Enjoy your lattes, my friends.
If you want to save money, a small indulgence every now and then is harmless and, quite possibly, even beneficial. Small spending cuts aren’t a waste, but they do just give you small savings. For big savings, consider these radical ideas for cutting household spending to invest or save.
1. Sell one car: I’ve many times been blown away by stories of families carrying 2 ginormous car-loan or lease payments of as much as $400 to $500 each. Sell a car costing you $400 per month and direct that money into your savings or investments. One-car families must make compromises, but they save money like crazy. In addition to no monthly payments, there are savings on insurance and upkeep. Moving from 2 cars to 1 is like getting the kind of pay raise that’s all too rare these days.
2. Cut your cable: Replace your cable TV package with a Netflix Canada subscription at $7.99 per month. You can get Canadian channels for free using an over-the-air HDTV antenna (I noticed one for less than $100 at a national electronics chain), and many networks make their popular shows available on their websites at no cost.
3. Cut your landline: Keep your smartphone, lose your traditional landline service. This could save you $40 to $50 per month.
4. Don’t have a line of credit: there’s a great argument for having a line of credit – it’s the cheapest way to borrow, it’s an unfailing source of money in an emergency and you don’t actually have to ever make a withdrawal. But let’s face it – if you have a line of credit, you’ll be tempted to use it. And if you use it, you’ll quite likely get used to making monthly payments. More and more, people are mentally pencilling in line-of-credit payments as a regular monthly cost, just like heat and hydro
5. Stay in your current home: too often, people get into the real estate market by buying what they regard as a starter home. The implication here is that they’ll eventually move to a bigger home to accommodate an expanded family and more possessions. There are 2 reasons why moving up is a savings killer. One, the cost of selling a home and buying another is huge in terms of real estate commissions, legal fees, land-transfer tax (if applicable), moving costs and more. Two, moving up generally means taking on more mortgage debt, which crowds out saving.