Fortunately there are plenty of ways to chop your spending without a lot of time or hassle. Some of these cuts will save you just a few dollars, while others can net even bigger savings.
Add them all up, and you could trim your annual expenses by hundreds of dollars or more.
Following are five areas where you can cut your bills fast. These tips can help you to weather the current economic downturn and continue to thrive once happier days return.
Energy and Gas Savings
Energy costs are boiling over. The U.S. Department of Energy estimates Americans will typically spend $2,350 on home energy costs in 2008, up from $2,100 a year ago.
Moreover, households are slated to spend $3,950 on gas for the year, up from $3,000 in 2007.
Fortunately, some relatively cheap fixes are available, and many begin in the home.
For example, weatherstripping, caulking doors or sealing windows can keep out cold and heat, lowering your heating and cooling bills.
"Every little step helps, and if you can't afford new windows or storm windows, plastic film kits aren't a bad alternative," says Ronnie Kweller, deputy director of communications at the Alliance to Save Energy.
Other tips for cutting home energy costs include:
Installing a programmable thermostat. These handy gadgets let you turn up the heat or air conditioning just before you get home rather than paying to keep your empty dwelling comfy all day. Households that use these thermostats typically save $180 per year, far more than the roughly $100 it costs to purchase the thermostat, according to the Department of Environmental Protection.
Switching to energy-efficient light bulbs. Yes, they do cost more than traditional bulbs, but they wind up saving money because they use two-thirds less energy and can last 10 times longer, Kweller says. That computes to savings of $50 per bulb.
Being efficient. Clean and change furnace air filters and wrap your water heater. These moves help your appliances run more efficiently and cheaply. Seal ducts on air and heating systems to improve efficiency by as much as 20 percent, according to the Alliance to Save Energy.
Lower the water heater temperature to 130 degrees Fahrenheit. That's hot enough to kill germs and safely wash dishes. Do laundry in cold water.
Meanwhile, you can also trim vehicle gas costs with the following steps:
Adopt good driving habits. You'll save a bundle if you stop speeding. If you typically race around at 70 mph instead of 55 mph, you're lowering your vehicle's fuel efficiency by as much as 17 percent, according to the American Council for an Energy-Efficient Economy, or ACEEE.
Pump up your tires. Tires lose about a pound of pressure a month, and if you drive with tires that are 3 pounds underinflated, your vehicle's fuel economy drops by 1 percent, according to the ACEEE.
Clean your car. If your car resembles a junk yard on wheels, clean it out. If you're hauling around 100 extra pounds, for example, you're lowering fuel efficiency by up to 2 percent, according to the ACEEE.
You can find more gas-saving tips in the Bankrate feature "15 ways to save money on gas."
Food and Groceries
Americans spend an average of $6,111 per year on food, according to the U.S. Department of Labor's Consumer Expenditure Survey. But with prices rising quickly, food is taking an increasingly bigger bite out of our budgets.
How can you save on something so fundamental? It's actually not difficult. A family of four can slash $240 from its monthly food budget by switching from pricey meals to lower-cost options, according to the U.S. Department of Agriculture.
The key is to embrace culinary change rather than fearing it.
"We can't be doing the same thing the same old way," says Sheryl Garrett, author of the "Personal Finance Workbook for Dummies."
Store shelves are crammed with relatively expensive prepackaged convenience foods designed to save time, Garrett says.
"But what we need to do is try to remember two simple words: whole foods," she says. "Instead of buying prepared, frozen, twice-baked potatoes, buy a real live whole potato. It costs a fraction of the price, pennies per pound. And it probably even tastes better."
Here are some ideas for saving at the supermarket:
Buy food less frequently. If you're running to the market before dinner each night, it's time to quit. Instead, think about what you want to eat for the next few days, and buy groceries at once. You'll save money, time and gas.
Use a shopping list. A full two-thirds of purchases at grocery stores are impulse buys, according to Paco Underhill, CEO and founder of Envirosell, a market research and consulting company. To reduce that temptation, make a shopping list and stick to it.
Pay with cash. You'll be more likely to stick to your shopping list.
Stick to the perimeters of the supermarket. That's where you'll find all the unprocessed basics you need -- dairy products, meats, bread -- while avoiding inner aisles brimming with tempting, processed foods that drain budgets.
Buy in season. Craving strawberries in January? You'll pay top dollar. With that in mind, make it a habit to eat what is in season locally. Guard against cravings by canning or freezing fresh items so you can enjoy those berries any time of year.
Cook cheaper meals. Instead of serving huge portions of meat, use it to supplement larger portions of rice or pasta in affordable casseroles. For other low-cost ideas, check out the U.S. Department of Agriculture's "Recipes and Tips for Healthy, Thrifty Meals."
For more tips on cutting your grocery bill, check out the Bankrate feature "32 ways to save on groceries."
Banking and Credit
Individuals pay banks, brokerages, credit card companies and other vendors a slew of extra fees, charges, interest and penalties.
One recent study by the Government Accountability Office and the Federal Deposit Insurance Corp., or FDIC, found that Americans spend $36 billion annually on bank fees alone. That's up from $24.4 billion in 2000.
Meanwhile, Consumer Reports estimates Americans spend $216 billion a year on fees for personal financial services, from banking to mortgages.
Don't just take these fees and rate hikes lying down. For example, if your lender hikes your credit card rate, call to have it lowered. You've got a 50-50 chance of getting resolution, according to a consumer study by U.S. Public Interest Research Groups, or U.S. PIRG.
"Credit card companies will routinely raise your rates to see if they can get away with it, so you have to be vigilant," says Ed Mierzwinski, consumer program director at U.S. PIRG.
When it comes to some fees, you may be your own worst enemy. For example, spend more than your credit limit these days and you'll be allowed to shop. The catch: You'll owe an over-limit fee, which typically runs $39.
"Keep a healthy cushion (between) what you're allowed to spend and what you (actually) spend," says Jim Campen, executive director of Americans for Fairness in Lending.
Other tips for keep your banking and borrowing costs low:
Comparison shop. Switch banks, credit cards, even brokerage accounts that drain your finances by switching to competitors offering better deals. It's easy to find the best offers using Bankrate's Compare rates tool.
Read the fine print. Pay attention to requirements that could wind up costing a bundle. A free checking account may sound appealing, but is there a minimum balance requirement? If you can't meet it, you may wind up paying fees that make that free deal pricier than you thought.
Watch out for ATMs. Whenever possible, pull cash out of your ATM in larger amounts to reduce repeat visits to the machine. According to Bankrate's 2007 survey of ATM fees, the average ATM fee for nonaccount holders was $1.78. However, some banks charge more. Tack on the foreign-use penalty your own bank levies when you use a competitor's ATM and you could well be spending nearly $5, or 25 percent of that $20 you grabbed on the go.
Chuck the debit card. Putting away the debit card lowers the odds of triggering courtesy overdraft protection fees. They kick in when you use a debit card and make purchases that exceed your account balance. Overdraft fees now average $34 per transaction, or $17.5 billion annually in the United States, according to the Center for Responsible Lending.
Pay on time/beware of default rates. Miss a payment deadline and chances are you'll wind up paying hefty fines. In fact, if you're late on one bill with any creditor, your other creditors can legally use that tardy track record to jack up interest rate they charge you. When you get bills, mark their due date on a calendar or set up automatic payments so you don't miss deadlines.
Scrutinize statements. More than two-thirds of lenders, 77 percent, say they can change rates "at any time, for any reason," according to Consumer Action. So even if you pay on time each month and think you're an ideal customer, study your statement and look at the fees, your interest and other unexpected changes that could cost a bundle.
For more on fees and how to avoid them, read the Bankrate feature "Here come the fees."
Taxes
If you're like most people, you probably don't pay much attention to taxes until April 15 rolls around. But taxes affect us daily, whether we're working, shopping or saving for important milestones like retirement.
As it turns out, fall is the perfect time to trim taxes. This year, 15 states have already or soon will sponsor reprieves from sales taxes as part of back-to-school shopping. These tax holidays vary, but typically are scheduled anytime from just before the school year to about mid-October, says Craig Shearman, vice president of government affairs at National Retail Federation.
"That could mean the difference between buying new back-to-school clothes or making do with last year's wardrobe for some families," says Shearman.
Other ways to reduce your taxes include:
Snag the first-time homebuyer credit. Individuals who buy a dwelling from April 9, 2008, to July 1, 2009, and who haven't had owned a primary residence for the previous three years can claim a new credit that's worth 10 percent of a dwelling's purchase price, or up to $7,500. The break phases out for joint tax filers with incomes of $150,000 (or $75,000 for individuals). It's important to note that these credits are structured more like interest-free loans than true tax breaks.
Claim the 2008 homeowner's tax break. Individuals who own their home outright or who've had a mortgage so long they're mostly paying principal rather than interest may no longer qualify to itemize on their returns. Now there's some temporary relief for them. This year, they can take $500 (or $1,000 for joint filers) of state and local property taxes as an addition to their standard deduction on their 2008 federal income tax return.
Grab breaks for low-income earners. One out of four eligible taxpayers fails to claim the earned-income tax credit, or EITC, worth as much as $4,716 a year depending on someone's earnings, marriage status and whether they have children or other dependents. If you qualified for but didn't claim the EITC, file an amended tax return for any previous year back to 2005.
For more tips on trimming your tax bill, read the Bankrate feature "10 often-overlooked tax breaks."
Car Insurance
Americans typically spend $820.91 to insure one vehicle per year, but in many parts of the country, premiums can reach "thousands of dollars," according to the latest study by National Association of Insurance Commissioners. Yet there's still much you can do to lower rates.
Boost your deductible. That's the amount you pay out of pocket before insurance kicks in. Raise yours from $250 to $500, and you'll shave money from your insurance premium because you're essentially agreeing to take on more financial burden in the event of a mishap.
Trim insurance for that old clunker. If your wheels are worth little, consider getting rid of collision coverage, which pays for repairs.
Snag low-mileage discounts. Have you cut back on your driving to save gas? Let your insurer know. If you don't drive much (less than 7,500 miles a year), you can usually get rates lowered.
Bundle your policies. Buy more than one policy from the same insurer and you may well get a break of 5 percent to 15 percent, according to Insurance Information Institute. So try keeping your auto, homeowners and other insurance policies with one company.
Make age-appropriate auto decisions. A driver's age may impact insurance rates. So, restrict your teen to driving the family's oldest car. Then, let the insurance company know your son or daughter has no access to more valuable cars you own. Older drivers may also pay higher rates. Seniors ages 55 to 70 may qualify for price breaks if they take a safe-driving course, such as the 55Alive program that's run by the Automobile Association of America and the National Institute of Highway Safety.
No comments:
Post a Comment