One of the biggest challenges in personal finance is figuring out ways to reduce the regular bills that we all face each month. These continuous regular expenses simply fill up our budget, leaving us less money to invest for the future – and also less money to spend on things that we enjoy.
The best approach for trimming required spending is to simply walk through all of the required expenses and look for ways to lower that number. Here are forty techniques you can use to do just that, divided up into several sensible categories.
Automobiles are money pits – they constantly go down in value, devour fuel by the gallon, and often require all manner of repairs and maintenance work. How can we reduce the cost of automobiles in our monthly budget?
Use public transportation If you have an option that enables you to ride to regular destinations (such as work, the store, or a shopping center) instead of using your automobile, you can save quite a bit of money on gas and maintenance by just dropping a few coins on the bus or the rail system and leaving the car at home (or parking it at a station). In fact, during my earlier days, I exclusively used public transportation and it was painful to add an automobile to my monthly finances.
Sell an automobile If an automobile is sitting in your driveway or garage and isn’t used, consider selling it. If nothing else, the insurance expense will go away, and if you can use the money from the sale to pay it off or, better yet, pocket some of the money, even better.
Carpool If you have an opportunity to share a ride to and from work with someone else, that not only significantly reduces wear and tear on your car and gas expenses, it enables you to use any carpooling lanes on the commute, which almost always save time when commuting and allows you to drive at a speed that .
Keep the tires on your automobiles inflated properly Once a month, stop by a local gas station that offers free air and check the air pressure in your car tires, then fill each one to the maximum recommended amount as stated in your manual. This improves gas mileage by one percent for every two PSI of air you are able to add to your tires.
Any opportunity you have to reduce your debt will obviously help in your monthly payments, but many people don’t have the cash available to eliminate debt. There are other options for reducing your monthly debt load, however…
Refinance your home and/or automobile Contact some lending institutions and inquire about rates. You might be able to get into a situation that reduces your monthly debt payments without significantly increasing your overall cost in the long term.
Consolidate your student loans Don’t hold out for a hope of better rates to consolidate your loans, especially if your current rates are quite high. Spend the time to find a good loan consolidation option and it will pay off every single month.
Get a small personal loan through your local credit union This is a great option if you’ve borrowed money to make a smaller purchase, such as furniture or a small home improvement project, and you’re finding the interest rates uncomfortable. The perfect place to look for a helping hand here is your local credit union, which will often offer small personal loans at a nice rate if your credit is solid.
Request a credit card rate reduction If you’ve got a decent amount on your credit card, call up your credit card company and request a rate reduction. If they won’t go for it, get a 0% balance transfer onto another card. The key here, though, is to stop buying on credit until your financial situation is healthy.
Sign up for automatic debt repayment plans Many installment plans, particularly those with student loans, offer an interest rate reduction if you sign up for an automatic plan. You should never pass these up – not only do they save money automatically each month, they’re also incredibly convenient. If you have any installment payments (particularly student loan debt), see if such an offer is available to you.
Sell unused items Dig through your closet and look for items that you no longer use that may have value, then use that cash directly to eliminate debts, thus reducing your monthly debt load. I did this myself with a number of items when my debt load became almost unmanageable.
We all face a continual onslaught of energy costs, especially as we use more and more electronic devices. Luckily, technology has brought us a few effective ways to reduce costs as well.
Install CFLs Compact fluorescent light bulbs are receiving a big push right now and their advantages are great: a longer lifespan and significantly less electrical usage. Stick with the name brands for now, even at a premium – my entire house switched to GE CFLs more than a year ago and I have yet to replace a single one. A tip: when comparing bulbs, use the lumens number to compare bulbs, not the equivalent wattages – the lumens indicate the actual amount of light emitted by the bulb. Remember also that under normal usage (4 hours a day) and normal electrical rates ($0.10 per kilowatt hour), replacing a 75 watt bulb with a 20 watt CFL saves $0.66 per month. Multiply that by all the bulbs in your house to see how much you’ll save every month.
Install a programmable thermostat A programmable thermostat allows you to automatically alter the heating and cooling of your home when you’re not at home, when you’re asleep, and so on, saving significantly on your heating and cooling bills.
Unplug all unused electrical devices Are there any electrical devices around the house that stay plugged in, but that you rarely use? Most electric devices use a small amount of electricity constantly, a phantom charge. To eliminate that usage, unplug the items.
Utilize timers and power strips Along those lines, consider utilizing power strips and power timers to turn electrical devices on and off. A power strip with a switch on it, when turned off, blocks the phantom charge on those devices; a timer can automatically turn off the charge going to a power strip (or anything plugged into it) at a certain time each night. This is a great way to eliminate phantom charge on your home electronic equipment at night.
Install a blanket for your hot water heater and reduce the temperature In many homes, the hot water heater is a major energy drain; the water is kept hotter than most people ever use, plus the heat is constantly lost to the environment, meaning you have to burn more energy than ever to keep the water so hot. Solve both problems by dropping the temperature down to 125-130 degrees Fahrenheit (around 60 degress Celsius) and also installing a blanket on your water heater to keep in the heat – a blanket can pay for itself in about a year.
Air seal your home Air sealing your home can prevent drafts, which can often cause the loss of cool air in the summer and the loss of warm air in the winter, both of which can increase your housing costs. Here’s a great guide to this weekend project from the EERE.
Many people look at entertainment as the first thing to cut when trying to trim costs, but they often forget to look at the regular expenditures that slowly eat away at your financial foundation month in and month out. Here are some things to consider that you may have overlooked before.
Cancel club memberships Look at things like a health club, a country club, and so on. How often do you really use these services? If you’re using a gym membership less than once a week or a country club membership less than once a month, you’re likely throwing away money.
Reduce or eliminate your cable bill For many people, this advice is beyond the pale, but it’s worth looking at. Perhaps you could trim back on your premium channel selection and just go with basic cable, or perhaps you could even eliminate your cable bill entirely – it will also help with electricity costs because you won’t be watching television as much and you’ll suddenly find you have much more free time.
Look for inexpensive entertainment options Do you utilize the local library? Do you attend local community events like municipal band concerts and so on? Are you aware of local volunteer groups and organizations? Your community often offers many options for inexpensive or free entertainment of all kinds – you don’t have to have a big entertainment budget each month.
Strongly reduce or eliminate travel We live very far from our extended families, so we are aware of the costs of travel. We’ve found that by being selective about what we travel to – and also open to inviting people to visiting us – we signifcantly cut down on travel expenses.
Cancel newspaper and magazine subscriptions If you get a magazine or newspaper in the mail but simply don’t read it, cancel that subscription when it comes up for renewal, no matter how much you “like” the magazine. An unread subscription is nothing more than expensive clutter.
Look at and consider reducing/eliminating other regular paid services Look at services like Netflix – are you really getting $19.95 a month out of these services? If not, just drop the service and look for other options, like a local rental store. What about satellite radio? If you use that but find yourself not using it or just sticking with the same things you listen to on regular radio (like NPR or top forty), then cancel the service.
My favorite room in the house is the kitchen, but for many people it just seems more convenient to eat out, even though it’s incredibly expensive and not as much of a time saver as you might think. Consider these options.
Cook (and pack) your own meals at home When you cook at home, make plenty so that you can freeze some of it for future meals and, even better, take some of it as leftovers to work, drastically reducing the cost of the typical workplace lunch. Some people may shy away from leftovers, but there are some secrets to making any leftovers as good as the original.
Reduce or eliminate eating out or getting take-out Take-out and dining out can be a huge timesaver for a busy family, but the expense can be tremendous – and it often doesn’t save much time, either. Instead, look at other options for dining at home: prepare lots of meals at once and freeze them for easy cooking later, focus on simple recipes, and choose recipes that utilize the fresh produce in season in your area.
Buy nonperishable items in bulk Many people never even bother to look at some of the larger packages of nonperishable items – they think it’s just too much. Try looking at the cost per unit of all of the sizes and choose the one that’s the best deal; often, it is the big bulky package, but that just means you won’t be buying it again for a long time. Spread out over months and over a lot of items (think of all of the nonperishables in your home – food is just the beginning), this can add up to a lot of trimmed fat.
Start a garden Vegetable gardening is a splendid hobby that can often turn a profit if done well. Focus on vegetables that are easy to grow and produce abundant fruit, like tomatoes, and learn how to store the excess through such processes as canning. Opening up a jar of tomatoes in the winter that were grown by you in the summer and canned in the fall is a wonderful experience – and it can really help with trimming the food bill.
Buy generic Many products (not just food) are available in a store-brand or generic form for significantly less money – quite often with the name brand, you’re paying for their advertising budget with the higher cost. Look carefully at the ingredients in generic and name-brand products and if they’re the same, go with the generic one on a regular basis, which will consistently trim money from your shopping bill.
We all have insurance to protect against the unexpected, but when we overpay for insurance, we leave ourselves vulnerable in a different way by stretching our budget too thin. Look into these options for ways to reduce your insurance premiums.
Downgrade your health insurance Ask at work about the various options available to you that might reduce your insurance costs, and don’t neglect to look into family options if you have children – if you do, all working members of the household should look at family coverage.
Shop for homeowner and auto insurance If you haven’t shopped around for homeowner and auto insurance lately, now’s a good time to get a few quotes, especially if your credit is strong. If you can save a substantial amount and maintain your current coverage, it’s well worth switching to another provider, but give your current one a chance to match.
Switch to term life insurance If you’re paying for whole life insurance or universal life insurance, look strongly at a term package instead. The cost per year will be significantly cheaper and at the end of the term, your life insurance needs will likely be far less than they are right now.
Raise your deductibles If you’re paying a large premium in order to have a small deductible, you might want to consider switching that, particularly if your claims are infrequent. Raising your deductible can often significantly reduce your annual premiums, easing the monthly strain on your bills.
There are many other areas of your budget that can also afford a bit of fat trimmed from them. Let’s look at a few more possibilities for lowering your regular expenses.
Reduce or eliminate your cell phone bill Ask yourself how much you really use your cell phone; if it’s not all that much, look at perhaps getting a prepaid phone with a small number of minutes on it for those emergency situations when you actually use it. If you do use it a lot, look at the features you’re paying for on your bill and see if you can trim any of those.
Move to a less-expensive child care option We pay a significant amount for our child care, but there are other good options available to us. Look at other child care options in your area carefully and see if it might not be worth moving to a less expensive scenario. If you’re lucky enough to live near grandparents, they might be able to assist with part-time child care as an opportunity to bond with their grandchildren.
Reduce or eliminate organized child activities My own children aren’t old enough yet to be in organized activities with costs, but my nieces and nephews certainly are and the bills can really add up. Look for activities that your child is sincerely interested in (if you don’t know, ask them what they really like) and focus on those while cutting back on the rest.
Eliminate services (housecleaning, landscaping, etc.) If you hire out household services to others, consider trimming back or eliminating them. Instead, put aside some time each week to do them yourself – not only will you save money, but you’ll find that many activities can get the whole family involved (like housecleaning).
Reduce (temporarily) your giving at church/synagogue/etc. If your budget is bursting at the seams, consider cutting back on your giving at your religious service. If this spiritually troubles you, talk to the leader of your religious group about the issue – they’ll usually be very supportive of this if you need some time to get your own house in order.
Strongly reduce or eliminate clothes shopping I have a close friend who insists on having a significant monthly clothes budget. I challenged her to trim her spending in half and instead focus more on looking for bargains – and she’s never looked back. If you need to dress well for work, don’t let that slide, but putting in some effort to look for a bargain can often pay huge dividends. Even better – have a moratorium on shopping for new clothes until you really need something new.
Reduce grooming expenses Instead of having your hair cut and styled weekly, cut back to every other week. If you have your nails done twice a month, cut back to monthly, or have manicure parties where you do it at home with your friends instead. If you buy expensive shampoos, look at lower cost options. It doesn’t have to cost a truckload to keep up appearances.
Reduce or eliminate consumable habits (smoking, alcohol, etc.) Any consumable habit, whether it be smoking or excessive drinking, can be a constant drain on a budget without any real benefit. Give the habit a kick in the pants and your wallet will breathe a serious sigh of relief.
Move to a less expensive area Many people leave this option out when looking at trimming their budget, but if you can find work in another area, it may be worth considering. Look around at other areas of the country where you can find employment, see what your salary would be there, and look at the housing costs. Quite often, you’ll find yourself significantly ahead by looking at areas like Minneapolis rather than areas like San Francisco, even at a significantly lower salary.
Using even a few of these options can really open up some breathing room in a budget, enabling you to break free of debt and chase your dreams.