Day 7 Steer Your Spending in the Right Direction

LEARN IT

Now that you have smart goals for your money, let’s make sure that you free up money for them by cutting out spending on things you don’t want or need.

The first set of items we’ll look at is your regular monthly costs. Often, you pay these costs with your bills every month and don’t think about them much. But precisely because they are constant, you have to watch them to make sure you aren’t automatically wasting money on things you aren’t using anymore or don’t need.

Consider this: if one of these bills is $10 more a month than it needs to be, then you are wasting $120 a year. And if you have five bills that are $10 more than they need to be, then you are wasting $600 a year. That’s more than the cost of most domestic flights—and is probably a good chunk toward one of your goals.

It’s easier to cut than you think. If you have a lot of rollover minutes every month on your cell phone contract, for example, you can probably downgrade. But that’s just one of the obvious ways to cut. We’ll walk you through the less visible ones right now.

Determine Your Monthly Expenses and Bills

Head to your Inbox and look for regular expenses that come in every month or every couple of weeks, like gym memberships, cell phone, utility and other bills, and automatic donations or subscriptions.

Take out a pen and paper and create two columns: one for items you don’t or almost never use and the other for things you use. Put each expense in one of these columns:

Things You DON’T Use:

This might include the gym, your cable, your landline, whatever—you probably already know in the back of your head what things you’re paying for but seldom or never use. Cut these. If you’re on the fence, ask yourself:

• How often do I use this a month? If it’s less than once a week, stop your subscription.
• Is the service I’m getting something that I can get elsewhere more cheaply or for free? If the answer is yes, then what are you waiting for? Stop wasting money on this, and save it instead for one of your big goals.

For example, if you only watch your cable on the weekends you’re actually in town, then you might consider cutting cable and watching your favorite shows online. Single episodes are just a few bucks on iTunes and many shows are free on Hulu. This one switch could save you $70 a month—or $840 a year.

Or, maybe you only make it to the gym once a week, making each visit a costly $25. Maybe you could instead go running in your neighborhood or pick up some exercise videos you like.

Things You USE:

For these, call the company—whether it’s your cell phone, cable, car insurance company or what have you—and negotiate a better deal. Back when you signed up, you probably selected the package that best fit your needs. But since then, perhaps your needs or the company’s offerings have changed and you can get a cheaper rate that more closely matches your usage.

One way to quickly see whether there are better deals for you is Billshrink.com. The site will analyze your current services and produce other offers—and lead you right to the proper sign-up page.

If you decide you want to stick with your provider but negotiate your package, follow these tips:

• Start with a goal in mind, whether that’s a competing offer from another company or even the introductory offer of your own company.
• Bypass normal customer service and ask for the cancellation department, which has deals specifically meant to retain disgruntled customers.
• Let the rep know that you’ve done research, tell him the rate you’re hoping for, and threaten to leave.
• If the rep offers you different services or promotional upgrades, look for the thorn. After a trial period will the price go back up? If so, mark the date on your calendar to cancel the promotion.
• Be assertive. Don’t take the first small price decrease they offer you.

Take a Look Around Your Home

One last way to cut your regular costs is to address the vampire in your house—the one sucking energy out of your home and money out of your wallet. Basically, every appliance that is plugged in but not being used at the moment is actually sending your electricity meter higher—and your bank account lower.

Some quick ways to cut your utility bill include:

Now, head back to your Budget to see how much more room you have in your budget after cutting in each of these categories. How much more can you set aside for your goals?

GET INVOLVED

WHAT TIPS DO YOU HAVE FOR CUTTING YOUR NECESSARY EXPENSES?
Share them now!