As you shelter in place you are likely spending a lot less money than you would have prior to the pandemic. This forced saving is probably one of the biggest positives (if you want to call it that) of being stuck at home as long as you continue to be employed. While the obvious savings are from transportation, lunch, and entertainment. Here are a few more money saving tips as you shelter in place.
1. Lower Your Insurance payments.
Don’t make the mistake of cancelling your car insurance policy during the pandemic — as you could pay a penalty for gaps in coverage, but policyholders can still lower their monthly payment but lowering the miles driven for the vehicle. Call the insurance company to make that change.
If you currently have 2 cars immediately switch one (the one you won’t be driving) to the bare minimum 3rd party liability insurance allowed by your state. For the second car ask the insurance company to put that car in the lowest miles driven bracket. This should make a significant difference in your monthly insurance bill.
2. Lower your monthly fixed costs
Cell Phone Service – Opt for a cheaper cell phone service plan as you shelter in place with lower data limits since you won’t be needing data service as you stay home largely consuming your home internet service. If you have kids and they have cell phone service. Consider putting their service on hold as they shelter in place.
Cable/Satellite service – If you haven’t cut the cord yet maybe this is a good time to consider cutting the cord and opting for one of the many streaming services available in the market. Hulu, Youtube TV, Sling TV are some of the streaming services available.
3. Refinance your mortgage.
The benchmark 30-year fixed-rate for mortgages is close to lifetime lows at 3.55% the week of May 13th. At those near-record rates, data firm Black Knight estimated 13 million Americans could shave at least 0.75% off their rate by refinancing. This is likely to be one of the best times to have your mortgage refinanced. For instance, a $500k mortgage at a 0.75% lower rate would result in a savings of $24,444 over the next 7 years.
One mistake people make while (re)financing a mortgage is opting for a 30-year duration rather than a shorter duration, which usually carries lower interest rates. Are you sure you are going to be in the same house for 10 years let alone 30 years? I haven’t lived more than 7 years of my adult life in any single home and never had a 30-year mortgage on any of the 4 houses that I mortgaged. Shorter duration loans like a 7/1 ARM or a 10/1 ARM carry meaningfully lower interest rates when compared to a 30-year loan. It is better to take advantage of these low-interest rates when refinancing than opt for a 30-yr mortgage loan which you may never end up utilizing fully.
What about rent?
If you are in a rental renegotiate your rental contract with your landlord or take advantage of a 3-month moratorium on rent payments.
If you plan to be there long-term it may be better to talk to your landlord and negotiate a 10-20% discount on your monthly rent than take advantage of the 3-month moratorium. It will build a healthier relationship for the longer term.
4. Cut your variable costs – Cancel any recurring subscriptions.
Now is the time to look at eliminating or reducing your nice-to-have unnecessary subscriptions.
- Magazine subscriptions
- E-book services
- Video-streaming and pay-TV services
- Mobile apps with monthly fees
- Gym membership (If you haven’t already done so)
There are now multiple services that specialize in finding and canceling any memberships, subscriptions and other recurring expenses you’re paying for, but not using.
Others can negotiate lower recurring expenses on your behalf. For example, imagine having your internet bill slashed without ever needing to pick up the phone to argue with the internet provider.
Examples of services and apps that can find and cancel subscriptions, negotiate lower bills or both include:
These services are typically free, at least at the outset. If a service can negotiate a lower bill for you, it often takes a small percentage of the money it saves you as a commission. But you generally won’t be charged if one of these services is unable to net you savings. So, it’s essentially free to try them.
Subscription services while they may individually look small on a monthly basis but they collectively tend to add up quickly. A monthly fee of $15.99 from Netflix and Apple Music at $14.99 ends up being $372 a year. The goal is to trim as much of the fat as possible from your budget to preserve as much of your income and savings as possible.2