7 Great Places to Cut Expense

Are you living the real-life more-month-than-money?  Is paycheck to paycheck a painful reality for you?  Well, we’ve come up with 7 ways to cut your expenses or 7 great ways you can cut your costs.  As we’ve been teaching you, living within your income is not always easy but it is definitely always worth it!  So, get committed and get ready.  Here we go!

These are the areas within a budget where you can cut costs fast:

1.      Cell Phone Bill:  Oh, you knew this but you just didn’t want to hear it!  You are probably paying way too much for your phone but it’s one of those things that is easily justified. 

Here are some great high payment excuses:  “My phone wasn’t holding a charge (Yeah, thanks, Apple.  Now we know why.).” OR “I really have to have good service (Why?  Are you a surgeon on call living in the mountains of Montana?).”  We all know we can pretty much talk ourselves into paying for something that we really don’t need at any time.  It seems that our phones and our service plans undoubtedly rank as one of those things that we most often do.  Sadly, we pay way to much for our phones and for our service plans.  If you are truly interested in cutting expenses, this is seriously one of the best places to bite the bullet and cut your costs.

Remember, there are free messaging apps out there, so it’s ridiculous to pay for texting now.  Also, you can Skype for free and literally SEE and TALK to your friends and relatives all over the world.  You don’t really have to use your phone to go online, either.  It’s more the fact that you may be used to using your phone to do that.  Simply retraining yourself can save you hundreds a year and not having to have the newest/latest model.  If you save just $500 a year and redirect that into your savings or retirement account, a conservative 6% return could mean nearly $7,000 in ten short years.  If you’re in your 20’s or 30’s, that could mean over $115,000 more towards your retirement over 35 years.  I think that is totally worth cutting out $500 a year for.  Don’t you? 

2.      Food and Groceries:  Food is one of your Big 3 Expenses and you should always do your best to keep the Big 3 under control.  Our January blogs were packed with information on how to save money in this category.  You can read the full articles Money Saving Grocery Tips, How to Really Save Money on Food, and The True Cost of Eating Out.

Just know that the cost of food is only going up.  Eating out is taking a larger and larger chunk out of your budget, as well.  Cutting your grocery budget is just a matter of better planning.  When I think about the extra few minutes it takes me to plan my meals, it’s really a no-brainer.  Remember, if you fail to plan, you plan to fail.  Just make a quick menu of this week’s dinner, check your pantry for what items you already have, make a shopping list of the items you’ll need, and stick to the list.  Saving money on food is Basic Budgeting 10on  Master this and you’re sure to go far.  But remember, cutting coupons IS NOT what we’re talking about.  It’s a waste of time and effort.  No one cuts coupons and becomes a millionaire.  They learn to cut expenses, live well within their income, save and invest their money wisely.

3.      Energy Costs:  Most energy costs can be cut by simply calling your gas and electric company and asking how you can save money.  I live in Arizona, so I called my electric company, SRP, and asked them that very question.  They put me on a plan where I do my best not to use electricity between 3 and 6 in the afternoon.  I am charged a high rate during those peak hours but much less for the other 21 hours a day.  It cut my bill by hundreds of dollars a month and all I had to do was learn to do laundry and run the dishwasher at night instead of during the day.

Installing a programmable thermostat can save you money, too.  Keeping the house warm or cool during the times of day when no one is home is a waste of energy.  Your dog or cat might not need it as comfy and cozy as you prefer.  So adjusting the thermostat can really save you money and a programmable thermostat makes it easy to do.  The Department of Energy writes that lowering your thermostat 10 to 15 degrees for eight hours during the day in winter can save 5% to 15% per year on your heating bill.   That’s pretty awesome.

Another option is switching to energy-efficient light bulbs. Although they cost more than traditional bulbs, they end up saving you money as they can last 10 times longer and they use two-thirds less energy.  Remember this during the holidays, too.  LED Christmas lights rock at Christmas time.  Your house is bright but cost-efficient.  Bonus!

4.      Car, Gas, and Insurance:  If you already cut back on your driving or carpool to save gas, let your insurer know because you may be eligible for a discount.  If you drive less, no more than 7,500 miles a year, you can get lower rates.  Also, bundle your policies, by getting your home and auto insurance through the same insurer.  You may get a get a break of 5%-15%, according to the Insurance Information Institute.  

Also, make age-appropriate auto decisions and keep an eye on your auto-payments.  We had State Farm put our under 21-year-old son as the primary driver on my husband’s Mercedes for months before we caught it.  They were charging us like $500 a month!  We called and fixed it letting them know that our young driver was driving an old beater and not a hot sports car.  Duh!  A driver’s age may have an impact on your insurance rates if you didn’t know.  So make sure you restrict your kids to driving the family’s oldest or least valuable car.  Then, make sure you inform your insurance company that your kids have no access to your valuable cars if they don’t. 

Also, you can cut vehicle gas costs by adopting good driving habits.  You will save a fortune if you stop speeding.  According to the American Council for an Energy-Efficient Economy (ACEEE), if you usually move around 70 mph instead of 55 mph, you are lowering your vehicle’s fuel efficiency by nothing less than 17%.  In that case, staying within the speed limit can save you money on gas each and every month (not to mention lower your risk of speeding tickets!).

Make sure you pump up your tires, as tires lose close to a pound of pressure every month.  If you drive your car around with tires that are 3 pounds underinflated, for instance, your vehicle’s fuel economy goes down, as well.

5.      Banking and Credit:  We’ve written about this before but it is worth repeating.  Do not pay for personal monthly checking.  Get a membership at a local credit union and get free checking.  Monthly fees, even $10 or $20, make a difference in your budget.  If you use a credit card, make sure you don’t spend more than your card’s limit.  You don’t want to be paying needless fees on anything.  Just being aware and being careful can save you money.  Paying for accounts, paying for late fees, and paying for over-the-limit fees are really just being lazy.  Do the work.  Care about yourself and your family enough to care about your credit and not throwing money away.  We are here to help you get it together!

6.      Cable:  Oh, I know this is a sore subject because it is at my house. According to a report from a market research company, the average monthly cable bill is around $120 and expected to be up to $200 a month by 2020. Mine is closer to $180 because of all the sports packages my husband loves. Listen, after more than 30 years of marriage, I can tell you that this is one place where I would LOVE to save money but I just haven’t been able to win this argument at home. My husband is a doctor and he says he’ll gladly take the deduction in the retirement pocket in order to watch his beloved teams so I just let this one go. I’m rooting for you, however, to attempt to get this one through the spousal decision-making process. I don’t watch cable. I have Netflix. It’s like $12 a month for a family package that includes my granddaughter and youngest son. I don’t need anything else, really. I recommend you use Netflix and get rid of cable. You can even go for a digital antenna ($8 on Amazon) to watch local channels for free. Cutting cost on ditching your cable can save you some major money. Putting those few hundred dollars a month away in your IRA can mean hundreds of thousands of dollars towards your retirement.

Here's a helpful link to an article on Reviews.com, The Best TV Providers.  

7.      Memberships and Subscriptions:  Again, this is in our 101 but it means some major savings. Look at your subscriptions. This includes, but is not limited to, gym memberships, magazine subscriptions (online and off), monthly post office boxes, and many more monthly and annual subscriptions. You need to write them all down and analyze what you need and what you don’t need, carefully. In some cases, my clients end up canceling nearly all of them. Be honest with yourself and diligent with your intentions on creating and staying within your budget.

When it comes to your family’s budget, you can cut costs on all your expenses if you really sit and analyze them well enough.  However, your budget is really all about you.  You get to tell each and every dollar you make exactly where you want it to go and what you want it to do.  Life is about living so I always allow my clients to make decisions that they can live happily with.  I don’t guilt them into anything but I do let them know exactly what some seemingly sacrifices can have some amazing returns for them in the future. 

Auditing your expenses and cutting back on what you don’t really need now can mean that you’ll be able to lean back during your retirement and not have to worry about where your next dollar will come from because you prepared for it years before.  Prioritize your spending now and you can relax later.  Knowing the difference between “needs” and “wants” is just being an adult and making adult decisions that you can live with now and in the future, as well.

Bottom line:  Stay positive and stay focused on your plan.  Tap into your original motivation so that you can reach your financial goals.  Be honest with yourself, track and name every dollar, and make adjustments accordingly.  You are in charge!

Michelle R Russell

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