When it comes to saving money, most people do the obvious such as eat out less, skip the $4 morning coffee, and watch more movies at home rather than pay $12 per person at the theater. These small steps can yield big results in the long run, that $4 cup of coffee just twice a week is a yearly expense of $416 a year. I’m sure most people are already cutting back on these extras so I want to cover some overlooked ways to reduce expenses.
Vehicle Insurance
If you’re like most people, you’ve probably had the same auto insurer for a number of years and just pay the bill on automatic pilot – this is a big mistake. For example, if you bought your car new you probably got full coverage which includes collision coverage so that if your vehicle was totaled in an accident you could replace the vehicle and comprehensive physical damage coverage which pays for damages done to your vehicle due to flooding, theft, or other natural disasters. Well, fast forward 3 years and that same coverage might not be necessary, as your cars value has decreased.
It is even a good idea to shop around for general liability insurance at least once a year. Call your current agent and discuss the fact that you are shopping around for lower rates and see what suggestions to your policy they suggest and then call other agencies to do some comparison shopping.
Health Insurance
Between health insurance, home insurance and vehicle insurance probably the most expensive is health insurance if you’re over the age of 40. Since rates and coverage varies wildly you need to shop around at least once a year. With the upcoming Senate hearing and a possible government takeover of health care, look for health insurers to become even more competitive, a savvy shopper could potentially save hundreds of dollars a year.
Pay Cash for Everything – The Las Vegas Effect
For some reason there seems to be a psychological difference between paying cash and using a credit card. Even a debt card gives the illusion that the money isn’t real. You’re one step removed from the feeling of real cash coming out of your pocket. If you think this isn’t real, consider the fact that casinos exchange your money for “fake” money or casino chips. Why do you think they do this? It’s because removing people away from the idea that they are losing real money promotes more gambling which equals more money for the casinos bottom line.
So, after you have decided how much money you can afford to spend on nonessential like eating out, movies, clothes, and entertainment put that amount of money into your wallet, divide the money into weeks or for the entire month, whatever works best for you. I promise that if you pay cash for everything, absolutely no credit or debit, you’ll find yourself rethinking a lot of your purchases.