The best way to save money and pay off your debts is to cut down your expenses. And when it comes to cutting down these expenses, the first thing we do is cut down our extra expenses. The Starbucks and the shopping sprees.
While these have a trickle-down effect on our savings, we are basically ignoring one section of our expenses- our fixed monthly expenses. These are our utility bills, our mortgages, insurance bills, etc.
7 Ways to Cut Down Fixed Monthly Expenses
7 Ways to cut down fixed monthly expenses are:
List Down Fixed Monthly Expenses
Start by listing down all your fixed monthly expenses. These include your utility bills, your loans, and all your memberships. When you have all your expenses listed and added up, you get a better idea of how much you are spending on expenses. This will give you a reality check and motivate you better to cut down the costs.
Refinance your Mortgage
One smart move you should be making is refinancing your mortgage. What refinancing does, it gives you a lower interest rate. This means lower monthly payments each month.
What happens is that sometimes interest rates go down. Or your credit score goes up. In both cases, lenders will now be offering you a loan at a lower interest rate. This means you pay less every month. Even a 1% reduction in interest rate will bring down payments every month.
Ideally, you should be looking at refinancing after the first year. Do your research. One place you can start is Crediful. They have a huge database to start with. While you compare rates, also look at closing costs and other fees that might add up to the total payment.
Meanwhile, consider refinancing the rest of your loans also. This could be your credit card loans, your auto loans, and even your student loans.
Pay Bills on Time
Many people don’t. It happens all the time, with all of us. When you don’t pay your bills on time, you end up paying fines. When it comes to credit card bills, these fines can cost a good part of your salary. Not paying bills on time will also eventually affect your credit score. This has a big impact on your financial position- your interest rate could go up for future loans.
A good idea is to set up automatic payment for all your bills. Or you could even set up reminders, so you don’t forget. Talk to your banks, and schedule all your bills at the start of the month. This way there’s little chance of delaying payment because you ran out of money at the end of the month.
Cancel Unnecessary Memberships
Have you got a gym membership that you hardly avail? Or cable subscription even though you watch everything on YouTube?
Well then, its time to reconsider those memberships. Cancel that membership. Look for cheaper options. Netflix is much cheaper than your standard TV subscription. Go running instead of hitting the membership.
If you aren’t comfortable with cutting down these expenses, monitor your use of membership for one month. If you don’t use it for one entire month, then do you really need them? You could also talk to your TV subscription provider and request a discount. The same applies to all other memberships. Get a lighter package if you don’t often use the gym or even your internet.
Cut down your use of water and electricity. That’s the best way to cut down your utility bills. Some ways you can bring down your bills are:
- Run your appliances during the night. Energy consumption is generally higher during the day. Those are peak hours, and utility providers charge higher during those peak hours. Try running the dishwasher, the dryer, and the washing machine during the night or during off-peak hours. Wake up to clean dishes and clothes.
- Air dry your clothes. Clothes dried under the sun have fewer germs than those dried in your dryer. Sun kills all the germs and it’s free.
- Unplug your appliances. If you aren’t using the TV, take the plug out of the socket. Appliances on standby are some amount of power. Turn off lights that aren’t in use. This adds up to a good amount at the end of the day or the month.
- Upgrade your appliances. Go for appliances that are energy efficient. Look for Energy Star models. The same goes for the bulbs used in your home. Ideally, you should replace your bulbs with LED ones or with compact fluorescent lights (CFLs).
- Get HVAC Maintenance. Opt for HVAC maintenance every year. This makes your air conditioning energy efficient which means better cooling. This translates to less usage of air conditioning.
- Lower Hot Water Heater Temperature. If you feel the water in your taps gets very hot, you should be lowering down your heater temperature. This will also bring down your utility cost.