Managing fixed monthly expenses can feel overwhelming when you’re trying to pay down debt. Between mortgage payments, car loans, credit card bills, and various utilities, it may seem like there’s little left for anything else. If you’re finding that your monthly expenses are eating up all your income, there are practical steps you can take to reduce costs and free up more money to tackle debt.
Recent data from Equifax reveals that many Canadians are facing financial strain, with the average consumer carrying over $21,000 in debt. Moreover, delinquency rates have increased, particularly in provinces like Ontario and British Columbia, where mortgage payments have risen significantly due to higher interest rates. If you’re wondering how to lower your expenses to pay down debt faster, here are four key strategies to help you save money and take control of your finances.
1. Cut Out Unnecessary Subscriptions and Recurring Charges
Take a deep dive into your financial statements, and identify all the subscriptions and recurring charges that come out of your account each month. You may be surprised by the number of services you’re paying for without even realizing it. These could include:
- Cable, internet, and phone services
- Gym memberships or fitness class subscriptions
- Meal kit services or grocery delivery
- Streaming platforms like Netflix, Amazon Prime, or Spotify
- Magazine and newspaper subscriptions
- Roadside assistance memberships
- Apps related to hobbies or fitness tracking
These expenses add up quickly, and many of them may be going unused. Consider cutting back or temporarily pausing subscriptions that aren’t essential. Reducing or canceling services could save you hundreds of dollars every year.
2. Shop Around for Better Home and Car Insurance Rates
It’s worth taking the time to review your insurance premiums regularly. Start by comparing quotes for home and car insurance to see if you can find a better deal. Many insurers offer discounts for bundling multiple policies, such as home and auto insurance, which could save you up to 25%.
If you’ve been with your current insurer for a while, inquire about available discounts. For example, you could get a lower premium for setting up automatic payments, installing a home security system, or increasing your deductibles. If you’re over 55, ask about senior discounts, which some insurers offer. Additionally, if you’re driving a less expensive car or rarely use one vehicle, reducing your coverage or removing a car from your insurance policy might help reduce your costs.
3. Negotiate a Lower Interest Rate on Your Credit Cards
Credit card interest rates can be steep, often hovering around 20%, and they can quickly add up if you’re carrying a balance. If you have a significant credit card balance, this high interest is likely costing you hundreds, if not thousands, of dollars each year. One of the easiest ways to lower your monthly expenses is to reduce the interest rate on your credit cards.
Call your credit card issuer and ask for a lower rate, especially if you’ve been a reliable customer. If you’ve fallen behind on payments due to a job loss or medical issues, explaining your situation might help your case. If your request is denied, consider transferring your balance to a credit card with a lower rate. Be sure to shop around for the best deals and apply for a card before missing or making partial payments, as doing so could negatively affect your credit score.
4. Review Your Monthly Expenses and Find Ways to Save
If you’re already focusing on the big-ticket items like insurance and subscriptions, it’s important not to overlook smaller everyday expenses. Even minor adjustments can add up over time and contribute to lowering your overall monthly costs.
- Assess your phone and internet plans: Check if you’re paying for more than you need, and downgrade if possible. Often, providers offer better deals for customers who ask.
- Consider using public transport: If you live in a walkable area or near public transportation, opting out of owning a car can save you money on gas, insurance, and maintenance.
- Cut back on discretionary spending: Look for free or low-cost entertainment options and take advantage of community events. Even skipping an expensive gym membership can lead to significant savings.
By taking these steps, you can free up more of your income and direct it toward paying down debt. Reducing fixed expenses is a critical strategy for improving your financial health and achieving debt-free living faster.
Final Thoughts
Lowering your fixed monthly expenses is an essential part of improving your financial situation and paying off debt. By eliminating unnecessary subscriptions, shopping for better insurance rates, negotiating credit card interest rates, and cutting back on everyday costs, you can free up more money to put toward your debt. Taking control of your finances doesn’t have to be difficult; with a bit of planning and strategic decision-making, you can reduce your monthly costs and take charge of your financial future.
