Surviving the Financial Crisis, Cut Spending

Sure, you can start packing your own lunch, and you can forgo shouting your friends to lunch once a week. (And those may be sensible steps to take.) But before you start clipping coupons, look for painless ways to reduce your expenses. The key is to briefly audit your credit card statements and monthly bills to identify items you don't need - and you may not even realise exist.

For example:
?Foxtel, internet, and phone services Consider a package deal from your local cable or phone provider. You can get digital phone service through a broadband connection, high-speed Internet, and digital channels for much less than you will pay separately. And while you're at it - how many of your premium cable channels do you really watch?

?Credit card rate reductions Call your credit card company and ask for a rate reduction. Simply say you want an interest rate reduction or you'll take your business elsewhere. If the first person you reach can't or won't help, ask to talk to a supervisor. If you have a $5,000 balance, even a 3% rate reduction in rate saves you $150 a year; even if it takes you an hour to get what you want, in effect you made $150 an hour for your efforts.

?Home insurance Reducing cost may be easier than you think. First consider raising your deductible; on average raising your deductible from $500 to $1,000 saves over 10% on annual premiums. Make sure the policy value covers your home, not the land - land doesn't burn in a fire. Ask about security items you can add that will provide rate discounts, and consider buying your car and home insurance from the same company - many offer multi-plan discounts.

?Auto insurance Evaluate your policy every year. If you haven't had an accident or a ticket, ask for a reduction. If you don't ask, you won't receive. And depending on the age of your car, you might be paying for roadside assistance you don't need - many new motor vehicles are sold with a manufacturer's warranty that includes roadside assistance in the event of a breakdown.

?Car loans Some finance companies now refinance car loans. If you have a high interest rate and you can qualify for a lower rate because your credit rating has improved, you may be able to reduce your monthly payments by refinancing. But be careful; if you also extend the term of your loan, you may end up paying more in total. Check out the total cost, not just the difference in interest rate.

?Gym membership Use it or lose it. If you pay your $60 a month and you use your gym three or more times a month, that's great. If you don't, cancel your membership. Start walking, jogging, or riding a bike.

?Subscriptions Do you get a daily newspaper? (Better yet, do you read it?) You can still check out most papers online, at no cost. Many magazines offer the same service.

?Avoid extended warranties Electronics and home appliances are more reliable than you think. Paying for ?peace of mind? is a more often than not a waste of money; make a smart purchasing decision up front if you want peace of mind.

?Book your travel early Buying airline tickets early can create significant savings, sometimes of over 50% or more. Begin your planning now. The planning itself can be fun, and you can save money while you're at it.

Small cuts help, but don't forget the big things, too. What about the motorcycle you ride less than 500km a year? It will decline in value every year; maybe now is the time to sell and invest the proceeds while the market is down. Or what about the trip overseas you're contemplating? Possibly now is the time to vacation closer to home - you'll not only save money, but you may find a less stressful, more relaxing option that may provide better family time, too. Take a critical look at what you have, what you can do without, and most importantly, what you could then do to profit from the funds you'll free up.