You’d probably think it was hard in some way, like that I spent a ton of time working on securing these savings, or that I cut back on something I didn’t want to cut back on.
What if I added that I made these cuts in about an hour, and I didn’t have to sacrifice anything I really liked doing to get there?
Now that I’ve got your attention, I want to talk to you about recurring charges.
These are the purchases that get posted to your debit or credit card every month without you doing a single thing about it, beyond that one time when you signed up and gave the vendor permission to charge you monthly.
This could be anything from an insurance bill to a gym membership to a Netflix subscription – and unless they’re really big expenses, you probably don’t even notice them when they hit your account.
But if you take the time to notice them, and figure out how much value you’re really getting out of them...
You could save big bucks, just like I did.
How to Get Started
Get your printer handy – or, let’s be serious, mosey on over to the printer at the office – and print out a copy of your latest credit card bill.
Don’t worry, I’m not going to make you sit down and examine all of your spending right now. I’m not even going to make you add anything up unless you want to.
All you need to do right now is to highlight or circle every single charge on the card that left your account without you having to do anything about it.
If you didn’t have to swipe, sign, insert your chip, or wave your wallet in front of a card reader, that expense goes on this list.
It’s a list of everything you once-upon-a-time gave someone permission to charge you, and today’s task is a simple one.
You just need to make a commitment to look those recurring expenses in the eye, and figure out if you still want them to be able to charge you that amount every month.
(And if you notice something that didn’t have prior approval? Call your bank and report that, stat.)
Related: Debit vs Credit Card
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How to handle different categories of recurring expenses
Not all of these expenses will be created equally, either.
This list will contain a range from necessary bills, all the way down to “Oh my god I spent $20 on in-app purchases for a mindless game I play on my work breaks.”
Since the categories are different, you’ll need different strategies to tackle each one.
Here’s how to handle each category, and the types of expenses you’ll want to watch out for in each.
Big, Recurring Bills
This is the Big Kahuna, and will (likely) be the biggest chunk of your list if we look at it from a dollars-spent perspective. It’ll include things like your internet, cell phone bill, insurance bills and cable costs (we’ll handle things like Netflix separately, don’t worry).
When you’ve got a list of big-ticket regular bills that come out of your accounts every month like clockwork, here’s what you need to do to tackle that list.
Step 1. See how much they really cost altogether.
When you add up these big monthly commitments, be prepared for a bit of a surprise.
They probably represent a not-so-insignificant portion of your monthly spending, and it happens entirely behind the scenes.
You know that “But I didn’t even get takeout this month, where did all my money go?!” feeling? Yup, these expenses are responsible for a big chunk of it.
Step 2. Check in on your usage.
Your next step is to look at how much of each regular expense you’re actually using…
...or how much you want to use in an ideal world.
For example, if you’re paying for 900 channels, but between you and the people who live in your house, you watch all of three hours of TV every week, and it’s all on five channels? You probably aren’t getting the full use out of that deluxe cable package.
Just about every big bill will have some kind of usage component – even insurance.
Dig into the details of each package, and evaluate how it measures up against the coverage, packages and benefits you actually need it to provide.
Step 3. Compare your rates.
Even if you need to keep every single feature and benefit and gigabyte and channel involved in your bill, that’s no reason to accept the current price you’re paying.
If you’re comparing a bill like your cable or internet, head over to Google and check out known competitors and what they’re charging for similar packages. If you could save $40 a month on a bill with the same level of service, that’s $480 a year.
If you’re looking at a bill that has dozens of different competitors who offer similar products (ahem, I’m looking at you, insurance) check out one of the websites that lets you compare your rates and get dozens of quotes online automatically.
Step 4. Call to negotiate.
If you’ve compared your rates, and checked your usage, and still aren’t convinced that switching is worth the hassle…
Then try to work with your current provider to lower your rates. Call them up and let them know about the better offer.
It’s cheaper to keep a customer than it is to gain a new one in most cases, so they have plenty of incentive to try to match or compete with the offers you found in order to keep you around.
Now that we’ve got your big, regular bills out of the way, it’s time to tackle your subscriptions.
This could be just about anything, from your Netflix account to a software you use for your hobby to a Spotify premium account.
Typically, these expenses will fall in the $10 to $50 range, but don’t be fooled:
Even a few $10 expenses a month can add up to hundreds and hundreds of dollars a year.
Once you’ve got a list of your different subscriptions in front of you, here’s how to make sure you’re actually getting value for your (recurring) dollars.
Step 1. Identify usage.
Just like you did with your bigger bills, check in on how much you’re actually using each service.
If you pay $10 a month for a membership to an online learning platform like Skillshare, but you haven’t watched a lesson in over four months?
You know what to do.
The same goes for services that you forgot you signed up for (and never cancelled) and services you aren’t using enough to justify the cost.
Step 2. Look at sharing options.
Now I’m not suggesting you share a Netflix password with 30 people, but if you live with roommates or a partner and use the same services, you might be able to switch to a family plan that gives you all access to the service…
...for a deep discount per person.
Talk to the people in your life, and compare notes on which services you use.
If you’re ready for the next step, of signing up for a family plan, it could save you both (or all) a lot of money in the long term.
Step 3. Cancel as needed.
If you find services that you don’t use anymore, this is an important step:
Do not pass go, do not collect $200, until you have cancelled every single one of them.
Some services will let you do this from the comfort of your online account, but others will make you call and speak to a real live human to get your account shut down.
No matter what hurdles they put in your way, if you’ve identified recurring charges you don’t use, or don’t want, cancelling is a must.
And sooner rather than later.
Step 4. Avoid the free-trial trap.
To avoid getting caught with subscription services you don’t use in the future, pay close attention to what happens when you sign up for a free trial.
If you need to input your credit card details to access the trial, you’ll be presented with a timeframe. After that timeframe is up? You’ll be charged every month for the service.
So, as soon as you’re done signing up, head over to your calendar tool of choice, and set a reminder for two days before your card is going to be charged. When you get that notification, it’s decision time:
Are you ready to pay for this service monthly, or did you forget all about it?
If you forgot, that’s the perfect time to cancel before it costs you anything.
Apps in which you spend money
There’s another sneaky category that deserves an honourable mention in the money-you-spend-without-thinking-about-it category, that you might not have even included.
It’s money you spend on your phone, without ever touching a credit or debit card – much less cash.
Thanks to apps, Apple Pay and other payment options on our phones, it’s easy to abstract these payments as “not real spending.”
I’m talking about things like Uber, in-app purchases, and any app that lets you order food while processing the payment in the background.
Since you put off the “pain” of paying, it can feel like a recurring payment that happens in the background, which is why you need to take a hard look at it once a month.
Step 1. Identify usage.
First, just get a sense of how much you’re spending in these kinds of apps.
Even a $10 Uber ride a few times a month can eclipse your internet bill, which isn’t an insignificant line item, so it pays to be aware. (Many of these apps make money primarily based on luring you into spending more, because you don’t notice it in the moment.)
Step 2. Set budgets.
If you find yourself spending more than you’d like, but wanting to keep the convenience and entertainment value of spending money in apps on your phone, the simplest step to take is to set a budget.
Give yourself a certain amount of money to spend, and once you’ve gone over it, cut yourself off.
Step 3. Remove access if required.
I joke all the time that I need someone to child-lock my phone, because of my penchant for in-app purchases…
But this is a legitimate option if you have someone in your life you trust, and you need to cut back on your phone spending.
Basically, you can lock your phone with a code that you’ll need to enter before processing any transactions. If you don’t know the code, and your person won’t give it to you? Problem solved.
The final step: Tally up your savings
If you’ve made any cuts – from negotiating down your internet bill, to cutting out a subscription, to setting a strict budget for your Uber usage – make a list of everything you just saved on a monthly basis.
Then multiply that number by 12.
That’s how much you just saved every year.
Not too bad for less than an hour’s worth of work, right?