If you're like most people, then your monthly telephone payment is simply a must-have bill that has to be paid. When it comes time to tightening up the budget or get rid of some of the luxuries, the phone bill will probably be near the bottom of the list. But that doesn't mean you can't do anything to reduce your monthly payment. One alternative many people are starting to use now is Internet telephony, also known as Voice Over IP or "VoIP" for short. But how does this stuff work and can it really save you money?

Internet Telephony 101

In a nutshell, internet telephony works by using your existing internet connection to make phone calls. You simply sign up with the service provider of your choice, choose your calling plan (similar to when you sign up for mobile phone service) and you can take advantage of quite a few benefits over traditional telephone service. First, the phone company charges you extra for long distance calling. If you make a lot of long distance calls, you might not have any idea how much your phone bill is going to be until they mail you your statement. That can be a real shock if you're not keeping track of your calling but with most internet-based phone services, long distance is included in the flat monthly rate.

when you sign up for most internet phone services, you can either keep your existing number, choose a new number or do both. The benefits of keeping your old number are obvious. But there are some advantages to adding a second number also. That's because when you pick your new number, you can choose any area code, even if it's not in your local area. So imagine you have family or friends that live across the country. You could simply add a second number based on their area code, which would cost you a few extra dollars per month. Then, they can call you anytime they want and to them (and on their bill) it's a local call. Depending on how often you talk with friends and family out of your local area, this might be an attractive, money-saving option for you.

Another great aspect of internet telephony is that most services offer you a wide range of features as a standard part of their calling plans. These features are normally things you would have to pay extra for when you sign up with your local phone company - features like call waiting, caller ID, voice mail, call forwarding, etc. Features like these usually come as a standard part of the calling plans offered by the major providers. And the calls are just as clear as what you get with your traditional phone service, if not better.

In a previous article, we wrote about how you can reduce debt simply by saving money on your major household utilities. The basic idea is: Reduce the utility bills, so you can put more money towards paying off the debts faster. This article looks at simple ways you can reduce your telephone bills.

1. Turn off the long distance. Yes this may sound drastic, but you'll be amazed at how much money you save. Most phone companies charge you a set fee each month to have long distance service - even if you don't use it. You're also charged more in taxes and other misc fees when you have long distance phone service. Not having the service will also make you think twice instead of simply picking up the phone and calling long distance anytime you feel like it.

That doesn't mean you should go without long distance service though. When you turn this service off with your telephone company, you should replace it with a more financially controllable source.

My favorite long distance alternative is calling cards. Spend just $20 once on a calling card, and you'll have much better control over how much is spent for long distance calls. You don't pay anything extra if you don't make calls one month, and the service is there whenever you need it. Once you've depleated the time available, it's simple, quick and easy to refresh the card.

Another alternative to long distance telephone service is becomming quite popular: The Internet. Email and Instant Messages are used by almost everyone these days, and most Instant Message programs allow you to talk by voice now too. Some even allow you to have both voice and video, so you can actually see the person you're talking long distance to!

2. Turn off the bundled services. Many telephone companies today are trying to sell you on bundles. They claim that by adding 10 different services to your telephone, you'll actually save money. Well... You might be surprised.

In my own experience actually, it was not the case. I added up the services individually and found I was paying more with the bundle than I would have if I'd added them all separately. And to make things worse: I didn't need or want over half of them.

So consider your extra, or bundled, phone services closely. Do you actually need three way calling? Do you use it? What about call return or call waiting? Are they essential to your everyday life? Some people will say yes to these, but I suspect most of us don't really need every single extra we've currently got on our phone bill.

One of the best ways to reduce existing debts, is to pay extra on those debts each and every month. Most Americans with large amounts of debt however, believe they don't have a dime to spare for paying extra. It may be easier than you think though. There are a myriad of ways to save money every day, but this article will concentrate on how to save money with one of your most expensive household utilities: Electricity.

Tips on Reducing Your Electric Bill:

1. Plant trees around your home. Trees are particularly useful, because they provide the most shade. You'll want to place the trees to provide the best amount of shade for large windows, and large sections of your roof. Planting trees alone can reduce the temperature by as much as 20 degrees. Creating this reduction in temperature around your house allows your cooling system to not work as hard, and this saves money on the bill.

Trees which shed their leaves in winter are the best investment, because they allow the sun in during winter. This allows your heating system to not work as hard, because the sun provides additional warmth naturally. The trees will also help reduce wind hitting your house, again helping your heating system to do it's job.

2. Clean your appliances. This may seem like a given for many, but I'm not talking about normal cleaning. Your refrigerator has coils on the back, and these get quite dusty and dirty. The more dirt that's built up, the harder the fridge has to work - and the more energy it uses. So clean the coils thoroughly at least twice a year. This will help reduce your electric bill and also increase the life of your fridge too.

Next you need to clean your air conditioner. Or the filter in it rather. Most cooling units have filters in them that collect dust, dirt and grime throughout the year. These need to be cleaned no less than once each year, but twice is better. If you live in a very dusty area, you'll need to clean the filters once a month during the hot season.

The third major appliance that needs to be cleaned is your furnace, or heating unit. These also tend to have filters, and those filters also need to be cleaned regularly. Cleaning this one at the start of the cold season is good, but cleaning it at least twice a year is better.

3. Unplug small appliances. Many people don't realize that small appliances can use electricity even when they're not in use. Modern coffee pots and microwaves are great examples: They have a digital clock display that's on all the time. By unplugging some or all of your smaller appliances, you can reduce the amount of overall electricity being used in your home most hours of the day.

4. Adjust your thermostat. By placing your cooling unit at 72 or higher, and your heating unit at 68 or lower, you can cut the cost of your electricity by as much as 30% each year. Additionally: Adjust the thermostats when you're not home - before you go to work for instance, or before leaving for vacation.

Know Where you Stand

Prior to making any financial transaction, you need to know what is exactly your financial situation and what do you expect to achieve. The usual advice at this point is to be realistic. However, don’t exclude anything and if you have goals you think are too hard to reach, just put them a “long term goal” tag, but don’t forget about them. All your dreams can be achieved as long as you have discipline.

Make a budget and include in it all your income and expenses. Divide expenses in daily, weekly, monthly and yearly expenses so you won’t leave anything aside. You can then multiply the daily and weekly expenses to know their monthly incidence and divide the yearly expenses for the same purpose.

Prepare a report with all your debts. It doesn’t matter who you owe the money, include any loans from family members, friends and lending institutions. Include the loan amount, the due time, interest rate if any, and all the information you have.

Cut on your Expenses and Debt

Now is the time to do some mayor fastening. Analyze all the information included in your budget and tag expenses with the following labels: essential, non-essential, superfluous. The difference between non-essential and superfluous expenses is that non-essential expenses are avoidable but contribute to your well-being, such as gym or yoga classes while superfluous expenses are avoidable and do not contribute to your well being.

Immediately cut on all your superfluous expenses and do whatever possible to cut at least a 30% on your non-essential expenses. Try to find a cheaper gym, or reduce the frequency of attendance to classes, etc.

Make a list with the most onerous outstanding loans and lines of credit you have. Usually Pay Day Loans, Credit Cards, and Personal Unsecured Loans are the most expensive. Try to get a consolidation loan in order to cancel these debts. If not possible, destine as much money as feasible to pay off the highest interest rate loan or credit card first and pay only the minimum on the others. Once the first debt is paid off, go on with the next one and so on.

Before buying anything see if you have the cash to pay for it. If you don’t, then, you can’t afford it and you need to keep that in mind. The second step is to see if the purchase falls into the essential category. If it does and you can’t wait, then buy it. If it doesn’t, avoid that spending till you have the cash to afford it even if you would use your credit card to buy it.

Many people dread going on a budget because they feel like they will have to give up so much in order to save money. They equate living on a budget to living in poverty. What many people don’t understand is that there are ways to live on a budget and still have fun.

Don’t lose everything

Instead of cutting all the luxury out of your budget, keep a few things that are necessary to survival. So you might have to start bringing your coffee to work every day instead of getting Starbucks every day, you can still go for your weekly trip to the ice cream parlor. Budgeting can’t be instantaneous; it is something that takes time. Give up a little at a time, and it won’t be so bad

Do what you love

Living on a budget does mean you have to cut out unnecessary spending, but it doesn’t mean you can’t still reward yourself. One thing that people cut out of their lives when they go on a budget is eating out. They think this means they are doomed to a life of boxed macaroni and cheese and cheap ground beef at home forever. Why not try to make a fancy meal at home? Do you love the vegetable lasagna at your favorite Italian Restaurant? Well try making it at home? It is much cheaper, and nothing tastes better than hard work. Instead of going to a movie at night, go to a Saturday matinee, which is sure to cut the cost down by at least a few dollars. Eat before you go so you won’t be tempted to buy snacks. You don’t have to completely cut out fun, just scale it down a bit.