The New Year is quickly approaching and many of us are taking a close look at our financial resolutions. With the recession in the U.S. deepening, Americans are looking for ways to cut back on spending and save more of their money. One of the biggest household expenditures often overlooked by people when they are creating their spending plans (I hate the word "budget". That's like using the word "diet". Everyone means to stick to theirs, but they don't.) are their monthly household bills, which I call the "monthlies". These are the recurring bills that we pay month after month and just assume that the amount we pay is what we have to pay, but there are areas where you can cut back and save plenty of cash.
1. Make your payments automatic. Most utility, cable and phone companies have "automatic monthly billing". Take advantage of these plans rather than mailing your monthly bills. The money will come directly from your bank account on the date that the bill is due. You'll avoid late payments and potential additional fees.
2. Review your montly bills. Everybody makes mistakes, and creditors aren't any different. Most people just pay their monthly bills without really reading them, but all monthly statements should be reviewed for mistakes. I recently caught an error on a bill from my exterminator. One phone call got the extra charge deleted from my bill, and saved me $165.
3. Pay all bills on time. This is related to Number 1 on this list. Don't be late paying any of your monthly bills, not even a little. Not only will you incur unneccessary extra fees, but you could potentially damage your credit rating as well. If you have an unexpectedly high bill one month, such as a utility bill, call and work out a payment arrangement, but don't ignore the bill.
4. Use average monthly billing. Many utility companies have "average monthly billing plans". They take the total amount you would normally pay over the course of a year for electricity, or natural gas for instance, and then average the payments out over the course of a year. Instead of paying $30 a month for natural gas during the summer and then getting socked with a $200 bill during the winter months, you might wind up paying $60 per month every month of the year instead. You're still paying the same amount over the course of a year, but you're paying a manageable amount each month.
5. Make them fight for your business. Your cell phone or internet service provider isn't the only game in town. The same goes for car insurance. Shop around and see if you can find a better rate. I did this with my car insurance, and when my insurance agent thought I was going to jump ship to another insurance carrier, he slashed my monthly premium and got me on a better plan.
6. Use a game plan for groceries. There are many ways of cutting your monthly food bill...double coupons, sales circulars, store loyalty cards...but don't overlook other options for buying food such as buying dry goods from the dollar store, taking advantage of Angel Food Ministries if they are in your area or joining forces with a neighbor who has a Sam's Club membership, pooling your money and then buying items in bulk. You could cut your food bill by 25 percent or more.
7. Keep on eye on bank fees. These days, banks are doing everything they can to make extra money, too. Keep a sharp eye on your bank fees. When I first opened my checking account I signed up for a "club account" which offered overdraft protection and free checks. After awhile, I realized I never used my overdraft protection and I rarely wrote checks. The "club account" cost me $11 per month, so I switched to a "free checking" plan (which also had overdraft protection) and eliminated the $11 per month charge. I saved myself $132 per year.
8. Monitor car insurance premiums. I used to be with a car insurer that raised my rates when I moved to a new zip code and when I was up for renewal, even though I had no accidents. I switched to a different insurer and saved nearly 50 percent on my car insurance. If your insurer raises your premiums for no apparent reason, it's time to shop around.
9. Determine if your "monthlies" are even necessary. Do you really need both a cell phone and a land-line phone? Perhaps you could get rid of the land line. If you pay for premium cable service but really only watch 10 channels, switch down to the "basic" plan...most cable companies have them, but you have to ask. Do you have magazine subscriptions for magazines you don't read? Drop them and read the magazine online, usually for free. Do you subscribe to the Sunday paper just for the coupons? Most sales circulars can be found online for free.
10. You need a plan. You can't figure out if you have areas that can be cut if you don't know what you are spending. Online budgeting services such as Mint.com, Mvelopes or Wesabe are free, but you can also use an Excel spreadsheet to track your spending. Once you have everything written down, it's easier to track unnecessary expenses.
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