Stretch Income – Help Your Money Go Further Each Month
When you have a set salary, stretching your income becomes important. You might be feeling the pinch, and looking for ways to help your money go further each month. You are probably already using coupons to buy some of your groceries and pinching pennies on some items. However, sometimes these actions aren’t quite enough.
Finding a little breathing room in your budget can relieve some of your money-related stress, and you might even be able to set aside more for your emergency fund, or for retirement. Here are some of the things you can do to stretch your income a little more each month.
Trim the Fat Out of Your Budget
Knowledge is power, and this is especially true when it comes to your spending. There are some estimates that say that the average household wastes 10% to 15% of its income each month. Even if you are wasting only 5% of your income each month, that can still be a pretty substantial amount. Honestly evaluate your spending, and see where the major money leaks are. Then, see if it is possible to plug some of them.
Increase Your Insurance Deductibles
Check your deductible. I was surprised when I realized that I had only a $250 deductible on my auto insurance plan a few years ago. I called and increased the deductible to $1,000 and saw a savings of nearly $20 a month. That may not seem like much, but what if you raised the deductible on your homeowners insurance and your health insurance as well?
I’m running the numbers, and switching to the high deductible plan I’m considering would save me almost $300 a month. Even paying out of pocket (I would never reach the deductible unless something major happened), I would still come out ahead each year. Put a portion of your health plan savings into a HSA, and you can use that to help with co-pays and out of pocket expenses, while it grows much like an IRA does.
Refinance the Mortgage
If you have sufficient equity in your home, and a good credit score, you can probably refinance to a much lower mortgage rate – especially if you bought your home before the financial crisis. We can get a mortgage rate that is 1.5% lower than our current rate. According to the mortgage calculator at Bankrate.com, my $1,121.16 monthly payment could be $932.30, if I refinance what I have left (no cash-out). That’s a savings of $188.86 per month. No to shabby. And if I’m more worried about the long term, I can pay $40 more a month and pay off the home in 20 years, saving thousands in interest charges.
Bottom line: There are ways to save more each month. You might have to put in some effort, but in the end, it’s worth it if you get to keep more of your money.
Writer: Miranda Marquit
Miranda is a freelance writer and professional blogger writing mainly on personal finance topics. You can more of her writing at the AllBusiness Personal Finance Corner.
