How to Save $5,000 This Year

How to Save on Home Expenses

When Molly Nee and her husband, Paul, decided to start a cultural website last year, Molly says, “we knew our income was going to take a hit, so we began looking for ways to live on less.” Since their careers allowed them both to work remotely, Molly and Paul opted not to renew the lease on their apartment in New York City (where expenses came in many forms) and relocated to a smaller town―saving them thousands of dollars each month. “Instead of a family outing revolving around a shop or an eatery,” she says, “we’re now likely to go apple picking or take a walk along the river. We’ve seen we can subsist on much less.”

Housing costs an average of $17,109 annually. Here are ways you can avoid pouring your money down the drain:

• Cut your energy usage. It's the No. 1 way to save on utilities. Click here for suggestions on how you can reduce yours. Annual savings: $596
• Make free phone calls. Download a Voice over Internet Protocol (VoIP) application onto your computer and dial up family and friends worldwide at no charge. Sign up at skype.com, lingo.com, or voip.com.
• Audit your bills. A recent study by the Citizens Utility Board found that the average cell-phone user could save $331 a year by shopping for a plan that better matches her usage. Find a suitable one at billshrink.com or lowermybills.com, two free cell-phone-plan comparison sites. And don’t file away cable and phone bills before taking a hard look at them. If there are services you rarely use or could live without, like premium movie channels and call forwarding, you could save as much as $500 a year. Annual savings: $831
• Appeal your tax bill. Recent market declines mean you may be paying too much in property taxes. Get a copy of your home’s assessment from your local assessor’s office and compare it with assessments on similar houses in your area. About 75% of appeals result in a reduction of taxes, says Richard Roll, president of the American Homeowners Association.
• Look into refinancing. Interest rates on home loans hit historical lows in the spring of 2009 and have remained low ever since. Use the refinance calculator at bankrate.com, which will figure out how much you’ll shave off your monthly payments with a lower interest rate, along with how many months it will take you to recoup the cost of refinancing your mortgage.
• Renegotiate your rent. Ever wonder if you’re shelling out too much? Log on to rentometer.com to find out whether your payments are reasonable for your area. Then present your findings to your landlord, or use the data when looking for a new place.
• Reduce your payments. If home values have dropped drastically in your area, or if you’re struggling to pay your mortgage, you may be eligible for a Home Affordable Refinance or Modification. This federal program helps qualified home owners by allowing them to refinance at lower rates or modify their loans to help them save on their mortgage. Visit makinghomeaffordable.gov for eligibility information.
• Cut your home owner’s insurance by installing safety devices. Many insurers offer discounts of about 5% to home owners who add smoke alarms and dead bolts to their homes. Call your provider to find out which items will qualify you for a discount. Annual savings: $40
• Boost your deductible. Increasing your policy’s deductible from $200 to $1,000 may save you as much as 25% on insurance costs annually. The average person files a claim just once every 8 to 10 years, so you’re better off stashing the amount of your deductible in an interest-bearing savings account. Annual savings: $201