Imagine your family's budget is a ship and unnecessary expenses you have are the leaks. The more leaks you have the harder it is to steer the ship and the higher chances of the ship sinking...
So what do you do? You tighten your financial ship!
Chances are you can EASILY save at least $100 per month (that's more than $1,000 per year!) just by following more disciplined approach to your finances.
And I'm NOT talking about depriving yourself and your loved ones of all the pleasures - this would actually be a bad decision.
All I'm asking from you - look for the opportunities to cut your expenses and earn easy money whenever possible.
Here's couple of things you should consider.
1) TV bill - take a closer look at it. Do you really have time to watch all the channels in your current package? Is there anything you can drop? Being a soccer fan I was paying $15 per month for Setanta Sports, however primarily I was watching it from September to May. So I dropped it in May and switched back on in September and saved $60. Also we dropped Showtime - savings of $15 per month.
Another thing you can do - negotiate with your current provider, tell them your got a better deal from their competitor (it would be better if you could substantiate this claim by a real offer) - you might get a break.
2) Similar considerations apply to your other monthly bills - gyms, Internet services, Long distance carriers (check the competitors!), cell phone and so on. Cancel services you don't need (text messaging for instance, or voice mail for your home phone) and re-negotiate the deal with your current providers.
3) Use cash back/reward credit cards to pay your utility/cell phone and other bills (see my post about Cash Back credit cards for more information). Even if you earn only 1.25% cash back this will translate into $10 savings a month.
4) If you let your money just stay in your checking account consider opening a money market account. Even now you can earn up to 2.5-3% in interest in such accounts (once economy improves the rates will increase to 4-5%). Your $5,000 in checking account will start earning you $10 per month if you link this account to a money market account and transfer your money there.
5) Don't miss on opportunities to make some money when you open a new bank account or a credit card (PNC bank will give you $75 for opening a checking account with direct deposit, Citi will give new bank customer at least $100 in rewards and so on). Sometimes you can open two individual accounts (for yourself and your spouse) and double the rewards! Do not open too many credit cards in a short time though - it might hurt your credit score.
6) If you have a big revolving balance on your credit card and pay a lot in interest, look for 0% or low APR offers from their competitors, then do some math - paying a balance transfer fee might be justified.
7) Always check your credit card bills - during last two years I found three fraudulent transactions worth $40 which credit card companies reversed without any problem (problem was to find these transactions).
8) Trim down your expenses (if you're going to the movies biweekly consider going there once in 3 weeks instead). Again, I'm not suggesting completely stopping going for lunch or getting a coffee at Starbucks, just please be more considerate about it.
9) If you are purchasing relatively expansive item do some reasearch first - you might find it is sold cheaper somewhere else; also you might find a money saving coupon, promotion, etc.
All these small things will add up to a substantial amount of saved money and all it takes is discipline and CONSISTENCY.
I'll be thrilled to hear your tips on family budget tightening and the successful stories, so please leave a comment and I will add it to the post!
Posts
Great Post!
ReplyDeleteI heard from my co-worker today that AMEX is paying people $300 to CLOSE THEIR ACCOUNTS???
Have you heard anything about it?
Regarding TV: we bought a Converter Box for one of our TVs. The converter box lets you use your regular Analog TV to receive Digital Broadcast channels. The Zenith box cost us $20 after $40 government coupon. I bought $20 internal antenna and can receive around 30 channels and they are FREE. Of course you would not get Soccer or Cinemax, but you will get the main broadcast channels, Philly channels (C&W for example) and the reception is excellent. So, if you really strapped you can completely cancel the cable or satellite and switch to Digital TV.
Igor,
ReplyDeleteGreat tip, thanks for sharing! That's exactly what I was trying to convey - be creative and you can save money without really giving up much.
To answer your question about the AMEX - yes, this practice became quite common nowadays (other companies are doing it too), but such offer is given not to all cardholders, but just to selected few ones(the very risky ones with pretty big balances). The rationale is to mitigate risk exposure to such a risky population.
In any case, I would not count on getting this or similar offer - your credit score should be very low for them to consider such an action.
Yes, it makes sense. They would not just give the money away. They want to retain the customers with good credit score, so they can make money.
ReplyDeleteHave you applied to AMEX card that has 6.5% cash back after $6,500? I think it is pretty good deal.
Yes, I have this card, however it does not come with 6.5% cash back (that would be nice though).
ReplyDeleteAfter $6,500 you'll be getting 5% cash back on supermarket, gas and drugstores purchase, and 1.5% (not 6.5%) on all your other purchases, which is still the best offer out there (see my post on Cash Back Credit Cards).
Hi, Vitaly,
ReplyDeleteHere is what we are trying to do to cut costs:
1) Paid off credit cards baalnces. Saved us around $120.00 a month. We now follow the rule: if you need a cc to purchase things, you can not afford them. Refrain from using devil in plastic. If you use it, pay the whole balance next month.
2) Cut off Verizon landline and international provider as well. We found ourselves do not use our land phone at all, while paying for it almost 60 bucks a month.International calls provider charged us around 45.00 a month for calls . Since my parents are no longer live abroad, but with us, we are going to cancel this service as well.
3) Since I work in NJ, i try to fuel my car in that state. Little savings, but still counts towards the effort.
4) I split my paycheck in a way that at least 15% of a biweekly payment goes to a saving account, so I do not have to think about saving, the direct deposit does it for me.
5)Opened PA 529 Investment plan and PA Guaranteed Savings Plan, deposit some money there whenever circumstances allow. Good example: I opened those accounts when my son was 20 days old. During 18 years you can use all child tax reward money to deposit to those accounts, you can use 20-50 % of you each annual bonus to be deposited there as well. It will not give him a free ride in Ivy League, but you can save up 45-50 k with no problem .
6) Always proceed on building your bank saving account to have a strong financial cushion that will allow to maintain your current standard of living at least for 6 months in case your family income takes an unexpected hit.
7)Resist an american desease: instant gratification and thoughtless consumption.
8) The greatest dilemma for me: lowering my TV bill,I have direct TV, PAY 90.00 a month, can not negotiate with them, and I am bound by 2 more years contract. I want to get a Comcast tv/internet bundle.
Hi Stanley,
ReplyDeleteYou've made couple of excellent points, indeed all you have to do is spend some time,identify saving opportunities (fueling your car in NJ) and methodically implement them in practice.
I totally agree on the idea of paying the whole credit card balance every month. Just to play the devil's (credit card)advocate- they are convenient (you don't have to carry big amounts of cash and you can purchase stuff online) and can produce a decent amount in cash back rewards. Also some of them still come with 0% on purchases offers so you won't have to pay interest for some time.
I also liked the idea of splitting your paycheck so 15% goes into saving account (I hope this is some kind of online money market account so you can get decent interest there too). I rebember the episode in Friends where Monica's father told her that 10% of her salary should be going to the saving account. You took it one step further by saving 15%!
As for your Directv bill - you still can consider cancelling the service (you'll pay an early termination fee of $150, right?). If you can save ,say, $30 dollars per month by switching to Comcast you'll need only 5 months to recover the fee. Or once Directv hears you want to cancel the service they might give you a better deal.
By Stanley :
ReplyDeleteHi, Vitaly,
Yes, I agree that using credit card when purchasing stuff online is still a good idea, especially if you accrue points or get some cash back.
Regarding the Direct TV; unfortunately I would have to pay $350.00 termination fee if I cancel the contract. Also, since my parents are currently living with us and will be living at least for another year, I would keep the Direct TV since it is the only provider of certain russian channels that they love to watch. Eventually, I will disconnect from them and switch to Comcast,but right now it is not a viable option for me.
I probably could also refinance the house and get lower APR for the purpose of lowering our monthly payments on the house. The payments are high, since we put 0% down 2 years ago. But I would refinance only if the difference in payments would be at least 200+, and after speaking with an agent, he could not give me this deal, because we had not had time to accumulate enough equity in our house to qualify for really low APR.
Therefore a real relief on our family budget will be paying off our cars in 2 years and the driving them for at least 3-4 years more. Cars are big expense.