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Big changes, big savings
By Tammy Barton

At MyBudget we make a point of reminding our clients that little changes to their spending habits turn into big savings over time. If you stop buying your lunch and start bringing it from home, you’ll save up to $2,000 a year. Even cutting back on a daily cappuccino will save around $1,000 over 12 months. But sometimes small changes aren’t enough. Sometimes it takes a big change to shake up a budget. Here are two big changes that make a big difference.

Sell a car

According to the NRMA, the average cost of running a family sedan is around $250 a week or $13,000 a year. As you would expect, small cars are cheaper to run, at an average of around $170 a week or about $8,800 over 12 months. NRMA's annual survey includes all the factors that influence the cost of running the vehicle, including fuel, insurance, registration, interest on finance and the hidden cost of depreciation.

Getting rid of a car, therefore—even a small one—can make a huge impact on your budget. It's worth asking the question "Can we be a one car family?" Can we take the bus to work instead of driving? Can we carpool? If you're a single person driving a large car, perhaps it's time to think about downsizing to a smaller one. The environment will also appreciate your lighter carbon footprint.

Reduce your housing costs

For most Australians, housing is their largest regular expense. Statistics show that the average cost of housing now represents around 28 percent of income for low income earners. Many middle and high income earners also find themselves with mortgages and rent payments that are breaking the bank. Reducing your housing costs, therefore, is a great way to positively affect your budget.

One of our clients quickly paid off a large credit card debt by moving out of her inner-city apartment and back home with her parents. It took some adjusting to, but she instantly saved $1,600 a month by giving up her lease. That’s nearly $20,000 a year. With the money she also saved on utilities and by buying groceries instead of eating out alone, her credit card bill was paid off within 12 months. You don’t have to move back in with your folks—even just downsizing to smaller accommodations or moving further out of the city may save you hundreds of dollars every month. You’ll not only save money in rent or mortgage payments, but smaller accommodations also cost less to heat, cool, maintain and furnish.

Clients who have spare room in their home, but aren’t ready to downsize, can reduce their housing expenses by taking in a roommate or boarder. Look back at our March 2010 article about cutting your housing costs by finding the perfect “roomie”. The savings here are potentially big—a lodger not only pays for their accommodation, but they also contribute to other household expenses.

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