How to cut the fat from our budget

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Cutting your expenses might be easier than you think and not require you to scrimp, save and cramp your lifestyle. The first step in identifying excess spending is to determine what you consider “fat” and decide how you want to address that. After that, it’s a simple matter of math, a little planning and keeping track of your expenses to help you save thousands of dollars each year.

Identifying wants, needs and waste is a big part of cost-cutting

Collect your bank and credit card statements from the previous year to help you create a list of your monthly and annual expenses. The website of the Better Business Bureau provides a sample household budget sheet that includes many common spending categories that will jog your memory.

Divide your expenses into necessary and discretionary categories. Necessary spending includes rent, utilities, gas and groceries. Discretionary spending includes movies, gym memberships, coffee and eating out.

Put an asterisk next to any necessary expenses you think you might be able to reduce. While you probably can’t negotiate a lower rent, you might be surprised to learn you can often cut your utilities, gasoline, home maintenance, insurance, food and health care costs without sacrificing quality or protection.

Cut your discretionary spending

Review your discretionary expenses and determine which you can eliminate or cut back. Compare the cost of a paying a once- or twice-weekly gym fee against an annual membership if you can start working out at home more often. Consider making coffee at home in the morning twice a week or more. A $10 weekly savings on java saves you more than $500 annually if you include the cost of interest from credit card purchases. Brown bag it more often, plan on watching one or two more movies at home each month instead of going to the theater and find your local thrift stores to help significantly cut your clothing, home furnishings, appliance and yard needs.

Save money around the house

Buy a programmable thermostat and reduce your annual heating and cooling costs by changing the temperature while you sleep and while you’re away at work. Use less water each year by washing clothes and dishes only when you have full loads, watering your lawn once or twice each week to a depth of about 1 inch, and placing a plastic drink container filled with water in your toilet tanks if you don’t have low-flow toilets. (REF 2, 3)

Contact your insurance company to see what you’ll save if you raise your deductible. If your company offers a flexible spending account or health savings account, look into the savings you’ll get by pre-funding your health care spending to reduce your payroll taxes. Review your credit reports and learn your scores to see if you can qualify for a new credit card that lets you transfer a balance at no interest for a year or more to eliminate interest payments. If you don’t buy generics when you grocery shop, purchase in bulk and use coupons, you’re wasting a big chunk of money each year. Start a garden and reduce your costs for expensive fresh vegetables. Keeping your car properly tuned, oil changed regularly and tires inflated properly will increase your mileage and reduce your gas spending.

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