Have you been laid off? Had enough with carrying credit card debt? Realized you’re behind in retirement planning? We’ve got you covered. 

When you suddenly need to come up with the money you don’t have, paying your bills may seem impossible. However, we know that there are four problem areas in everyone’s expenses that can (probably) take major cuts and free up more cash for your emergency.

These cuts may not be comfortable, but they do offer you big opportunities to save money in exchange for the inconvenience. Consider which cuts are easiest for you to make and which would be more difficult to incorporate into your lifestyle. You may even find that a major cut in just one category is all you need. Let’s get started. 

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Your Rent or Mortgage

For most Americans, the monthly check to your landlord or lender is the largest expense every month. Cutting back here easily frees up hundreds of dollars a month, so stay open-minded. There are a few options for cutting back on this big expense:

Negotiate with your landlord or lender for a lower monthly payment. Proceed with caution here. You may be able to negotiate for smaller payments now, but larger payments could loom in the future. Your landlord may ask that you pay anything you missed now by the end of the lease. If you renegotiate your mortgage, you’ll end up paying more in interest over time. 

Open your home to a new roommate or roommates. Not the most ideal situation, especially if you’re in a one-bedroom apartment. However, people do this all the time and all across America. Ask the people you trust for roommate recommendations. You never know, you may end up with a new lifelong friend in the process. 

Move-in with a trusted friend and sublet your apartment or rent your home to another person. Again, not the most fun, but the savings are undeniable. Be sure to work with your lender or landlord so they know your plan. They might even have some suggestions to help you. If you’re renting out your home, you’ll also need to adjust your homeowners insurance to accommodate renting. Always be sure that you have the proper coverage. 

Your Cell Phone Bill

It may seem like the world couldn’t function without them, but smartphones have only been around for 13 years. Switching from a smartphone to a flip phone or even a landline (retro!) can save you hundreds of dollars. According to the Bureau of Labor Statistics, most Americans pay more than $1,000 a year for their cell phone. But a basic flip phone plan at an economy cellular company costs $360 a year, or $30 a month. A landline costs about $120 a year, or $10 a month.

Forgoing a smartphone may seem impossible. But, there is a small group of people who’ve cut the ties. And there is something to be said for it if you can swing it. Beyond the expense, smartphones take up a lot of time. Games and social media are attractive distractions, while marketplace apps like Amazon make impulse buying way too easy. 

With the pressure of convenience to use “easy pay” methods of getting the newest cell phone model, people upgrade their phones faster than they would if they paid out of pocket. It may seem like a convenience, but trust us, it’s costing you money. A new iPhone costs $1245. Even if you don’t upgrade for two years, that’s an extra $625 a year added to your phone bill.

Look, there’s a lot of reasons to rethink your phone bill. And we know that this option will be impossible for people who rely on cell phones for work, like rideshare drivers. But even forgoing the newest model for last year’s model can make a big difference.

Your Insurance

Car insurance is required for every driver. Home insurance is required by any lender. Life insurance is a vital way to protect your family. But it’s easy to overpay on insurance for many reasons, including 

  1. Carrying too much or unnecessary coverage.
  2. Not comparison shopping often. 

Too Much or Unnecessary Home Insurance Coverage

Your home is your most important investment, and there’s no reason to skimp on home insurance. However, there are occasions where homeowners overpay. Areas to look out for:

  • The cost of rebuilding the home is less expensive than the home’s market value. This is more common in popular areas where home values are inflated. 
  • Personal property coverage that exceeds the replacement cost of your personal belongings. If you don’t have high ticket items in your home, you may be able to pay less for coverage. 
  • High liability coverage limits for people who don’t have guests over. If people don’t visit, you may be able to lower coverage limits and pay less. 
  • Low deductibles are more expensive. Keeping more money in your savings accounts to cover a higher deductible saves you money. 

When adjusting your coverage options, be thoughtful. You don’t want to open yourself up to too much vulnerability. You’ll also need to comply with your lender. 

Too Much or Unnecessary Car Insurance Coverage

Carrying collision and comprehensive coverage on auto insurance may not be necessary. If your car is not financed and not worth more than a few thousand dollars, the cost of added coverage doesn’t outweigh the benefits. For example, a car is worth $6,000, and the cost of additional coverage is $600 a year with a $1,000 deductible. 

The maximum payout you can get from your insurance company is $5,000 in the event your car is totaled. On the other hand, you could save that $600 a year in an emergency fund you can tap into to replace your car if necessary. 

If your car is financed, forgoing collision and comprehensive coverage is not an option. You can, however, try downsizing your vehicle to one that’s more affordable. Getting rid of a car payment saves you from making another monthly payment. Plus, you won’t be paying interest anymore. 

Other options include sharing your car with a trusted driver to split costs or choosing alternative transportation. Commuting by bicycle or through public transportation can save you hundreds.

Comparison Shopping

If you haven’t compared your insurance rates in more than six months, you might be missing a better deal and more savings. The cost of car insurance is not stagnant, and the cheapest price last season might not be the cheapest this season. Old violations fall off your driving record, claim rates change in your area, insurance companies change the ways they calculate risks. 

A best practice is to comparison shop for car insurance every six months or every time your policy renews. You can do this easily by comparison shopping with Insurify. Simply save your profile and click the tab to get a notification for price drops. 

The same goes for home insurance, too. Reviewing your policy documents regularly means you know exactly what’s covered. And comparison shopping for a better price keeps costs low. 

What if you can’t pay home or car insurance?

If you can’t pay, contact your insurance company right away to discuss your options. Your home loan lender and your home insurance company want to be able to work with you. Being upfront and honest early gives you the best chance of avoiding fees and gaps in coverage. 

Based on our research, not paying car insurance results in more expensive policies in the long run. Not to mention you can be fined and even face jail time if you drive without mandatory insurance. 

Your Internet and Home Entertainment

Living without cable TV may seem like a drag, but it can also be liberating. If you have cable, consider making a cut, even just temporarily. Options for home entertainment abound in this day and age. From streaming services to YouTube to renting movies at the library, you can find entertainment for a fraction of a cable bill. At least consider downsizing your cable package.

You can also slow down your internet speed for savings and look at price comparisons with other providers. Sometimes you can even bargain with your internet provider for a lower monthly bill. Another option, if you live in an apartment building, is to share your internet with a neighbor. 

Frequently Asked Questions About Saving Money

Where should I save my money?

That depends on what you’re saving for. Your emergency fund should be kept in a high-interest savings account, preferably unlinked from your checking account. Keeping it out of sight means you’ll be less likely to spend it. Your downpayment on a house can be kept in a certificate of deposit (CD) account or other safe, higher yield savings vehicle.  Savings goals that are long term, like your retirement savings, shouldn’t be in a bank account. It should be invested in stocks, bonds, and other investments according to your risk tolerance and time horizon. Retirement savings should also be in accounts designed for retirement, like a 401k, 403b, or IRA. Generally speaking, the longer a financial goal’s time horizon, the more aggressive and risky your savings vehicle can be. Speak with a financial advisor about your options. 

What are other expenses I can cut to save on monthly expenses?

You can cut out luxury spending like a gym membership and work out at home. Turn down the thermostat or stop running AC. Refinance student loans for better interest rates, if refinancing costs makes the life of your loans less expensive. Stop ordering take-out or reduce spending at restaurants. You can also be more careful about what you spend at the grocery store. Choosing off-brand products and vegetarian-based meals can save you a lot of money. You should also look into coupons and advantageous cashback programs.  But if you want to know how to save money fast, you need to know how to stop spending money. The less you spend today, the more buying power you have tomorrow. 

What are my options for making extra money?

An equally important way to save more is to make more money. You can have a garage sale, post things on craigslist and eBay or start a side hustle. Speak with the owners of local consignment shops to see if you can sell things there. You can also make things to sell in these venues.

Conclusion: Big Cuts Hurt in the Short Term, But Benefit You Long Term

These suggestions may seem drastic, but if it means the difference between a lifetime of debt and financial independence which would you choose? Being careful about your spending protects your interests now and in the future. Plus, you’re more likely to have a higher credit score and bigger buying power in the future. Invest in yourself, and you will flourish. 

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Updated June 15, 2020

J.J. Starr is a financial copywriter and enjoys helping readers find the information they need. In addition to her background in banking and financial advising, she is also a poet with an MFA from New York University. She lives in Amherst, Massachusetts. You can learn more at jjstarrwrites.com.