Earning more helps but another way to remain financially stable is to live within your means. By leading a more frugal lifestyle, you can have more money to put in your savings or investment accounts without having to earn more. Here are a few suggestions to get you started.
Downsize Your Home
Although a big house has its own aesthetic and functional appeal, maintaining one almost always translates to larger day to day expenses. A large house is usually more expensive to purchase and its’ upkeep is costly. From huge utility bills, costly cleaning and gardening to high taxes, the list just goes on and on. It can also be very time consuming to take care of a large house.
If your main reason for keeping a big house is the size of your family, consider selling the property once the kids have moved out. You can down size to a small but comfortable home in a more convenient location or consider moving to another area where real estate is cheaper. You should also consider what amenities are available in the area as you select your new residence. Remember your needs will change as you and your spouse grow older. Consider a townhouse or condo which requires minimal outside maintenance.
Consider Renting Instead of Owning
Another option is to get rid of your mortgage payments and other expenses like maintenance, taxes and insurance and just rent a house or apartment. When added up, these expenses can be quite substantial. On the other hand, renting a home has its own pros and cons. On the plus side, the landlord is responsible for all maintenance and you just pay the rent. But rents can keep going up and your landlord can chose to not renew your lease. It is essential that you make an informed decision to rent or own based on what is the best choice for you.
Reduce Your Debt
Consolidate all your loans into one. If you have a home equity line, use that to consolidate your debt as the rates are usually a lot lower than for unsecured loans. If a home equity line is not available, talk to your bank about a fixed interest loan. Consolidate your credit cards, auto loans, college loans, pay-day loans etc. Then focus on paying this one loan off. Try to pay the same amount as before. With the lower interest rate, this will mean you are paying more towards the principal. The sooner you pay off your debt, the sooner you’ll be out of the red.
After consolidating your debt consider making some life style changes. For instance, if you’re having a hard time managing your credit card spending, consider cutting up all your credit cards or keep just one for emergencies. Another option may be to set a spending limit and pay of the credit card in full each month. Once in a while you may not be able to pay it off – if that happens, don’t be too hard on yourself and try to pay it off in the next cycle.
Become a one car family
Next to your house, your car is usually the second most expensive property you own. Cars also require insurance and regular maintenance, both of which can be pretty expensive. Consider sharing a car with your spouse or if public transportation is available, try using that for your commute. If you own two cars, consider selling the second one. Alternatively, you may want to swap a gas guzzler for a hybrid or other fuel efficient one. A hybrid or other new car will mean significant upfront cost but will save you a lot in the long run.
Decrease Your Entertainment Expenses
Another helpful step towards frugal living is to cut down on the little things that add up to a sizable chunk of change. Consider eating out once a week instead of twice. Rent a movie instead of going to the theater. Fill up your coffee cup at home or work instead of at Starbucks. Pack your own lunch 3 days a week. Simple life style changes like these can add up to thousands of dollars in savings every year!
Reward yourself – Splurge Once in a While
Being frugal is a practical way to achieve financial stability but is also admittedly not always fun. Make it a point to splurge once in a while. Set up some goals and reward yourself when you achieve one. For example, if you remember to pack your lunch 10 times go to your favorite restaurant or take your spouse out for coffee on the weekend.
Being frugal can be challenging but you can choose to make it fun rather than choose to feel deprived. Think of these minor changes as life style adjustment that will keep paying you forever!
Image by Ken Teegardin on Flickr