Reducing Fixed Costs and Behavioral Spending Patterns With These Money Saving Hacks
In several podcasts and blogs I’ve covered budgeting, cash flow and gorilla money saving. Now, I’d like to do something I have never done before and that’s dig into the details. I want to look at some fixed expenses in your budget where you can make cuts, eventually leading to saving you thousands of dollars in the long-run. And these money saving hacks probably have never crossed your mind!
When thinking in terms of details I ask:
“What are some of the things we subscribe to or pay for?”
“Is it possible to cut this cost out?”
“If you shop around will you find a better deal?”
The answer is yes!
There are so many times that we forget that shopping around for a better price is one of the greatest money saving hacks out there.
Don’t be the guy on the treadmill. That guy is mindlessly paying bills each month. You are learning to be savvy. You are shopping for the better deal. You practice money saving hacks that are guaranteed, unlike buying a lotto ticket!
Money Saving Hacks with Your Phone(s)
Case in point, just like everyone else, you get a phone bill every month and you pay it. If you think about all the smartphone competition out there, you will realize there are so many options in reducing your monthly cell phone bill.
You could find a mobile virtual network operator (MVNO). These providers (Cricket, Republic Wireless, Virgin Mobile and Boost) lease wireless telephone and data service from major carriers (think Verizon, Sprint or T-Mobile). That means you are still at 4G and you maintain great sound quality. However, as money saving hacks go, you are slashing your bill by a quarter.
As always, read the fine print or ask questions to ensure the service will meet your personal needs.
Currently, Sprint has a plan that is FREE. After taxes you are spending approximately seven dollars. This one change will save you up to $2,000 per year.
When I moved from Las Vegas to San Diego in August. I had to change my cell phone service from Verizon because we couldn’t get any service in San Diego. I was stoked when we changed to T-Mobile and saved 30%. They didn’t work out either–no service!
Now I’m trying Google FI. I was originally worried about the networks they run off of. So far, I’ve been pleasantly surprised. Here is a breakdown of what I pay:
- $20 for a phone (unlimited calls and texts)
- $10/GB up to 6 GB (After 6 GB there is a cap and your bill/data is free for the rest of the month)
Since I typically use less than 1 GB, I was excited because my bill will likely be $30; my wife’s will be even less. This might be one of my favorite money saving hacks!
It turns out that running across multiple networks provides better service. You are not stuck with one network, depending on the area you are in some networks run better (or worse).
Google FI and T-Mobile are the best cell phone providers If you travel Internationally. Sprint is also solid choice for international travel, which comes standard to your plan. There are other major companies that you will have to pay a daily or monthly international plan which would defeat the money saving hacks mindset. These would be more expensive and the service would probably not be as good as Google FI.
When starting to use money saving hacks your cell phone service is a great first step. What is a great second step?
Money Saving Hacks with Your Insurance Costs
Insurance prices are based on algorithms that determine the risk that you will file a claim on your policy. Individual insurance companies put more weight on different factors than another company would. Some of those Algorithms insurance companies look at are:
- Zip code
- Credit history
- Marital Status
- Driving record
After my wife’s fellowship we moved to the 24 hour city of Las Vegas. The car insurance in Vegas was horrible. It was through the roof expensive, double compared to what we were paying in San Diego.
We saved 53% by switching to Geico when we moved back to San Diego. We went with a bundled insurance plan for our two cars and house.
[Disclaimer: I am not getting paid by Geico to endorse their insurance company!]
If you take an online defensive driving course you could save a couple of hundred dollars. And remember the Algorithms list? Improve your credit history. What other ways can you save on auto insurance?
- Shop insurance companies
- Keep a good credit history
- Check for low mileage discounts
- Bundling house and car insurance
- Determine insurance costs prior to purchasing a car
- Raise your deductible or reduce optional insurance on an old car
Those are two great money saving hacks that have worked for me. This is one of the money saving hacks that might seem more immediate and personal. Maybe even emotional–I’m talking about the grocery bill!
Money Saving Hacks with the Grocery Bill
This is a trainwreck area for me. I spend too much money when I go to the store. I also buy too much and then it goes to waste. I would think that is pretty typical for a lot of families. Having said that, this is the place to make a quick cut to your bill.
Caution: It may take a little bit of planning.
A solid example is never walk into the grocery store while you are hungry. Doing that is an impulse purchase (or several) just waiting to happen! So, one of my money saving hacks is to plan to eat before you grocery shop.
[easy-tweet tweet=”Sometimes you just need to know which spouse handles shopping better, too, right? Because if you have the tendency to walk in a store and not think about what you need than want, you just might over spend. – @howtomoneyjoel” user=”physician wealth” url=”https://financialresidency.com/?post_type=portfolio&p=3444&preview=true”]
Remember that Aldi is your friend. Aldi is a small grocery store with a peaceful feel. It has wide, uncluttered isles and very few employees. With the simple floor plan, the basic selection of products and do it yourself bagging–the savings are passed on to you.
I’ve written in prior blogs about the psychology behind behavioral spending–and the grocery store is a perfect example. One of the most important money saving hacks is to understand what happens to you at the grocery store doors. The manipulation the supermarkets use to keep you trapped within their walls is notable. The floor plan, the product placement, lighting and music are all designed to delay your departure and influence your purchases.
Other grocery bill money saving hacks are:
- Use a list
- Pack your lunch
- Eat what you buy
- Change where you shop
One the most comical (but true) of the money saving hacks that I’ve heard was that leaving your kids at home while you grocery shop is like getting a $20 off coupon!
Money Saving Hacks and Entertainment
You can save money and still have plenty of screen time with your favorite shows. All you have to do is cut your cable and go with online streaming. While the content of these services have expanded their prices start at just $20. This could lead to saving a couple of hundred dollars a month.
An added benefit is more time for your family or you could start a podcast like I did!
Some online streaming services are:
- Amazon Prime
- Sling TV
- HBO Now
- Amazon Prime Video
- YouTube TV
And there are many more.
Money Saving Hacks: Considering Initial and Secondary Costs
Most people only look at the initial cost of something. One of the most important money saving hacks is to ask yourself: What the total cost will be in the long run.
An example is when you are buying a house. The bank will tell you how much you can afford. The bank benefits from how much they can convince you to borrow. What they want you to borrow may not be what you can actually afford.
That is especially true if you take your own priorities and goals into consideration.
Plus, after the initial expense of buying a house, there are other costs to consider:
- Closing costs
- Home inspections
- Initial home repairs
- Future home repairs
- Homeowners Insurance
- Heating/Air conditioning cost depending on the size of the home
Then there are some “soft” costs that new homeowners don’t consider. The lure of buying new furniture or appliances to fill the house.
One of the money saving hacks associated with buying a new home or car is to consider the long term financial repercussions.
Money Saving Hacks and the Case of the $5,000 Used Car
Joel Larsgaard related a story to me of one of his listeners. The listener did a breakdown of what a $5,000 car would cost him over five years. He considered the cost, taxes, insurance, gas, maintenance, etc.
He then considered the fact that he lived in downtown Seattle. What if he took alternative modes of transportation (renting a zipcar, taking the bus, scooter) instead of buying a car?
It turned out that there was a $22,000 difference in favor of using public transport options!
We don’t know if he considered depreciation. That is something that needs to be taken into consideration.
My friend Robert Ferrington, who was on my podcast discussing student loans, doesn’t own a car. He has a wife and children. His wife has a car but he uses Uber to go everywhere in San Diego. He figured out that it was less expensive to Uber everywhere (and give tips) than to own a car.
If you are single and don’t have car seats–I can see how some of these options might work. If you have children with their car seats, I don’t see how it would work.
Money Saving Hacks and Your Hobbies
The way money saving hacks impacts your choice of hobby depends on far you want to go with your choice. How much do you want to spend on clothes, equipment or travel for your hobby? What is the most import thing that you gain from your hobby? Is it companionship?
There are ways to think about your hobbies to clarify why you want to pursue this hobby and why it matters to you.
Money Saving Hacks and Social Comparison
I had Sarah Fallaw on talking about her book The Next Millionaire Next Door and we talked about the physician millionaire and what that looks like. We are constantly bombarded with advertisements and emails. How does this affect what we decide to do? Does this affect how effective our money saving hacks are?
How does advertising play into our decisions? Our needs, wants and wishes? It turns out that advertising and the people we surround ourselves with have the greatest impact on our wants and wishes.
They trigger the need to buy or the “I’m not enough” mode of thinking. They tell us we need to raise our status level or that we need to improve ourselves in multiple ways.
This is a marathon–not a short term sprint.
Joel from the podcast How to Money shared with me that his opinion is that envy, not greed is the major problem in our culture today. The people that have the least stress and the most meaning in their lives are living below their means. The people that are living to impress their neighbors or friends are not happy or fulfilled.
My hope for today is that I have shared some money saving hacks that will help you live your best life and become financially independent. I’ve packed the tips in from saving on your phone, insurance and grocery bill. I am hoping the discussion on saving money on entertainment, estimating what is important about your hobbies and the secondary of any decision will help you on your journey to financial independence.
As you start to implement these money saving hacks make one change at a time. Then take some time to adjust and then make another change.
Which of the money saving hacks interested you the most? Why did that one interest you? How soon do you plan to start making changes with these money saving hacks?
Be sure to share us with a physician friend of family that you know could really use good financial information! They’ll thank you later.