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5 expenses not to trim

Unfortunately, cutting costs in some areas now will make the financial pain worse later. Here's what to do instead.

By Stacy Johnson Sep 14, 2011 12:11PM

This post comes from Brandon Ballenger at partner site Money Talks News.

 

Times are tough, and they don't seem to be getting much better. About 14 million Americans were still unemployed last month, and that hasn't changed much since April, according to the U.S. Bureau of Labor Statistics.

 

Many people are understandably looking for ways to cut expenses and stretch dollars. There are lots of ways to do that, but some seemingly logical ideas actually end up more expensive in the long run. In the video below, Stacy Johnson offers a few examples of being "penny wise, pound foolish," along with a few suggestions for smarter savings. Check it out, then read on for more.

1. Car maintenance

Bad idea: Skipping an oil change. You could save $30 now, but that's little consolation when you see smoke under the hood because your engine seized up, leaving you with a $5,000 bill.

Better idea: If your car is running well, cut back on tune-ups instead. Check with your mechanic, but many will say that if your car seems to be running fine, you may not need it.

2. Car insurance

Bad idea: Reducing your liability coverage. Whatever you might save, it's not worth it in case of an accident. You need enough insurance to cover your net worth.

Better idea: If you have a clunker that's worth only a few hundred bucks, consider dropping collision and comprehensive. That's one of several ways to save on car insurance. Another idea? Raise your deductibles. (How does your vehicle compare on insurance rates?)

 

3. Health

Bad idea: Skipping or splitting your prescription doses. Even if you're feeling fine and can halve costs, it's not worth it if you end up in the hospital.

Better idea: Consult with your doctor about all your medications and see if there's anything you could stop or cheaper medications you could substitute. Ask about free samples and generic versions -- many popular drugs are going generic in the next year. Our recent story "Many prescription drugs are getting cheaper soon" has details and other ideas.

 

4. Home

Bad idea: Cutting back on homeowners insurance. As Stacy pointed out, even if home values are dropping, replacement and repair costs aren't.

Better idea: Raising your deductible. Going from $250 to $1,000 can save you 15% or more, and that's less risky than lowering your overall coverage. Make sure you protect everything inside by having a home inventory too. There are also ways to save on renters insurance.

 

5. Debt

Bad idea: This may be the most obvious bite-you-in-the-butt decision, but don't miss loan payments or just pay the minimum. That's no way to get ahead, even if it gives you more flexibility now.

Good idea: Use Unbury.me to take a look at how much extra interest you'll owe by skipping or cutting payments, and learn the best way to pay off debt. (Do you have too much debt? Try MSN Money's calculator.)

 

Bottom line? There are tons of ways to save money. Just make sure you're picking the smart ones. Check out "10 painless ways to save $1,000" for more ideas.

 

More on Money Talks News and MSN Money:

4Comments
Sep 15, 2011 12:28PM
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Agreed.  If in a bind, raise your deductibles.  Realistically, if anything happens to your home/car/personal property, there are ways to replace what was lost w/o even using your own cash.  Most good (meaning people-friendly) insurance companies will write YOU a check for the damages and let you deal with it the way you want to instead of micro-managing all the money.  That lets you save money right there.  Secondly, higher deductibles are as good for you as they are for the insurance company.  Low deductibles tempt people to use insurance for frivolous reasons.  35 year old stove dies? Make a claim!  Someone hits you in a parking lot and creates nearly-undetectable spider cracks in the bumper paint? Make a claim! 

That is not how its supposed to be.  Insurance is there to assist you in a loss that would be an overwhelming burden without it:  house fire, car theft (comprehensive), robbery, storm that puts a tree in your kitchen.  Not making petty claims constantly will keep your rates from rising and from getting dropped.

Sep 15, 2011 3:44PM
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Cut back on your possessions overall, and you will save a LOT of money.  You can cut back on your insurance (possessions cost you money), cut back on your auto insurance (cheaper car, one car instead of multiple).  Buying fewer things keeps you out of debt, and living a more relaxing life not worrying so much about stuff will keep you from getting sick so much.

The simple life is a good option, turn off the TV, stop keeping up with the joneses, and don't mow the lawn so much, nobody cares how good your grass is.

Americans are obsessed with "lifestyle" and that is what is putting them in the poorhouse.

Sep 15, 2011 10:28AM
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#4 is right on the button.  Story in the paper this week of a man who was a professional musician and lost everything in the recent fires in Texas, including a $20,000 violin.   He didn't have the riders on his insurance to cover the instruments and now will have to borrow money so he can buy new instruments to make a living.
Sep 18, 2011 8:09PM
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another lame article, I can think of plenty of examples when you shouldn't pay debt, here is one, kids are hungry, job security is uncertain, bankruptcy likely......then stop paying the debt and save for hard times to come.    Another example....I am heading for bankruptcy because my house is in foreclosure and I have 20k in credit card bills, does it make sense to contine making payments on those cards?  I don't think so.
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