Big changes, big savings

You've probably heard that cutting back on small, everyday luxuries (like your morning latte or once-a-week takeout) can help you save more for retirement. While small changes will add up, the truth is that those savings aren't likely to have a noticeable impact on your financial future. To make a real difference, you need to think bigger.

"The good news is that you can make a big change now that will drastically improve how much money you have for retirement," says Katie Ross, education and development manager at American Consumer Credit Counseling. Consider these four changes as you plan for the next chapter in your life.

1. Become a one-car household. 
   "Cars are expensive to buy and maintain, and they take up a big chunk of your budget," says Ross. If you live and work in an area where it's practical to travel by bike or use public transportation, you can save hundreds each month by not having a second car. Some people may even be spending as much as $1,000 a month on their vehicle between monthly payments, insurance, repairs, and gas. "That's significant money that could go toward your retirement savings," Ross adds.
2. Downsize your home. 
   Are you living in a home that has more space than you actually need? Then consider this: You're also paying more to heat it, cool it, furnish it, and maintain it. "If you have built enough equity in your home, you can make out well by selling and downsizing," says Ross. You can then funnel the profit from the home sale right into your retirement account.
3. Make a move. 
   If you bought your house to be in a great school district, chances are that you're paying higher taxes than you need to today. Once your kids have flown the nest, you should ask yourself if there are other reasons keeping you where you are. "You can likely move to a less expensive city or town—even one nearby—and enjoy most of the same benefits but at a lower cost," says Ross.
4. Refinance your mortgage. 
   If moving isn't an option due to family or employment commitments, consider refinancing. "One of the biggest line items in every budget is the mortgage payment," says Ross. "If you're able to refinance for a lower rate, this can result in a substantial savings each month." The only downside to refinancing? You will be paying for your home longer. However, putting that extra cash into retirement savings now means that compounding interest is setting you up for financial comfort down the road.