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5 Unexpected Ways to Make Room in Your Budget

Reading time: 6 minutes

You’ve undoubtedly heard that eating out less or buying fewer fancy lattes are two keys to making room in your budget. Those tips make for grabby headlines — and may be true to some extent — but they don’t exactly provide a complete picture of smart budgeting that can help you make lasting financial change in your life.

While it’s always a good idea to watch your discretionary spending, there are several less-talked-about strategies that might not be as flashy but may do more to help you save money in the long run.

1. Negotiate the interest rate on your credit card

Credit card interest rates are not static. If you consistently miss payments or fail to pay the minimum on your accounts, you may see your interest rates increase. On the flip side, if you’ve done a good job of keeping your account current and your credit is in good standing, you might be able to obtain a lower interest rate.

If you’re a longtime customer who hasn’t missed a payment in at least 12 months, call a credit account specialist and try to negotiate a lower interest rate with your credit card company. You can strengthen your argument by presenting offers for lower rates from competitors. Fear of losing your business may serve as an incentive for your current credit card company to lower your interest rate.

2. Negotiate with your cable company, wireless carrier or internet provider

If you feel like you’re spending too much on your phone, TV or internet, you might want to approach your service provider about lowering your rates. To increase your leverage in the negotiation process, research competitors in the area, gathering information on the average costs that come with a new service, including installation fees, early termination fees, etc.

When you make the call, let the customer service representative know that you’re considering switching to a different provider. In most cases, the representative will attempt to offer you different, usually more affordable, packages to entice you to stay. The first offer is often not the best one, so don’t feel obligated to accept something that doesn’t meet your needs. Have an end price in mind, and present the reason for your proposed cancellation as an external problem, like a strained budget. That way, you can position your argument as shared-interest problem-solving, as opposed to direct conflict with the service provider. With any luck, you’ll end up paying what you want for only the things you actually need.

3. Consolidate your credit card debt

If you owe debts to several lenders, you may have trouble keeping track of multiple payments due each month. To alleviate that stress, try bundling your separate payment and due dates into a single monthly payment through a process called consolidation. You may even reduce your overall interest rate in the process.

You can consolidate credit card debt on your own via a series of balance transfers from your existing credit cards to a new card with a lower introductory interest rate. A heads up though: Don’t close the old accounts. Keeping credit card accounts open for an extended period of time, even if they’re not carrying a balance, is generally good for your credit scores.

You can turn to a debt consolidation company for assistance. However, stay on the lookout for scams that promise to help you quickly and easily pay your creditors less than you owe. Debt consolidation companies are required by law to provide information about their pricing, terms and expected results, as well as any penalties for failing to pay your debts.

If you’re still unsure about the best way to tackle your credit card debt, you can schedule an appointment with a credit counselor, who can help devise a personalized plan to get you out of debt.

4. Cut down on utility bills

If you find that you’re paying more for electricity, gas and water than you want to or can reasonably afford, there are steps you can take to lower your utility bills. In the short term, this could include low-cost solutions, such as participating in your utility providers’ rewards program, scheduling an energy audit or lowering the temperature on your water heater. Looking to the long term, you might consider making a small up-front investment to cut costs over time. This could include buying Energy Star certified appliances, installing a programmable thermostat to better control your heating and cooling, or upgrading your home’s insulation.

5. Refinance your mortgage

Put simply, refinancing is the process of taking out a new loan, usually with a lower interest rate, and then using that new loan to pay off your existing debt. When it comes to deciding whether to refinance your home, timing is everything. If you delay the decision and interest rates rise, you could end up paying tens of thousands of dollars more in interest over the life of the loan.

However, before you begin refinancing, you need to consider whether you can afford the process. Refinancing generally includes closing costs, loan origination fees and appraisal fees on top of your new monthly mortgage payment. You’ll need to have enough equity in your home to close out your old mortgage and take out a new loan. Finally, make sure your credit scores are in a good place and always shop around with different mortgage lenders to ensure you get the best rate possible.


If you take advantage of these five money-saving strategies, you may be able to significantly reduce your monthly expenses. One of the greatest benefits of these strategies is that the work you need to do is all up front. Once you negotiate lower rates on things you already pay for, consolidate your debt or refinance your mortgage, you can generally sit back and reap the benefits of your hard work with lower payments every month.

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