5 ways to offset higher taxes this yearPublished:
With the 2013 drop off the fiscal cliff, most American families are going to see taxes increase by $1,600 this year — around $140 per month.
Couple that with an unemployment rate of almost 8 percent, and it’s no wonder that many cash-strapped Americans are looking for ways to reign in their monthly expenses to try and save a little money.
To give your budget a boost, we’ve got five ways to cut costs on everyday items:
1. Cut down your grocery bill. It may not seem like you’re spending that much on cereal and cheese, but food can be a household’s biggest expense.
Thankfully, one of the best ways to save money on groceries can be delivered right to your doorstep on Sunday morning — your local newspaper is full of coupons from grocery stores and food manufacturers.
Clipping coupons may seem like a hassle, but it’s a great way to cut costs. With many coupons offering two-for-one specials and savings up to 80 percent off, it’s easy to cut your grocery bill by as much as 20 percent each month.
2. Bundle your services. Bundling services like cable TV, cell phone, and Internet service can save some money, but before you sign on the dotted line, do your research.
Make sure that your “bundling” deal doesn’t automatically sign you up for the most expensive cable TV plan or the largest cell phone data plan on the market. Pare down the services you need and then approach your cable provider about a bundled deal.
Also, make sure you know the length of the contract you’re signing. A bundled deal for two years can end up costing you more than it’s worth if you move in six months.
3. Investigate landline alternatives. One of the most popular alternatives to traditional land line telephone service is Internet phone.
Devices offered by companies including MagicJack and NetTalk Duo can be connected to your computer for calls. The devices range in price from $60 to $100 and annual service plans cost around $150.
As long as you have a solid Internet connection, you can make good use of an Internet phone.
4. Reduce home energy bills. While it’s always a good idea to turn off the lights when you leave a room, installing a programmable thermostat in your home can reduce your energy bills by as much as 20 percent.
Just make sure you leave the installation to an expert. As the weather gets warmer, it’s also important to think about the little things — did you get that insulation in the attic repaired? What about your ceiling fan blades?
During the summer months, they need to rotate in a counterclockwise direction in order to cool rooms more efficiently.
5. Get rid of your unnecessary possessions. Although it may sound obvious, selling your unwanted items and downsizing your home is one of the best ways to make a little spare cash.
Even if you live simply, you may have clothing in the back of your closet or books on the back of the shelf that could find a new home elsewhere.
Also consider putting your old cell phones, digital cameras, and other small electronics on the market — even if they’re used. If you don’t feel like posting a listing on Amazon or eBay, think about having an old-fashioned yard sale.
If non-profits are more your style, items including clothing, furniture, and used toys can be donated for a charitable giving tax deduction.
You won’t see any cash but you can get a break come tax time. Just make sure you keep all your receipts.
Final Thoughts: With a little effort and planning, a down economy doesn’t have to adversely impact your household budget.
You just have to evaluate your finances, do some research, tighten your belt, and roll up your sleeves.
Although the payroll tax increase can seem like a significant blow to the wallet, learning how to save on your monthly expenses is essential no matter how much money you’ve got in the bank.
David Bakke writes about managing money, filing taxes, and investing for retirement on the popular financial blog, Money Crashers Personal Finance.