Now on to the "real" topic of my blog, the next installment in Brian O'Connor's series of articles featured on the website DailyFinance.com.
The $1,000 Challenge, Part 3: Shrinking Your Car-Related Costs
We focused on easy savings categories for the first two installments of "The $1,000 Challenge" (based on my book of the same name): utility bills, and those forms of miscellaneous spending that are automatically charged each month to bank accounts or credit cards.
(If you missed any of the previous installments of The $1,000 Challenge on DailyFinance.com, feel free to check out the whole series so far.)
You've got two approaches here: Either cut your current fixed costs or, more radically, find a way to reduce your overall driving. Let's start with cost-cutting.
In all cases, you want to avoid rolling over the unpaid balance of a lease or car loan into a new lease or loan, which just leaves you with more debt, and owing much, much more on a car than it's worth.
Insurance is one place where you can often find big savings. Shop around, ask for any kind of discount you can find (good driver, over-50, good student, and others) and remember that the best deal often comes from bundling your auto coverage with your homeowners and other insurance policies. Consider raising your deductible (especially if you have some savings on hand) or dropping policy for add-ons that you can live without. Coverage that replaces a broken windshield may be something you can cut, for example.
If it's been awhile since you first bought the car and took out the policy, it might be time to drop your collision and comprehensive coverage. The standard rule of thumb is that if you car is worth less than 10 times what you're paying for annual comp and collision, it's time to cancel the coverage, which can account for up to 40 percent of your insurance bill. If you do, set aside at least some of the savings each month to build a fund to help replace the car if you have a serious accident, or to eventually replace it.
When it comes to keeping your car or truck on the road, your best bet is to pay for affordable maintenance regularly so you can avoid more expensive repairs down the road. Regular oil changes and keeping your tires inflated are a lot cheaper than a new head gasket or two pairs of radials.
But for significant savings, try to eliminate driving when you can. I'll talk about it more when we look at the costs of working -- for me, commuting is a major job-related expense -
- Week 1 - Miscellaneous Spending: $132.89
- Week 2 - Utilities and Phones: $139.39
- Week 3 - Transportation Costs: $41.61
- Total Monthly Savings: $313.89
You can find more detailed suggestions in my book, "The $1,000 Challenge." Make sure to post your ideas, tips, strategies and how much you find to save here in the comments or share them on the Facebook page. Just grab a bill and start today.
- Follow Brian: On Facebook, on Twitter and on his blog.
- Read Brian's columns in The Detroit News.
- Buy the Book: Discount orders on "The $1,000 Challenge."
- Start the challenge from the beginning: Find the earlier columns here.