Cut Your Biggest Expenses and Pay Off Debt

By Sylvia Burleigh

Since the beginning of the biggest recession since the depression, Americans have gotten creative on how to do a lot with very little when managing their households.  Indeed, when you search  terms such as saving money, credit card debt and credit repair, a user is greeted with results that reach into the millions. And its little wonder, according to a recent consumer expenditure survey by the Bureau of Labor Statistics, the average consumer spends the majority of their paycheck on housing, transportation and food.  While cutting back on cell phone usage, cable movie channels and canceling your gym membership, can get you only so far, we look at some creative and possibly substantial ways to cut your expenses and lower your debt even further.

Your home
Interest rates have never been lower and now would be the time to refinance.  In exchanging a higher interest rate for a lower rate, you’ll have access to cash to pay other debt.  Another advantage is that you can also shorten your mortgage terms from 10, 15 or 20 years.   When you crunch the numbers, it can save you a lot of money in interest.  If you keep the same monthly payment with a lower interest rate, you’ll build up equity faster since more money will be put towards your principal.  In the current market a consistent monthly mortgage payment may help get your expenses on track so if you have an Adjustable Rate Mortgage (ARM) contact your bank to trade for a Fixed Refinance Rate Mortgage (FRM).

Transportation

With gas prices increasing as vacation time nears, every driver is looking to save money on their vehicle.  If your household can get by, use one vehicle.  By owning one vehicle, you’ll save on gas, maintenance and insurance. If this is just impossible, consider using public transportation or biking.  If you have a long commute, consider carpooling with a work colleague.

For car insurance rates, sometimes it’s just a matter of contacting your current auto insurer and getting a higher deductible.  I saved $500 raising my deductible. If you think it’s time to shop around, there are many ways to get insurance quotes for free online.  http://www.insureme.com/ or http://www.netquote.com/ Also see if a discount is available to you when you combine both your home and auto insurance.

Food

According to the US Consumer Unit Expenditures survey, the third largest expense among the average US consumer is food.  The survey found that on average a household spends 12.4% of their income on food; 7% at home and 5.4% on the road or dining out.

The Internet is a good indicator of how consumers save their money.  For instance, google the word coupons on any given day and the results are an abundance of websites from Groupon to couponmom.com to Coupon Cabin.

In fact, consumers have gotten so creative, they’ve taken to growing their own gardens, making an effort to freeze and can what they grow.  Also leftovers are making a comeback for lunch.  If you spend an average of $5 to $10 a day on lunch that’s a weekly savings of $25 to $50 a week.  While it seems like common sense, entertaining at home is suddenly vogue.  Potlucks have seen a comeback along with backyard barbeques and picnics.  Websites dedicated to making certain food items from scratch, like bread, have increasingly populated the (steamykitchem.com) Internet as have online communities and blogs such as www.breadtopia.com , allrecipes.com www.365ofcrockpot.com

If you’re looking to cut your expenses even further, ALWAYS consider your three largest expenses: housing, transportation and food.

Sources: http://www.mortgageloan.com/refinancing-frequently-asked-questions-2364

http://portal.hud.gov/hudportal/HUD?src=/topics/owning

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