If you want to cut expenses in 2013, there may be no better place to start than right at home.
"I will save money on monthly expenses."
"I will not eat ice cream."
"I will do yoga."
What do these sentences have in common? That's right - they're all New Year's resolutions that have little chance at being fulfilled.
Hold on - "I will save money on monthly expenses" actually has a chance, thanks to the many ways you could save on everything from your mortgage payments to your cable bill.
In fact, you might be surprised at how much you could save. So eat the ice cream, forget the yoga, but read on to see how you might be able to finally fulfill that New Year's resolution of saving money.
Cost Cutter #1: Refinance Your Mortgage
We're guessing that if you're like most homeowners, your biggest monthly expense is your mortgage payment. So wouldn't it be nice if you could reduce it by tens, or even hundreds of dollars?
But how is that possible, you ask? The answer lies in the low interest rates, which can be as low as 3.34 percent for a 30-year fixed-rate mortgage. This rate is as of December 6, 2012, according to government lender, Freddie Mac.
And even if you bought your home as recently as 2008 or 2011, refinancing to that rate could make a significant difference. And yes, we know what's in your head right now: "How much could I save?"
So let's look at an example of two homeowners. Homeowner A, who bought their home in January 2008, and Homeowner B, who bought their home in January 2011. Both have 30-year fixed-rate mortgages. 'We'll also use the historical interest rate data for January 2008 and January 2011 from the Federal Reserve, which oversees national monetary policy. Just keep in mind that everybody's situation is unique, so your savings may vary. Ready?
|Homeowner A||Homeowner B||Refinanced Mortgage|
|Interest Rate||5.76 percent||4.76 percent||3.34 percent|
|Total Interest Paid
(over life of loan)
Savings: By refinancing, Homeowner A saved $432 per month and $155,570 over the life of the mortgage. And Homeowner B didn't do so badly either, saving $246 per month and $88,656 over the life of their loan.*
Cost Cutter #2: Bundle Your Cable, Internet, and Phone
Everyone knows buying in bulk saves money. So why are you still getting your home digital services, namely cable, Internet, and home phone, from separate companies? That could be causing you to lose money every month.
In fact, bundling two or three of those digital services could save you a significant amount, says Consumer Reports senior editor, Jeff Blyskal. "Depending on the competition in your area, we found that it could save you 40 or even 60 percent," he says.
And he adds that the low rate is usually locked in for anywhere from six months to two years. Then your rate might go up.
However - and this is a big however - that doesn't mean you have to sit there and take the rate hike. In fact, Blyskal strongly suggests you do exactly the opposite. He says cable companies are being hit hard by the same economic challenges that likely led you to look for savings - so they'll do a lot to keep customers.
For instance, the results from the Annual Telecom Survey conducted by the Consumer Reports Research Center in April 2011 revealed some promising potential savings for customers. Out of the surveyed Consumer Reports readers who said they bundled services, one-third said they negotiated for a better price or package before signing up. Of that one-third, more than 90 percent were successful.
So just how big can the savings be? For more than 40 percent of hagglers, the reward was a discount of up to $50 a month - not too shabby.
The bottom line, he says, is that bundling and bargaining is in the consumer's favor.
Cost Cutter #3: Re-shop Homeowners Insurance
If you own a home, you likely have homeowners insurance to protect you against loss from natural disasters, fire, theft, and vandalism.
But if you thought all policies were the same, here's some good news: shopping around can often make a big difference in your homeowners insurance premium, says Loretta Worters, vice president of communications for the Insurance Information Institute (III).
In fact, "Prices vary from company to company, so it pays to shop around. Get at least three price quotes," notes a home insurance article published by the III. However, III warns that you don't want to simply go with the lowest price either.
"Don't shop price alone. You want a company that answers your questions and handles claims fairly and efficiently," notes III. "Ask friends and relatives for their recommendations."
On top of shopping around, another way to save is to "buy your homeowners and auto insurance from the same insurer, says Worters. "Some insurance companies will reduce your premium by five to 15 percent if you buy two or more insurance policies from them," she says.
Cost Cutter #4: Make Your Home Safer
Have you been thinking about installing an alarm system, putting on a new roof, or investing in storm shutters for your home? If that's a yes, in addition to making your home safer, these updates could also save you money on your homeowners insurance.
Just how much can you save? According to Worters, typically, you can get discounts of at least five percent for installing things such as a burglar alarm, smoke detectors, and dead-bolt locks.
"In addition, some companies may cut your premiums by as much as 15 or 20 percent if you install a sophisticated sprinkler system and a fire and burglar alarm that rings at the police, fire, or other monitoring stations," says Worters.
Finally, she says, "Adding storm shutters and shatter-proof glass, reinforcing your roof, or buying stronger roofing materials can all help make your home not only safer, but insurance more affordable."
But before you start making these additions, she advises checking with your insurance company about discounts first, since all alarm systems and other upgrades don't qualify with all companies.
Cost Cutter #5: Make Your Home Greener
No, we're not talking about donning overalls and painting your home the color of moss. We're thinking more environmentally, as in doing things such as installing low-flow toilets or a programmable thermostat for your heating and air-conditioner.
"Toilets are by far the main source of water use in the home, accounting for nearly 30 percent of residential indoor water consumption," according to the U.S. Environmental Protection Agency (EPA). They go on to say that "switching to high-efficiency toilets can save a family of four, on average, $2,000 in water bills over the lifetime of the toilets."
And besides the toilet, another thing that can add up to savings and a more comfortable home is installing an ENERGY STAR programmable thermostat, says the EPA. These thermostats allow you to program your heating and cooling system to specific settings for six or more times during the day, notes the U.S. Department of Energy's website.
How much you save can vary, but, as an example, the U.S. Department of Energy says that you can expect to save 5 to 15 percent per year by turning your thermostat back 10 to 15 degrees for eight hours a day. That might merely mean using an extra blanket at night. So maybe it's time to snuggle up and save.
*Please note that our example does not take into account any interest homeowners may have already paid. Homeowners should also consider that refinancing can come with closing costs.