18 Ways to Beat the Rising Cost of Living

You may be feeling stretched these days, and so you’ve resolved to cut back on a few luxuries. That may not be enough. Ironically, a lot of the stuff you don’t need has been getting cheaper. It’s the basics that are skyrocketing: gas, food, and heating or cooling your home. Big-ticket necessitites like health care and education keep ratcheting up. But you don’t have to just live with today’s bigger bills. By cutting out some waste and taking advantages of a few easy but over-looked deals, you can rein in your budget without feeling like a penny-pincher.

Gas

The most noticeable inflation spike is at the pump, with prices topping $4 a gallon in many areas. Your first strategy should be to change how you drive, but what you drive could have an even bigger impact.

1. Conserve Fuel-in any car
   Underinflated tires can cut your mileage per gallon by 5%. Check your tires once per month. And lose the lead foot: You can save up to 33% by maintaining steadier, slower speeds. Potential savings: About $800 per year.
2. Take advantage of your credit card
   If you pay in full each month, pick one, like Chase Freedom, that gives cash back on gas. Forget it if you carry a balance: rewards cards usually charge higher rates. Potential savings: Up to $200 a year.
3. Get rid of the guzzler
   Making your next car a hybrid could triple you mileage per gallon. If gas stays above $3.60, a Toyota Camry hybri makes up for its premium over the standard model in a year and a half. Even if you choose not to buy a hybrid, choosing the most fuel-efficient vehicle in your car class can still save $200 to $1,500 a year in gas costs. Go to edmunds.com to compare the true fuel cost for all 2008 models. Potential savings: $2,400 per year if you trade an SUV for a hybrid.

Food

You don’t need to switch to only store brands or spend hours combing Sunday circulars to cut costs. Just be a little more mindful of how you manage your money and your time.



4. Learn stupid supermarket tricks
   Stores use all kinds of marketing ploys to get you to buy more than you ever intended. The more you see, the more you purchase. Bring a list and stick to it, and never shop when hungry or tired, as you’ll find it harder to resist temptation. Search high and low. The cheapest items are often on the top and bottom shelves. Potential savings: Up to $1,200 per year from cutting out just half of unplanned purchases.
5. Know when to stock up
   You can get a weekly list of items going on sale at your local store, including sales that aren’t advertised, at thegrocergame.com. The service costs $1 for a four-week trial or $10 for an eight-week subscription. Buy in bulk when deep discounts are on. Potential savings: More than $1,000 a year.
6. A little home cooking
   Putting a homemade meal on the table five to seven nights a week may seem daunting. If you plan entrees with overlapping ingredients and buy everything for the week at once, you can not only save money but, often, put a dinner together in the time it would take to pick up takeout. Potential savings: $50 per month.

Home Energy

Tired of telling your spouse to turn down the heat? A few one-time investments and some occasional maintenance can reduce your bill, no nagging required.



7. Seal up your house
   To find air leaks, conduct a home-energy audit following the instructions at energystar.gov or hire a pro to do it for you ($200 and up). You can cut up to 25% of your heating and cooling costs by adding insulation and using caulk, spray foam and weather stripping to seal leaks from around windows and doors in attics and basements. Potential savings: $1,375 in five years, after materials.
8. Get efficient
   Install an Energy Star programmable thermostat for $60 to turn down the heat when you sleep and raise it in the morning. Be sure to change the air filter in your heating and cooling system every three months. Potential savings: $220 per year.
9. Slay the vampires
   Vampire appliances suck electricity even when you aren’t using them. Plug devices with standby power, such as TVs and stereos, into a power strip so you can turn them all off at once. To further cut your electric bill, replace regular bulbs with compact fluorescents. Potential savings: More than $300 over five years.

College

Whether your child will start next year or in ten years, a little planning can yield a lot of savings. Use tax-free savings vehicles and secure the cheapest loans.



10. Contribute to a 529 plan early and often
    These state-sponsored plans let you exclude your college-savings earnings from federal and state taxes. For calculators to estimate your total costs, as well as details about your state’s 529, go to finaid.org and savingforcollege.com. If you local plan charges more than 0.5% a year, consider another state’s. Potential savings: About $5,000 in tax savings over 10 years.
11. Max out cheap federal aid first
    Before applying for any private loans, take out the maximum in federal, typically Stafford, loans. Their fixed rates (6% to 6.8%) are generally less than privates lenders’ variable rates. After you tap out Staffords, federal parent PLUS loans are generally the best deal. Potential savings: $8,000 on $27,000 in loans in 10 years.

Medical Costs

The 4% increase in health-care prices is in step with overall inflation. But you’re feeling more pressure if your company is raising deductibles or slashing coverage. Keeping your costs down without cutting back care won’t be easy.



12. Choose your deductible wisely
    If your company gives you a choice, you may be tempted by the lower premium on a high-deductible health plan. These work for some people, but you face more financial risk if you get sick, and you may have to pay full price for most prescriptions until you meet the deductible. High-deductible plans are generally best for younger people without health problems; others should stick with traditional plans. Potential savings: High-deductible plans could save you $750 a year in premiums. But if you get seriously ill, a traditional plan could mean thousands less in bills.
13. Don’t pay taxes you don’t have to
    If you have a qualifying high-deductible health plan, make sure to contribute to a health savings account to fund your current and future medical bills. If you have a traditional plan and your employer offers a flexible spending account, sign up. It lets you use untaxed salary to pay for many out-of-pocket health expenses. Potential savings: About $280 for every $1,000 set aside.
14. Don’t be afraid to haggle
    If you go out of network or are in a high-deductible health plan, ask the doctor for a discount. You can get an idea of reasonable prices at your insurer’s website or, or an $8 fee, at healthgrades.com. One poll says that 60% of patients who negotiate with a doctor succeed. Your best bet: Offer to pay up front in cash. Potential savings: $85 for a specialist consultation.

And don’t forget…

A dollar saved is a dollar saved, so you should look to trim any needless cost, even on goods not jumping in price. Here are four easy ways to find extra money you didn’t even know you were spending.



15. Ask your credit card issuer if you can get a lower rate.
16. Don’t use all your minutes? Change cell plans.
17. Look at your insurance. You may want to lower the premium for your car insurance, for example, by raising your deductible.
18. If you really aren’t going to the gym anymore, stop putting off the inevitable: Cancel.

Check out these other great posts!

Planning for the Cost of Higher Education

7 Ways to Shop Smarter

Ten Quick Tips for Frugal Living

Tagged as: college, food, gas, home energy, medical costs