What if you’ve gone through all the “low hanging fruit” cost-saving ideas and still find yourself well below the annual savings needed to achieve your retirement nest egg? If this is the case, here are some aggressive steps you can take to turn things around in the last 10 to 15 years before retirement. Although some of them might not be feasible if, for example, you’re underwater on your home, tough times call for tough measures, so look at all possibilities and leave nothing on the table.
- Sell your home and use the proceeds to pay cash for a smaller one.
- If this isn’t possible because you have no equity, at least sell your home and get into a smaller one, which will reduce your mortgage payments, utilities, insurance, etc.
- Look into refinancing at today’s rock bottom rates.
- Rent your basement or a room in your home and use the cash to pay off debt or increase your savings.
- Sell your home and rent a smaller one or an apartment.
- Sell anything you have in your home that you don’t want/use anymore.
- Make your kids pay their way if they are in their 20s and staying in your home and eating your food. Even if you charge them $250 a month, it’s still a lot less than what they’d pay if they lived on their own.
- Sell your car and get a more economical vehicle that you can purchase with cash.
- If you have two cars, downsize to one which will reduce your insurance, maintenance, and registration fees.
- Get aggressive with your insurance. If you have older vehicles with blue book values below $2,500, carry liability coverage only. By cutting out the cost of collision, comprehensive, and other miscellaneous coverage, you can easily cut your auto insurance expense in half.
- Call your lender and see if you can refinance or ask for a lower payment option. Just make sure the lender doesn’t increase your loan term. Think this is impossible, think again. Lenders want to keep customers paying and will do almost anything to keep your business.
- Cut out all vacations that involve airfare, hotels, and car rentals and instead take day trips with your family or start camping.
- Reduce the number of times you go out for lunch and dinner to once a month.
- Stop buying clothes and shoes you don’t need since you probably have a closet full of stuff you can wear that still have the tags on them.
- If you have memberships to clubs, associations, gyms, etc., get rid of them as you can always get your exercise by walking or riding a bike.
- Instead of buying gifts for family and friends, make them something instead or have them over to your house for a nice meal and a movie.
- Stop buying anything you can get at your local library for free (e.g., books, magazines, movies, music, etc.).
- Get rid of your cable or satellite TV and watch your shows on the Internet and/or get an antenna so you can watch your local channels for free.
- Dump your cell and/or home phone and get a prepaid one for emergencies only. If your cell phone is your central entertainment center; eliminate all services you can get through your cell phone or tablet (e.g., home phone, internet, cable or satellite subscriptions, etc. ).
Other Savings Ideas
- If you have stuff in a storage facility, sell it on eBay or Craigslist and save on the storage fees. Remember, if it’s not in your house, you probably don’t need it.
- Don’t replace anything that isn’t broken, which means you keep all your electronics, appliances, computers, car, etc., until they stop working.
- Stop smoking. It’s a very expensive habit that’s not only bad for your health, but results in higher medical and life insurance premiums.
- Eliminate cash contributions to your favorite charities and instead give your time or donate unwanted clothing, furniture, etc.
As I said, I know these options aren’t very appealing, but they may be the best chance you have of getting yourself out of debt and back on track. Even if your financial situation isn’t as dire and doesn’t require draconian steps, and I hope it isn’t, don’t ignore some of these money-saving opportunities. Everybody’s threshold for pain and self-sacrifice is different, so what might look impossible to one person could be a tolerable lifestyle modification to another.