3 Ways to Save Money (A Lot of Money!)

save a lot of moneyI’m sure you are familiar with the “latte-factor”, which was popularized by David Bach in his Automatic Millionaire book series. For those of you who are unaware of this, it is the idea that cutting out small expenses from your budget, like buying coffee, adds up over time. If you can find a few things to cut from your budget, over time, you will save a lot of money.

Better Ways to Save A Lot of Money

Personally, I have nothing against the latte-factor. I think it is a good idea and a nice way to save a lot of money. However, I think you shouldn’t just focus on the small things that you spend money on. I think you should also focus on a few big things that can have a dramatic impact on your finances.

For most of us, cars, houses and insurance are our largest expenditures. Over the years, we pay huge sums of money to our mortgage company and our insurance company. Why not look to save money there?

Car & Home Insurance

For many, this expense rises over the years and we just accept it. This is a big mistake. You need to review your insurance coverage and shop around for better prices on an annual basis. Case in point, this past weekend a friend and I were talking. She told me how much her car insurance was. She showed me her policy and I was surprised at how much she was paying. I encouraged her to get a few free quotes just to see if she was paying an inflated amount. She jumped online and spent 10 minutes getting free insurance quotes from Geico and Esurance. In both cases, her premium would be close to $300 lower with these companies than her current one. Talk about an easy way to save a lot of money!

I told her that she shouldn’t just pick to the cheapest insurer. She should check out some reviews first just to see how they stack up when it comes time to submit a claim. I also told her to check out a few insurance providers that offer both home and auto insurance because by combining them with one insurer, she will qualify for multi-line discounts, which should save her even more money.

Personally, I was with one insurance company for over 10 years. My policy kept rising even though I never made a claim, nor had a speeding ticket or accident. I shopped around and found I could save over $150 per year with another insurer that was rated even better than the one at that time. I jumped ship and didn’t look back. Now I get a free quote each year just to see if what I pay is reasonable. I encourage you to do the same. Again, it takes no time at all and you might realize you are over spending unnecessarily.

One other point with car and home insurance is your deductible. This is the amount of money you are responsible for paying out of pocket should you file a claim. When first driving or owning a home, money might be tight. As a result, the deductible you choose will be low. But now that it has been a few years and you have an emergency fund established and you are stronger financial ground, you need to raise your deductible. Choosing to pay $1,000 out of pocket as opposed to $500 will lower your premium.

Going back to my friend, her quotes were “apples-to-apples” meaning we kept everything the same when comparing policies. Then we raised her deductibles from $500 to $1,000 and her savings were even greater. If you choose to not get a free quote, at least review your deductible and raise it if you can afford to do so.


With the drop in housing prices, many homeowners are still underwater. If you are one of the few who is not (or one of the many that qualify for HARP or HAMP), I encourage you to look into refinancing. Rates are at historic lows right now. As of this writing, you can get a 15 year fixed mortgage for under 3%. When you factor inflation into the picture, you are essentially paying a 0% interest rate!

This was another topic I discussed with my friend. She refinanced a few years ago to a 30 year mortgage at 5.375%. Since rates have dropped since then, she can now refinance into a 15 year fixed mortgage and her monthly payment will increase by $200 per month. She will pay off the loan 15 years faster and save over $130,000 in interest.

Your first step in the process is to see what your current lender can do. From there, get a quote from one or two other banks just to make sure you are getting the best rate possible. If you find out that you can’t refinance, look into paying your mortgage off early to save thousands in interest charges.

For your convenience, here is a refinance rate table from Bankrate that allows you to enter some information and get current rates. (Note that you can scroll down the list further than what is shown.)


For the most part, avoid buying a brand new car. When you factor depreciation into the mix, it’s a losing battle. The only scenario where you could justify buying a new car is if you keep the car until the wheels fall off, it has been a reliable vehicle in the past (meaning you could get 200,000 miles out of it) and you either pay cash or can get an interest rate under 3%. Otherwise, your best bet is to buy a car that is a few years old that is in great shape. Doing so will save you thousands of dollars.

Also, try to stay away from sports cars or other types of cars that carry high insurance premiums with them. This will also save you money over the life of the car. Lastly, make sure you follow the maintenance schedule for the car as well. It may be a pain to take it to a mechanic (not the dealership) and have the routine maintenance completed, but doing so will greatly improve the chances of the vehicle lasting for as long as possible.

(Note to readers: if you click on the link for the insurance and refinance quotes and get a free quote from any of the insurers listed on the page, I do get compensated. Thank you in advance to anyone who completes a free quote.)

Readers, what are other areas that you can save a lot of money?

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  1. says

    Outside of what you listed, our next biggest expenditure is food. We spent way too much last year, mostly because we ate out more than I expected. That is easy to do with four kids who are always on the go doing some activity. I’m trying to cut about 20% off our food budget this year by planning better, having more cheap, cooked at home meals each week, making more Costco runs and by eating out less.
    Brian @ Luke1428 recently posted..Bikes, Lies and Video GamesMy Profile

  2. says

    A combination of the obvious little things (latte-factor) plus the big things (mortgage, car, etc) is probably the best way to tackle shaving money off of your monthly expenses. Tackling something like your food budget, which is full of lots of individual and not necessarily related spending decisions, should come later.
    My Financial Independence Journey recently posted..8 Things To Do Before You Start Investing (or most of personal finance summed up in one post)My Profile

  3. says

    Insurance is a big one. When I went to go renew my home insurance, I thought I was getting a heavy discount with one company through my employer. They were a bit difficult to deal with, so I went shopping for insurance rates and found one company that would give me BETTER insurance for $500 less per year than even the discounted insurance company.
    Tushar @ Everything Finance recently posted..Financial Goal for the New Year: Boost Your Retirement SavingsMy Profile

  4. Sue D says

    CABLE, (did I just yell?) after listening to my husband whine for five long years, we took the plunge and got rid of it and the cable phone in one fell swoop. We start saving 100.00 a month for the first time this month. Will be doing my happy dance when the auto pay is down to 60.00 or so. Next, finding a cheaper internet provider, any suggestions for someone in WI?

    • moneysma says

      Congrats on canceling it! I’d love to do the same, but I enjoy sports too much. If I could find a way to watch sports without cable, it would be gone in a heartbeat. As for internet providers in WI, I am not sure. I’m over on the east coast, so I’m sure the providers are different. Hopefully another commenter near WI will have some suggestions.

  5. says

    Great insights and points! We recently cut out netflix from our budget as we our Amazon Prime members and they now have a streaming feature. We also cancelled my cell phones insurance which was $10/month as I am now eligible for a free upgrade. I’m perfectly happy with my iPhone 4 and won’t be upgrading anytime soon. Long story short just by doing some spring cleaning to our budget at the end of last year we were able to save approximately $60/month.

  6. says

    Buying a brand new car is good for the following reasons – you get a warranty so you don’t have to pay for parts for like 5 years and you get a lot of mileage. If you buy an old car you will spend half your life in the repair shop, trust me. However, buying a car that is 2-3 years old in perfect condition is the best case scenario (if you can find such a vehicle).

  7. says

    Regarding insurance, I saved some money (although it wasn’t much, just under $20/year, but every little bit counts, right?) by combining my home and auto insurance to be under the same provider.

    The biggest money saver I would say is cooking your own meals. I now consider going out to eat a luxury due to the overpriced food, but treating yourself once in awhile is fine.
    MakintheBacon$ recently posted..Financial History Does Repeat ItselfMy Profile

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