By JOHN EWOLDT
Minneapolis Star Tribune
If you lost your job, which expense would you cut first? Many victims of job loss are too paralyzed to know where and how to cut the fat, said Sara Croymans, who teaches personal finance classes such as "Getting Through Tough Times" at the University of Minnesota Extension Service Regional Center in Morris.
For those needing help in trimming expenses quickly, here are some tips:
-- Trim cable and phone bills. Go "back to basic" by downgrading from "digital starter" to "basic" cable, which costs only about $15 per month or less. Every cable company is required to offer it, so if they say it's not available, the customer service rep is wrong.
-- If you have a cell phone, you can downgrade to a cheaper plan, but make sure everyone on the plan knows how to keep track of minutes used. Otherwise, the overage will cost you more. Try a prepaid cell phone for the person who can't shut up.
In its January issue, Consumer Reports said that a two-cell-phone family using 700 minutes per month could save $100 to $220 a year buying per-minute packs from Virgin Mobile. Prepaid plan options are similar to traditional plans -- choose a phone and then a package. Keep your same cell phone number with prepaid, too. Consider canceling your landline or paring back on features.
-- Check into free or reduced-price school lunches. Check with your child's school about putting your children in the free or reduced-price lunch program, even if temporarily.
-- Ask utilities about hardship payment plans. Those with a financial or medical hardship might be able to get protection. Ask your gas and electric companies.
-- Become a one-car family. If you have more than one vehicle, park one and cancel the insurance on it, saving $100 a month or more.
-- Review your insurance deductibles carefully. Most experts recommend saving money by raising your deductibles on auto and homeowner's insurance. But not in every case, said J. Robert Hunter, insurance director at the Consumer Federation of America. If you're barely making ends meet and you get into a car accident or a storm damages your house, will the extra $500 or $1,000 out of pocket break the budget?
Before you raise any deductible, check your savings cushion. Raising your deductible might only save $30 to $100 per year, which might not be worth it if you're living on the edge and you're suddenly stuck with a $1,000 repair bill. Hunter recommends comparison-shopping policies by phone. "Identical coverage can easily be twice the premium at two different companies," he said.
-- Ask credit card companies for an interest rate decrease. Some experts recommend letting creditors know your financial situation, but Scott Bilker of www.debtsmart.com says credit card companies then are likely to close your account or lower your credit limit. You're better off asking for an interest rate decrease while your credit is still good and you're making on-time payments, even if it's the minimum. For advice on how to do it, go to DebtSmart.com.
Gerri Detweiler of www.credit.com cautions that charges or cash advances made several months before a bankruptcy might not qualify for discharge in a bankruptcy.
-- Talk to your mortgage company right away. Don't wait until you're three months behind on your payments to talk to your lender. Tell them about your situation before you're behind and you'll have a better chance of keeping your house.
-- Shop for deals on prescriptions. If you don't have insurance or have a high deductible, Google the name of the drug and Canada. A 100/50 Advair diskus (60 puffs) is $45 via Canada or $161 at Costco. Sometimes Costco or Sam's Club's prices are lower than Canadian, especially on generics.
-- Check for free or used goods before buying new. Make a habit of checking Freecycle.org or Craigslist.com before making purchases. If you have to buy new, use www.pricegrabber.com or www.shopzilla.com for price comparisons before buying online or locally.
-- Don't cut expenses that could bankrupt you. It may be expensive, but without health insurance, a medical bill could be catastrophic. An unplanned pregnancy or appendectomy might be an expense you'd never get out from under without insurance.
-- Eat healthy. Don't resort to cheap fast food that isn't good for you.
E-mail John Ewoldt of the Minneapolis Star Tribune at jewoldt(at)startribune.com.
(Distributed by Scripps Howard News Service, www.scrippsnews.com.)
