The World According to Me

Choice 4: Where can you cut spending? Big ticket items.

The biggest expenses most people have in their budgets are their housing and transportation costs. For many people these expenses are off limits when it comes to making a financial plan, but you should at least consider your options.

Consider moving. If you own your own home, is it more home that you need? Can you move to a smaller house or a house in another neighborhood? If you rent, is there a cheaper house or apartment available? This is one of the hardest choices a person has to make when changing their financial path. Just remember that nothing is harmed by having the discussion and gathering the information.

Consider how to reduce your transportation costs. Vehicles are another big ticket item. They cost a lot up front and then a lot to insure and maintain; just look at the soaring price of gas. Consider reducing the number of vehicles you have or whether you need a vehicle at all. Look at the options available to you for walking, biking, carpooling and public transit. Some places even have wonderful car sharing programs. By not owning a car, I am able to put that money towards my travel budget. It often amazes people how much of that I can do when they can’t. It’s a choice I’ve made. Remember that if you have recently purchased a new vehicle, it may cost more to get out of your car loan than to keep it. Make sure you know all the ramifications to any decisions you make.

Consider letting go of the luxuries. Don’t forget to look at other big ticket items like vacation properties, recreational vehicles or time shares. Look at the possibilities of selling items like these. If your goal is to get out of debt, selling luxury assets is a good step. If you own free and clear you need to make a choice about keeping the item or reaching your goal and then making re-purchase one of your longer term goals.

When it comes to making any new purchase big or small (but particularly one you have to finance), think about how it will affect your financial situation. Think of how that money may be better spent working toward your goal. That new couch may look good, but when you are still paying the credit card company for that couch years and years later, it may not be worth it. Especially if you look back and realize that if you had waited a little while you could have bought it without financing.