Honestly, I don't know how we survived the years of failing to pay attention to our finances. Obviously, we are now paying for that blindness: our debt load is far too high despite our income, and we always feel like we have no money. But, we forge ahead, looking for places to cut without eating into our lifestyle in large ways (such as selling our house and buying a smaller place would do). Although we continue to look for bigger ways to save, I have reduced over 300.00 in monthly "expenses," by just cutting back on some of the things we had automatically billed monthly. I was shocked at how a few "luxuries," can really add up -- $300.00 per month is $3,600.00 per year!!!!!!!
In an effort to help you find some of your own hidden costs, I will tell you what we did. First of all, by organizing and tracking our finances, we were able to figure out what we were spending and where we were spending it. Thus, step one is to organize your finances. That will give you a good idea of what you are spending your money on: you look at your debit receipts, credit card receipts and checks, and, although you won't know everything, you will see where you spend quite a bit of your money.
If you are like my family, you probably signed up for some goods or services that you can get more cheaply or can live without. In our case, we reviewed our homeowner's insurance and found that by increasing the deductible to $1,000.00 for an incident (from $200.00), we could save about $900.00 per year or $75.00 per month. Next to go was Poland Springs home water delivery. I signed up for it on a walk on our neighborhood boardwalk on a hot summer day a few years back. I thought that it would be ideal to get water delivered and to have our very own water cooler. Well, by the time I cancelled it, it had crept up to a $60.00 per month charge. I cancelled it, and, instead, I buy bottled water at the supermarket or at Costco for about $20.00 per month. That's a $40.00 savings.
One day, I was listening to Jim Cramer talk to the head of AOL and they both got a laugh over the fact that although AOL was offering free service to those who had a different method of connecting to the internet (such as cable as I myself have), about 50% of such people were still paying for AOL. I was part of that group. I contacted AOL that same day, shaving another $25.00 off of my monthly expenses -- with absolutely no repercussions whatsoever on our lifestyle. I also cut down some of my minutes on my cell service with another savings of $35.00 per month. Why did I do that? Well, I wasn't using the number of minutes I had signed up for -- one phone call and I got a lower plan. That saved me about $30.00 per month. I may save another $15.00 per month by getting rid of the phone insurance: I have been reading reports showing how such plans are not worth the money. (I haven't done it yet, so I am not including it).
In going over my credit card statements, I noticed that my Blockbuster monthly fee, which started at $22.00 per month for unlimited rentals, had crept up to $38.00 per month. We hardly even use it, so, out it went. At the same time, I walked across the street and cancelled my daughter's gym membership which had crept up to $70.00 per month from about $55.00 per month when we signed her up. She doesn't use it, we have a treadmill in our house, and plenty of equipment if she chooses to work out. Just an unneccesary expense. Finally, today, I bit the bullet on cable: we have the ultra-premium "gold" package, with every channel imaginable; however, other than HBO, and one show a year on Showtime, we do not watch the movie channels all that much. We do sometimes, though, but, it is definately a luxury to have so much abundance -- especially when that abundance costs an additional $50.00 per month. So, I cut to a much lower package -- no movie channels.
I keep looking at my bills to identify those places where we are spending unnecessarily. When I find others, I plan to cut those that we can. Some areas I still need to research are in the insurance arena: a better homeowner's, car insurance premium or life insurance/disability premium might further reduce monthly outlays. Those are for the future right now, because we are in the middle of cycles for them, and I do not have the time or inclination to make those sorts of decisions.
I also finally moved to a true budget to further refine our spending patterns and to, hopefully, find other areas where we are spending unnecessarily. However, even before I budgeted, I was able to save my family all of these expenses without really hurting our lifestyle. In fact, the water change just made my job a drop harder (as the shopper and carrier of the water from the supermarket), but did not change the family's ability to drink water. We do not miss Blockbuster at all: We still have a membership; I rented one movie over vacation, and, once in a while, we rent an on-demand movie from our cable service. That is fine for our movie needs for now. Paying for a gym membership that you don't use is a hard one: it is sort of like giving up on a hope. But unless you use the gym, that money should not go into the gym owners' pockets. Gyms make a great deal of money off of people who do not use them. Use it or get rid of it. When you are ready for it, it will be there for you again. The other things were just wasteful spending: paying for minutes we weren't using, and for a service that was free.
Little changes: huge savings. The grand total of savings is $328.00 per month or $3,946.00 per year. Imagine if I take all of that money and put it toward debt reduction -- I will certainly achieve my goal of being debt free far sooner than if I keep putting it into someone else's pockets. Where are you clearly "wasting money?" Look at everything and get rid of those things that are not really of value to you. While $50.00 in a vacuum may not feel like a lot of money, added to $20.00 here and $30.00 there, it adds up -- a lot.
Also, this change has allowed me to adjust my thinking as well: before I sign up for a monthly service or fee, I give myself time to think about whether or not it is something I can use. Very often, it is not. Then, it just ends up being money wasted and does no good in getting us toward our goals. And I have learned something else. Do not worry over what you have not done in the past: look at your future and work from there. Otherwise, the guilt over wasteful spending will eat away at you. Notice how I did not focus on what I could have saved over all this time that I was spending -- that money is gone. But the money that I do not spend in the future: that is going toward my goal of being debt free.
Savings:
Homeowner's insurance: $75.00
Poland Spring: $40.00
AOL: $25.00
Verizon: $30.00
Blockbuster: $38.00
Gym: $70.00
Cable: $50.00
GRAND TOTAL: $328.00 per month or $3946.00 per year!