Budgeting 101: Your Monthly Expenses Need An Overhaul

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I was flicking through the channels on my cable TV years ago when I stumbled upon premium movie channels HBO and Showtime. “Cool!” I remember thinking to myself…knowing when I signed up for my Time Warner cable package, I had only signed on for a lower package. “Free premium channels!”

You’re probably not as naïve as I was then. As you may have guessed, this was part of a free trial that later expired…but the premium channels stuck around at their regular monthly prices. My old self did not budget whatsoever, and with autopay set up the increasing cable bill went unnoticed for far too long. The lesson? Pay attention to your television bill, yes. But even more so – analyze your expenses to remove as much waste as possible.

Consumers too frequently ignore small monthly expenses. It’s why QVC will sell you a pair of $69.95(!) flip flops for 5 easy payments of $13.99. Think about that. This month I need to make my mortgage payment, my car payment, pay the electric bill…oh, and pay my flip flop bill.

Ok, so 5 payments of $13.99 come out to $69.95. So at least you aren’t paying interest to finance your flip flops. But at some point spreading the cost of flip flops over five months should tell you that $70 flip flops are not really in your budget.

The point is, even small monthly payments add up. And if those monthly payments consist of premium cable channels you didn’t know you had or a pair of flip flops that are already in the closet for winter, that money should be routed someone much more useful.

Where Can I Cut Back?

Beware of little expenses. A small leak will sink a great ship. ~Benjamin Franklin

This is why I emphasize the importance of budgeting. Budgeting begins to unearth all the potentially wasteful spending. If budgeting still isn’t your taste – at least look at a recent bank statement or credit card bill to understand what some of your regular bills look like.  Free services like Personal Capital are great ways to compile all expenses and give a detailed summary of your spending.

A great place to start is with television, home phone and cell phone bills.  This is how I attacked our budgeting deficiencies when we first got serious about our financial lives.

Television: TV is rapidly changing, with companies like Netflix and Amazon leading the charge to offer alternatives to the standard cable experience. Cable isn’t dead yet…but they are being forced to change the way they provide content.

Now is our time to take advantage as a consumer. With lots of movies and television series available through Netflix and Amazon Prime, not to mention original shows, now is a great time to consider cutting the cable cord for good. You can always add an HD antenna to keep your local channels. Many times the antenna will offer an even greater picture than cable since many cable providers still do not stream in 1080P. Netflix is now streaming some shows in 4K Ultra HD.

Another great option is Sling TV, started by Dish Network. Sling TV is a modern version of cable offering popular channels for $20 per month. You can stream online through your mobile devices or at home with your Roku, Amazon Fire TV, Apple TV or Chromecast. And the service tries to distance itself from cable with no setup fees, long-term contracts, or rising monthly bills (at least yet).

Just about the only people left out from these options – and it’s a fairly large population – are fans of live sports. Live sports are likely the primary reason that cable TV has survived in its current state for so long since they have had a stranglehold on the industry for years.

This may be changing now though. Sling TV offers several ESPN and FOX Sports channels, though they are currently offered in separate $20 packages. And many major sporting events like the Olympics, most golf majors, and NFL football can be viewed on local telecasts via an HD antenna.

At the very least, if you still want to hold onto cable or satellite, be sure to review the pricing levels and call to make sure you are receiving the best promo rates available. This may mean calling every six to twelve months and threatening to cancel your service. But it can often save you at least $20 per month.

Home Phone: If you still have a need for a home phone, there are some incredible (read: cheap) services available today. If you have phone service from a company like Comcast – take note of these options.

  • Google Voice. This is my favorite right now. Google offers a free phone number through a service called Google Voice. It allows you to make and receive free U.S. and Canada phone calls (provided you are located in the United States or Canada) from the Google Hangouts plugin in Gmail or app on your smartphone. You can also have Google Voice forward calls to a number of your choosing, like your cell phone or work phone.

But my favorite feature is that Google Voice can actually replace your home phone completely with free caller ID and voicemail. And there is no monthly fee whatsoever. The only one-time cost is buying a VoIP phone adapter for about $40-50 on Amazon.com. The adapter plugs into your home internet via Ethernet and attaches to a regular wireless home phone via phone line. Using your Google Voice phone number, you can now make and receive free U.S. and Canada phone calls to your home phone. International rates are extremely cheap as well.

From my experience, the call quality is excellent and other callers cannot tell the difference. Caller ID works well, and I have many options for receiving voicemail – including having Google transcribe the message and texting it to my phone. Pretty cool!

  • Ooma: Similar to the Google Voice home phone service, Ooma provides VoIP calling using your regular home phone.   The service also requires the purchase of an adapter in order to make and receive phone calls. The adapter costs under $100 on Amazon. Like Google Voice, there is not a fee for monthly calling service, but unlike Google Voice, you must pay a few bucks per month for taxes and fees.

Ooma customers are typically very satisfied with their service, and the Ooma phone adapter has an overall rating of 4.3/5 on Amazon.

  • magicJack: At a cost of about $35 per year, or $100 for five years, magicJack offers another alternative to your standard home phone companies at a fraction of the cost. The equipment for magicJack costs about $60 and you pay for one or five years of service off the bat. There are no additional monthly fees and magicJack offers you a free conference call number and a companion mobile app to receive calls on your cell phone.

All three options offer home phone service at a fraction of the cost of typical phone companies.

Cell Phone: Landlines have moved closer to extinction thanks to cell phones.

You are undoubtedly familiar with the main four companies – Verizon, AT&T, Sprint, and T-Mobile. But believe it or not, there are plenty of other choices. And many of these alternatives run on the same reliable networks as Verizon and AT&T for a reduced cost, even if you want the fancy new iPhone.

The option that is best for you depends on your location. Toptenreviews.com compiled a list of the top providers and rated their coverage and quality. To understand which company will offer you the best price for your data, talk and texting needs, websites like WhistleOut.com offer comparisons for your own situation.

Okay, fine. But what about the other stuff?

We always look for ways to cut our monthly expenses.  Here are some other tips.

  • Does your checking account charge you monthly maintenance fees? Many require a minimum balance to avoid these fees. If the minimum balance is not something you can consistently maintain, you have other options! Ally Bank and Capital One 360 offer interest checking accounts with no monthly maintenance fees. The interest is not a lot, but better than most other options. And I personally cannot stand paying maintenance fees to hold my money somewhere earning interest far less than inflation. That’s why I never have.
  • Still paying for the local newspaper? There are many free news sources online that will give you the same coverage and all the breaking news you can handle. But you (hopefully) already knew that.
  • Paying for a gym membership that you rarely use? Join a cheaper gym that offers fewer bells and whistles but still gives you a place to workout when you need it. If you have the space in your home, consider setting up an area where you can work out. There are free workouts that can easily be found on YouTube. All you need is a yoga mat and some athletic gear.
  • Want to lower your energy bill? Consider making your home more energy efficient. Replacing windows can be costly, but new shades or temporary plastic window insulator kits for the really cold or hot months can keep your home more comfortable and the energy bill down. LED light bulbs are becoming more affordable and have much longer lifespans than incandescent lighting. And they cost at least six times less to operate. Program your thermostat to reduce heating and air conditioning usage when you are not home.

And there are countless more. Once you’ve compiled a list of your monthly expenses, tackle each individually. Ask the question for each item, “What can I do differently to reduce or eliminate this cost?”

Once my family started to cut out wasteful spending, we sped up our student loan debt pay down until it was $0 and starting investing after that. The future looks a whole lot brighter!

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2017-05-02T21:45:00+00:00 March 16, 2017 7:00 am|Categories: Budgeting, Recommendations|Tags: , , |0 Comments

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