half of Americans have $7,000 or more of revolving credit card debt. Eliminating this debt would save more than $1,000 a year.

Refinance your mortgage. With today’s low interest rates, refinancing your mortgage could save you thousands. By lowering your rate only 1 percent, you’ll save more than $64 a month over 15 years on a $75,000 mortgage (a total savings of almost $11,600). Many banks are so hungry for customers, they’ll forego the usual closing costs.

Cut energy costs. Fans can reduce perceived air temperature by 10 degrees at one-tenth the cost of air-conditioning. In winter, reversible ceiling fans help heat your house by pushing warmer air lower to the living area without creating any draft on occupants. Inspect your home for leaks around windows, doors, pipes, ducts, electrical outlets, and vents that go through walls. Simply caulking and weather-stripping can cut your bills up to 10 percent. Close doors and vents in unused rooms. Set your thermostat as high as possible in summer and as low as comfortable in winter. Just a few degrees shift can save significant costs.

Reduce insurance expenses. Shop around for coverage on life, health, car, and homeowner’s to save hundreds of dollars. Consider raising your deductibles to save 15 to 30 percent on your insurance payments. Review your coverage annually to check rates, applicable discounts, and adequate coverage.

Be a savvy shopper. Avoid impulse buying. If you see something you want, put it on your “wish list.” If you still want it after two weeks, save when purchasing it by asking for discounts. Most stores mark prices up significantly, giving them plenty of room to lower prices and still make a profit. Arrive armed with competitive prices from other stores or the Internet. For best results, offer to buy an item in cash for lower than list price. The powerful sight of five $100 bills for that $750 couch will be hard for many managers to refuse.

Eat well and save. One evening out at even an average priced restaurant can equal half a week’s grocery spending (not including the cost of the baby sitter). Limit eating out to promotional specials and two-for-one deals. Bag your lunch and snacks at work. At home, cook from scratch as often as possible. This can be up to six times cheaper than buying a mix, frozen meal or eating out, and is usually more nutritious.

Maintain your stuff. Keep up with your car’s maintenance schedule, have the furnace and lawnmower cleaned seasonally, and vacuum refrigerator coils monthly. Take good care of your possessions and you may see thousands in savings accrue on utilities, repair bills and, of course, replacement costs. Check owner’s manuals for maintenance specifics.

Save on entertainment expenses. The best things in life really are free. Explore local trails, attend a community event, or drive to a nearby lake or beach. Most Sunday papers have local events listed. Consider “cutting the cable” and tuning into the world around you.

Barter and trade. Barter instead of paying cash. Perhaps you have a skill or make a product that others can use. Offer to exchange these for free car repair, plumbing service, yard work, medical services, baby-sitting, musical lessons … the list has endless possibilities.

Pick a few of these ideas that appeal to you and start working on them today. Before you know it, your budget will be a bit slimmer and your pockets a bit fuller.