Wednesday, July 30, 2008

Money Matters: Cut Your Spending by $500 Per Month

The Consumer Reports Money Lab shakes loose a bushel of savings hiding in everyday spending.

Find Cheaper Auto Insurance
Average Savings: $65
Annual surveys of Consumer Reports readers have shown that many have stayed with the same auto insurer for 15 years. Depending on your profile and where you live, you might be able to save hundreds a month by shopping around. (In all the categories listed, the monthly savings shown are Money Lab estimates based on what average consumers spend. Your actual savings will depend on your circumstances.)

For example, a married couple without violations or accidents but with a driving-age son in Los Angeles can save $380 per month on standard coverage by switching to a lower-cost auto insurer, according to data compiled by the California Department of Insurance. But a retired couple with no violations in Fargo, N.D., can expect to save only about $30 per month by switching insurers.

How to Do It
Start at the Web site of the National Association of Insurance Commissioners, and click on NAIC States & Jurisdictions to find your state's insurance department. Most provide comparative premium quotes based on standard customer profiles. If your state doesn't, you can get quotes from insurers by phone or over the Internet. You can also compare premiums from multiple carriers by using independent Web sites, such as Insweb, Insurance.com, and Insure.com.

Optimize Your Life Insurance
Average Savings: $110
Life-insurance premiums have dropped so dramatically since the 1990s, it will probably pay for you to replace a policy bought years ago with a comparable one. A $500,000, 20-year guaranteed level term policy from Prudential, for example, would have cost a healthy, nonsmoking, 50-year-old man about $2,125 a year in 1998, according to Accuquote.com. Today the same guy, now 60, could pay Prudential $1,385 a year for the same coverage over the next 10 years. Savings: $60 per month.

Another option at any age: Adopt a healthier lifestyle and get re-rated for a lower premium. For example, a 40-year-old man with a $1 million, 20-year term policy could save $50 a month by cutting his cholesterol by 30 points; $65 a month if he dropped 50 pounds to reach normal weight; and $165 a month three years after he quit smoking.


How to Do It
Get a physical checkup and follow your doctor's advice for shaping up before applying for a new policy. You can get premium quotes at LifeInsure.com. Don't cancel your existing policy until you have a new one already in place.


Shop Smart for Food
Average savings: $200

Making different choices in the supermarket and when eating out can net monthly savings ranging from $130 to $255. The average family of four can chop its grocery bill by $190 a month by shifting to a lower-cost mix of foods, according to data from the Department of Agriculture. The agency monitors prices of four nutritionally balanced grocery baskets at different cost levels: liberal, moderate-cost, low-cost, and thrifty. The liberal basket contains more food per month than the moderate-cost one, a greater proportion of pricier food like beef and fish, and more wasted leftovers.


In 2006 American families spent 44 percent of their food budget eating out. By cutting restaurant spending in half, you can save another $30 to $60 per month.


How to Do It
Plan menus around sales on fresh poultry, fish, meat, dairy, and produce, and make use of leftovers. Avoid costly prepared meals. Eat more low-priced, high-nutrition foods such as beans and potatoes, says Andrea Carlson, a USDA economist. Shop in lower-cost stores such as Aldi Foods, PriceRite, Costco, Trader Joe's, Wal-Mart, and Sam's Club, but be sure to compare prices. Try less-expensive store brands. Sign up for store discount cards. Stock up on sale-priced staples.


When eating out, take advantage of prix-fixe meals and off-hour discounts. Eat half of the big portions in vogue today at the restaurant and take the rest home for a next-day encore.


Stop Paying Bank Fees
Average savings: $25

The American Bankers Association says 52 percent of consumers spend nothing on bank fees each month. But somebody's paying fees, and lots of them, because the Federal Deposit Insurance Corp. says banks collected $39 billion in account fees and penalties last year. That works out to an average of $28 per month per household. But with some planning, you can pay zero.


How to Do It
Bank at a large institution with lots of ATMs in convenient locations to avoid the cost of using other banks' machines—as much as $4 per withdrawal. And use the no-fee cash-back option at supermarkets.

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1 comment:

Life Insurance Canada said...

Nice article. Sometimes you just have to take a look around and count 1+1 and you can save nice money. Especially in life insurance. Whole life is expensive option for those, who want some investment product and don't want to care anymore about investing. But if you choose term life, you can save huge money. Check term life quote Canada, you can see 20 years $500 000 policy for 30 years old male starts at $400 annually - whole life would be maybe 5x more expensive! So you just have to think, before you make some financial step. It's better to spend your money on your kids .)
Take care
Lorne