Saturday’s Saving Tips – Reviewing your Budget to Find Savings (Guest Post)

Revisiting your home budget and looking for quick wins (guest post)

“You won’t be able to swing it,” my father – a financial professional with a whole bunch of three-letter accolades to his name – insisted. He was positive my husband and I would be unable to survive, let alone thrive, on my husband’s paycheck and my meager earnings as a freelance writer. “No way,” he said.

Never one to listen to my parents’ advice, I quit my full-time job. But before I gave my two weeks’ notice, I gave our family’s finances a complete overhaul. My goal? To cut costs wherever possible in an attempt to trim down our budget without sacrificing our fun factor.

Mortgage Refinancing

The first – and most daunting – step toward finding “free” money in our budget was refinancing our mortgage. At the time, we were paying 6.75 percent interest on our home loan – way above the going market rate. We used a loan calculator with a home loan comparison feature to narrow our choices down to two options:

  • 30-year fixed at 4.5 percent: according to the loan calculator, this option would drop our monthly payments by about $200. Over the life of the loan, we’d save nearly $35,000.
  • 15-year fixed at 3.5 percent: we’d pay about $95 more each month with this option. However, we’d pay it off in half the time, saving ourselves more than $100,000 in interest.

Because my husband and I were looking for quick money, we went with the first option.

Savings: $192/month

Reevaluating Our Insurance Options

Next, we took a hard look at our auto and home insurance policies. While I’d always been told it’s best to bundle these two types of insurance under a single policy, I quickly learned this wasn’t always the case.

We’d been using Company A for both policies since marrying five years earlier. We paid $1200 on our two vehicles and $625 annually on our home. My first call was to my current provider to see if they could cut me a deal. My agent proposed increasing my deductible from $500 to $1000 on the vehicle policies, while raising my home insurance deductible by more than double, bringing our combined payments to $1600 a year. Not satisfied, I continued searching.

Company B – another nationally-known provider – offered me $800 a year to insure both our cars… without increasing our deductible. After calling around, I ascertained this was the best rate out there and signed up.

However, Company B quoted me an arm and a leg – nearly $900 a year – to insure our home. I called Company C, a smaller, regional provider with an excellent Better Business Bureau rating, and got a quote on home insurance that was only $25 a year higher than what I was paying in a bundled policy with Company A.

Savings: $375/year ($31.25/month)

Telecom Services

The next bill on my monthly budget was the bundle for my Internet, cable, and home phone service. At first, I thought cutting out the home phone would do the trick – only telemarketers and my mother-in-law called us on that number anyway. But the customer service representative said that would only reduce the bill $5 a month.

Undeterred, I did what I urge anyone looking to save money on telecom services to do: ask to speak with the retention department. While the customer service rep has little leeway to give you the best deals, the folks over in retention can slash prices dramatically. When I threatened to cancel my service in favor of another provider, the department manager quickly offered to not only reduce my current bill of $137 a month by half, she also upgraded me to a faster Internet downloading speed as a “loyalty” bonus. Best of all, she locked in my rate for two years without forcing me to sign a contract.

 Savings: $69/month

Utility Costs

Because of where I live, I didn’t have the option of switching to a competitor for my utilities. But that didn’t mean my hands were tied. I remembered seeing something from my natural gas provider in the mail about locking in an annual rate based on my previous year’s energy consumption. I’d been exceptionally frugal turning up the thermostat the year prior, and knew this would keep my bills low.

After doing some research on the web, I learned my electric company offered lower rates to individuals who promised to employ energy-friendly habits at home. The company gave me 24 energy-efficient light bulbs, which I promised to install, and offered me 25 percent off my bill if I could cut my energy usage by 25 percent off the previous year’s usage. I did both, and saved 44 percent.

Savings: $33/month

The Bottom Line

In all, I was able to slash my monthly budget by $325.25 – that represented a savings of nearly 15 percent. Even better? I was able to prove my father wrong… and that, my friends, was priceless.

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