financial zen

No doubt if you’re involved with Personal Finance, you’ll have figured ways to reduce your bills by some.

“Ways You Can Decrease Recurring Household Bills” from the Real Estate Journal brings it up but I think they’re missing a few key points.

They are working on cutting their bills down - but it seems they also went for more bang for their buck! They didn’t reduce prices, they allowed themselves to be upsold on their cable and internet. They didn’t look to decrease their bills, they looked for more for what they were paying.

It’s not that getting more for less is bad, but when your goal is to reduce spending, keeping bills at the same levels is detrimental and counterproductive. So you get ten more channels for the same price - great! Now you have more to watch instead of doing something with your life. Maybe that’s a bit too harsh, but do we really need 100+ cable channels when you know nothing is on that is going to satisfy you?

At the end of our test we racked up a net savings of $323 a year. Not bad, but we hoped for more after negotiating through the tangle of phone trees and inscrutable pricing plans. We actually let ourselves be talked into paying more for an upgraded service from one provider and struck out completely with two others. On the bright side, we’re no longer completely in the dark about our electric bill after hearing a clear explanation of it for the first time.

I think that one line (emphasis mine) is the saving grace. They got a better explanation of one of their bills - my problem is why didn’t they do this sooner? You should very clearly understand every bill you are paying - if not, why are you paying it? Why are you getting that bill? Will you pay my bills if I send them to you?

I’ve found an effective way to help my budget is to sign up for the budget plans with the utility companies - I’ve done it with gas and electric. They give you an estimated bill monthly, and after a year’s time they reevaluate it - I saved a ton going this route, although I initially overpaid, at the end of the year my next year’s bill was much cheaper - but I monitored my usage and made sure I wasn’t abusing the system. Personal Responsibility!

Have you had any experiences lowering your bills, or getting a better understanding of them?

MSN Money has a great article showcasing people that conquer huge debts quickly - and it makes ours look like a small pittance!

A couple paid off a $150,000 mortgage in five years, another knocked out $8,000 (of $49,000) of her credit card debt in nine months!

The stories themselves focus on a couple key components of most frugal living/personal finance topics: grads getting a house, unexpected job loss with debts out of control, or my favorite, a desired life-style change to spend more time learning and loving your family.

The key factors they really show us, are something you’ve no debt read (and will continue to read about, until everyone out there thinks of it as common-sense!) is:

Live like a college student! Just because you graduated and are ‘making the big bucks’ doesn’t mean you need to start splurging. Sure, buy yourself something nice - but save, scrimp, and pay off! It’ll be in your best interests in the long run - I know quite a few people in their thirties who tell me they wish they buckled in and paid off their debts earlier, and not delaying them and spreading them out as long as possible, to the point that after marriage and kids, it’s still an issue.

The last story, one of post-divorce, had a great list of tips (but I think they needed some help, emphasis mine):
* Opts for basic TV service — no premium channels. Why cable at all? Free TV still lives!
* Chooses a dial-up Internet connection ($9.95 a month) over high-speed service. I agree - only get High Speed if you really need it
* Buys food in bulk to last for months. Canned goods and non-perishables all the way!
* Takes his lunch to work. I skip lunch at work most days so I can eat with my wife after work - I’m a little more hungry, but it’s nice to sit with my wife.
* Makes a budget for the holidays, birthdays, etc., and sticks to it. This applies to all social events - budget, and stick to it. And do you really need a million-dollar party?
* Applies “extra” paychecks to debt (a biweekly pay schedule had provided a third check two months a year). I love the three paycheck weeks. That is debt pay-down time.
* Applies any bonuses toward his debt. Bonuses, rebates, tax refunds - all of it to your debt!
* Sets the thermostat in winter to 63 degrees. Wear warm clothes, socks, sweaters or get a space heater - preferably one with a built-in thermostat and sensor!
* Sets the air conditioner to 79. If it’s summer, be naked. The environment will thank you.
* Buys compact fluorescent light bulbs to reduce electric bills. We’re in the process of this now! Save money in the long run.
* Takes out $25 in “walking around” cash each week. When it’s gone, he doesn’t spend more. I don’t think I even hit $25 with my current budget. It’s a nice idea, though.
* Keeps the credit cards at home. I love how it’s plural. Leave them at home, frozen. With no balances.
* Shops with a list and buys only what’s on the list, and avoids looking at anything else, including sale items. When my wife and I started doing this, we noticed a drop in 50% of our grocery bill.
* Keeps his car tuned up to avoid bigger expenses. This is important to prevent that “little problem” from becoming “the big problem.”
* Doesn’t keep up with the Joneses. He says he doesn’t care what they drive, where they vacation or what they wear. I love the Joneses. They give me a model to avoid, because I don’t envy their American Express bill.
* Avoids buying coffee or food “on the go” but instead eats at home whenever possible. The little expenses add up.
* Stays away from vending machines at work. Vending machines are trap doors to fatty fat and brokey broke.
* Doesn’t play the lottery. Gambling is gambling. If you want to throw money at something, throw it to me.
* Buys broken bags of mulch and fertilizer at deep discounts. This goes for many items - always check for a discount on used/dinged goods. Cosmetic defects are just that - cosmetic.
* When shopping for appliances, buys last year’s model. Buy last years, and check out for places that have close-out deals.
* Budgets vacations and looks for coupons wherever possible. This is what we’re doing - setting a goal and time frame, and slowly budgeting towards it. When we reach it - we’re taking a vacation. Not before.

A ton of useful tips for a grad, a divorcee, or anyone looking for a lifestyle change. They mention taking a second job, which I recommend (and have done before) but remember not to stress yourself out! You need to budget your time so your loved ones don’t suffer!

Tricia (@ Blogging Away Debt) has a great article talking about MSN’s “Money trouble? It’s your own fault!”

She’s right, it reads like tough love - but one thing I think most people need to understand is that is what they (and their debt need) - a good ole’ kick to the head.

Placing blame won’t do anything except delay the inevitable. As I once read:
A young man will blame the world for his troubles, a smart man blames himself, a wise man blames no one.

People get too hung up on placing blame - on others, on themselves that they miss the whole issue - their is debt to resolve!

I once blamed the credit card lenders for preying on my ignorance - I realized it was my fault, and knocked my debt down and focused. Now, the majority of my debt is from a wedding, a honeymoon, and an emergency. It’s under control - and my wife and I are knocking away our debt like crazy. I’m looking forward to post our state of “monetary affairs” at the end of the month so we can better come to grip with our finances - we’re all ready aware we’ve got a fast-food problem!

Three days ago we canceled cable television. We mostly live on downloads of television shows and netflix.
What made me laugh was when they asked why I was canceling…

Them:”Sir, why are you canceling?”
Me:”It’s too expensive and the VOD never works.”
Them:”Well, if I sign you up for a new promotion it’ll lower your cost by $7, to $82, and it’ll add HBO for free for three months.”

No dice.

So we’re cable-free (uh, television, I mean). I kept the internet (for work and personal use, for my wife and I).

Monthly Savings: ~$45
Yearly Savings: ~$540

Boo yeah.

I read a lot about the Latte factor - that all those Lattes you buy can add up to big bucks!

Take this post from Free Money finance - he shows four examples about your daily habit, and how it adds up… over 40 years.

I agree, little factors add up. But *anything* adds up over $40 years. Let’s talk car payments - lose that car! Walk to work (or bike)! Insurance and maintenance add up, too. Don’t have kids. Live on Ramen and multi-vitamins. There are so many ways to save money if you look.

Of course, this comes in your interpretation of… The Latte Factor! If you really want to save money, those are really legitimate ways - lose the car and take the bus or move closer to work (I know a guy that bikes to work year round, another person that carpools). You don’t need to eat out everyday for lunch (do you really need to Never Eat Alone?).

The idea is - do you really need that cup of joe in the morning? Or, if you really need that coffee - do you really need it to be Starbucks brand? Do you need the $5 flavors when a $1 cup of coffee with free cream and splenda will do?

The idea is to cut out those small expenditures that we take for granted - and to cut out the ones that will cost us in the long run (smokers, I’m looking at you, same thing with Mickey D’s addicts). I don’t drink coffee in the morning (usually). If I do, it’s a $1 a cup at the little deli place downstairs - Starbucks is across the street, so if I really wanted it, I’d get it there - but I don’t. I’ve maybe been in Starbucks one dozen times, if that many. I dig the atmosphere, the whole “watch me type my novel” crap that goes on - but I don’t dig the prices.

Dong (@ AskDong.com) also points out that when you’re considering cutting lattes - you should really look at your budget and see if it’s that huge of an expense - his example shows that Dining/Going out was a huge expense over his lattes. This is an excellent example of realizing what the Latte factor is about - realizing where you are burning money - not necessarily in lattes and coffee, but in the things we do every month that we take for granted.

I’m not saying we need to go the ultimate route - No Impact Man is all about reducing his environmental foot print - and in essence, is being incredibly frugal. Borderline hippie-commune frugal. I love it. I’d love to follow in his steps, but I’m not quite at that point yet. Subway is too easy a choice when I’m studying for four hours after an eight hour day of work, and my pregnant wife is half awake. Maybe someday, but today!

Anyone else do the latte factor? Have you seen that it’s not your lattes but something else eating your money?

Dawn at Frugal for Life has written an excellent article about ways to save a dollar a day.

I can’t agree with all of them more than I all ready do!

• Cancel cable/satellite - or at least downgrade. Do you really need to have 100+ channels?
• Do you need a cell phone and a home phone? My wife and I have cell phones - no land line. It’s worked great for two years.
• Quit smoking! This one, other than saving money, will let you lead a healthier life. Stick around so you can see your kids growing up.

She’s got a lot more listed, and it’s definitely worth a run through.