The easiest way to save money is to reduce your fixed costs, find cheaper alternatives to things you’re already paying for, or to stop paying for services you don’t really use. With this in mind, here are five tips to help you save $100 this month.
1. Refinance Your Mortgage
As reported here by the L.A. Times, 30-year mortgage interest rates are at near-record lows. Homeowners with decent credit should be able to realize significant savings both in their monthly and overall interest payments by seeking a lower interest rate. For example, reducing the rate on a $100,000 20-year loan from 6% to 4% will save about $110/mo. That’s over $26,000 during the life of the loan.
The first step to getting a lower rate is to simply call your bank and ask. Many banks are willing to offer customers streamlined, no-fee refinancing. If that doesn’t work, consider shopping around for a better rate, but read the fine print: fees associated with refinancing can sometimes exceed 1 to 2% of the total value of the loan, eliminating the savings associated with a lower rate.
2. Buy Generics
Despite what multi-million dollar advertising campaigns may suggest, there’s usually no significant difference between name-brand and generic food products. According to a study conducted by Consumer Reports, generic brands usually cost between 27 and 35% less than name brands. The USDA estimates here that a two-person household on a moderate grocery plan spends just over $600 per month. If just over half of that grocery bill has a generic equivalent, this should work out to about $100 in savings per month.
The same advice goes for over-the-counter medicines. If you’re concerned about the efficacy of generics, don’t be: the FDA requires that generic medicines contain the same active ingredients as their name-brand equivalents.
3. Scrutinize Your Services
Businesses love selling subscription-based services: once a customer signs up for a plan, inertia will usually keep them paying for that plan, month after month, whether or not they use everything in that plan.
Overcome consumer inertia by taking a hard look at whether or not you actually use all the services you pay for.
Services to scrutinize include:
- Your minutes and data usage on your monthly mobile phone plan. Compare your usage records with the limits on your plan. If you’ve been way under your limits for the past several months, switch to a cheaper plan.
- Your gym membership. Workouts are great, but if you’re only going a few times a month, you may be able to save by paying for each visit a la carte.
- Your cable television bill…especially if you have Netflix and high-speed internet.
4. Re-evaluate Your Car Insurance
Just as inertia can keep you paying for services you don’t use, inertia can keep you paying more than you should for car insurance. There are several ways to reduce how much you pay in car insurance.
- Examine the components of your current policy; you may find some components unnecessary. For example, if you have access to another vehicle or public transportation, there’s no reason to include a rental car on your plan.
- Consider reducing comprehensive and collision coverage if you drive an older vehicle that’s fully paid for. Be sure you have enough cash on hand to pay for a replacement vehicle if necessary.
- Call your insurance agent and ask about discounts, or altering your current coverage. Most would rather see you pay a little less than to lose you as a customer.
- Comparison shop. Car insurance is a competitive business, and prices vary wildly among companies. A little time on the phone could save you hundreds of dollars a year.
- Increase your deductible…if you can afford it. According to the Insurance Information Institute, increasing your comp and collision deductible from $200 to $500 can lower your monthly premium costs by 15 to 30%.
5. Brown Bag It
Eating lunch at restaurants might be convenient, but it also takes a serious toll on your wallet. According to a survey from the Winnipeg Free Press, eating out just 3 times a week could cost as much as $2,000 CAD per year. An analysis from Time found that workers who packed their own lunch and saved the difference (at a paltry 2% interest rate) would be over $34,500 richer after ten years.
In general, brown bagging should cut your lunch expenses by at least 50%, but you’ll probably save more. If you’d like some tips on getting started, be sure to check out our article on batch cooking.
What’s your best tip for saving $100 a month? Please share with our readers in the comments.