Seven Ways to Cut the Fat from Your Budget

[ftmdaily]

by Jennifer Robinson | FTMDaily.com Staff Writer

HOUSTON, May 26

As you are on your path to Financial Freedom, I want to offer you some tips on how to stop wasting your hard-earned money. Why keep giving your money away to the corporations who are so desperate to reach into your wallet, when you could be saving this money for yourself?

Maybe you are on Level One (click here to learn more about our Five Levels of Financial Freedom), desperately trying to start your systematic monthly savings. Or maybe you are saving money each month, and now you want to increase the amount that you put back.

Regardless of your situation, the following tips and ideas can help you and your family “cut the fat” from your monthly budget. Try to implement at least two ideas this month!

1. Cut back or eliminate your cable/satellite package.
Cutting back on your cable or satellite package can really save you some cash every month. Typically, lowering your plan can save you $5 – $10 each month. This adds up to an annual savings of $60 – $120. Eliminating the cable altogether can save you even more!

And, if you think about it, how many times does the following scenario happen? You have 200 channels, 150 high-definition channels, and 75 music channels, and you sit back in your recliner and say to yourself, “There is absolutely nothing on TV!”

So why pay for something that so often disappoints? Instead, try some of these free or low-cost substitutes.

- Netflix.com ($5 – $20) – For only $10 per month, Jerry and I get unlimited streaming movies, TV shows, and documentaries on Netflix. We have never been disappointed with the selection, and we have the freedom to watch whenever we want without commercials. The key here is to be able to connect your PC to the TV (most PCs have this capability) or to stream through your gaming console.

- Hulu.com (Free – $8) – Still want to see your favorite shows on TV? Hulu.com is a great alternative. For no cost at all, you can view many popular TV shows the day after they air with limited commercials on Hulu.com. Many of these shows are available for at least a week on the website. For only $8 a month, you can have access to all of Hulu’s archived shows, and the site now offers a wide selection of movies, as well as access through gaming consoles, smartphones, and tablets.

- Blockbuster OnDemand (No monthly fee; rental fee varies) – Instantly watch movies on your PC, gaming console, smartphone, Blu-ray player, or DVR.

2. Pack your lunch.
If you are eating out every day of the work week, you have a huge opportunity to see some savings stack up in your budget. Let’s say that you spend $6 on lunch five days a week (this is assuming you are eating fast food, but use $10 if you tend to eat at nicer restaurants).
Now, I have been packing my lunch for some time now, and I have an average cost of $1.80 per meal. That is a $4.20 savings each day versus fast food, adding up to a whopping $1,050 savings for the year!

3. Give up the soda.
I know, I know, this is easier said than done. However, if you are determined to make a change, it is not impossible. Jerry and I gave up soda about 8 months ago. Not only have we saved quite a bit of money, but we are healthier and actually have more energy than ever!

The average 12-pack of soda costs around $4, making each can about 33 cents. On the other hand, bottled water is only about 9 cents per bottle (I purchase in bulk at Costco). Furthermore, on the occasions that you eat out, soda costs between $2 and $3 versus water, which is absolutely free.

Assuming you replace three cans of soda per day with three bottles of water, you would save $22 during the month and $263 for the year. (Multiply this by the number of people in your home to get a total savings for your family!)

4. Switch to CFL or LED light bulbs.
This option is something that I have recently put into practice. I was hesitant, because I did not want to make the initial investment in the bulbs. However, when I finally decided to make the change, I discovered that many retailers have sales and specials on CFLs and LEDs frequently. Search your local sales ads, or search online to find deals in your area.

After I switched to the efficient light bulbs, I calculated that previously I had been using almost 1700 more watts in my home with the old bulbs (assuming all the lights were on at the same time). At this time last year, my electric bill was $30 higher. I’m hoping to save this amount each month throughout the year. (I will post updates on this one as I experience more savings.)

5. Try the local beauty college.
Haircuts at salons start between $25 and $45 and only go up from there, depending on the extras you usually get (highlights, waxing, manicures, pedicures, etc). Beauty colleges charge $10-$20 for a haircut and usually $20-$40 for hair color. Most colleges offer all types of hair, nail, and spa services. Some even offer special day discounts or monthly discounts, as well as senior or student discounts.

This may seem like a scary idea (especially to some of the women out there). Here are a few tips to ease the thought of a “newbie” cutting your hair.

- Ask for the student who has been there the longest. You may have to wait an extra day or two for an appointment, but it may be worth the wait.

- Be very specific in describing your haircut, and bring pictures. The more vague you are, the more room for interpretation by the student.

If you cannot bear to get your haircut by a student, then opt to get only your manicures and pedicures done at the beauty college. This option still saves money!

6. Monitor your spending.
By monitoring your spending, you will be less likely to incur those annoying overdraft fees that your bank charges. At my bank, the overdraft fee is $35. If you have to pay an average of four overdraft fees per year, you could save $140 on an annual basis by simply monitoring your spending.

I accomplish this by devoting only one minute per day (or less!) to simply logging in to my online bank account and checking my balance and processing transactions. If there is any issue, I take care of it right away. If you notice your balance is getting low, you can transfer funds from a savings account or another checking account and it will post that day, avoiding any overdraft fees.

***Be sure to read your bank’s policy on overdraft fees and timing of funds transfers. Each bank has a slightly different policy.***

7. Implement the “Cash Only” System
When I was in college (and paying for it on my own), there was one particular semester that I needed to save a big amount to pay for school. I came up with the “Cash Only” system at that time, and I cannot tell you how revolutionary it was to me! I still use it to this day.

The “Cash Only” system works like this.

1. Start with a category of spending in your monthly budget (i.e. groceries, entertainment, transportation, etc).

2. Determine a reasonable budget that would work for you and your family.

3. Then, take that specific amount of money out of your bank account in cash and vow to never use the debit/credit card for purchasing items in that particular category.

For example, you may budget $500 per month for groceries for your family. Therefore, you would start with $500 cash, and divide it among you and your spouse (whoever makes the majority of the grocery trips would keep more of the cash). This way you are never caught at the store without the cash, and you do not have to pull out the debit card.

Once the $500 cash is gone, then you do not spend any more money on that category for the month. This will teach you what is important when you go to the grocery store, and the system can potentially save you the biggest amount of money out of all the different ways I have listed in this article.

I hope these ideas will jump start your monthly budget and help you and your family to start saving more money.

Link: http://ftmdaily.com/personal-finance...onthly-budget/

[jdj1984]

I just read this article this morning over at ftmdaily.com. Great tips!

Definitely check out their weekly podcast here.