Even if you have set a budget for yourself, it can be easy to come up short each month. If you’ve been struggling to make ends meet for a few months, you have probably already started making changes. You may have started cooking meals at home, or stopped getting that second pre-work coffee. While trimming down your necessities is a good start, there are a number of large recurring expenses that you can probably cut to streamline your monthly budget even more. If you’re going over your budget each month, review your monthly expenses and try cutting these key areas to get your finances under control.
Reevaluate Your Insurance
Monthly insurance premiums for auto, home and health insurance can add up quickly, but they can also be negotiated, especially if you have policies from multiple companies. First, talk with your providers to make sure you are receiving all the discounts you deserve. If you can’t find any effective discounts, many insurance companies offer reduced rates for bundled plans, so this can create significant savings. You’ve seen the ads saying that you can save hundreds of dollars by switching to a specific company – they are usually true.
If cutting costs is your main priority, you can consider raising your deductible to get lower monthly premiums, but this can come back to haunt you in the case of an emergency.
Switch to an Third-Party Energy Supplier
Utilities can be one of your largest recurring costs, and the bills can be hard to predict. Using less energy by will decrease your bill, but you can also save by finding a new electricity supplier. A third-party energy supplier will work with your current utility to build a structured discount for each customer. You will still receive your energy from your utility company, but a third-party utility provider can save you up to 20 percent on electricity and natural gas.
Refinance Your Home and Car Loans
Refinancing your home mortgage can provide the most significant cuts to your budget, sometimes shaving off hundreds of dollars each month. This is a long-term budget solution, however, since it will involve upfront costs like interest points and taxes, just when you initially bought the house. Refinancing your car loan can provide some quicker savings, depending on the age of your car and your credit score. Many credit unions and local banks offer rates as low as 2 percent on refinanced loans, down from the typical 6 to 8 percent on most car loans. This may only bring savings of $15-30 a month, but it can be a way to tap into your car’s equity to pay off higher-rate credit card debt at a much lower rate.
Consolidate Your Credit Card Debt
Speaking of credit cards, many consumers have interest rates higher than 20 percent and the average household credit card debt in the U.S. is nearly $16,000. With that much debt, the average cardholder also has 3.5 credit cards. While this can mean multiple minimum payments each month, it also means increased confusion. Consolidating that debt to one or two cards can bring significant monthly savings by cutting out an additional payment. The simplest way to do this is to transfer the balance of a card to one with a lower rate. In addition, there are a number of nonprofit credit counseling services that will charge a low fee to consolidate debts and deal with creditors on your behalf. If you don’t feel comfortable transferring the debt on your own, try the credit counseling route before you think about a debt consolidation company, which can lead to more financial hardship.
Try a Points Credit Card
If you have your credit under control, but you’re spending too much on leisure expenses like travel or entertainment, you may want to look at switching to a rewards credit card. There are plenty of rewards cards out there that offer points for airline travel, hotels and more. Just be careful not to increase your spending to get more points. That will defeat the point of managing your finances. Spend normally, but reap the rewards that companies offer.