20 Ways To Cut Your Personal Spending Now
April 2020 ISSUE By Wesley W. Lyon, II April 1, 2020Personal Finances Budgeting, Spending, Saving
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The recent stock market rout may have left you short on retirement savings and time. This makes for a difficult choice; you must reduce your spending and/or work harder in order to save more. Below are 20 ways to cut your spending to fund increased savings, during these turbulent times.
1. Refinance your debt to slash interest costs. Mortgage rates recently plummeted to an all-time low, making this the perfect time to refinance your home and practice debt. 30-year conventional mortgage rates are as low as 3.0%, with 15-year rates as low as 2.65%.
2. Use a home equity loan to pay off high interest rate debt to cut your costs, if your debt is preventing you from fully funding your retirement plan and cutting your taxes. Also, consider a cash-out home refinance to pay off your high interest rate debt and cut your monthly payments. This will allow you to increase your retirement plan savings, while slashing your income taxes and interest costs.
3. Paying for smartphone insurance? Many credit card companies offer this coverage at no additional cost if you pay your wireless bill with your credit card. Eligible cards include Mastercard World and World Elite, Chase Ink Business Preferred Visa, Uber Visa, and U.S. Bank Visa Platinum cards.
4. Reduce your cell phone bill by up to 50% by buddying up with friends to create a family plan or using a Mobile Virtual Network Operator (MVNO) instead of a major carrier. Many MVNOs operate on the same network as major providers such as Verizon, but provide cell phone service at a fraction of the cost. MVNOs that operate on the Verizon network include Spectrum Mobile, Visible, Straight Talk, and Xfinity Mobile.
5. Reduce cable costs by finally cutting the cord! There’s a plethora of streaming services available to you, and many of them are free. If you’re an Amazon Prime member, you can access over 18,000 movies and 1,900 TV shows, many of which are available for free. Other free streaming services include IMDb TV, Tubi TV, Pluto TV, Crackle, and Roku.
6. Negotiate your cell phone, internet, and cable fees with your current providers. Be prepared to threaten to switch carriers, which many times will lead you to the company’s retention department. They’re usually willing to offer you lower rates to keep your business.
7. Cancel unwanted pesky subscriptions. The subscription industry has been built around small recurring monthly transactions you probably don’t notice. Apps such as Truebill, Bobby, and SubscriptMe help make you aware of your subscriptions and help you cancel them.
8. Track your monthly living expenses in order to cut unnecessary costs. Once tracked, audit them to see what’s necessary and what’s not. Even small dollar purchases such as coffee and bottled water can add up. Redirecting your daily coffee purchase of $3.50 into savings could translate to over $85,000 in 30 years if invested at a 5% rate of return.
9. Shop around for auto and home insurance rates, especially if you’ve been a loyal customer. Insurance companies routinely use price optimization, charging higher rates to customers less likely to switch. This can cause you to overpay your premiums by 30% or more. Companies look at many factors such as web browsing history, subscriptions, and loyalty to other service providers to determine your expected loyalty, then raise premiums based on their findings.
10. Bundle home and auto insurance for even further savings. This makes managing your policies and paying your bills simpler, plus on average homeowners save 11.4% by bundling their policies.
11. Use a smart thermostat to cut your electric bill by up to 20% or more. A smart thermostat works by setting temperatures higher during the summer and lower during the winter, but only when you’re scheduled to be away from your home. You may already have a programmable thermostat, but simply haven’t properly programmed it.
12. Rent, rather than buy, your vacation home to avoid negative cash flow averaging $3,000 per month. Renting allows you the flexibility to travel to various destinations, while avoiding the expensive holding costs, including irritating repairs and maintenance of a second home. If you already own, consider selling and paying off the mortgage to eliminate your mortgage payments, property taxes, utilities, and maintenance costs, saving thousands each month.
13. Purchase a slightly used car instead of a new one to save 30% or more. New cars lose up to 30% of their value in the first year of ownership, with 20% lost as soon as it’s driven off the lot. Instead of purchasing new, find a discounted vehicle at the dealership that still has the new car smell, but at a fraction of the cost. Purchasing used will also save you money on sales tax, registration fees, property taxes, and auto insurance. For even further savings, avoid the temptation of a “new car” and keep driving your current vehicle.
14. Once the pandemic ends, take advantage of huge airfare discounts. Also, subscribe to airline deal newsletters such as Scott’s Cheap Flights, Secret Flying, and Airfarewatchdog. These sites provide information on incredible airfare deals. Be flexible on the dates of your travel in order to take advantage of these deals, with travelers saving an average of $550 per ticket according to Scott’s Cheap Flights.
15. Save money by staying at an Airbnb instead of a hotel. While not every city provides savings over a traditional hotel, travelers in some major cities can save up to $100 or more per night using Airbnb.
16. Stop hoarding your credit card points and use them to reduce your personal spending. Most credit card companies devalue their points over time, counting on the lure of the perfect redemption to make you hoard them. Remember, the best use of your credit card points is the purchase you actually make!
17. Maximize your credit card rewards by establishing loyalty with one hotel chain and one airline. Choosing an airline that uses your local airport as a hub is usually best, while hotel choices should be based on personal preference. Accumulate airline and hotel points using your tax-deductible business travel, then utilize them later for personal vacations. For doctors who don’t travel as often, consider a cash back rewards card instead.
18. Perform plastic surgery by cutting up your credit cards. Spend cash instead, which can reduce impulse spending by 30% or more!
19. Save money on online retail purchases by using a browser add-on such as Honey or PriceBlink. Honey automatically searches for coupons or discounts and applies them to your purchase, while PriceBlink automatically searches over 4,000 retailers for the same product at a better price.
20. Slash insurance costs by switching your life, disability, and business overhead insurance coverage to the ADA or AAO. Also, avoid unnecessary life insurance riders including accidental death, waiver of premium, and dependent child coverage. Further reduce premiums by increasing the elimination period on disability coverage to 180 days and business overhead coverage to 30 days.
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The McGill Advisory content is provided for informational purposes only and does not constitute legal, accounting, or other professional advice.
Copyright © 2021 John K. McGill & Company, Inc.