Common Ways to Slash Expenses

In the job market such that it is, dominated by cost cutting fever, it’s harder than ever to make more money. If your budget is tight and income salvation looks nowhere to be found then the best option is to cut living expenses. Fortunately there are ways to do that which won’t require radical alteration of your lifestyle. A few adjustments here and there, but nothing drastic.

Cut telephone expense

Get rid of your landline, right? Maybe, but way too easy and not everyone is in a position to do it. No, I’m thinking more along the lines of switching to a computer based line. My wife and I did that two years ago through Vonage and it’s worked well for us. We still need a landline for occasional faxes and also for the long conversations our kids like to have that they’re forbidden to have on their cell phones.

We had the traditional landline service for two lines with all the preverbal bells and whistles, and it was running over $140 per month. We switched to Vonage for both lines and had similar features as with the full service provider, except we also have unlimited long distance to select countries, including Canada, Mexico and major European countries. The full cost, including taxes and other fine print charges was about $60 per month, enabling us to save nearly $1000 per year ($80/month X 12 months).

If you can get by with a single line, you’ll pay only $30-$35 per month. Unless you do a lot of business calling on your landline, there’s no need to have it.

Cut down on meat consumption

Because it costs more than other food types, meat tends to take up a disproportionate amount of the grocery budget. If you eat meat every day, you’ll save quite a bit of money by cutting that back to three or four days per week.

Eggs and beans are good protein substitutes and both cost a lot less than meat.

Also consider substituting meats. Chicken is a lot cheaper than steak, and buying whole chickens is cheaper still. Stocking up when they’re on sale will save even more.

Eat out less

This is a standard area of recommended savings, but only because it’s such a rich source. You don’t have to go cold turkey here; simply cutting back can make a big difference. For example, if you normally eat dinner out twice a week, at an average cost of $50, cutting that back to once a week can save $200 per month, or an amount equal to an average credit card payment or student loan payment.

Also, if you’re in the habit of buying lunch at work every day, understand that this also counts as eating out. Even if you only go to fast food restaurants at an average of $5 per meal, you’re spending about $100 a month. Eating lunch out just one day a week and brown bagging the others can save you $80 per month, that’s nearly $1000 per year! See how the nickels and dimes add up?

Raise the deductibles on your auto and health insurance

There’s real savings to be had by raising the deductibles on your auto and health insurance, and since both are typically recurring monthly charges lowering the premiums can provide welcome relief to your budget. And there are ways to do this without putting yourself or your family at greater risk.

For example, let’s take a fictitious a married couple, both 40, with two dependent children covered under Assurant’s CoreMed health insurance plan. They’ll pay approximately $471 per month in premiums with a $2000 deductible. But by increasing the deductible to $3500, the monthly premium drops to $376 a savings of $95 per month. A quick calculation shows that saving that much each month for 12 months is $1140 per year, which is better than 75% of the deductible you forfeited.

If you have ongoing health conditions that typically cause you to hit your deductible every year you won’t want to do this. But otherwise you can offset the risk of the higher deductible by having an amount equal to the deductible sitting in your emergency fund. This is a form of self insurance, but as you can see, the cost of paying for lower deductibles is almost dollar-for-dollar. If you don’t normally come close to your deductible in a typical year, then raising it and backing yourself up with your emergency fund can save you a lot of money.

Gasoline

With gasoline prices running steadily toward $4 a gallon, this is an expense that gets more attention these days, as well it should. If you’re paying $50 per week to fill your tank, then you’re paying at least $200 a month just to keep your car on the road. The only way to cut that down especially in a time of rising prices is to drive less. How do you do that?

1. Walk or bike to anywhere that’s within a mile of home. Not only will it save money but it’s also great exercise that might help cut down on some healthcare bills.
2. Consolidate trips. Few places we go are for emergencies, so we can delay them and group them with other trips. The fewer trips you take, the more you save.
3. Drive off peak. That might mean a flextime arrangement at work that will put you on the road before the morning and evening rushes or after them. Avoid heading to the mall on weekends where you’ll have to fight for road space with the weekend shopping crowds. Traffic jams mean burning gas getting nowhere.
4. Work-at-home. If you can do this just one day per week, you’ll reduce your gas for commuting purposes by 20%.

The combination of these efforts can reduce your budget by hundreds of dollars per month. That can allow you either to bank more money giving you a greater sense of control over your finances or to have extra to enjoy life more. Either way, the less money we spend on basic living expenses, the more we have for those things that make a difference in life.

(Kevin Mercadante is professional personal finance blogger, and the owner of his own personal finance blog, Out of your Rut. He has backgrounds in both accounting and the mortgage industry. He lives in Atlanta with his wife and two teenage kids)