Keep Your Money to Yourself - Part 1: Cut Your Expenses

January 30, 2008 By Erica Barton

Whether you are an “Average Joe” trying to go above and beyond the paycheck-to-paycheck lifestyle, or you are a business owner struggling to keep your business open and thriving, there are hundreds of things you can do to increase your cash flow every month. This article is the first in a four-part series that will help you increase and keep money in your bank account. Utilize the seven tips below and begin increasing your cash flow instantly.

Tip 1 – Use your Profit and Loss Report

For businesses owners, a Profit and Loss Report (P&L) is a common tool. For everyone else, this would be the same as a Spending Journal with one little extra: your income. Your P&L (or Spending Journal) adds income and subtracts expenses. When totaled, the profit or loss (a.k.a. cash flow) is left behind. By carefully analyzing this report for a specified period of time, you can deduce where you are spending too much money and which expenses should be cut.

TIP 2 - CONSIDER SWITCHING BANKS

Since the banking industry is extremely competitive, you can renegotiate all kinds of banking fees. This includes your monthly fee, bounced check fees, and over-the-limit fees. Contact your banker and ask them to reverse these unnecessary expenses and to convert your account into a free checking account. Banks will often cooperate just to keep you happy, or they will upgrade your account at no extra charge based on your banking history. If you use QuickBooks to do your bookkeeping, make sure your bank can create a QuickBooks Web Connect file and you will be able to reduce your bookkeeping expenses as well when you download all your transactions instantly. Bank of America, Citibank and Wells Fargo are three banks that work well with QuickBooks.

TIP 3 - ASK YOUR CREDIT CARDS FOR BETTER INTEREST RATES

It is common for credit card companies to raise your interest rate to as much as 24% if you are even 24 hours late. Most people never notice because they are not contacted separately, it is simply presented discreetly in your next bill. Contact your credit card company and ask them to lower your interest rate and you can cut your monthly bill in half instantly. Also ask for Balance Transfer Deals and you can wipe out interest altogether for a period of several months to a year or more.

TIP 4 – GET A REWARDS CREDIT CARD

If you do not have a credit card with rewards or a low interest rate, you should consider switching. Rewards cards can supplement your annual income, or be used to reduce other business expenses (such as airline tickets or hotel rooms). By paying for all of your needs on a credit card and then paying that credit card off every month, you can accumulate interest on the money in your bank account while also rapidly accumulating rewards. Both Citibank and Chase offer excellent rewards cards with no annual fee.

TIP 5 – REDUCE YOUR COMMUTING EXPENSES

While in the past, the best way to reduce your commuting expenses was to carpool to and from work, there are many other ways to cut commuting expenses. One would be to invest in an energy-efficient vehicle, like an electric car or scooter. Another would be to ride a bicycle to get where you need to go (also a healthy option). The best recommendation I can make, however, is to begin “Telecommuting” to work. Thanks to technology today, people can work from home and become more productive and efficient then when working in the office. Another added bonus here is that you could cut daycare costs (if you have children) and work whenever your child is sleeping. You will find you have focus on your work, freedom from micro-managers and more time with your family…all while saving commuting time and costs. (If you need advice on getting your boss to approve of telecommuting, get Timothy Ferris’s book “The Four Hour Workweek.” He will walk you through the process step by step.)

TIP 6 – DON’T SPEND DOLLARS ON PENNY JOBS

The Mary Kay Company has always taught their 1.2-million+ consultants to never waste their valuable time doing jobs that you could pay someone else less money to complete. For example, if you make $50 an hour working at the things you do best, then why spend your spare time cleaning your house when you can pay someone else $10 an hour to do it and you spend your time bonding with your family instead. Whether your boss does or does not allow you to telecommute, there are many things that you could outsource saving you time and therefore money. Elance.com is a great website that connects with independent contractors from all over the world to complete all kinds of jobs, and many of these jobs can be completed for as little as $2 (American) per hour. Why not use them to research your competition or develop a website for you instead of spending days doing it yourself? Or, why not simply use them to research business grants or college scholarships instead of struggling to find them yourself?

TIP 7 – REEVALUATE YOUR DUES

It is a good practice to look at your insurance every year. Premiums generally increase on your anniversary date. By simply “shopping around,” you may find that you can get a better rate somewhere else. If you choose to stay with the company you are with, you may be able to bargain them to a lower price by simply having their competitors’ quotes in your hand. Also, ask them what their best-discounted specials are. You may find that by adding another policy, you can actually save money. For example, State Farm Insurance offers a large discount on auto insurance when you add life insurance or homeowners insurance to your policy. Often, the discount is large enough to pay for the new policy while also giving you a discount and protecting your assets. Reconsider your networking fees, Internet fees, telephone and cell fees…anything you regularly spend money on. By shopping around, you will be able to renegotiate and cut expenses instantly.

These are just a few things to look at today. Hopefully, they will inspire you to reevaluate your spending habits and find where you can increase your cash flow. Also, check out article 2, “Keep Your Money to Yourself – Part 2: Get the Best Deal” on ways to always get the best deal on what is on your shopping list.

Posted in banking, banks, budgeting, business, credit cards, financial plans, income, money, personal finance, saving money

• Tips For Finding The Best Credit Cards There are many different credit card companies that are available for credit card holders to choose from.  Many credit card holders are unaware of what the credit card companies offer and therefore do not take...
• Saving Money with Wachovia's Way2Save Wachovia bank recently announced a new program called Way2Save. If you watched the super bowl last night, you were bound to see a few ads for the program. The Wachovia Way2Save program works by automatically...
• The Dangers of Financial Illiteracy Financial illiteracy is a growing problem throughout the world, and as the recent housing crisis has brought to light, it can have dangerous consequences. There are a few basic financial tips that everyone can use...
• Get Rid Of Your Credit Card Debts Credit card debt consolidation is a quite effective option of eliminating your credit card debts. Getting into credit card debt is really harmful for your credit score. It is even worse if you let it...
• Getting Out of Credit Card Debt; You Can Do It! Credit card debt can cause massive stress. Imagine a life without credit card debt. Can you see it? If you’re like many average families, you may have a hard time getting a clear picture. Many...