Another Way to Save Big Money Every Month

Another Way to Save Big Money Every Month

There are three general strategies you can use to become debt free. One of the most powerful is to reduce expenses. Reducing your expenses will increase your disposable income and allow you to divert more of your monthly personal revenue toward retiring debt. To find where there is the most room in the typical (what the heck is that anyway?) American’s budget for cuts, we’ll just take a quick look at the statistics for average personal expenditures, generously provided by Uncle Sam’s U.S. Department of Labor.

According to the Feds, the average American spent $46,409 annually in 2005, the last year with available data. In 2004, Americans spent $43,395. The largest single expense category in ’04 was housing, at $13,918, or 32.1% of all expenditures. In 2^nd place in the competition for American’s dollars was transportation, at $7,801 annually, or a whopping 18% of our yearly expenditures. We spend more to get around than for anything else besides a roof over our heads! Third place was food, at $5,781 per annum.

Coming in at number 4 on the annual expenditure list in 2004 was personal insurance and pensions. Guess what comprised the largest component of the category? Give up? The correct answer would be Social Security, at an average of $4,433 a year. That works out to a monthly average contribution of about $370. Imagine what you could so with that if you were to invest it at a piddling 6%, compounded? Instead of waiting for their meager Social Security stipend every month, Americans would have some real assets. That $4,433 annual contribution, broken into monthly contributions, would balloon into over $736,000 at the end of a 40 year career! To make it even more attractive, it would be all yours, to do with as you saw fit. If you retired at 65, after beginning contributions at age 25, you’d be able to withdraw a monthly check of over $4,400 for the next 30 years, assuming you maintained the same 6% rate of return.

Imagine what you could do if you averaged only a little higher return rate, say 8%. Don’t bother, I’ll tell you. You’d have amassed a retirement nest egg of $1,291,673. I’m not altogether sure, but I dare say that you’ll not have an account with your name on it and over a million dollars in it under our current system. Had you availed yourself of that $1,291,673, and again, maintained the 8% rate for the next 30 years, you could pay yourself $9,477.84 each month. I bet most of you would be getting a raise after retirement with monthly checks of that magnitude.

Now that I’ve concluded my daily rant about private retirement accounts, back to the original theme of reducing expenses. The areas of largest expenses would seem to have the greatest capacity for savings. One of the largest subcategories with each major expense category is insurance. These days Americans have insurance for everything. Partly because of legislation, partly due to the sad propensity of Americans to litigate for every little thing, and partly because it makes good financial sense, we have now insured our cars, homes, lives, boats, motorcycles, businesses, pets (really!), health, and just about everything else.

Due to the sheer amount of money spent on insurance each year, there is substantial room for the average person to realize substantial savings. Most people haven’t shopped for, or compared insurance plans. Because of that great business equalizer, competition, you may be cheating yourself out of money every month. In the last few years, more companies have sprung up that will shop various companies for you to compare rates among different insurance providers. This is a real benefit to consumers. So much so that other industries are seeing similar businesses arise.

Here are some firms that will look at the market and compare rates of different insurance providers for you. You may be able to save significant amounts from your monthly insurance bills, with the most likely savings coming on Auto and Life insurance.