Just because you’ve had a budget for a long time and can afford the payments, doesn’t mean you couldn’t save more.
When I decided I was ready to start focusing on my debt, I needed to free up cash fast to be able to make extra payments on the debt.
I cut out some of the tried and true budget busters and got creative where I could. Here are the top 7 items I cut from my budget so I could save more to pay off debt.
Get Smart On Utilities
The hubs and I started analyzing our utilities spending behavior.
Using our electric company’s website – and the letter they send us every month comparing our usage vs. the average neighbors vs. the ‘most efficient’ neighbor – we could how we were overconsuming.
A large part of our bill was spent on heat in the winter (obviously, and only made worse by a 20+-year-old furnace)/ cooling in the summer. That one was expected.
But what we didn’t expect to see was that our next big offender was electricity spent on lighting.
Yeah, I know. How can we blow our electric bill on lights?
Anyway, we changed out all our light bulbs from the regular incandescent to LED bulbs. And it didn’t cost us much because we signed up for the free light bulb program with our utility company and they sent us 12 LED bulbs to put throughout our home.
For all the other light bulbs, we bought them ourselves – IKEA has some great prices on LED bulbs and started going around the house evaluating the fixtures.
For example chandeliers with 9 light bulbs, had 6 of them unscrewed enough where they wouldn’t burn electricity, outdoor lights were set to be photosensitive and turn on only at night. Bathroom vanity lights that had 3 bulbs were reduced to two so we still had lots of light, but less wattage being used.
Then we bought the nest to better regulate the temperature in our home and keep it constant throughout the day which decreased the energy needed to heat and cool the house.
And when the A/C unit finally keeled over last year, we took the discount deal to replace the old 80% efficiency furnace as well for a 95% efficient furnace.
These changes helped reduce our electric bill by nearly $40 – $50 a month.
Extend Time Between Grooming Appointments
Like most women, when trying to save money the first thing to go is the salon treatments.
And it was no different for me. I used to get my hair re-tightened every month. That was until my loctian doubled her rates. Yay for her! No fun for me.
So in order to stay on budget, I extended my grooming treatments to every other month.
And to be quite honest, my hair didn’t look noticeably different and I had no adverse effects with my hair from doing it.
Bottom line: cutting my grooming budget was actually a lot easier than I thought and I was able to save myself $40 every other month.
Lowered My Insurance Premiums
Now, this isn’t something that folks can do anytime throughout the year. But if it’s open enrollment time or you have a ‘qualifying event’ – say job loss, divorce, getting married, or having a baby for example – then it’s a good time to consider lowering your insurance premium.
I did this by switching from the company PPO plan to an HSA high deductible plan. This lowered my premiums by nearly $100 per month.
I’m pretty healthy. Somewhat young (depends on who you ask). And I basically only go to the doctor for my preventative care so it made sense to me to lower my monthly payment on insurance and save the money to pay for the doc if I needed to go.
It was also fantastic to get access to an HSA which has tax-free contributions, tax-free growth, and tax-free withdrawals. I now use my HSA as an investment strategy for retirement.
You can find out more about HSAs and if they are right for you, with this article on the topic.
First Kill All My Subscriptions
We didn’t have a lot of subscriptions, but there are a few that we regularly paid for and weren’t sure if we needed it.
We started by putting them on hold (at least the ones we could), and watched if we would need it. Any subscription we didn’t use, we canceled.
This also included replacing some paid subscriptions for free alternates.
By dumping those, we saved another $50 per month.
Lowered My Life Insurance
This was another step I took during my open enrollment to lower my with-holdings and increase my take-home pay.
I am usually very very pro life insurance as a way to build wealth for my family. So I had a large amount of insurance – more than I needed.
I decided to lower my life insurance to more accurately reflect what was needed when I wasn’t around, saving me about $40 per month.
However, I will admit that while making these changes I found a gap in my insurance coverage.
I did not have long term disability (LTD).
And studies suggest that we are more likely to suffer an injury and become permanently disabled, than die young and need life insurance.
So that savings was reabsorbed into the additional coverage of LTD. So I did save some on this step, but I reallocated it.
You can decide if it counts 🙂
Lowered My Data
I love the idea of cutting costs and going to Republic wireless or some other super cheap phone company, but my job doesn’t really allow for that. So instead I opted to get out of the ‘unlimited data’ range, and getting into a 5 gig number which has been working out well.
I will admit though, that I’m deathly afraid of going over my data and ending up with a monster-sized unexpected bill, so I set up data usage alerts on my phone to tell me when I’m nearing my limit, and restrict my usage once I’ve hit it.
I haven’t had an overcharge yet.
And I’ve saved about $100 per month.
Cut Out Cable
This one is an oldie but goodie. Why? Because it works.
To be honest, I don’t even know who still has cable anymore. But up until a few months ago, we did.
And it was costing us over $80 every single month to have hmmm …. maybe 100 channels of which we only watched about 10.
We substituted that for a cheapie Netflix setup that we share with the grandparents and a few antennas for local channels, and so far it’s been pretty awesome
Bonus Tip #1: Reduce your loan payments
If you need to free up money for building an emergency fund, or even paying off your debt, then lowering your interest rate so your minimum payments pay more towards the principal has to be on the list.
If you have $20,000 in credit card debt, with 25% interest then your minimum payments are likely around $600 per month, then it’ll take you over 30 years to pay back the loan, not to mention an extra $43,833 in interests (that’s over double how much you borrowed)!.
but get that interest rate lowered to 9% for example, and you will now be fully paid off in a little more than half that time (15 years) and have only paid $6577 interest.
Your money goes a lot farther into paying down your debt when your interest rate is lower.
And you don’t need to be scared about finding a provider or getting your score dinged for checking. Credible is an online tool that does all the work in finding lenders with affordable rates for you.
You just answer a few basic questions – your name, how much you want to borrow, how much you earn, etc. – and it brings the lenders to you and shows you rates that you are already pre-qualified for.
And the best part? it doesn’t check your score while doing it! Yeah!
No more time-wasting with lenders who make you fill out a bunch of questions only to deny you AND ding your credit score with a hard inquiry for nothing!
If you don’t decide to use one of their lenders, then no harm no foul. You can just go on your merry way. It really is the concierge service of lending.
Bonus Tip #2: Reduce your home insurance
I was able to save our family $1000 annually by switching our home insurance provider, and I actually got MORE coverage!
We can easily get comfortable with the price we pay in homeowners’ insurance, but every year or so it’s worth it to ask how you can lower your rate, or find a cheaper provider.
Increasing the deductible, or adding features like home security systems etc might help.
So what now?
I’ve showed you mine.
Do you have a method or item you cut from your budget to save you big bucks? If you do, then, I’d love to hear what you did. Leave a comment and tell us what you did and how well it worked!
Let’s all share our tips to get better with our finances! To your success!