Saving Money Step-By-Step
I know it might feel impossible to put more money in your pocket. The key though is having a plan and following it through.
Time after time people prove to be their own worst enemy in this process. I’m not being cynical, just a realist. No advice in the world is going to help you if you don’t follow it.
If you will just follow the process below you can put more money ion your pocket. Think about it, every dollar that you save in expenses is like getting a bonus. Why work harder when you can simply work smarter.
It is not unrealistic that you can save over $700 a month if you follow this step-by-step plan. This is the same approach that a good credit counselor should take but they don’t. So don’t wait for someone else to save you loads of money, take the time right now and do it yourself.
Money Saving Homework
Directions: Take some time right now to follow the steps below. If you need to stop at anytime, stop. You can always come back and pick up where you left off later. Just follow the steps below to begin saving money.
Step 1: Check Your Credit Report
Your credit report and credit score are so important that you must check your credit score right now if you have not done so in the past six months. The majority of credit reports contain errors and errors cost you lots of money. A credit report error easily leads to a lower credit score and the lower your score the more you’ll pay for things like insurance, mortgages, car loans, credit cards, etc.
Take a few minutes right now to look over your consolidated credit report. I am a huge fan of consolidated credit reports. A consolidated credit report allows you to see all three major credit bureau reports in an easy to read, side-by-side format. It makes it extremely easy to compare what the different credit bureaus are reporting about you and spot errors. That makes the consolidated credit report worth four times the price of the report.
While it is now possible to get a free copy of your credit report from the bureaus it is just not easy to do. The reports will arrive at some point in the future and at different times, they will be in different formats and by the time they all arrive you may have already moved on to something else in your life. Pay for the consolidated credit report, get it online right now and let’s move forward.
Step 2: Reducing Communication Costs
There are a couple of major areas of your monthly expenses that are real easy to save on without changing your lifestyle. In a very few minutes you may be able to save more than $100 a month or more.
I hate local telephone bills. Most people pay way to much for phone service or have loads of extras they rarely use but pay through the nose for each month. Your phone company may call the plan “The Works” but I call it “The Shaft.”
I changed my phone service to a broadband service and was able to slash my telephone bills by more than 50% while getting loads of extra features. I have a separate business account with them and get a free fax line, you can too.
Cell phone service is a huge money drain. If you are not using your cell phone that often you are paying way too much every month for basic service unless you are using a pre-paid cell phone.
A pre-paid cell phone makes absolute commonsense if you make limited calls or if you have a teenager at home. If you make limited calls you may be paying as much as $50 a month for your cell phone plan. If you are using a pre-paid cell phone plan you pay $0 per month. A quick yearly savings of $600.
I also love pre-paid cell phone plans if you have a teenager. A regular cell phone is like a blank check. I’ve had clients that have had children run up cell bills of over $1,000 a month because they were not aware of how many minutes they were using. That makes a regular cell phone like an unlimited credit card.
By using a pre-paid cell phone you can establish limits on how much you are willing to pay each month. Your child can even easily purchase additional minutes if they want to to talk more. The pre-paid cell phone contains costs while giving your child a phone.
While you are at it, make sure you have the best plan for your cell phone. Here is a super easy way to see if there are better cell deals available. It practically takes a Doctorate degree to understand a cell phone bill. They don’t make it easy. I have worked with so many clients that were using the wrong plan for their usage that this is the first step I always ask people to look at.
Don’t be intimidated about looking if your current plan has an early termination charge. I’ve just seen too many cases where it was cheaper in the long run for people to pay the termination charge and switch rather than continue to pay through the nose for the wrong plan.
Step 3: Reducing Insurance Costs
A huge mistake people make is dropping insurance to save money. That is just a recipe for disaster. Don’t do it. Instead of dropping expensive insurance, just reduce the cost by shopping for a less expensive plan.
Insurance cost reduction involves an insurance review for home, car, life and medical costs. Take a few minutes right now and ask for lower rates from at least the two places listed below. You may be very surprised at how much you can save. Even if you discover that you already have the lowest cost policies, you will get confirmation you are doing the right thing. A very smart thing to do.
Step 4: Find Out How Much Your Home or Condo is Really Worth. Think About a Lower Mortgage Payment
It might be the right time to refinance or even consider moving. Saving money with a lower mortgage payment or smaller mortgage might be the one best step you can take to save hundreds of dollars each month.
If you are planning to move in the next three to five years and your home is still rising in value then an interest only loan may be a good move for you. It can dramatically lower your mortgage payment. The only negatives are that you are not paying down the mortgage. On the positive side your house will continue to appreciate normally and you get to stay where you are for a lower cost. When you move the loan will be paid off in full anyway.
Get a real value for your home, and not some guess. I’d suggest using the online Instant Home Valuations service.
If you are not planning to move in the next few years, it is still not too late to look at your refinancing options. Here are a few links you can visit to see if one of them might have a program that feels right for you.
Step 5: Increase How Much Interest People Give You
With interest rates on saving accounts so low it pays to put your money in a higher returning account. Over the years I have always been very impressed with The Orange Savings Account from ING Direct. Great rates, no fees, no minimums. In fact many of my friends have accounts with these folks and we all have had great experiences and earned a very high rate of interest. Hey, I look at it this way, if someone wants to give me more money for letting my money sit there, I’d be a fool to turn them down.
ING Direct is an internet bank. Even though they don’t have any local branches you can easily transfer money back and forth from your regular account. You can even set up an automatic monthly savings plan. Put it on automatic and watch the cash build. Many clients love this approach because they are able to set aside $50 a month and by the holidays they have $600 plus interest just sitting there for presents. It is super easy, mindless and you get a higher return than you will locally. Smart thing to do? I think so.
Step 6: Give Yourself a Credit Card Checkup
Why pay more for interest on your cards then you have to? It is simply money spewing out of your pocket that does not have to.
Step 7: Think J-O-B
If you want to put more money in your pocket each month, one way to do it is to reduce expenses, the other way is to increase income. This step is a bit more time consuming but it can pay off big time.
I remember this one client that said nobody would pay him more and there was no sense in looking for a new job. It really bugged me to see him have such a defeatist attitude so I made a couple of calls for him. Miraculously the second call I made was a winner. I got him an interview. He went and they offered him a position making $40,000 a year more. He had struggled with living paycheck-to-paycheck for years and in ten minutes his worries were over.
It never hurts to take a look at the job opportunities that are available. Looking does not equal leaving. If you look around you can see if you are getting paid a fair wage in your current position. If you’ve been with a company for a couple of year’s most new hires are going to make more than you in the same position.
If you don’t want to hassle with looking for an opening then consider posting your resume online at one of the following sites and let potential employers call you.
We’ve probably hired over 100 people over the years after finding their resume on these sites. Employers do it, I did it, and others do it.
But before you post your resume online, have a professional resume review. Most resumes an employer looks at are horrible. They contain typos, errors, nonsensical information or are poorly formatted. Take a little bit of time and have a professional resume review so you can put your best foot forward. It is a commonsense thing to do.
Step 8: Think Debt Consolidation
If you are paying high rates of interest on credit card debt then this is the time to seriously consider a lower fixed rate debt consolidation loan from LendingClub.com. Since LendingClub is a peer-to-peer lending network, where people like you and me lend to people like you and me, then the rates are lower. They’ve cut out the banks.
You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.
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