Four Steps For Decreasing Your Monthly Outgoings
Posted on May 22nd, 2010 in Debt Assistance | No Comments »
photo credit: JOE MARINARO
The less money you spend each month, the more you will have left over for debt repayments so it follows that if you’re serious about wanting debt assistance, you will take the time to do a complete audit of your monthly outgoings.
Whilst it can be dull, a smart way to get started is to start a journal to record your outgoings. Every time you spend any money – send a check, buy something in a store, whatever – you jot it down in your journal.
Keep a detailed record in the hope that you can not only find obvious ways to reduce your outgoings but to also find what one author has called the “Latte Factor”.
The Latte Factor is a fantastic concept and one that I have mentioned to a lot of people over the years who often get a great big “aha” moment when they hear it. The Latte Factor looks at the small, pointless sums of money we spend each day.
If you were going to buy a wide screen TV for $500 or more you’d probably think twice before buying it. But when it comes to speding a few dollars on a posh coffee, or even 50c on a daily newspaper, such small sums typically don’t worry us. What harm can a few dollars do?
And yet, added up over the month, all these little spends can add up into one big sum of money. Working out what your Latte Factor is, so you can knock it on the head can make a massive difference to the amount of cash you have left at the end of each month.
Once you have put a budget in place, showing your monthly expenses, there are a host of ways to potentially reduce your spending – often by a surprising amount. Here are a few suggestions to give you some food for thought…
Cell Phone
Many of us spend huge amounts on out cell phones each month, often on a contract so we don’t even realize exactly what we’re paying until we’ve already made the calls.
Consider firstly whether your cell phone is a necessity or really more of a luxury for you. Do you *really* need it?
If you do, then there are three further considerations.
Firstly, can you use your phone less without compromising your lifestyle? If so, you may well be able to spend less on your phone each month.
Secondly, could you swap from a contract to a prepaid phone enabling you to control your costs more simply? When you put $20 credit on your phone, you can’t overspend because when you get to the end of that credit your phone will simply stop working until you top it up again. No long conversations now – you’ll be thinking more about when your phone runs out.
Finally, and this sounds counter intuitive, could you upgrade to a more expensive contract? Hang on, I hear you say, aren’t we meant to be saving money here? As someone who has worked in the cell phone industry in the past I can tell you that quite often consumers put themselves on a low tariff. And then often go over it and end up paying additional fees ontop of their contract each month.
If you are one of these cases then one can often save money by upgrading to a tariff that costs more but offers you far more minutes or talk time and texts, which will actually save you from paying those “topup” fees and can actually work out considerably cheaper over the long run.
To be certain, grab your last 3 or 4 cell phone bills, work out your average number of calls and texts per month and compare this with the cell phone plans offered by your provider to see if upgrading to the next package could actually save you money.
Utilities
Utilities – electricity, gas, water and so on – are competitive markets with many big companies trying to fight each other for market dominance. This competition means that you may be able to get a cheaper deal elsewhere if you fully investigate it.
Could you, for example, roll your gas and electricity up into one tariff to save money? Could you combine your phone and internet to save money? Could you move your electricity to a different supplier and save money?
There are numerous websites who will help you figure out the cheapest tariffs for you and hundreds of dollars can easily be saved by making a few phone calls to switch suppliers.
At the other end of the scale, try to use less of each of your utilities unless you are on an unlimited plan. Save water by turning your forcet off when brushing your teeth. Collect rain water to water the garden. Take showers instead of baths. Switch off electrical goods when you’re not using them rather than leaving them on standby. And so on. Many of us are naturally wasteful and a little intelligent thinking can quickly slash your utility bills by a surprising amount.
Sustenance
According to statistics, around a third of all the food we buy ends up in the bin because we cooked more than we needed, or it went out of date.
Reducing your wastage can be easy by simply keeping a careful eye on sell-by dates so that you eat everything in order.
In addition, there are a range of frugal cookbooks available to help you create nutritious, delicious meals without breaking the bank. Could you give up some of your meat each week, for example, and replace this expensive luxury with equally delicious vegetarian meals which tend to work out far cheaper?
Lastly, consider *where* you’re buying your food. High street convenience stores are often far more expensive than out of town supermarkets where bargains are aplenty. And when it comes to half price deal,s buy on get one frees, 50% free deals and so on, how much fo your weekly food intake could you derive from these sale items rather than just buying whatever you want each week?
Again, huge savings can be made when buying food and drink if you’re willing to put your mind to it.
Transport
Many of us own a car to get around – it’s an essential part of everyday life. But it’s also so convenient that it can be tempting to drive everywhere.
Are there places you go do where you could walk or cycle? Often there are, as reports show that over 50% of our car journeys are less than 2 miles in distance.
Also, consider looking into changing your insurance provider to see if you can get a better deal, and also considering public transport from time to time. Not only can trains or buses get you to your destination just as quickly as going in a car, but you have no worries about finding, and then paying for, parking when you get to your destination.
All of the above are of course only a few suggestions. Once you have seen where you’re spending your money, take the time to consider each and every expense to see where cuts can be made. I don’t want you to give up all your fun, or this process will quickly stop working for you, but if there are easy, painless ways for you to cut your spending, then why not do it, and pay off your debt faster?
