Get Your Spending Under Control cont'd

Plug Spending Leaks

Reduce expenses by eliminating “extras” in as many areas of your daily life possible. Start with cutting back on the number of times you eat out or buy coffee.  If you are eating out for lunch every day, try bringing your lunch a few days a week. 
 

Eating out once a week?  Try cutting down to once a month. These small cutbacks add up and can help with cash flow when finances are tight.   

Track your expenses so you can easily pinpoint where you can cut back. Use this basic tracking plan:

• Write down everything you buy for a two-week period.
• Review spending leaks — buying things you can do without, such as sodas, snacks, fast food, or video games.
• Plug them — stop buying things you can do without.

Read more about plugging spending leaks.

Reduce Recurring Monthly Expenses

Make a list of all your regularly occurring expenses. Include “hidden monthly costs” such services charged to your credit card or included on your monthly bill (example: cell phone texting and ringtone charges).

Explore whether you can reduce your housing expenses. Can you move in with a family member, even if that means moving to another area? Selling your house to reduce costs and convert equity to cash is an important decision to be made with great thought because real estate has traditionally been an important long-term asset.

Carefully consider these questions to help determine of selling your home is the right thing to do.

• Will you have enough home equity to live on in a worst-case scenario?
• Would you be able to sell your home in current market conditions?

Examine reducing transportation costs. If you have a car payment, how close are you to paying it off? Can you sell the car, eliminating hundreds of dollars every month in payments, gas, and upkeep? Can you keep the car but use it infrequently and instead carpool or take public transportation? Can you decrease the amount of insurance you have on the car? 

Create Your Emergency Fund

Take the savings from plugged spending leaks and reduced expenses to create and continue adding to your emergency fund.

Read more about building your emergency fund.