Families today are watching every dime they spend, and some are making rather drastic reductions in an effort to save money. While some budget cuts can be beneficial and can ease the burden of financial stress, “saving money” in certain areas now may actually cost you money in the long run. Here are four key areas that you should avoid cutting back on.
Home Maintenance
When you are trying to live within a tight budget, it is easy to let things like a slow drip in the bathroom faucet fall to the back-burner in an effort to save money. Some repair issues, however, can cost you money and should be dealt with immediately. For example, that slow drip in the faucet will cost you a fortune in wasted water over time if it is not repaired (either through municipal water charges or extra electricity if you have your own well-pump). Of course, when you do make repairs, you can attempt to make some repairs on your own (replacing the washer to stop the drip may only cost a dollar or two in parts). Taking a do-it-yourself approach can save money, but this is not always the case. For example, incorrectly repairing a leaky pipe may result in more significant plumbing damage as well as the possibility of water damage in your home. A small drip outside the sink is much more urgent than a drip in the sink because it doesn’t take long for moisture to rot floors and create mold damage thus requiring thousands of dollars in replacement costs for walls and floors.
Other Expensive Leaks
Another source of leaks is in roofing and gutters. A simple blocked gutter can cause water to back up and get behind the facia board and cause all kinds of water damage as can a leaky roof.
Air leaks around windows and doors will cause your heating or air-conditioner to have to work harder to keep up and increase your utility bills by much more than the cost of sealing the leak.
And of course the most expensive leak of all: Gas leaks which can cause explosions destroying your whole house!
Never take shortcuts or procrastinate on necessary home repairs and maintenance.
Auto Insurance
Many people are reducing their auto insurance to the minimum amount required by law. In many states, this minimum coverage only pays for the damages you cause to others. It may not pay for your expenses like car repairs, medical bills related to an accident and more. Without ample coverage, you may have to pay for these expenses out of your own funds. Furthermore, even the state’s minimum liability coverage may not fully cover the expenses that you caused to another driver, and that driver may sue you for damages. It may be best to keep your coverage in place and lower your premium by shopping for lower rates, maximizing your use of discounts and adjusting your deductible.
Family Medications
Many adults and kids alike take prescription drugs on a regular basis. This may be medication for asthma, migraines, birth control, depression and more. If your prescriptions are unaffordable for you, you may decide not to refill your prescription when you run out of medication. However, this can ultimately result in more significant health issues in some cases. It is better to search for more affordable ways to get the medication you need. For example, if your medication is not covered by your insurance or if your coverage only pays a small portion of the cost, consider shopping for a prescription drug plan or a new health insurance plan. You can also talk to your doctor about alternative medications or generic brands that are available. Walmart and many other pharmacies now have a $4 generic plan that allows you to get your generic prescription filled for only $4 per month.
Minimum Monthly Payments
When your budget is really tight, you may feel that you have no choice but to skip a credit card or auto loan payment. However, even a single late payment can have multiple negative effects. For example, if you are late on your credit card payment, you may be charged a late fee, and your interest rate may increase. In addition to the expense of the late fees, this could result in your minimum monthly payments going up and in greater difficulty reducing your debt balance. Furthermore, your credit rating will suffer, and this can affect your cost of credit for new loans in the future. It may be best to ask your auto loan company to extend your loan by a month or two so that you can skip a payment or to consolidate your credit card accounts to reduce your monthly debt load.
While there are many expenses that you can cut back on without significant ramifications, there are some things that you really cannot afford to cut back on. Keep these points in mind as you make reductions in your budget.
See Also:
What You Need to Know About Deducting Travel Expenses
Appliances That Bump Up Your Electricity Bill
Highly Skilled Worker Shortage in a Recession?
10 Things You Need to Know Before Starting a Home Business
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Photo Credits: By Bryn Pinzgauer