Whether it's an unexpectedly large mortgage, higher utility costs than you budgeted for, or the desire to update your furniture, it's common for a new house to strain your finances. Before you rush to downsize, let's review ways to boost your cash flow.

Change your tax withholding.
When you take on a higher mortgage, you're paying more in interest. That interest is deductible on your federal taxes, and many people think tax refunds are as good as it gets. But you're waiting more than a year to get money you could have right now! Rather than count the days until next April 15, revise your withholding. Each paycheck will be bigger because fewer taxes are taken out up front. Last year's average federal tax refund was about $2,400—that's like finding $200 more a month in your paycheck.

Factor in the property tax break.
If you happen to be a first-time homeowner, don't forget that your property taxes are fully deductible on your federal return. The same logic applies here as above: If you anticipate getting a refund, adjust your withholding and reap the benefit of that tax break in every paycheck.

Insure smart.
Boosting the deductible on your home insurance to $1,000 can reduce your annual premium by 20 percent or more. Same with your car insurance. Look into buying your auto and home insurance from the same provider; you typically get a break of about 10 percent by having both policies with the same company.

Go mobile.
Unless you absolutely need it, get rid of your landline. Using only a cell phone can save you about $50 a month.
From the September 2006 issue of O, The Oprah Magazine

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