Your
budget is like an old house in the winter. If you don’t keep on top of things
and focus on being efficient, money starts leaking out every window and under
every door.
Plugging
the leaks in your financial life means taking a hard look at all your expenses
and all your spending habits. Almost everything you spend money on can be a
target for spending less. But some of the easiest ways to improve your
household bottom line is finding the small amounts of wasted money in everyday
expenditures. They can quickly add up to a big hit to your budget. The trick is
to turn that around and add up the savings instead.
One
example that almost everyone encounters is the price of gas. Your daily or
weekly routine of stopping at the same station to fuel up may be costing you
extra. Online resources such as Gasbuddy.com can help you locate the cheapest
fuel on your route to work. Some offer promotions to earn prepaid gas cards if
you’re willing to spot and report low gas prices in your area.
Bringing
a bag lunch every day instead of eating out or getting takeout at work is a
common piece of advice that can mean big savings. It’s also not always
convenient or realistic for many people with a busy household in the morning.
But you can still shave money from your daily lunches by tracking what you
spend. If you find yourself spending $12 a day on lunch, set a maximum average
budget of $10 and try to bring lunch once a week. Or skip the soda, juice drink,
or bottled water a few days each week and use the water cooler or tap. That
daily $2 savings is about $500 a year.
You
could be leaving money on the table if you belong to a health club or gym and your
employer or health plan offers reimbursement benefits. Insurers such as Blue
Cross & Tufts typically offer an annual reimbursement of about $150 for
qualified memberships. More and more employers, meanwhile, are enrolling in
healthy living incentive plans through their insurers. Employees can qualify
for hundreds in additional reimbursements by establishing a healthy living plan
with their physician.
When
it comes to auto insurance, make sure to review your coverage and deductible
limits each year. If you have an older vehicle, a good driving history and no
auto loan, you should consider saving money on premiums by increasing your
deductible or even eliminating collision coverage.
Some
of the biggest sources of money leakage are your monthly debt payments.
Interest charges are great for the bank, but money down the drain for you.
Consolidate debt where you can and establish a debt pay down plan that attacks
either the smallest balances first, or the accounts with the highest interest.
As you pay off one account, roll that payment amount into paying off the next
debt on your list.
Think
before banking. It’s the best way to avoid ATM and other fees. Be aware of your
own bank’s policy on charging fees for out of network ATMs. Understand that a
convenience ATM not affiliated with your bank is guaranteed to mean a fee of
several dollars.
Overdraft
fees are the open floodgates of money leakage. The average overdraft fee
nationwide was just under $30 in 2012. Depending on how your bank orders the
processing of transactions, one overdraft of just a couple of dollars can
result in two, three, or more fees. Nothing is more demoralizing then incurring
$100 in fees because a $5 debit transaction caused an overdraft, Understanding
your bank’s policy is important. Keeping a close watch on your balance and close
track of your transactions is critical.
Even
your paycheck may be costing you money. Many Americans typically have employers
withhold more than necessary for state and federal taxes. The big refund at tax
filing time feels good and can be a useful windfall for saving or paying off
debt. But the reality is by withholding too much, you are lending Uncle Sam
money every pay period at zero interest. Even low-return government bonds and
Treasury securities pay better than that!
So
while you tighten up the seal on your household windows and doors this winter,
make sure to plug the leaks that are draining money from your household budget.
Steve Trumble is President and CEO of American Consumer
Credit Counseling and a member of the AICCCA Board of Trustees
