June 29, 2015

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If you’ve looked at your monthly spending and realized that you need to cut back, I think there are basically two ways you can go about it.

You can cut back on your discretionary spending, aka the money you spend after you’ve paid your bills. People talk a lot about saving money in this category. Common tips for this type of savings include “pack a lunch instead of going to a restaurant” or “rent a movie from the library instead of going to the theatre” or “use coupons at the grocery store!”

It seems like most people — and most finance blogs — focus on the first kind of spending. Which can be a mistake. I mean, it’s never a bad idea to keep an eye on your discretionary spending and make frugal choices when and where you can. But there are two main reasons why this can be the wrong place to start when you need to lower your expenses.

Cuts to discretionary spending are often too small to make a real difference to your budget. Coupons are well and good, but do you really want to spend time every month looking up coupons, printing them, cutting them from the newspaper, organizing them, and driving to different stores to use them, all so that you can save 50 cents on creamed corn? The return on your time is minuscule. This is often referred to as the latte factor: finance “gurus” love to shame you for buying lattes instead of making coffee at home. But many others believe that it’s not worth beating yourself up over a few dollars a day. And I’ve written before about how deals and discounts can trick you into wasting money.

And it takes constant vigilance!


You have to remember every day to pack your lunch, home brew your coffee, use your coupons, get the discount. The human brain can only handle making so many decisions in a day. It’s easy to get burnt out on budgeting when it eats up so much of your daily brain power.

So let’s talk about the second kind of spending: installed spending, aka the money that you already know you’ll have to spend at the beginning of the month. This includes your rent or mortgage, any student or car loan payments, your bills, insurance, or other recurring expenses. This is where you can really make huge changes in your life. First of all, you can see big numbers here. You spend way more on your house every month than on your food, right? (I mean, god, I hope so.) And second of all, you only have to put in the work in one big up-front push, and then you just sit back and feel the savings forever!


There are big ways to do this — downsize to a smaller home, sell your car and buy a cheaper one with a lower (or no) payment, refinance your student loans — but these are huge, multi-step processes that each deserve their own blog post. Today I’m just going to write about one thing you can do today: negotiate your bills.

Step One: Make a list of all of your recurring expenses.

The usual suspects are your cell phone bill, your cable bill and internet bill (often this is the same carrier), your car and home/renter’s insurance, your electricity bill and your heating bill.

Step Two: Do some research.

Here’s what you’re looking for: deals that your provider offers to new customers; competitors in your area offering the same service at a lower price; coupons or special offers for the service.

Step Three: Make changes on your own.

Some deals can be activated online. Many services offer discounts if you sign up for auto-pay. For example, the bank that services my auto loans offers a reduction of 0.25% on my loan interest if I have a direct deposit. Also, make sure that you’re using everything that you’re paying for. Does your phone plan include more data than you use? Are you wasting heat or electricity? Do you really watch all those cable channels? The first move you can make is to switch to a cheaper version of what you already use, or make plans to reduce your electricity / heat consumption.

Step Four: Make some calls.

Once you’ve done all you can via the web, it’s time to start negotiating for what you use by phone. Or, if you’re like many people I know and hate phone calls more than the thought of actual, literal torture, get a chatty friend to make the calls for you. Find the number for the support line, and keep pushing whatever buttons you have to push to get through the automated answering system and talk to a real person.


Step Five: Be nice.

A lot of people will tell you to be really bossy and harsh with the call center employee but in my experience that doesn’t make them want to help you. Ask them how their day is going. Explain, kindly, that you are calling to find out if there’s any way that your monthly bill could be lowered.

Step Six: Expect resistance.

Call center employees have one of the worst jobs on earth, and their pay is usually determined by whether they get you spend more money, not less. There’s no incentive for them to help you. If they say that they can’t help you, first you pull out your research. “Okay, I understand, but your website is advertising a lower rate on the same service I use. Why can’t I receive that rate?” Or, “I noticed that [your competitor] is offering a similar service for a lower rate. I like your service and I’d like to stick with you, but I can only afford to do that if you can match or beat their lower rate.”

Step Seven: Ask for a manager.

Usually you have to go through a few levels before you reach someone who is authorized to give you the deal. Be patient.

Step Eight: If all else fails, call again.

When I called to get my internet bill lowered, the first guy who picked up the phone was no help. He “couldn’t” offer me a deal, wouldn’t pass me to a manager, and just kept saying, “But if you upgraded to a TV and landline bundle, you could get more value for the money!” Ughhhhhh.

So I ended the call, got some tea, did some stretches, and called back. The guy who picked up the phone this time literally said, “You’re paying the full rate? Mrs. McGrath, no one pays the full rate!” In about one minute flat, he lowered my rate by $18 a month.

Step Nine: Be prepared to switch providers.

There are some services that just don’t negotiate. Insurance is a big one. Almost always, the best thing you can do with insurance is skip the bargaining and just move straight to a new company. Do this every year or two. Insurance companies love to raise the rates on you a bit and a bit, so that like the frog in pot of water, you don’t notice that you’ve reached boiling until it’s too late. It can also make sense to switch energy companies and shop around for the lowest price of oil, depending on what’s available in your area.

Earlier this year, inspired by the “Challenge Everything” posts by my favorite blogger, J. Money of, I spent a Saturday lowering my bills. I received reductions on my internet bill and cell phone bill, and I switched insurance providers. This one day of work saved me more than $500 a year.


Obviously, coupons can go shove it.

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