Before I left the house today, I rushed a load of laundry into the washer, argued with a delivery service that didn’t want to leave a package on my doorstep and dealt with the fact that my dog had managed to get into something truly vile. All by 6:30 in the morning.
Life happens. Stuff happens. Which is why, long ago, I gave up trying to control the things that are beyond my control. Particularly when it comes to money. Living through the economic roller coaster of the past 18 months has taught us all that we can’t change stock prices, gas prices or milk prices. So why worry about them, particularly when we can focus our energy on things we can fix. Like?
Our expenses. People everywhere are coming to the realization that yes, you should spend less than you earn each month. Preferably substantially less, to create a fatter emergency cushion in the short term and subsidize diminished retirement assets in the long term. It’s an exercise that goes way beyond easing off on the manicures. In fact, I think you’ll be surprised at the money you can save if you put your mind to it.
Lower your interest rates
Mortgage, car loan, credit card debt. List your top expenses for any month, and these likely rank among the highest. You can knock them down by working on the interest rates. First, your mortgage. Thanks to the president’s Making Home Affordable program, you no longer need 10 to 20 percent equity to refinance. You can qualify if you owe as much as 105 percent of the value of your house; you should consider refinancing if you have an interest rate of six percent or higher, says Fred Brock, author of Live Well on Less Than You Think. Start by going back to your lender for a quote on a new loan. Then, shop Web sites such as lendingtree.com for comparison. Skip the mortgage brokers this time around, as some lenders aren’t willing to work through them anymore.
For roughly $15 out of pocket, you can refinance your car loan as well—right now, the average interest rate on a 36-month used-car loan is 7.89 percent. If your original interest rate was three points higher, you could save about $35 a month with a simple refi. To do it, call a local credit union (a good source for loans). If you’re not already a member, find one at the Credit Union National Association, cuna.org.
If your credit card interest rates have soared, call your company and ask for a reduction. If the answer is no, look for a balance transfer offer at a lower rate and make the switch. It’s important to remember that paying down a credit card balance gives you a guaranteed return equal to the interest rate on the card. That makes it a better deal than just about any other investment these days.
Take a whack at your insurance bills
Too many people consider homeowner’s insurance a fixed expense because they make the payment with the mortgage, says financial adviser Ellie Kay, author of Living Rich for Less. That’s wrong. “You could save hundreds of dollars in some cases by having the policy reevaluated,” she says. “Tell the insurer you’re shopping around. It’s incredible motivation for them to look for discounts.” Those include rate reductions for improvements such as security systems and roof upgrades. Increasing your deductible to $1,000 can get you another 20 to 25 percent off. If you buy home and auto insurance from the same carrier, you can net 5 to 15 percent off both bills.
A recent survey noted that 25 percent of consumers believe auto insurance rates are standardized among companies. Also wrong. Many discounts are available; make sure you’re getting the “midcentury” rate for drivers ages 30 to 59. And watch which driver is assigned to which car: A stay-at-home parent should be on the vehicle that’s most expensive to insure. You can save by shopping around for this insurance too. Start with a quote from your current agent, then compare that with quotes from Geico, esurance.com and other companies.
Then there’s life insurance
When your major life expenses—mortgage, college, building a nest egg—are behind you, you can think about letting your life insurance lapse. If something happened to your spouse, would you be OK without a payout? Think about it this way: Could you invest your capital at a guaranteed rate of return, add that amount to any future income and have enough to live on? If so, you can stop paying for the policy. If it’s not quite enough, think about buying less coverage.
Head to the Web site of your power company and see if it offers an energy audit. This is a process in which a representative goes through your home to show you where you’re losing energy and how to fix it; they also check out the efficiency of your heating and cooling systems and suggest ways you can conserve hot water or electricity. If you don’t go for the bigger fixes (like new windows), the less expensive ones (like caulking your old ones) typically enable you to make up the cost of the audit in a month or so.
Or you can do it yourself using the tips at energystar.gov. The site offers a home energy yardstick, which will help you figure out the degree to which you’re overspending. In some areas, you can also save by agreeing to a restricted use of power during times of high energy usage. (These load management programs vary by company, but many give you a discount for a limited number of months, say, June to September.) The power company will install a programmable thermostat, then, if there’s a crisis, it may turn off your air conditioner from a remote location for a few hours. Savings: from $60 to $200 a year.
Play hardball with your communications provider
You probably already know that you can save by purchasing phone, Internet and cable from a single vendor. You can also save by threatening to take all of that business to another company. I employed this strategy when Verizon came to my town—and knocked $60 a month off my Cable-vision bills for the next six months. Also, look around the house for communication redundancies. Do you need DVRs on every set? Also, how often do you use that landline? Nearly 20 percent of American homeowners have already dropped theirs.
Reevaluate your automatic debits
Ordinarily I’m a big fan of putting bills on autopilot. But sometimes when we have money zapped out of our accounts automatically, we forget how much we’re spending. So it’s time to take another look at the health club, Netflix and the credit monitoring service. You can put a fraud alert on your card for no fee simply by calling one of the three major credit bureaus and asking. (They’ll share the information.)
Finally, stay focused
One problem with cutting expenses is that people devote time to the challenge for a month or so, then stop. It’s important to consider this a work in progress. One way to keep your outlook positive is to track how much you’re saving. The $100 you knocked off your insurance bills, plus the $65 that you’ve trimmed from the heating bills, plus the $115 a month that you’re no longer paying in interest to your creditors? That’s $1,545 a year—real money.
So what do you get when you’ve slashed this and cut that? Allow me to answer that question with a story. My pal Fran Rubel Kuzui, who in her former life helped create Buffy the Vampire Slayer and now runs a yoga studio in Japan, was seated on a recent flight next to an executive from a luxury accessories label. He was wringing his hands over the fact that the $1,000 handbag is no longer the “it” item. “I don’t think there is an ‘it’ item anymore,” he lamented. “Oh, but you’re wrong,” Fran said. “It’s called peace of mind.”
Jean Chatzky is More’s finance columnist and the author of several books. Read more of her advice here .