I speak every day with people who are trying to save their home from foreclosure. As a counselor for one of the largest HUD-approved housing counseling agencies in the nation, I work with homeowners and their mortgage companies to see if we can modify their loan or find some other way to cut their payments. As a result, I find ways to cut expenses every day for homeowners, and I've used these same techniques to cut more than $6,000 from my own expenses so far this year. The good news is that most people can use this strategy and achieve similar results.
Housing is the first place to cut costs. With interest rates on mortgage loans at historic lows, I recently reduced my mortgage payments by about $4,000 annually by refinancing. After comparing rates for several weeks, I applied for and was approved for a 10-year loan at 3 percent by the Delta Community Credit Union in Atlanta. Having equity in my home and a credit score near 800 certainly helped, so if you have this leverage with your lender, now is the time to use it. But anyone can make additional payments to the mortgage balance and ultimately control the interest rate, length and overall cost of the mortgage. I plan to do just that and reduce the loan to seven years.
Any person I counsel gets a complete review of their monthly expenses, and one category I review closely is the cost of car and house insurance. Many insurance companies have been raising rates recently, and I recently saved $370 a year by combining my car and home insurance coverage with the same company. Once I determined that the cost of hazard insurance policies in my area was rising, I tried to increase the deductibles or qualify for another lower priced policy. I couldn't get a lower price using two companies, so I contacted my car insurance agency and added homeowner's insurance without reducing my coverage.
Another category I examine is the combination of technology expenses that eats up more and more of everyone's budget -- cable television, telephone and internet. I've saved about $700 annually by dropping my telephone land line and Internet and getting a reasonable data plan for my cell phone.
Finally, I've developed a variety of shopping techniques to save approximately $1,200 annually on groceries and household items. Here are the techniques that save the most:
- Check the sale or clearance racks first because you may find exactly what you need or a lower priced alternative. An item with a slightly dented box in the clearance rack can save you half or more.
- Use coupons for items you plan to buy at the store where you normally shop. A recent trip to CVS with a 30 percent off my entire purchase coupon, plus individual item coupons, turned a $50 purchase into $25 purchase. I use the same strategy with Bed Bath and Beyond because they regularly send me 20 percent off my total purchase price and $5 off for $15 purchases.