As the new year rolls in, some individuals are venturing into budgeting for the first time, driven by their New Year’s resolution to manage their finances better. Others may have been budgeting already, but accordingly adjusted their plans to match this year’s resolutions such as dining out less for lunch, enrolling in a gym, and so forth. However, before you congratulate yourself on your newly minted budget, remember to do one critical thing— scrutinize all aspects. This is an efficient approach to lower your costs. Let’s discover how.
FIXED EXPENSES
Absolutely, you might be thinking – some expenditures are inescapable and non-negotiable. But bear with me for a moment. For instance, you may have just invested in a house with a sizable mortgage, selling now could result in losses due to closing costs, leaving you feeling stuck. Nonetheless, you could look into reducing your mortgage interest rate or perhaps renting out a spare room to offset the mortgage cost.
DEBT ELIMINATION
With manageable finances, you might want to consider settling some bills outright, averting the burden of additional interest payments. This could be an auto loan, credit cards, student loans, or even medical bills. Look up the terms of payoff, check for any penalties applied for early settlements, and if you do have to pay such, evaluate if you can still save money. If the payoff penalty equates to one payment, and you save an amount equivalent to two payments in interest, it’s still a profitable deal.
BILL BARGAINING
Should you decide that living without cable is acceptable, ring up your cable company, willing to cancel your subscription. Inevitably, they may offer you a customer retention package, valid for at least half a year. If you aren’t content with their offer, negotiate further. If unsuccessful, proceed with the cancellation.
RAISING CONSCIOUSNESS
As for costs such as groceries, utilities, and fuel, it comes down to personally challenging your decisions. Is there a need for two separate errand trips on Saturdays, or can you merge them with your weekday commutes to conserve fuel? Is that bag of potato chips a necessity or a spur-of-the-moment purchase? Is it vital to have the water running for 10 minutes prior to stepping into the shower? Small savings in these areas could motivate you to scrutinize your expenses more closely.
COMPARISON SHOPPING
For any bills where alternative providers are available (like insurance), compare prices for the best bargain. While doing so, examine the insurance coverage you hold— such as increasing the deductible to decrease your premium.
INQUIRY IS KEY
The emphasis on questioning everything isn’t to suggest that you’ll reduce spending in all areas, but rather that, by undergoing this comprehensive evaluation, you ensure no money slips through the cracks. If you discover surplus cash in your budget, use it sensibly by settling debts or investing.
