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If there is one thing life has taught us, it is likely that we can live with so much less. Less travel, less eating out, less activities, etc. But for many, it has also put their finances in a precarious position. If you are looking for how to reduce your expenses and manage your budget better, here are some basic ideas for reducing spending to help make your budget work for you.
Start with your current monthly budget. If you don’t have a budget in place, debt under control or solid credit, please check out all this material first. Go to my personal finance pages, free monthly budgeting tools and guides so you can clearly identify your expenses so that you can surgically take them on one at a time. This way you can maximize your monthly cash flow and have a solid financial foundation. Be sure to also watch my YouTube video below on budgeting as a companion to the all the material.
It seems like there is an insurance for everything these days. Auto, home, renters, lender, RV, health, dental, vision, life, etc. Having appropriate coverage in these areas is a very important part of being financially responsible – but that doesn’t mean you should have to pay an arm or a leg for them.
Gabi is a great website for comparing insurance costs and ensuring that you are getting the best deal. Do your research, compare quotes, and make sure that you are not overpaying for your insurance.
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Insurance companies do not reward you for your loyalty, so always price around to see if there are better deals to be had out in the open market. There is no better company out there for auto, home, renters, landlord and umbrella policy insurance comparison shopping than Gabi. Within a couple of minutes, you’ll be able to find the policy that is the best fit. Try Gabi and save!
This might not seem like something you can change – but you can actually negotiate both. If you are having a difficult time making ends meet – it is better for you and your lender or landlord to work out a price you can afford to pay, rather than missing payments.
If you are a renter, contact your landlord and explain your situation and give them a number that you can better afford (obviously, you need to be reasonable and fair in deciding upon this number, very few lenders will be happy to hear you can only afford 1/2 your payment.) If you own, consider refinancing your mortgage for a lower payment. Interest rates are at an all time low right now, which makes it a great time to refinance.
#1 Rated Home Loan Mortgage & Refinancing Platform
If you’re looking to get you the best deal possible on your loans, period. By giving you multiple offers from several lenders in a matter of minutes, they make comparison shopping easy. LendingTree is a leading online loan marketplace with one of the largest networks of lenders in the nation. And we all know-when lenders compete for your business, you win!
Credit Card Debt
Most Americans have credit card debt. These payments can easily balloon out of control. Consider consolidating your debt with a personal loan. These usually have a much lower interest rate and more stable payment requirements. If your credit is still in good shape, you can also apply for a new credit card with 0% interest and transfer the debt to this card. If you can pay off the debt before the interest rate grows, all the better!
#1 Rated For Debt Loan Consolidation
Payoff is a one-stop shop for you to be able to consolidate your debts up to $40,000 into one lower interest personal loan. They offer no application fees, no commitments, personal support and when you apply it doesn’t impact your credit score. You choose the terms of your loan and once you’re satisfied you have the funds to pay off your debts.
This might not seem like a game changer, but energy bills can change drastically throughout the year and many energy companies have options to help stabilize or lower your monthly payments available. Call your energy company and ask if they have programs to lower bills available. Some options require you to lower your usage during certain peak times during the day (which, if you are working outside the home is generally not a difficult thing to incorporate), or they can guide you in how to change a few habits to make your energy bills lower. These things typically include increasing or decreasing the temperature on your thermostat, insulating your garage, or other simple and usually inexpensive options.
Cable and Internet
I know these things may not feel like something you can live without… but you definitely can. Research and call various internet providers in your area and call and get quotes. Use these to negotiate for a lower bill with the company you are currently using, or if one is significantly better, switch!
Cable is quickly becoming obsolete with so many streaming platforms available. Do some research and find out which of your favorite shows are offered for free on which streaming platforms. You may find that you won’t need cable at all. You might be able to access your local stations for free with an over the air antenna. Some of the most popular options are: netflix, amazon prime video, youtube tv, hulu, slingtv, etc.
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My recommendation for cutting the cable TV cord is Hulu. You don’t need a special box and it’s a great low-cost alternative to a traditional cable plan. Stream full seasons of exclusive series, current-season episodes, hit movies, Hulu Originals, kids shows, and more.
Cancel Gym Membership
With so many free workouts on various apps and websites, there are plenty of ways to get sweaty without paying monthly fees. Especially if your gym is closed due to the pandemic, or you find your motivation lacking. If you are unwilling to cancel completely, see if there are cheaper gyms or even recreation centers close to you that would be a good fit for you.
Sell Your Car
Sell your current car and buy something you can afford to pay cash for. This way, you eliminate your monthly payment and you still have safe transportation options.
Find A Cheaper Phone Plan
There are many “pay as you go” phone plan options available, there are even some options that are virtually free (Google Voice). Do some research and figure out what services you really need and which you can live without. Then find the cheapest plan available that meets your needs.
Automate Your Finances
Avoid paying late fees by making sure that your bills are being paid on time. Many companies even offer discounts for paying automatically or paperless-ly.
Entertainment is one of the biggest monthly expenses that is considered “unnecessary.” But we all know that getting out and doing something fun is important for mental health and social health. So consider ways to go out, without having to pay. Pack your own lunch or dinner, use groupon or other discount websites, and do more outdoor and free activities like hiking, bike riding, etc.
Finding ways to making staying at home fun are also great options. Pedicures and cocktails at home make for a great girls night in. Host a video game tournament, or a movie marathon event.
A good budget tracker is a financial friend for life. If you can find a program that feels intuitive and easy to use for you, use it! Keep track of every dollar you make and have a plan for how you are going to spend those dollars. Then stick to it! This is much easier said than done.
Generally you should have a budget that breaks down to something similar to this:
50% of your take home pay should be spend on the following things:
• Mortgage or rent – about 30% of total income per month.
• Food and Groceries
• Health care (including insurance premiums)
• Transportation (auto insurance, gas, car payment, etc)
• Debt payments
• Utilities, and other monthly bills
15% of your monthly income should be going toward long term savings for retirement. This can usually be done pre-taxes.
5% of your monthly income should be saved in a “rainy day” fund for emergencies or big future purchases (like cars, a home, etc.)
#1 Rated For Automated Budgeting
There is no better-automated tool to keep your budget on track than Mint. I have personally used Mint for years and the best part about it is that it is totally free! With Mint, you can link all of your accounts all into one place, put limits on expenses, categorize, allocate and automate your budget. My recommendation is to use Mint along with Personal Capital.
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Hands down, Personal Capital is the best platform for you to calculate your net worth. Personal Capital also fills in all the gaps I tend to find with Mint as well. They also have a very robust portfolio management offering that is a hybrid of a managed and Robo advisor. The best part of all is that their net worth and portfolio projection tools are completely free to use.
If you can follow this budget, you will have money left over each month to spend on entertainment and other extra purchases. However, following this plan can be difficult if you live in an expensive area or have a lot of debt. Do your best and make this your goal. No matter what your situation or your spending habits are, a good budgeting tool will be your friend. Many people use and recommend Mint and Personal Capital.
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