One of the best ways to save money without decreasing your standard of living is to pay less for services you already pay for anyway - such as auto insurance.  One area that can play a major role but is often overlooked is debt service.

Most of us carry debt.  Student loans, credit cards, auto loans, and mortgages can add up to a heavy burden.  By debt service, I mean the cost of carrying that debt…most easily seen in terms of the interest rate.  For example, if you have $5,000 in credit card debt at 20% APR, you are paying $1,000 each year to “service”, or pay for, that debt. 

So the first step I want you to take in auditing your expenses is to consider the debt that you have and see how to reduce the debt service costs.  Look at your most recent credit card statement.  It should tell you what the annual percentage rate on the card is.  Credit card rates are generally between 10% and 20%.  If your rate is at the high end of that spectrum, and you have good history with that card (meaning that you’ve made on time payments as long as you’ve had the card), then call your credit card company and negotiate that rate! 

Often, the card company will agree to reduce your rate.  If not, I like to play hardball with the card companies.  Assuming your credit is good, you probably have plenty of card offers on the table.  Ask to speak with a manager, and explain that you have a better offer but would be happy to keep your business with your current company if they can bring your rate down to, say, 12%.  If not, you are thinking about cancelling the card.  The manager may balk, but will more often than not try to accomodate your request.  

Even if you don’t carry a balance from month to month, it may be worth talking down your rates.  When you run into financial difficulties at some point, time spent securing that lower rate may pay off.

Of course, the best way to deal with credit card debt is to eliminate it.  Same goes for auto loans.  Once you’ve saved up a little cusion of emergency funds, bend every effort towards paying off that debt.  Once you’ve paid off one card or loan, direct that payment amount towards other debt. 

You should treat student loans at low interest rates and mortgages somewhat differently, however.  Student loans and mortgages are generally deductible off of your income taxes, typically have very attractive rates, and (in the case of mortgages) allow you to leverage your money into an appreciating asset (a house).  Thus you may want to hold onto your student loans and mortgages, and invest any surplus cash flow.  But pay off those credit cards and auto loans!