22nd April 2016 –
First off, a big welcome to all of the new readers who have come on board following my cheeky little promo on Reddit FI Australia. I hope you enjoy my articles and get some value out of them. Your comments and feedback are always welcome.
So let’s get started…….
This week’s article is borrowed, more or less, from moneyning.com along with my own 5 cents worth added in for good measure. Moneyning.com is a well written blog by David Ning who, after a successful career in IT and sales, gave up the daily 9 to 5 at aged 28, and retired early. He now struggles to find enough hours in the day being a full-time dad as well as managing his personal finance websites. It’s well worth checking out at moneyning.com.
One of the quickest and easiest ways to reduce your spending each month is to take a look at the most common expenses. The ones you faithfully, but reluctantly, pay every month. I’m talking about ‘the monthly bills’. You know the ones I mean……electricity, gas, mobile phone, home phone/internet, Fox or Sky TV subscription, insurance, and so on.
If you’re smart, you’ve probably set these up on automatic payment so that they always get paid on time and you never miss the due date or get hit with late payment penalties.
I’m guessing, in most cases, you just take a passing glance at the invoice when it arrives and if it looks similar to last month, just pay it without another thought.
Well, with a little bit of research and effort on your part, I’ll bet that you can easily shave hundreds of dollars off these bills each year.
Take a look at these examples……
- Mobile phone – Do you currently have an on-account plan with plenty of text, calling minutes and data? Chances are that you never come close to using your ‘allowance’ each month but are still paying for it regardless. Then, at the end of each billing cycle, it’s gone, and you start all over again. Have a look through your next bill and see how much you are actually using. Then have a look at what alternative plans are available or consider a pre-paid plan. The other thing to consider is that mobile phone companies are constantly bringing out new, cheaper plans to stay competitive. However, they never tell their existing customers they could get a better deal if they change, so you could be paying a fortune for a legacy plan while I get the same usage for a fraction of the price.
- Home Phone – Do you still have a home telephone line? That’s so 1980s… Consider how much time you spend on the home phone each month and there’s a good chance it’ll fit within your mobile plan. So why have it? The only exception here is if you need a physical line for your internet connection. But if you get charged for all calls, including local, like here in Australia, then don’t use it for calling. We have a physical line for our internet but no phone plugged in.
- Internet – Have you looked into the different technology (and thus, options) available to you? If you are a low volume user, could you actually use your internet-capable mobile phone and hook it up to a PC (known as tethering) to get essentially the same service for a fraction of the cost? If you require a larger amount of data, shop around to find the best deals and look for reviews of the different providers on the web. Remember, they all use the same technology and physical cable to deliver it to your door so once it’s up and running, why would you want to pay a premium, each month, charged by some providers.
- Pay TV – There are now plenty of legal alternatives to Fox and Sky TV and most are significantly cheaper too. Unless you are unable to live without your live sport fix for the Rugby Union or Rugby League (depending where you live) why pay $60 or more each month for the rest of the crap they show. Netflix, Stan, Lightbox etc. have so much content available for less than a quarter of the price, and with no lock-in contracts you can pick and choose who you want to watch on a month-by-month basis if you want. And another tip from me. If you want to see all of the overseas content that Netflix won’t show here because of licensing agreements, check out an unblock-us.com subscription as well to unlock the content that the rest of the world get to watch.
- Gym Membership – Gym? Do you actually go anymore? Or did you start with a ‘hiss and a roar’ for a few months and now you just dangle your membership card from your keychain? Guess what, just having a gym subscriptions doesn’t get you fitter, it just gets you poorer!! Most people are going after a healthy and fit body instead of becoming a muscle man (or lady). The fittest people are always the ones who go out to jog every day. They run on the road, on the beach and in the parks. You don’t need to smell other people’s sweat and pay a bunch of money just to stay fit right?
- Clubs, Newsletters, Subscriptions – Enough said. Unless they provide real value, stop paying for them.
- Electricity – Many tricks for saving power we already know, but in order to save money every month, we have to change our habits. Turning off lights and electronics whenever they’re not needed, dial down the hot water heater to 45 degrees, and opening windows or use fans instead of A/C are all simple ways to not only save but to put less strain on the overall environment. Also, power companies operate in a similar way to mobile phone companies and are always offering cheaper plans or incentives to win new business. Of course, if you are a loyal existing customer, thanks for your payment each month, but don’t expect to hear about the better deals. So shop around and when you find a better deal, it’s so easy to change supplier now. Just do it and reap the rewards.
- Medication – Check with you doctor to see if you can switch your prescriptions to generic brands. In most cases, you’ll get the same medication but much cheaper. Same applies to a number of over-the-counter meds such as pain relief and cold medicines.
- Cars – Oil changes and regular maintenance may be out of your league but wash your own cars, please. And check your tyre pressure at least once a month. Tyres that are underinflated by 25% will increase fuel consumption by 2% as well as increasing wear on the tyres, and affect braking and handling (A little tip from the Stig there).
- Insurance Companies – Firstly, how much insurance do you have, and do you really need it? Most people carry too much insurance ‘just in case’. You could be paying a fortune in premiums each year for unnecessary amounts of cover. I’ll take a look at this in an upcoming post. But in the meantime, see if you can pay your premiums monthly without penalty, instead of a lump sum each year. It’s far easier on the wallet to pay monthly. Ahhhhh, that feels better already. This is one of the most competitive industries out there and all of these companies want your business. If you find a better deal from another company and are happy with who you’re with, give them an opportunity to match it. If not, goodbye!! I saved an easy $250 a year on my car insurance by comparing online, and got a far more comprehensive package at the same time.
- Review annually – Finally, review your regular bill providers at least once a year to see if they are offering you the best deal or just to see how keen they are to retain your business. Be upfront and tell them that you are shopping around and see what they come back with.
We’re so use to the cost of services increasing over time, you may find, that with a bit of research, many of them actually reduce which will put money back in your pocket, or at least offset any increases from others. You could be surprised how much you can save.
You can read the original post here at moneyning.com
So let us know how you manage to save money and keep your expenses in check each month.
In next week’s article we’re going to call in some experts when we look at how carrying large amounts of debt is going to kill your chances of reaching your financial independence goal, and some proven ways of digging yourself out of this great big steaming pile of financial poo. See you then.