The European economies have taken a hit recently, and government-imposed austerity measures have incited the citizenry to take to the streets in protest. Demonstrations in Belgium, Greece, Italy and Spain were prompted by steep cuts in government programs designed to reduce exploding budget deficits. Spain, for example, is under orders from the EU to pare its deficit from 11% of GDP to 3% within three years by 2013. (Learn more in Has Europe Risen To The Challenge?.)
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Across the Atlantic, the open question is if and when similar austerity programs will be implemented in the U.S. to get runway spending under control. For Americans who find themselves in a difficult financial situation, the need to find new ways to make ends meet is already a reality. Here are several ideas to help you make that happen.
- Reduce Your Debt
The first step to controlling debt is to stop taking on new debt. Put the credit cards away and only use them for emergencies. If you have multiple credit card bills or personal loans, consider getting a debt consolidation loan with a lower interest rate.
Refinancing your mortgage may be an option if you have sufficient equity and plan to stay in your home for several years. Interest rates for fixed-rate loans are currently at multi-decade lows.
- Cut Home Expenses
Cancel the premium channels on your cable or satellite television and terminate your DVD subscription. Many service providers are now offering package deals that combine TV, internet and telephone service. If you have a landline phone, get a discount plan for the cell phone and eliminate internet and text features.
Cancel your telephone land-line if you can make do with only a cell phone. New cost-saving technology such as VOIP (Voice Over Internet Protocol) can also provide significant savings over a traditional landline.
If you are living alone and have extra room, consider subleasing to a roommate or moving to a smaller place. The recession has forced rents down in many areas, so you might try renegotiating your lease. (The ultimate home expense cut? Don't have a household. Check out Save Money - Travel For A Living.)
- Save Money Shopping
There's no shortage of coupons available that can save money at restaurants and supermarkets. At the drug store, ask if a generic is available instead of the prescription brand. Limit the number of shopping trips by visiting several stores during the same trip, and buy in large quantities whenever possible.
Discount retailers and membership stores also offer savings across the board. Shop smart by waiting for sales and buying out-of-season on the items you know you will need in the future.
Talk to your family about eliminating gifts except for immediate family members on important holidays and occasions.
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- Cut Energy Costs
Install an automatic thermostat that operates on a timer. Use more blankets, electric blankets and fans that consume much less energy. Turn on lights and other appliances only when needed, and turn them off when not. Switch to energy-efficient bulbs that pay off in the long run.
There are tax rebates available for home weatherization and alternative energy sources. These are cost-effective if you plan to stay in your home several years. (For more, don't miss 6 Ways To Save On Your Utility Bill.)
- Reduce Travel Expenses
Carpool to work if possible, or use public transportation if available. Bicycling is a great way to exercise and save money at the same time.
If it's time for a new car, there are many hybrids and compacts that offer significant fuel savings. If you have two cars, perhaps you can sell one and rely on other modes of transportation to supplement one car. (If you still want to travel, read Best Frequent Flyer Credit Cards For (Almost) Free Travel.)
Shop around for the best rates on automobile insurance, and make sure you get any discounts for which you are eligible. These include good driver, anti-theft device, passive restraints, anti-lock brakes, retired driver, low mileage, multi-vehicle, good student and trained defensive driver. Increase your deductible and drop collision coverage on older models that are fully depreciated.
- Save on Entertainment
If you usually eat out once a week, cutting that to once or twice a month will save hundreds of dollars a year. When you do go out, don't order alcoholic drinks that will run up the bill. Bring your lunch to work instead of buying it every day.
Stop buying books and use your library. Most libraries also offer DVDs that can be checked out at no charge. Cut your magazine subscriptions down to the few that you actually read. If you can do without a newspaper, you can get plenty of news over the internet.
Instead of vacations away from home, rediscover the area around you. Visit the national parks, museums, and other entertainment venues that are low-cost or free.
- Change Your Lifestyle
Change your personal life. Preventative maintenance on your body can improve your health and save thousands of dollars. If you're paying for a gym membership but not using it, you'll probably save more money if you start going to the gym than you would by canceling. Adopt a healthy lifestyle and shed some pounds if you are overweight. (For more tips, check out 5 Ways To Get Healthy And Save Thousands A Year.)
The Bottom Line
Always be on the lookout for ways to readjust your spending habits. The little things do add up and can make the difference between keeping your head above water and defaulting on your financial obligations.
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