Last week Statistics Canada reported the biggest jump in inflation in eight years.What lead the steep increase? Food and fuel: probably not news to you unless, of course, you don’t eat, drive or take public transit. With inflation on the rise and interest rates likely to follow soon after, now is a great time to retool your finances and find some quick and effective ways to cut costs.
Here are five ways to cut out major costs and see your savings grow right away:
1. Refinance your mortgage: Some experts think the Bank of Canada is going to have to raise interest rates soon to combat inflation (then again, some think they’ll stay put). Whatever the policymakers end up doing, now is a great time to look at getting a lower interest rate for your mortgage, either to reduce your monthly payments or pay it off faster.
Going down even one percentage point can make quite a difference to your monthly payments. For example, going from five to four percent, a monthly payment on a $200,000 mortgage with a 20-year amortization goes from $1,314.25 down to $1,107.34 — a savings of $206.91 a month.
2. Use cash only: Try going plastic free this month and leave your debit and credit cards at home. Not only will you save money on transaction costs (skip those trips to the bank machine!), you’ll also avoid making impulse buys that are so much easier to put on plastic. When you have to shell out cold hard cash, you might think twice before buying those new shoes/tights/sunglasses.
3. Turf the takeout menus: My husband and I used to be takeout junkies — now we can’t remember the last time we ordered in. Depending on how often you buy restaurant food, you could end up saving hundreds of dollars a month by not indulging and cooking at home instead. I recently wrote this blog post on how we have learned to avoid the takeout trap. Another side benefit — avoiding salt-packed restaurant food is a great way to drop extra pounds for summer.
4. Streamline your cable: It’s summertime. With so much to do outdoors, now is a great time to pare down your indoor entertainment costs. Take a close look at your cable or satellite TV bill and find ways to cut back. Opt for videos and DVDs borrowed free from your local library instead. You’ll notice savings on your next bill.
5. Say goodbye to your savings: Have money left over at the end of the month? Congratulations — now put it somewhere you can’t get to easily, like a savings account at a different bank. Tally up your monthly savings from the steps above and set up a monthly transfer into that savings account for the exact amount. That way you can save up for a meaningful goal, like paying off your mortgage or creating an emergency fund for tough economic times (because we’re not out of the woods yet!).