One of the most difficult challenges in personal finance is figuring out how to spend less money, in other words how to reduce your monthly expenses. Even if some of our regular bills appear small and insignificant on their own, the cumulative effect can be enormous – and become a significant drain on our resources.
No matter how aware we are of our spending habits, we are still faced with the dreaded bills — and those bills can be especially daunting now that millions of Americans are facing job losses and other financial challenges as a result of the coronavirus pandemic. There are dozens of ways to cut monthly costs, but determining where to cut can be difficult.
Make Use of Public Transportation
You can save a lot of money on gas, parking, and maintenance if you have access to public transportation. You can get from one side of town to the other, to work and back, and to most important events for a small fraction of the cost of owning a vehicle. You will save money every time you are able to leave the car at home.
And that’s just the money you’d save on gas and maintenance and the like; if you can avoid buying a car entirely, you’ll save even more. There are many ride share options to consider as well, companies like Uber and Lyft allow you to get around at a much lower cost than owning a car. You may also want to consider simply taking the bus! There are bus stops all over town and they are really inexpenive.
I’ve used this strategy myself: in the past, I relied solely on public transportation to get around and save money, and it was excruciatingly painful to add a car to my monthly budget.
Reduce Your Car Expenses
After housing, transportation is one of our most expensive expenses. There are numerous ways to save money on automobiles. If you are making car loan payments, you should consider selling your car and buying something used that does not require you to pay a loan.
Even if you have to pay for some repairs or to get the car in good shape after purchasing it, you will most likely save money because loans are expensive. You’ll also save money on car insurance because older vehicles are less expensive to insure.
You can also save money on car insurance even if you keep your current vehicle by shopping around. Many businesses calculate their rates in a variety of ways. Call around and compare prices; you’ll most likely find one that charges less for the same coverage. To save money, you can also ensure that you are not overinsured and opt for a smaller policy.
Gas prices seem to be rising all the time these days, so try to limit your driving to save money. Carpooling with coworkers is an excellent way to reduce your driving time. Also, keep short car trips in mind. Often, you can save money by riding your bike instead of driving. Also, make sure your tires are properly inflated so you don’t have to spend more money on gas for something so insignificant.
Make Yourself Useful
If you are a homeowner, you are well aware of how costly it is to have someone come out to your home to repair broken appliances. In most areas, just having a plumber come out and give you an estimate will cost you more than $100.
You will save a lot of money on home maintenance if you learn how to do a lot of small jobs yourself. Replacing a faulty toilet, repairing the stair railing, or tightening some loose boards on your deck can save you a significant amount of money each year.
And, while you’re at it, you can feel really good about yourself for being self-sufficient and learning something new. Saving money feels good, but saving money while also making something work is even better.
Look into adult learning centers near you to learn how to do these things, as they frequently have instructors teaching classes on topics such as home plumbing and simple woodworking. Otherwise, watch some YouTube videos where people are sharing their knowledge so you can do things yourself.
Sell Any Unused Items You Own
Search your closets or attic for items you no longer use that may be valuable, and then sell them on eBay or Craigslist. You can then use the money you earn to pay off debt and put it behind you for good. When my debt load became nearly unmanageable, I did this with a number of items, including my baseball card collection.
Consume More Whole Foods
If you’re not careful, your grocery bill can quickly add up. Consequently, saving money on groceries is an important step toward better personal financial management. One way to avoid overspending is to avoid the processed food aisle at the grocery store. Packaged foods are more expensive per calorie than buying the ingredients to make your own food.
You can save up to a dollar per loaf of bread if you buy flour and make your own bread. The savings from bread alone can easily amount to $30 per month. Get a bread machine and you’ll have fresh bread baked every day with little effort.
When you cook for yourself, you can also buy in bulk rather than buying packaged foods. Rice, grains, and beans can all be purchased by weight, which allows you to save a significant amount of money. If you eat more beans and grains, you will have less need for meat and will be able to save money. Cooking from scratch takes time, but if you plan ahead of time, it won’t seem so bad. Cooking from scratch will also save you money on medical bills because your health will improve dramatically.
Consolidate Your Student Loan Payments
Determine whether it makes sense to consolidate all or some of your student loans if they are locked in at a high interest rate. While this isn’t as effective as it once was because most federal loans now have fixed rates, if you find a good loan consolidation option, it could save you money every month.
Credit Card Rate Reductions
If you have a fairly large credit card balance, contact your credit card company and request a rate reduction. They may be willing to negotiate if you pay your bill on time every month. If they refuse, get a 0 balance transfer to another card with a lower interest rate. If you have a history of late payments, a credit card for bad credit can help you rebuild your credit score and qualify for future cards with better rewards and lower rates.
Reduce Your Tax Bill
Some people do not consider taxes to be an expense. Even fewer people realize that by making a few simple changes, you can reduce your tax bill to a manageable size.
For example, if you frequently receive a tax bill instead of a return after filing, you are most likely not having enough money withheld from your paycheck. Revise your W-4 form, which you give to your employer, to instruct them to withhold a little more so you don’t get hit with a large bill next year.
You can also put money into things like IRAs to reduce your taxable income. Yes, the money must be saved and cannot be used right away, but in the long run, it saves you money while also making you money over time.
If you are having financial difficulties and are unable to pay the money you owe, contact some tax relief services to see if they can help you reduce the amount you owe to the IRS. If you want to reduce your tax bill, you should definitely read this post to learn about the most common tax credits that you should not overlook!