How I Saved $700 A Month
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There are so many articles written on the web on how to reduce your monthly expenses, especially in today’s economy. With today’s unemployment rate at 9.5% (as of June 2009), it’s not a surprise that everyone is looking for ways to cut expenses.
As for my family, although my husband and I are both employed, our income will be significantly reduced. We’re expecting our second child one month from today (Aug 30, 2009). That means I’ll be on short term disability for a few months. My husband will be taking advantage of the Paid Family Leave program offered by the state (California is among one of the three states that offer protected leave from work to take care of your spouse, child or parent AND get paid approximately 55% of your income). Needless to say, our household income will be reduced even more.
In anticipation of our “pay cut”, we have taken a proactive approach in looking at areas where we can save money. Here’s what we did to get an extra $700:
(1) Reduce APR’s On Our Credit Cards
We called my husband’s CitiCard and asked for a rate reduction. If you have good credit with them, they will drop your interest rate by a few percentage points at the minimum. His CitiCard has a balance of $17,000 with an interest rate of 29.99%. Imagine paying nearly 30% on a $17,000 loan. I don’t know when we’d be able to pay that off. We were able to negotiate for an interest rate of 4.99% for 6 months. Although this is only a temporary reduction, we can always call back after 6 months to negotiate for another rate reduction. The monthly minimum payments went from $690 to $290.
Total Monthly Savings: $400.
(2) Loan Modification On Our Home
Not everyone will be qualified for a home modification and the process is time consuming. The approval process may take up to 90 days, but it could be well worth it in the end. After nearly 4 months of waiting for an answer, our application for a loan modification was approved. We are now paying $200 less per month on our mortgage.
Total Monthly Savings: $600
(3) Cable, Phone and Internet: Need vs. Want
We had the Verizon Bundle for $99 (or $120 after taxes and fees). After looking at our daily habits and our schedules, we realized that we really don’t watch TV nor do we use our landline. The Verizon Bundle is a great deal, but only if you use all three services. We decided to cancel the cable and the phone, keep the high speed internet. We signed up for Netflix ($10 per month) and used our cell phones instead. Our bill went from $120 to $70 per month.
Total Monthly Savings: $650
(4) Consolidate Cell Phone Bills
I’m not too familiar with other phone carriers offer out there, but I do know that AT&T’s family plan works great for us. You add another line, up to 5 lines total, to your plan for $9.99 per month. We transferred my brother’s line to our plan. Our cell phone bill was $120 for 4 lines (we are paying for my parent’s lines as well). His cell phone bill was $75. Together, our bills totaled $195 per month. When we added his line to our plan, we now pay a total of $140 per month. I pay him $80 per month and save $40; he saves $15. It’s a win/win situation.
Total Monthly Savings: $690
We could use the $700 to purchase milk and diapers (lots of milk and diapers) for the baby. But instead, we thought we’d work within our existing budget and use the extra cash to pay down the principal balance of my Bank of America credit card (it has the highest APR right now). That in turn will save us more money in the long run.
I think every household can find areas of improvement when it comes to finances. You just have to look hard enough at where your money is going. It’s important to note that the money you “save” is not used to purchase things that you don’t really need. Now, c’mon ladies. Do you really need to buy those cute strappy summer sandals that are on sale at Macy’s?
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Your web site is top-notch I will have to read it all, thank you for the diversion from my classwork!