Unprecedented is the term most commonly used right now with respect to our current situation. I woke up today to see my small Chicago suburb highlighted on the national news for our shelter in place order and it got me thinking, What can I do to constructively use some of the time provided me by this event?
As a financial and divorce professional, my thoughts immediately went to finances and budget, especially with the specter of recession and tough financial times ahead. For some, the difficulty will be compounded by a tough economic environment and the lifestyle changes that come with divorce. Planning and analysis can help reduce the impact of this and these five money saving tips can help unclutter your finances and give you more disposable income and stability.
1. Know Where Your Money Is Going
By reviewing your budget, you should always know where you are spending your money. With our fast paced lives, however, we sometimes lose track of the small things. In aggregate, these small things can become much bigger expenditures. I recommend everyone look at some of their bank statements from the few months previous to the coronavirus outbreak. Where were you spending money outside of the home — coffee from expensive shops or eating out? Now that you cannot get it, do you really miss that super mocha double skim cappuccino? Have you found ways to cost effectively replace them due to necessity? Can you continue these behaviors and habits into the post COVID-19 world? If so, you may find that you have much more in available income than you previously thought.
2. Entertainment Subscriptions Add Up
I am as guilty as anyone else of falling into this as anyone. With Netflix, Amazon, Hulu, Spotify, Audible, etc., it is really easy to fall into the thought process that one more $7.99 a month doesn’t matter. They add up though. Now is the time to decide which ones you really use. Many times, you can cancel and pick up a different one when you have a different preference. You can even create a calendar for what you want to binge when and selectively sign up or cancel to meet those preferences. Also, if you use traditional cable providers, check to see if you are in the best subscription for your needs. Call and find out if there are any promotions or better packages to meet your preferences and budget.
3. Review All Your Utilities and Other Bills
Utilities are heat, gas, electricity and phone (cell and landline). You should take a look at all of these for accuracy and determine if you’re paying what you should be. You should determine your high utilities are based on billing or usage. If billing, get it fixed! If usage, determine whether it is due to your behavior or based on something like a leaky toilet that is costing you extra water costs.
Do you really need a landline? Have you used it at all in the last month? I actually found out for my own situation that I could save over $20 per month if I dropped the landline. In favor of an additional cell phone line and handset, I analyzed how to make sure my youngest could stay connected when he needed to. Speaking of cell phones, review your bill and determine if there are any surprise charges. Give a call to your provider to see if you are optimized for your usage.
4. Can You Decline Your Housing Expenses?
For this, I am talking more about housing expenses like taxes and mortgage. Have you appealed your tax bill to the full extent that you can? Many municipalities and counties have multiple dates and methods for appeal and each one can save you money. During this time, you can research important deadlines as well as the comparable properties that will help your case. If you have mortgage insurance and are not sure as to when you can drop it, give a call to you mortgage loan servicer to get the specific details as to the timeline and pre-requisites to get rid of the mortgage insurance.
5. Look at Your Credit Report and Credit Habits
This is also a great time to look at you overall credit situation. Request a free copy of your credit report and look it over in conjunction with looking at you credit card statements. This is just more than just whether you pay on time, it is about utilization. Do you have too much credit? Are you just buying to much stuff? Are the cards that you have the best for you in terms of interest costs as well as rewards. You can find a good bit of income by spending less, paying less interest and using the right rewards to out cash in your pocket.
Out of all the money saving tips, your finances should always be front and center. Not that you should obsess on them, but managing them provides security and opportunity. I go over these money saving tips commonly when talking to prospective buyers, especially first-time buyers, or divorcing clients as a way to help them in times of change or uncertainty. Coronavirus has put us all in a time of great uncertainty. Like those who prepared for disasters are weathering the storm better than those who haven’t, it will be those who prepare financially who will best weather the fiscal ripples in 2020 and beyond.