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Re-Evaluate Your Recurring Expenses

Written by Nickel - 19 Comments

Over the past few months, I’ve locked in hundreds of dollars worth of savings without giving up a thing. How? Easy. I re-evaluated some of our recurring monthly expenses, reduced our level of service, and we’re now saving nearly $30 per month on an ongoing basis, and without sacrificing anything.

Streamlining our Netflix subscription

As I noted awhile back, we decided to scale back our Netflix subscription because we weren’t taking full advantage of it. We’d been on the 3 DVDs at-a-time plan, but we haven’t been watching all that many DVDs. On the other hand, we use the heck out of the online streaming service thanks to our Roku player. We thus decided to drop to the 1 DVD at-a-time plan, which still gives us access to unlimited streaming.

That decision saved us roughly $8.50/month and we haven’t missed a beat. Granted, $8.50 isn’t exactly a princely sum, but it’s our $8.50, and we weren’t really gaining anything by forking it over, so we might as well keep it for ourselves.

Cutting back on cell service

Next, I was recently reviewing our cell phone bill when I realized that we’re paying for way more service than we need. We’ve been on a family plan with 700 monthly minutes at a base price of $60, but we’re nowhere near that in terms of actual usage.

We ultimately dropped from the 700 minute cell phone plan to a 550 minute plan that costs $10 less per month and which qualifies for an additional $7.50/month discount from my employer. When you figure in the nearly 15% in taxes that gets added to our bill every month, we’re looking at roughly $20/month in savings.

Where can you cut back?

I could do the typical finance-writer thing here and point at that it costs nearly $40 in per-tax earnings to cover that $28.50 in unnecessary costs (depending on your income tax bracket), or that by investing that $28.50/month at an 8% return for the next 30 years will result in a roughly $40k nest egg. But I won’t.

Instead, I’ll simply point out that I’ve merely scratched the surface here, and further challenge you to take a closer look at your own spending. Are there any areas in which you can cut back without even noticing it? If so, then do it.

This isn’t to say that you should only cut back in areas where you won’t notice the impact, that’s up to you to decide. But you have no excuse not to cut back in the pain-free areas.

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Published on February 17th, 2010 - 19 Comments
Filed under: Frugality

About the author: Nickel is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!

19 Responses to “Re-Evaluate Your Recurring Expenses”

1
Mike Lutter Says:
February 17th, 2010 at 9:37 am
I love me some netflix streaming. I think there is a much better opportunity for saving with netflix than just $8.50. The power of netflix streaming and DVDs can give you access to all the TV watching you should ever want to do. So, use that as motivation to cut out your cable or satellite bill. This could mean a $50-60 per month savings if you do it.
2
Dan Says:
February 17th, 2010 at 9:59 am
Car insurance is the easiest place to cut back (and perhaps eliminate entirely) and not notice anything.
3
Dan Says:
February 17th, 2010 at 10:00 am
That was a joke, btw…
4
Mrs. Frugal Says:
February 17th, 2010 at 10:42 am
I review our various insurance policies regularly and pretty consistently find lower rates. Recently we saved $30 / month by changing car insurance policies. We’re putting those $$ towards our debt.
5
Michael Harr @ Wealth...Uncomplicated Says:
February 17th, 2010 at 10:47 am
@Nickel – I always love these friendly reminder posts about cutting recurring expenses. It’s something that not nearly enough of us do because while it’s convenient and helpful to automate your savings, it’s convenient and well, not as helpful to automate your expenses. Often it’s the old ’sleeping dog’ trick that works against us.

You sign up to automate an expense through bill pay or auto debits and over time, you start accumulating more expenses than you need. It’s generally not until you get a ’shock’ to your financial life that you really start to evaluate what you need.

As for Netflix, after getting an HDTV, HDMI cable, wireless keyboard and mouse, and a basic cable package (mind you this isn’t the classic type with ESPN, TNT, USA, etc…this is truly basic cable), we simply started streaming all of our shows. Sure, some of them aren’t available until up to 8 days after the original airtime, but we still get everything we want for FREE online.

More important than looking at ‘dink and dunk’ expenses, I think it’s critical to examine the three black holes of budgeting. I wrote a quick piece about it here: http://bit.ly/ca8BgU
6
geo Says:
February 17th, 2010 at 10:47 am
@Dan,

Joke aside, car insurance is a great thing to look at for these kinds of savings. Increasing deductibles, or dropping collision on an old car entirely, or eliminating duplicates items like road service when you already are in an auto club can shave off a good bit which you won’t notice.
7
Pineview Style Says:
February 17th, 2010 at 11:11 am
I’ve heard about dropping collision on an old car entirely will save $$$. How much money would I save on average if I did that?
8
MikeS Says:
February 17th, 2010 at 11:35 am
@Pineview

It depends on the age of the car and a few other factors. The older the car, the smaller the premium for collision is in the first place.

As an example, I’ve got a 9 year old car with a book value of about $4000. I think my collision premium for the year was maybe $100.

You should be able to look at your policy and specifically see what is being charged for the collision premium.
9
Frank Frugal Says:
February 17th, 2010 at 12:36 pm
Those recurring expenses can make a huge difference.

Personally I like to think about things in terms of a year’s expense, to even things out. I ask myself, “Would I be willing to pay (monthly price x 12) for a year’s worth of this?” and “Would I be willing to pay (monthly difference x 12) for a year’s worth of option A instead of option B?”

This keeps things small enough that I’m able to justify the things that really are important to me, but large enough that I’ll realize the impact.

A handy rule of thumb is that $83/month becomes about $1,000/year.
10
Todd Says:
February 17th, 2010 at 12:42 pm
This may sound trivial, but automating your bills or using online billpay can really add up in postage savings over time. Several years back, we were mailing in at least 10 bills per month. That portion of our postage expense has been 100% eliminated.
11
Matt Says:
February 17th, 2010 at 4:07 pm
@ Dan: You made me wonder… then made me laugh out loud. +1 to Geo’s comments about real ways to reduce auto insurance costs. Our emergency fund allows us the flexibility to have $1k deductibles, which has helped us keep our auto premiums low.

@Nickel: 700 minutes to 550 minutes… Sounds like you use AT&T. We’ve been on the 550 minute family plan for as long as we’ve been married. I can’t remember the last time our minute usage (excluding mobile to mobile and night/weekend minutes) exceeded 250 minutes/month. I would love it if they would offer folks like us a 300 minute/month plan.

@Todd: I’m with you 100%. I’ve automated all of my bills except for the mortgage (b/c they charge a fee to auto-draft more than the required payment). Even that is paid online, though. A standard book of stamps lasts me 6 months or more now (except at Christmas time, of course).
12
craig Says:
February 17th, 2010 at 5:39 pm
1 DVD a time with Netflix is all you need with streaming. Not a lot of movies available but enough to last you till you receive your next dvd.
13
Dan Says:
February 17th, 2010 at 7:54 pm
I’m glad you guys got a laugh

I driver a ten-year-old car. First car I’ve ever bought (had it for nine years so far.) It almost qualifies for beater status, but not quite. However, it’s only worth about $1k, so to me, collision is out of the question.

What’s a more serious issue, however, is how much coverage to carry. I live in a high-cost area (metro DC) and make a pretty decent salary (upper 25% in national household income). Although I sure don’t “feel” rich (and have a negative net worth, being fresh out of school with student loan debt and all) and nor am I claiming to be rich, I’m fairy certain that I’m quite suable in the event I cause an accident that results in damage beyond the state minimums on the policy that I carry. That is to say, if somebody making what I make caused an accident that I was in, I wouldn’t think twice about taking him to court. I’d look at his paycheck and figure he’s far from broke.
14
LeanLifeCoach Says:
February 18th, 2010 at 7:18 am
Great reminder to take time and review your expenses routinely. Where there wasn’t savings last year there may well be this year. Things do change!

For us the opportunity continues to be in food. Every time we go to the store or consider what we buy we find opportunities. This has been the year of trying generics. Some work some don’t but overall all every penny counts!
15
Jenev Says:
February 19th, 2010 at 1:56 pm
Re-evaluating cell phone packages once a year has saved me a lot of money.
Currently I’m saving at least $1200 over a 2 year period by cancelling my existing cell phone contract and switching to a prepaid cell phone ‘Straight Talk’ package from WalMart.
$45 per month for unlimited calls and unlimited text, or $30 per month for 1000 anytime/anywhere minutes and 1000 text messages.
This is a super savings deal I wanted to share with you.
16
DD Says:
February 19th, 2010 at 2:19 pm
I lost a little part-time side job that was covering a few “non-identified” expenses. When that happened, I realized I better buckle up. Checking my tax withholdings on my main job to make sure that was where it should be, I found $40 month that I could get back now rather than as a refund later….my savings account pays a .0003% interest compared to the IRS’s rate of 0%. Also, cell phone, cable, and internet – I cannot tell much if any difference from reducing and racked up about $115 per month cutting off the fat.
17
MikeS Says:
February 19th, 2010 at 3:21 pm
I’ve cut about $300 of my monthly expenses over the past year. I was a little annoyed with myself for not staying on top of it better.

Things that I was able to reduce:
Car Loan: Refianced through AAA and reduced the payment by about $50 a month

Insurance: Reduced auto and homeowners insurance by about $40 a month and reduced life insurance costs about $20 a month while actually increasing coverage about $100K

Groceries: Reduced average monthly costs about $100 by using coupons and buying more generics

Electricty: Found out our state market is deregulated and I could actually shop around, switch providers and realized about $100 a month

Next up is the cell phones when the contract is up in less than a year. My vow is to not let the expenses creep up like that again. I don’t even want to think about how much money I probably wasted.
18
Deborah White Says:
February 19th, 2010 at 6:03 pm
This info was the best ever so we finally, finally got rid of cable which was 75.00 a month. Then I went to Bill Shrink and got my cell phone reduced by 34.00 a month. I got new house insurance with better coverage for 33.00 a month less, then reduced car insurance for a savings of 44.00 a month. That is 186.00 a month MORE for paying off credit cards. It was offset by the 9.95 a month for netflix but I really like it! I had to buy antennas for the TVs for local stations and the roku but those will be paid for in 1 month.
19
Frugal Babe Says:
February 21st, 2010 at 12:38 pm
We don’t pay for any cable/satellite TV service at all (and we don’t have a TV). Instead, we have cable internet and the basic Netflix package. We love the streaming Netflix. We watched the first five seasons of Lost last fall, and we’ve dabbled in several other shows – all commercial free. We’ve also watched lots of streaming movies. We watch everything on a laptop, which we just set on the coffee table. When we’re finished, we put it away, and there’s nothing taking up space in our living room.

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