Real Clever Moms

In part one we talked about how to set your budget of monthly expenses. Now it’s time to reduce those costs.

First, go through your list of monthly bills and see how you can reduce each one. Quite often you can call credit card companies and get a reduced interest rate. You may be able to switch cell phone providers to find a lower rate.

Many people don’t take advantage of offers that come through the door for cheaper monthly cable or a lower monthly telephone service. Also, one of the easiest fixed costs that you can lower is insurance. Call all the car or home insurance companies and get them to beat each others’ offers. As long as you are realistically lowering your monthly costs then you are going in the right direction.

Next, take a look at your existing credit score. If you have good credit, then you are in a good position to shop around for a better rate on a car loan or home mortgage. If your credit isn’t great, then log onto the three credit companies: Equifax, Experian, and TransUnion. These companies will give you practical information on how to fix your credit so that you can lower monthly costs by either consolidating your debts or replacing them with loans that have a better interest rate. Again, be careful you don’t end up paying more. Ask what the fees are for consolidation, usually a percentage of the total debt.

Then have a look at all the things that can buy less expensively, such as cheaper gas or store brands of food. There are lots of ways to spend less on the things you buy on a regular basis by either finding sales, coupons or special offers or by buying it somewhere else where it’s less expensive.

After this comes the part where you have to look at all the things you can cut out of your budget altogether. Are you paying for any monthly subscriptions or memberships that you don’t really use anymore? Do you spend money on services or products that you don’t use? Do you really need certain expensive brands of clothing, cosmetics and other products?

Once you have sorted through all your expenses, you should see if your monthly costs, both essential and non-essential, are lower than your monthly income. If they are then great, pat yourself on the back for a job well done. Begin to make larger payments on your debts, and be sure to add a little extra to savings every month as well.

If your expenses are still greater than your income, and you have really tried to squeeze every last dollar out of the costs, then you may have to reconsider your larger situation. You could either start cutting things out of the budget by using only one car (you’ll save on insurance, gas, maintenance, and car payments), using just one cell phone, or eliminating your landline, or by eating out only once a month. You may also go back to the income and find ways to increase what’s coming in by looking for a better paid job or by working from home in the evenings.

Either way, try to be creative in thinking about the ways you can save money so that living on one income is a comfortable step and not a financial nightmare. With a little thought and planning ahead, you may be able to get by easier than you think.