Part 11 in a series on how to be successfully self-employed
If you get into the habit of tracking your expenses you’ll find areas where you can cut expenses. You may find, unfortunately, that you have too much house, too many recreation vehicles and other lifestyle things that will subvert your goals to cut expenses. Before you attack any big lifestyle changes, you may find that small savings can make a big difference.
Small steps
Pack a little snack for yourself and swear off the midday cappucino with biscotti that you’ve been depending on to get you through the day.
Think about your grocery shopping habits. For starters, never leave home for the grocery store without a list of what you need to buy. And never go grocery shopping when you’re feeling hungry! Check your local newspaper for best buys, and shop at the "no frills" stores. If you’re a coupon clipper, use them for products you would normally buy; don’t buy something just because you have a coupon for it.
Buy fewer snacks and soft drinks – or eliminate them altogether. Prepare more meals from scratch instead of buying processed, precooked or heat-and-serve meals. Learn to eat rice and beans instead of meat and potatoes every day.
Change your “eating out” habits. Instead of eating out once a week, cut it down to once a month or once every couple of weeks, and make the meal out a celebration — a reward for having lived within your budget for the month.
Don’t go shopping at a big advertised sale if you don’t have the cash in hand to buy a needed item. A savings of $50 on an item that puts you $50 in debt is no savings at all. Before you buy anything, ask yourself if you really have to have it.
You will find hundreds of ways to cut expenses. Little inconsequential savings like this will mount up. Here are a few more. You will come up with many more ways for yourself.
- Trade things you don’t want with friends, neighbors, relatives.
- Restrict family between-meal snacks to inexpensive and healthful in-season fruit and vegetables, home-popped corn, raisins, etc. Take your lunch to work.
- Save and reuse plastic sandwich bags and paper lunch bags.
- Use washable cloth dish towels instead of paper towels.
- Attend movies early when prices are generally lower.
- Don’t buy expensive gifts. Give exotic home grown plants or bake a cake.
- Use plastic bread wrappers and produce bags for freezer use.
- Organize a baby-sitting club with friends & neighbors. Take turns.
- “Do it yourself” rather than hire someone to do home repairs, painting, garden work, cutting the lawn, etc.
- Swap services with friends and neighbors who can do things you can’t.
- Avoid spending on "throwaway" items such as disposable razors, flashlights, pens, toothbrushes, paper cups & plates, diapers, cigarette lighters, etc.
- For parties, use reusable plates, cups, glasses, utensils, and napkins instead of expensive paper and plastic disposables.
- Buy and sell at garage sales and flea markets.
- Pay insurance premiums annually. It’s less expensive in the long run than paying monthly, quarterly, or even semi-annually.
- Check all monthly bills closely, including your bank balance. Big companies can and do make mistakes.
- Examine your check at restaurants to make sure no error has been make.
- Buy things out of season for big savings, such as after Christmas.
- Substitute less costly transportation (bike, bus, walk, carpool).
- Reduce your cable/satellite services down to the very BASIC service.
Bigger steps
Once you get a few small expense-cutting measures under your belt, you may be ready to tackle some more significant cuts. See if any of these apply to you:
- Quit smoking.
- Give up your cell phone.
- Stop buying season tickets to sports events, concerts.
- Replace your health club membership with a set of weights and some good jogging shoes.
- Trade in your SUV for a more fuel-efficient vehicle.
- Look for more ways to cut your taxes – more itemized deductions, e.g.
- Sell and write off losing investments.
- See if you can get a better rate if you have term life insurance.
- Increase deductibles on auto and homeowner’s insurance and drop collision insurance if your car is paid for.
- Keep your car two years longer than you normally would.
- Appeal your home assessment to cut your real estate taxes (this can be costly up front as it will require the services of a real estate appraiser and possible an attorney).
Biggest steps
- Refinance your mortgage if it will result in significant savings.
- Move into a less-expensive home. If you’re married, you can take capital gains out of your house tax-free. So you could sell your home, buy a modest house and save the difference.
Conserve
Also think how you can conserve the resources you have. Some ideas:
- Wrap food carefully, store it promptly, use it while it’s fresh, plan leftovers.
- Save on automobile fuel by using good driving habits, consolidating trips, making sure car has anti-freeze in winter.
- Maintain your house with minor repairs, wash walls instead of painting.
- Conserve energy with insulation, weatherstripping, storm windows or plastic.
- Close doors and windows to retain heat, use fans to cool your home.
- Refinish furniture rather than replacing it.
- Keep clothing clean, and follow care instructions.
- Store clothes properly, protect leather items from water and salt.
- Before you purchase clothing, consider how much it will cost to maintain it.
Part 12, “Make Your Money Go Further,” continues the series on becoming successfully self-employed.
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