One of the first things you hear about when looking for ways to save is the so-called “latte tax,” or what it adds up to when you buy coffee out all the time. Sure, java expenses can add up, but you would have to drink a lot of coffee for it to make a meaningful difference at the end of the month. Too many people fall into the trap of making a few of these small spending cuts and wonder why they still cannot get by. To make a real impact, one must face tough decisions and make life changes that will really bring some savings and change the situation for the better.
The first place to look at is housing. If you are a home owner, have you had your mortgage for a while? If so, it might be a good idea to refinance, which can lower your monthly payment by hundreds of dollars. At the time of this writing, interest rates are very low, making it especially attractive to refinance. Another option is to seriously consider downsizing into a smaller home, which can also lower your monthly payments and leave you with some cash from the sale. For renters, think about going back into the searching phase and finding a better deal or subletting a room in your apartment.
Besides housing, there are many other large expenses that can be reduced. Insurance ranging from auto to homeowner’s can often be lowered in the case of those with a good record. Have you considered car pooling, and selling or paying off your car?
When it comes to food, it is not so much about cutting coffee as changing your overall approach to eating out. You should rarely do it. By preparing your own food for most meals over a long period, the savings are substantial. Cook in big batches so it lasts for a while and bring lunch in to work. This is not to say you cannot socialize and go out with friends, but you do not have to order large items every time.
When you are looking at places to cut spending, it always pays to think big. Generally, try to find things that will save three digits a month. If a penny saved is a penny earned, this is one way to give yourself a heck of a raise!