How to earn an extra $500 a month: Part 4

OLYMPUS DIGITAL CAMERAPart 4 wraps up the series on earning an extra $500 per month.  The focus this time is not increasing income, but instead decreasing expenses.  After exhausting all of the previous options, there always remains the option of cutting expenses.  Below are three examples designed to save an average of $500 per month.  It is unlikely that a specific example may fit you perfectly, so the best option is to pick from each example those options that do work for you.

Example #1  ($150+$80+$270)

  1. A newly created cost is the smartphone data plan.  With many 2 phone plans pushing past $200, perhaps a simpler approach is needed.  Here’s the action… drop the phone plans and get a prepaid plan and free internet at your local library.  The savings here can be as high as $150, which still leaves an allowance for going prepaid.
  2. Cut out the $20 per week for office lunches, coffee, etc.  Home cooked food gets better with time and experience.
  3. Downsize your car payment.  If you have a car payment, try trading it in for something older that will reduce of your payment.  A New $24000 car will have a payment of $450 per month with good credit.  Cutting down to a $10000 car will save $270 per month.

Example #2 ($300+$100+$25+$75)

  1. Refinance that car.  Extend the term if needed.  It will be good to free up the cash flow, and car debt for those with good credit it is not that expensive.  If you had three years left and a balance of $24000 at 5%, refinancing to five years at 2%, would save $300 per month.
  2. Cut the cable TV.  With good quality programming on Netflix and Amazon Prime, cutting the high end cable and movie packages will save upwards of $100 per month.
  3. Ask for a reduction in rent.  This applies to good tenants who pay on time.  A vacancy costs a landlord a good amount of money.  On top of that, they are paying 10% management fees and taxes on top of every gain.  Asking for a modest $25 per month (or hopefully more) off of your month should be reasonable to many landlords who wish to keep a good tenant.
  4. Make sure not to buy more insurance than needed.  Insurance is mainly designed to protect personal assets.  If you don’t have much in the assets category, cutting insurance and raising deductibles can free up some cash.  $75 per month alone on health insurance is achievable.

Example #3 ($260+$40+$200)

  1. Carpool, walk, or take public transportation.  This really applies to your second car.  Get rid of that $15000 new car you just bought on a 5 year loan and save $260 per month.
  2. Ditch the home phone.  The home phone and long distance is now becoming more expensive than a prepaid cell phone with unlimited talk.  Since most have the cell phone, this will save about $40 per month.
  3. Refinance the house.  There are many options for no-cost refinancing.  Refinancing a house that you bought three years ago for $165,000 at 5% can now be refinanced at 3.25% for 30 years, freeing up $200 per month.

The FPO series on earning an extra $500 per month has provided multiple methods for achieving that goal of bringing in some extra income.  Combine that with some of the savings methods above, and the result should be a complete transformation of your personal finances.

About Steve @ FPO
Hello FPO readers, I have been writing on financial topics for about 12 years now, but I have only recently reignited the fire of publishing online. I have to say, its good to be back. I am an electrical engineer by trade who enjoys all topics engineering and financial. I started Financial Place Online (FPO) to create a value added financial news and education website that would provide a refreshing daily financial read. Financial Place Online websites are built around the principles of consumer empowerment, leveling the playing field, zero spam tolerance, and none of those annoying sidebar or banner ads. For us, it's all about enjoying a good read.

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