Reducing your monthly expenses helps you make the most out of every dollar you earn and frees up more cash flow in your budget. It also helps you avoid financial distress so you don't have to struggle to make ends meet. The following strategies and tips can help you reduce your monthly spending so you can save money and achieve your financial goals faster.

How to Reduce Housing Costs

• Get a roommate to share in your monthly costs.
• Move in with your family or with a friend until your financial situation improves and you can comfortably afford housing on your own without sacrificing other things in your budget.
• Sell your home and purchase something less expensive, assuming you can sell the property at a high enough price to pay off the total balance due on your mortgage.
• Rent your home out and find a less expensive place to rent or buy yourself. The rent you receive should always cover your mortgage payments, taxes, association fees and insurance, at a minimum.
• Find a less expensive place to live if you’re renting and find out when you can get out of your lease without any penalties.
• If you're locked into a lease then you can consider subleasing; just make sure to ask your landlord first, since some properties do not allow for this.

Cut your Utility Costs

• Check the insulation in your home to reduce heat transfer so you can save money on energy bills.
• Caulk windows and use weather stripping on windows and doors to prevent warm/cool air from escaping through cracks and gaps.
• Take advantage of a free energy audit from your local power company and make any low-cost changes they recommend.
• Buy energy-efficient appliances to reduce your energy consumption.
• Check to see if your utility company will subsidize some of the cost of upgrading your appliances to energy-efficient models.
• Save money by enrolling in a load management or off-rate program from your utility company.

Reduce Telecommunications Costs

• Get rid of your cell phone if you can get along without it or compare costs of getting rid of your home phone and then use your mobile device as your primary contact.
• Shop around for the best deal on cellular service.
• When you decide to switch service providers, wait until your current contract is up to avoid penalties.
• Keep a calling plan that is appropriate for your usage patterns. You should be able to ask your current service provider to analyze your usage for you.
• Buy your phones instead of leasing them.
• Take advantage of all of the free hours and features that come with your mobile plan.
• Find out if unused minutes can be rolled over.
• Check your local phone bill to see if you have optional services included that you don't really need, such as Caller ID or Call Blocking. Each option you drop could help you save hundreds of dollars annually.
• Make long-distance calls during the least expensive times of the day or week.

Cut Food and Entertainment Costs

• Make meal plans one week at a time based on the monthly amount of money you have budgeted for groceries. Take just one trip to the grocery store. The more trips you make, the more you are likely to spend.
• Buy in bulk when it's practical. Just be careful about purchasing perishable items in bulk, since they may go bad before you have a chance to use them up.
• Use coupons and always take advantage of rebates and in-store sales.
• On workdays, pack your own lunch rather than eating out.
• Skip after-work happy hours or limit the number of happy hours you attend and/or the number of drinks you buy.
• If you entertain at home, make dinner parties potluck where everyone brings something for the meal.
• Don't pay for any premium cable or satellite channels that cost extra money each month, such as HBO and Showtime.
• Borrow books, DVDs, and videotapes from the library rather than buying them, or exchange items with friends who have similar tastes.

Reduce Your Clothing Costs

• Only buy what you need. Spending money (i.e. shopping) should never count as a hobby!
• Purchase items on sale, at discount stores and at resale shops.
• Shop yard sales in your local area. If you shop in the right neighborhoods, you can find real bargains on high-quality items.
• Swap clothes with friends.
• Always make sure a "sale price" is really a bargain.

Decrease Your Transportation Expenses

• Use public transportation.
• If your car is expensive to operate and maintain (consider costs of gas, insurance, and repairs), sell it and buy a less expensive vehicle.
• Consider purchasing an extended warranty so you can keep your vehicle on the road without high repair costs.
• Look for a mechanic who is certified and always check out a mechanic's complaint record with the local Better Business Bureau.
• Improve your gas mileage as much as possible:
  • Reduce weight by cleaning out your trunk and passenger areas
  • Get regular oil changes
  • Check your tire pressure against the car manufacturer’s specifications
  • Drive with your windows down and the A/C off in city driving
  • Drive with the windows up and A/C on for highway driving
  • Slow down and avoid shifting gears at high RPMs

Lower Your Insurance Costs

• Talk to your insurance agent to discuss discounts and how to reduce your insurance costs.
• Raise your deductibles on the collision and comprehensive auto insurance or drop that coverage entirely if your car is old and it’s not worth the added cost.
• Shop around for insurance regularly to make sure you’re getting the best rates.
• Don't pay for insurance you do not need: appliance, car rental, flight, credit, life insurance on the lives of your children, etc.
• If you have a whole life or universal life policy, think about converting it to a term life policy. Term life insurance has low premiums and no cash value.
• Do an insurance checkup to see if you have enough insurance or need different coverage; insurance needs often change over the years.
• You don't need life insurance if you have no dependents! If you have a policy, cancel it.
• Check to see if you’d be eligible for auto insurance discounts if you complete a state-sponsored driver's education class.
• If you install a security system in your home, check to see if you get a discount on your homeowner's insurance.
• Purchasing your auto and home insurance from the same company to qualify for bundle discounts.

Lower the Cost of Your Prescription Drugs

• Buy generic drugs, whenever possible. Always ask your doctors if there are generic versions of drugs that they prescribe for you. Doctors often up-sell new brands even when cheaper (and more proven) generic drugs are available.
• Compare how much you pay now versus how much the same drugs cost if you bought them at a different pharmacy in your area or online.
• If you are over 55 and an AARP member (American Association of Retired Persons), you may be able to reduce the costs of your prescription drugs costs by purchasing them through the association's mail order pharmacy.
• If you are eligible for AARP but not a member yet, you should become a member. Contact AARP by calling toll-free (888)-687-2277, or by writing to AARP 601 E Street, N.W., Washington, D.C. 20049. You should also be able to get the information through the AARP's website at http://www.aarp.org/.

Reduce Your Banking and Credit Costs

• Save on fees by choosing a checking account with a minimum balance requirement that you can always meet.
• See if you qualify for free checks from your bank.
• Purchase checks through a check printing company rather than through your bank, since they're usually cheaper.
• Reduce the number of checks you write each month by taking advantage of automatic debit options, paying bills online or by using debit card.
• If you use a debit card to pay for purchases rather than using cash or checks, be sure to record the amount of each debit. Otherwise, you risk overdrawing your checking account and incurring overdraft fees. You might also have your banking privileges terminated.

Become a Smart Shopper!

Smart shoppers stretch every dollar and get the most "bang for the buck" by comparison shopping. They comparison shop for buying gasoline, groceries, insurance, electronics, clothing, a new car, and more. The following list provides good examples of comparison shopping:

• When you shop for groceries, always compare items based on the unit price. For example, if your grocery store sells four different brands of multi-grain bread, you should buy the one that gives you the most slices for the least cost. If two stores sell the same brand of milk and the cost per gallon of the milk at Store X is twenty-five cents lower than at Store Y, you buy your milk at Store X.
• If the cost for a gallon of gas at the station near where you work is 20 cents more than the station near your home, you should plan your fill-ups at the station by your home. It’s important to note that this does not mean you should drive around looking for the best price on gas, as this practice tends to waste more gas than it saves!
• If your family has decided to purchase a new camera and you know what features you want, you should compare the prices at electronics stores, a local camera store, a discount store, a warehouse store, and online. This way, you have a better chance of finding the one vendor who is selling the camera you want for $100 less than everyone else.

Tip: Typically, any items you purchase at a convenience store or a specialty store will cost more than purchasing those same items at a grocery store chain, a warehouse store, such as Costco or Sam's Club, or at a discount store, like Target or Wal-Mart.

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