by Lisa Thompson
Now that you’ve taken a magnifying glass to your finances in Your Income Decreased. Now what? – Part 1, you need to figure out where you can cut back on the services you purchase. This may mean switching to a more basic service or a different service company entirely. Examine each expense to identify whether there is a less expensive option. (Note: If you signed up for a multi-year contract or bundle your services, then you could be hit with large penalty fees for breaking the contract or changing your services. Review the fine print before making changes.)
- Phone: Drop long distance on your home phone if you don’t use it much or have long distance on your cell phone. Consider using a prepaid long-distance calling card. If you need long-distance and have high-speed internet, consider a VOIP service (phone over the Internet) like Vonage. Reduce your cell phone usage and switch from an unlimited plan to a more limited or pay-as-you-go plan.
- TV: Switch to the most basic cable or satellite TV service available and watch some of your favorite shows online at the network’s web site or video-streaming sites like Hulu.
- Internet: Choose a slower service. Use free access points such as WiFi hotspots when you need speedier Internet.
- Transportation: Combine errands and take fewer car trips. Consider walking, biking, or public transportation. Less car usage means fewer stops at the gas station and less maintenance. Service your car regularly so it runs efficiently. Check your tire pressure. Sell your second car.
- Insurance: Research your options carefully and request quotes from different companies. Many companies provide discounts if you have more than one type of insurance policy (usually auto, home, or life) through them. Consider reducing coverage (such as collision and comprehensive coverage) or raising deductibles to lower your premiums.
- Entertainment: Checkout movies or books from the public library rather than renting or buying digital copies. Some libraries also offer Xbox, Playstation, and Wii games. Listen to music on the radio, the musician’s own web site, or on free Internet radio sites like Pandora, iLike, or Last.fm. Watch sporting events on TV.
- Credit Cards: Charge only what you can afford to pay off immediately. If you already carry a balance, try not to add new charges until you pay off what you already own. Find out if the credit card company has a special payment plan for those who are unemployed.
- Student Loans: Check if you can deter payment of your student loans.
There are also a lot of small things you can do to reduce everyday expenses. Separately, the savings may seem trivial, but they add up over time.
- Shop smart: Switch to a store-brand product. Buy in bulk. Use coupons and fill out rebate forms. Shop sales and clearance. Find deals at thrift and discount stores. Consider consignment shops. Make a shopping list before heading to the store and stick to it. Buy only those products you actually use.
- Lower your energy bills: Turn off lights when you leave the room. Set the thermostat lower in the winter and higher in summer. Insulate and lower the temperature of your water heater to 120 degrees. Use the microwave instead of the stove. Unplug electronics you are not using. Wash clothes in cold water. Switch to compact fluorescent light bulbs. Regularly service your furnace and air conditioner. Get a low-cost energy audit.
- Reduce your water usage: Repair any leaky toilets and faucets. Turn off the water when you brush your teeth. Wash larger but fewer loads of laundry. Take shorter showers. Install a low-flow showerhead. Turn on the dishwater only when it’s full. Water your lawn less and only in the morning or evening to reduce evaporation. Collect rainwater to water your plants.
Also, if there are purchases you can postpone in the short- or long-term, put them on hold until you are financially back on your feet.
Even if you do all these things, it still might not trim your budget enough. Your Income Decreased. Now what? – Part 3: Eliminate expenses will look options in cutting TV, Internet, and phone services.