Budgeting has common benefits and challenges. You can improve cash flow to slash debt faster, start investing or build an emergency fund. A better perspective on your personal finances also helps make more informed decisions.
However, cutting expenses beyond the obvious can be difficult. Aside from drinking fewer lattes or brown bagging your lunch, other expenses may seem inevitable.
Thankfully, there are painless ways to downsize without increasing liability or foregoing all leisure.
Here are a few ideas:
Review Your Home Insurance:
As the largest purchase most consumers will make, many homeowners choose low deductibles to protect their houses. This peace of mind comes with higher insurance premiums.
Even a slight increase in your home deductible provides instant monthly savings. This money helps finally put a dent in principal balances on debt or start saving for retirement. Elliott Broidy and other risk managers have brought attention to periodic portfolio reviews for practical coverage. The same concept has benefits to our everyday lives, as well.
Many home policies have excessive coverage. This includes insuring the land against fire or flood damage. Unless you use the property for farming or to generate other income, this is unnecessary for most homeowners.
Upping the deductible by just $500 protects a home against damage and leverages better cash flow to improve your balance sheet.
Buy Your Own Car Parts for Auto Repairs:
Car repair shops charge high markups on auto parts that can be purchased at most local supply stores.
The cost of brake repairs, suspension work and transmission repairs can all be reduced by supplying the parts. Simply ask if the shop installs customer supplied parts. Midas is a national chain with locations that may install your auto parts.
In most instances, the labor for car repairs is covered by the shop, while parts are under manufacturer warranty.
Refinance Your Car Loan:
With loan rates near record lows, you may be overpaying for car financing, especially for auto loans signed over a year ago. In addition to lower monthly payments, your first due date will be 60 days away. This provides additional relief to meet monthly expenses or set aside money for that month.
Raise Your Auto Insurance Deductible:
As your car ages, major repairs become less practical. The cost of fixing transmissions, engines and auto body damage could exceed an older car’s value. Many drivers do not adjust their car insurance policies to reflect depreciated value. Adjusting your auto deductible to practical levels will slash premiums and boost cash flow.
It is also a chance to check your policy for overlaps. For example, if you have AAA membership, rental car and towing services are often covered.
Switch Cell Phone Plans:
In a fast paced world, texting and data have become favored modes of communication. Unlimited text and web browsing with reduced talk are more than sufficient for most consumers.
No contract cell phone plans are now offered by nearly all carriers and provide maximum flexibility. A simpler plan also limits lengthy conversations to in person meetings, which can strengthen relationships.
While chit chatting has its own value, a basic plan could also spare you from many time consuming and idle conversations.
Family budgets often have excess overhead that adds little value. Since personal finance is dynamic, comparing recurring costs to your current needs is a fast way to improve cash flow.