Monthly Household Budget – Expenses to Cut Back

As part of my personal money management routine, I am currently looking for expenses to cut from our monthly household budget. I believe there are always areas for improvement in our household spending that can be reduced with a little creativity. Even if it is a very small amount of savings – overtime those small amounts really add up. The past few months my wife and I had been focusing on reducing our variable costs such as groceries and household items, along with any gifts and entertainment expenses. One example of these cutbacks was on our holiday spending. We were able to cutout several hundred dollars in spending from our monthly household budget compared to the previous year. As a result of this, we have increased our cash position and can leverage this savings by rolling this money into a certificate of deposit that will earn us some interest.

You may ask – what is left to cut? While we did an excellent job in controlling our variable spending over the last several months, we didn’t really address our fixed costs. Since we have a house, the majority of our fixed costs are wrapped up in expenses related to our home. Here are some fixed expenses we have already been able to cut or are currently planning on cutting. Maybe there are a few ideas here that readers of PFI can use to save some money!

1. Car Insurance – No, we didn’t save $100 on our car insurance. But a few weeks ago my wife and I met with our insurance representative to discuss our current plan. We carry our car, home, and personal article insurance through the same provider. We requested that our representative walk us through all of of our plans and look for cost cutting that would have little to no impact on our insurance coverage. Low and behold, he actually found a slight clerical error. My wife (who is a stay at home mom) was actually listed as driving our family vehicle to work. As this is not the case, the error was fixed and we saw savings of $2.50 in our monthly household budget. OK – that is nothing great but something we can build on. Think of it this way – that savings translates into a $30 annual savings which would pay for our home internet service for one month!
2. Mortgage – We currently have a 30-year fixed loan on our home at 5.625%. If mortgage rates drop below 5% (some experts are predicting 4.5%), then we will work to refinance with our lender. Keep in mind that you need to factor in the costs involved with refinancing to ensure it is a true savings. If we are able to refinance our mortgage to a rate under 5% – that could be a huge costs savings on our monthly household budget.
3. Cell Phone – Our two year plan from our cell phone provider expires in a few months. I plan on calling them and asking what they can do to help us reduce our costs for our current plan. We already have a base plan but I plan to use the recession as my backup. Companies are struggling to keep customers so I believe our provider will work with us. If not, we can always look to a competitor. I actually wish I didn’t have a cell phone at times – but that is a different story.
4. Cable – We actually have satellite service and are under a two year contract with 14 months remaining. There is a fee to break this contract – but there are some reports of local cable competitors offering to pay this fee if you switch over to them. I will definitely be investigating this option. I have also heard that the satellite companies are throwing in some perks or reduced costs to keep existing customers. Either way – I think the recession may actually help us out with this expense.
5. Local Phone – I hate having a local phone more than having a cell phone. I would prefer only one to be honest. The only reason we even have local phone service is because we have DSL for internet service (which requires a phone line) and our satellite provider requires a phone line be hooked up to our box. There is not much savings here as we have the bare bones plan (no long distance, call waiting, etc.). The only costs savings would be to completely cut the service. With options like Skype – people may now have a very cheap alternative to a phone.
6. Internet – We have basic DSL service for our internet service. If I can figure out a way to switch our satellite service to a cable provider and get cable internet service, then we could cancel our DSL and local phone service. There are several things that would need to happen here but there may be some costs savings available to us to reduce our monthly household budget.
7. Natural Gas & Electric – There are not a lot of direct ways to cut these costs with our providers. Instead, we have started changing out our light bulbs with CFL bulbs and attempted to reduce the amount of electricity we use. We have also worked to control our heating costs through a list of energy saving tips. One long term goal of mine is to rely less on traditional electric and natural gas for our utilities and look to solar and geothermal options for our home. In the perfect world – I would have a self-sufficient home that does not rely on non-renewable natural resources. While that goal would be expensive and hard to reach – I think that offsetting some of our consumption of natural resources with renewable sources is an attainable goal. Purchasing solar powered products, for example, would be a way we could start down this path.
8. Water – Again, not a lot of options here other than water conservation. I think we do a very good job at it right now so we probably won’t focus too much on this area this year.
9. Car Payment – We have fully paid off one of our vehicles and recently purchased the vehicle we had been leasing. The vehicle we just purchased was financed at 8% because of the timing of the purchase and some difficult logistics. Anyways, our credit union can give us 5.75% for the same terms so we are in the process of refinancing our auto loan. This reduction will be a nice savings in our monthly household budget.

All of the cost savings that I am looking for from our monthly household budget would be invested into passive income producing assets. Now is a great time to purchase the stock of some incredible dividend producing companies that have been beaten down by the recession. We could also take a safer route and invest the money into a certificate of deposit that would earn us interest. Either way – the important lesson here is that instead of using these savings to increase our variable cost spending – we are going to make that money work for us.

What fixed costs have you been able to cut back on? Are you working to reduce your monthly household budget?

Tagged as: Monthly Household Budget