By Andrew Housser
Most of us would not hesitate to stop and pick up a $100 bill that was lying on the ground. And most would agree that finding extra cash each month would be a nice boost to the bottom line. Although you cannot count on money magically appearing, you can work to find a little extra, either by making more or spending less. Here are some simple ways to do both.
1. Sell. Clean out closets, basement and garage. Sell bigger-ticket items like sporting equipment, electronics and furniture on sites such as Craigslist or eBay. Take designer clothes to consignment shops (visit these stores first when updating your wardrobe, too). Host a community sale with neighbors -- a larger sale will attract more buyers than an individual one. Reassess your belongings every six months and offer unwanted items for sale.
2. Pay attention to your paycheck. You may be able to boost your take-home pay by adjusting your tax withholding. Use the IRS Withholding Calculator to check whether you can adjust your federal income tax withholding allowances. Have the difference in pay automatically transferred to an online savings account. Also consider enrolling in a retirement fund; you will benefit in the future from the automatic savings. Plus, you can defer paying taxes on your contributions to most types of retirement accounts. The advantage to this strategy is that the government takes a smaller tax bite out of your paycheck – but make sure you withhold enough that you don't get stuck with a tax bill on April 15.
3. Cut back on expenses. Many of us have a little extra cushion in our monthly budget -- items we can cut back on or eliminate entirely. Review your budget monthly to see where your money is going and how you might be able to save more. For instance, itemize what you spend in a month to dine out. Go through cable or phone bills carefully to see what services you are not using. Take a closer look at items such as an unused gym membership, a Netflix or other media subscription, or a standing happy hour with a friend. You may be surprised at what you can do without.
4. Stick to cash. Once you have a clear idea of your monthly living expenses, take out just enough cash to get you through the month. Whenever possible, include a little extra so you can have some fun (maybe 5 percent of your paycheck).
5. Evaluate your insurance. Review your current policies to make sure you are getting discounts for safe driving records, home security systems and joint policies. Take a look at your car insurance deductible. Depending on your car's age and value, it may be time to raise the deductible. Visit sites like esurance and NetQuote to compare rates on home and auto insurance. If you find a better deal, contact your current company first to see if they will match it.
6. Refinance your mortgage. If you are a homeowner, plan to stay in your home for some time, and you have not refinanced your mortgage for a few years, look into the possibility of doing so if your credit score allows. Mortgage rates continue to hover under 4 percent. For example, refinancing a $270,000 mortgage from 5 percent to 4 percent APR could save more than $150 per month.
Creating a little extra cushion in your income can be a tremendous boost both to morale and to your budget. Remember, every little bit adds up. No savings is too small to make a difference. With just a few small changes, you may find that you have more to spare than you thought.
Andrew Housser is a co-founder and CEO of Bills.com, a free one-stop online portal where consumers can educate themselves about personal finance issues and compare financial products and services. He also is co-CEO of Freedom Financial Network, LLC providing comprehensive consumer credit advocacy and debt relief services. Housser holds a Master of Business Administration degree from Stanford University and Bachelor of Arts degree from Dartmouth College.