(Part 2 of a 3 part series on getting your finances in order) Link to Part 1: 5 Ways To Get Out of Debit

Lower your big monthly bills

Consider refinancing your mortgage and car loans – typically, the biggest bills a family pays each month – at lower interest rates. This will increase the amount of money you’ll be able to save.

1)  As you gradually pay off your consumer debt, your credit score will rise. This will make you eligible for lower interest rates on your mortgage. (Check your credit score at no cost through annualcreditreport.com.) Talk with your mortgage broker regularly to see whether interest rates have declined.  Or search for lower rates online. Bankrate.com updates mortgage rates weekly based on data from banks across the country.

2)  Pay off your car loan with a home equity line of credit. Typically, home equity loans carry lower interest rates than car loans. The interest you pay each month is tax deductible. Search for the lowest rates at bankrate.com and interest.com.

Spend Less

After digging yourself out of debt, here are strategies that will keep you in the black.

1)  Don’t place yourself in situations where you’re likely to make impulse purchases – for example, don’t wander through Borders on your lunch hour if you can’t resist magazines or CDs.  If you receive a lot of catalogs at home, cancel them through catalogchoice.org.

2)  Don’t shop recreationally.  Instead of “going to the mall” for fun, make a list of the items that you need, and go only to the stores where you can find a good price on them.  If window-shopping tempts you to spend, don’t go to movie theaters or restaurants in shopping malls.

3)  Don’t shop online.  Make it more difficult to log on to shopping sites by not bookmarking them.  Think of the Internet as a source of information, not a source of shopping entertainment!

4)  Put yourself on a spending allowance. Calculate the amount that you can afford to spend each week on discretionary expenses, such as buying lunch, clothing, books, music, coffee, dinners out, movies, and so on.  Go to the ATM on Friday; withdraw that amount, and don’t take out any more cash (or use a charge card!) during the week.  If you spend your money over the weekend, pack your lunches, and don’t go out to eat or shop until the following Friday.

5)  Turn frugality into a game.  See how much you can save by bringing lunch from home.  Form a thrift group at your church to share coupons and inexpensive recipes and to exchange ideas about free activities in your community.  Substitute a healthy activity – like a swim or walk – for a shopping spree.

(The next part – “Start Saving Now” – will be posted next week)