This being the last blog post of the year, I feel it’s only appropriate that I write about something that often shows up in new year’s resolutions: saving money.
These little tricks won’t take much time at all to implement and they can result in big savings with minimal effort. In fact, you can probably do some of these things before getting ready for the countdown party tonight.
Small expenses add up
Have you ever heard of the “latte factor”? It’s a term coined by David Bach, who wrote a best-selling personal finance book called The Automatic Millionaire: A Powerful One-Step Plan to Live and Finish Rich. The “latte factor” refers to a cup of latte, which doesn’t seem like a big purchase, but would add up to a large expense over time if you buy it every day. It’s a simple idea, but also a powerful one.
But if you’ve read my previous thoughts on saving money, you’d know that I hate having to think about it. I focus on my biggest expenses and have managed to save $20,000 in 1 year without a budget in the past that way. I don’t want to have to restrain myself from joining the line at Starbucks every morning. That would require a lot of self control and, even if I manage to do it, I’d be thinking about that latte all day. The next day, I might not be so strong.
I still save on little things. But instead of stressing out over lattes, I focus on other little expenses that won’t require me to put in much ongoing active effort.
Save money — the easy way
One awesome way to reduce spending is to save money on subscriptions and other recurring payments — the bills that come regularly like clockwork. Every little saving counts when you’re working with recurring payments. Even reducing one bill by $5 a week would save you $260 by the end of the year.
Entertainment and services
1. Cancel your landline phone
I haven’t had one for 3 years now and I haven’t missed it yet. If I need to make or receive a call, a mobile phone or a VOIP service like Skype or Google Voice works perfectly. This way, I also won’t have to connect and disconnect the line every time I move or travel.
Just by getting rid of your landline phone, you could save $50 a month or $600 a year.
Savings = $600
2. Cancel your cable
Thanks to the Internet, you have unlimited amount of entertainment available at your fingertips, literally. And a lot of it is free, so why pay a fortune for cable? Even Netflix subscriptions only cost between $6.99 and $11.99 — and you’ll be able to watch thousands of videos on demand.
The average American pays $75 a month ($900 a year) for cable TV, according to research firm Centris. Canceling your cable would be a huge saving, but if you can’t quit cold-turkey, consider downgrading your subscription. Remember, though, that you’d still be paying at least $25 a month ($300 a year) with a basic cable subscription.
Savings = $900
3. Review your cell phone plan
Check your old phone bills to figure out your usage patterns. Do you use your phone for making calls or watching online videos? Adjust your phone plan to match your needs and consider removing premium services like call waiting or busy call return. If you travel so much you rarely use your local number, maybe you should switch to a pay-as-you-go plan.
If you reduce your monthly cell phone charges by just $10, that’s already $120 a year.
4. Bundle your remaining services
Using one provider for landline, cell phone, Internet and cable could lead to big discounts. You could save $20 or more per month, or $240 per year.
Savings = $240
5. Cancel your magazine subscriptions
You can find almost any information you need online for free, so why pay for it? If you cancel a magazine subscription early, you could sometimes get a refund for any future issues you’ve already paid for.
If you can’t bring yourself to cancel, consider switching to an online subscription instead. It’s often cheaper and won’t clutter up your home. Plus, you can easily bring multiple magazines to read on your tablet as you travel. (This goes for books too.)
Savings = $15 for every canceled subscription
6. Cancel your gym membership
Bonus: Once you get used to working out on your own, it’ll be easier for you to maintain a workout schedule when you travel.
The average gym membership costs between $40 and $50 per month. But CNBC reports that the true cost is closer to $800 a year after taking fees into account.
Savings = $800
7. Switch to cheaper classes
Why spend money on a premium course when your community center or YMCA offers similar courses? You could learn pottery, philosophy, music, dancing and many more at cheaper prices.
Community center courses could easily be cheaper by $50 a month, which would make you $600 richer by the end of the year.
Savings = $600
8. Bundle your insurance
If you currently have multiple insurance products from different companies, ask each company to how much your premium would be if you combine all those products. Bundling all three main insurance lines (home, auto and life) and travel insurance with one insurance company can save you as much as 15 percent of your insurance premium. If you currently pay $3,000 a year for insurance, you would save $450 a year.
Savings = $450
9. Increase your deductibles
Deductible refers to the amount of money you pay out of pocket when you make an insurance claim. For example, if someone breaks into your home and you suffer $5,000 of damage, your insurance provider would only pay you $5,000 minus your deductible.
If you increase your home insurance deductible from $250 to $500, you could get a rate cut of 10 percent. Pushing it up to $1,000 removes another 10 percent from your bill. If you spend $1,000 on home insurance each year, this 20 percent translates into $200.
In the same way, increasing your car insurance deductible from $500 to $1,000 could save you 15 percent or $150 on a $1,000 annual insurance premium. (You’ll save a lot more if you get rid of the car altogether, but that’s not always practical.)
Savings = $350
10. Get insurance discounts
Check with your insurance provider if you’re eligible for any discount. Depending on the type of insurance and company policies, you could slash your rates for being a student, taking driving lessons, working at a certain company, using the same insurer for a certain number of years, etc.
Savings = depends
11. Automate bill payments
Automate as many bills as you possibly can. This way, you’ll have fewer things to remember and you won’t have to pay late fees. Depending on the bill, you can directly set this up with the biller or with your bank.
For credit cards alone, late fees average at $35. By paying your credit card bills on time, you could avoid $420 in fees in 1 year.
Bonus: By paying your bills on time, you’ll improve your credit score, which will help you qualify for lower interest rates on loans and credit cards, which will save you even more money in the long run.
Savings = $420
12. Pay off credit cards
It’s not enough to just make your credit card payments on time; you should also pay them off every month.
The average American adult with a credit card carries a balance of $5,047, according to the Federal Reserve. At 18 percent interest, you would be paying $860 a year in interest alone if you only make the minimum payments.
By paying off your balance each month (preferably with automatic payments), you could be saving $860 throughout the year.
Savings = $860
13. Lower your interest rate
If you can’t pay off your debts right now, make a payment plan and work toward your freedom. In the meantime, talk to your bank about consolidating them to get a lower interest rate. For example, you could apply for a low-interest credit card, which charges as low as 10 percent interest. You could often get even lower rates with a personal line of credit or a home equity line of credit.
On a balance of $5,407, the 10-percent interest rate means you’ll be paying $490 in interest if you were to only pay the minimum payments. This is $370 lower than what you would pay with an 18-percent interest rate.
Savings = $370
Savings and Investments
14. Move your money into a fee-free high-yield savings account
What do you do with all the money you’re saving? You want to get the most out of it, obviously. Instead of a regular savings account, go with a high-yield savings account. And make sure there are no monthly fees — with so many banks offering free checking accounts, there’s no reason to be stuck with bank fees.
I’ll be the first one to say that even these so-called “high-yield” accounts don’t pay out much these days, but they’re still better than regular savings accounts. You’ll enjoy higher returns when interest rates go up.
15. Cut down on investment fees
Stop paying high transaction and management fees to invest your hard-earned dollars. Instead, go with low-cost index funds. Warren Buffett says they perform better than most other funds anyway.
Looking for more ideas to save money?
Check out these posts:
- 100+ Easy Ways to Save Money
- How to Save Money to Travel the World
- Your 3 Biggest Household Expenses and Why You Should Focus Your Travel Savings on Them
- How I Saved $20,000 in 1 Year Without a Budget
- 3 Studies Reveal Why Budgets Fail
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