Week 9: February 25th-March 3, 2007
New Habit: Un-fixing Fixed Expenses
Frugal Habit? Yup.
When frugal people talk about cutting costs, we are usually talking
about expenses such as groceries, electric, fuel, and other areas that
vary according to usage. Although fixed expenses such as rent,
insurance, and telephone take up the majority of our paychecks, we
can’t lower them, right? Wrong.
As satisfying as it may be to shave $20 off your weekly grocery bill, it
lacks the budgetary OOMPH of drastically lowering a fixed payment.
It may be more difficult initially to negotiate a lower insurance bill or
find a cheaper cellular plan, but those savings will be there month
after month without any further effort. Also, savings on actual bills are
more likely to end up in your savings account because you can
permanently adjust your budget. This week, I decided to make a habit
of looking more critically at the big picture. Here are the areas I
examined:
I. Rent. If you own your home, you can skip this section because
your housing expenses are an investment. The rest of us should
make a habit of keeping an eye out for a sweet deal on housing. True
bargains are rarely listed in the classifieds, but ask around and check
out unconventional sources such as craigslist. In my case, I didn’t find
anything because my family already has one of those extraordinary
deals. Due to unique circumstances, our landlords are more
interested in keeping their property in pristine condition than
collecting the highest possible rent. It never hurts to look, though.
My Annual Savings: $0
II. Insurance. Being the big, worried babies that modern people
are, my husband and I carry multiple kinds of insurance, including life,
auto, medical, and renter’s. Even big, worried babies shouldn’t be
naïve enough to pay more than we have to.
a. Life insurance often can be found free or cheaply in small
(4 or 5 figure) amounts through banks, employers, and credit
cards providers. If you need more and are in sound health, you
may want to consider a larger policy, especially if you have
dependent children. Whole life is rarely a good investment—a
subject for another day. When I checked around, I found that my
family is paying a lower-than-average rate for our term life
policies.
My Annual Savings: $0
b. Auto insurance is a biggie in our home as we have three
vehicles and several young adult males. I thought we were
already getting the best possible rates, having called all of the
major companies and checked on www.progressive.com.
However, I found even better prices through several non-
traditional sources. If you belong to a union or professional
organization, a political group, AAA, AARP, or even a grange,
you should ask them about discount insurance. We did and
ended up saving $70 a month. Finally I save something! Yay!
My Annual Savings: $840
c. Health insurance seems to increase every time I blink too
hard, and it shows no sign of slowing down or stopping. Until it
does, my best bet (and yours) is to find an underwriter. Many
employers offer insurance for their employees, which covers my
husband. For the rest of our household, I found a state-
sponsored low-cost insurance plan for middle and working class
families. Every state has a similar program. With ours, we get a
real Blue Shield policy with real Blue Shield cards and all of the
attending privileges, but at no cost. In California, we had a
similar deal that cost $35 a month. In Washington, the program
will only cover adults who are pregnant, so check out cheap(er)
policies through the professional organizations discussed in the
auto section and through the National Association for the Self-
Employed. If you are a healthy type who rarely needs medical
care, it is probably cheaper to pay out-of-pocket for your annual
visits and spend much less on a high deductible or catastrophic
policy that will only cover you in a worst case scenario. Since we
were already paying zero for health care, there was no potential
for savings, but you can bet I’ll be buying a catastrophic policy
once this baby is born.
My Annual Savings: $0
III. Fixed Entertainment Expenses. In our case, this includes
internet, Netflix, and various lessons for the kids. Our lessons are
almost exclusively through our local YMCA. A family membership
costs almost $700 a year, but this comes out to a pittance when you
consider that at any given time our eight household members are
involved in at least one activity each. Give them a call if you haven’t
already. They offer scholarships and volunteer opportunities for
families who can’t cough up the annual fee. This leaves Netflix and
internet, which combined with the local library provide the lion’s share
of our family’s entertainment in the absence of local channel
reception. This was an acceptable arrangement—television is not,
after all, a necessity—but our internet provider sent us a flyer offering
a special deal that would give us the mondo-huge-cable-TV-package-
with-movie-channels for only $15 more than our internet bill. Since we
pay $20 a month for Netflix, it seems worth a try. We replaced Netflix
with cable for a savings of $5 a month.
My Annual Savings: $60
IV. Telephone. Like most families, we have a land line and a
cellular phone line. Our land line costs $35 a month for local service,
which seems shockingly high but normal for our area. I checked out
low-cost plans, but we earn too much to qualify. Our cell phone costs
$30 a month and is needed for emergencies and long distance calls.
However, our internet (and now cable) provider is offering another
special deal which will give us unlimited local and long distance for
$25 a month. I haven’t called yet, but it’s on the to-do list. This will
allow me to cancel our cell phone plan when the contract is up and
return to the Virgin Mobile pay-as-you-go plan that I previously used.
The minimum for Virgin Mobile is $25 every two months, bringing our
savings to $27 a month.
Annual Savings: $324
So lowering your bills is frugal, but can it truly be a habit? I say
definitely! It’s ridiculous to spend hours every week baking bread to
save a few dollars and not occasionally investigate ways to save
hundreds at a time. Always keep your eyes and ears open for a
better deal, and make an appointment with Google every few months
to explore.
Amount Saved: I will save $1224 annually. That's huge, especially if
it makes it to my savings account where it can bear interest.
Difficulty on Scale of 1-5: 2. Not difficult, but time consuming.
Time: About 4 hours
Check out the Frugal Habit of the Week Archives
New Habit: Un-fixing Fixed Expenses
Frugal Habit? Yup.
When frugal people talk about cutting costs, we are usually talking
about expenses such as groceries, electric, fuel, and other areas that
vary according to usage. Although fixed expenses such as rent,
insurance, and telephone take up the majority of our paychecks, we
can’t lower them, right? Wrong.
As satisfying as it may be to shave $20 off your weekly grocery bill, it
lacks the budgetary OOMPH of drastically lowering a fixed payment.
It may be more difficult initially to negotiate a lower insurance bill or
find a cheaper cellular plan, but those savings will be there month
after month without any further effort. Also, savings on actual bills are
more likely to end up in your savings account because you can
permanently adjust your budget. This week, I decided to make a habit
of looking more critically at the big picture. Here are the areas I
examined:
I. Rent. If you own your home, you can skip this section because
your housing expenses are an investment. The rest of us should
make a habit of keeping an eye out for a sweet deal on housing. True
bargains are rarely listed in the classifieds, but ask around and check
out unconventional sources such as craigslist. In my case, I didn’t find
anything because my family already has one of those extraordinary
deals. Due to unique circumstances, our landlords are more
interested in keeping their property in pristine condition than
collecting the highest possible rent. It never hurts to look, though.
My Annual Savings: $0
II. Insurance. Being the big, worried babies that modern people
are, my husband and I carry multiple kinds of insurance, including life,
auto, medical, and renter’s. Even big, worried babies shouldn’t be
naïve enough to pay more than we have to.
a. Life insurance often can be found free or cheaply in small
(4 or 5 figure) amounts through banks, employers, and credit
cards providers. If you need more and are in sound health, you
may want to consider a larger policy, especially if you have
dependent children. Whole life is rarely a good investment—a
subject for another day. When I checked around, I found that my
family is paying a lower-than-average rate for our term life
policies.
My Annual Savings: $0
b. Auto insurance is a biggie in our home as we have three
vehicles and several young adult males. I thought we were
already getting the best possible rates, having called all of the
major companies and checked on www.progressive.com.
However, I found even better prices through several non-
traditional sources. If you belong to a union or professional
organization, a political group, AAA, AARP, or even a grange,
you should ask them about discount insurance. We did and
ended up saving $70 a month. Finally I save something! Yay!
My Annual Savings: $840
c. Health insurance seems to increase every time I blink too
hard, and it shows no sign of slowing down or stopping. Until it
does, my best bet (and yours) is to find an underwriter. Many
employers offer insurance for their employees, which covers my
husband. For the rest of our household, I found a state-
sponsored low-cost insurance plan for middle and working class
families. Every state has a similar program. With ours, we get a
real Blue Shield policy with real Blue Shield cards and all of the
attending privileges, but at no cost. In California, we had a
similar deal that cost $35 a month. In Washington, the program
will only cover adults who are pregnant, so check out cheap(er)
policies through the professional organizations discussed in the
auto section and through the National Association for the Self-
Employed. If you are a healthy type who rarely needs medical
care, it is probably cheaper to pay out-of-pocket for your annual
visits and spend much less on a high deductible or catastrophic
policy that will only cover you in a worst case scenario. Since we
were already paying zero for health care, there was no potential
for savings, but you can bet I’ll be buying a catastrophic policy
once this baby is born.
My Annual Savings: $0
III. Fixed Entertainment Expenses. In our case, this includes
internet, Netflix, and various lessons for the kids. Our lessons are
almost exclusively through our local YMCA. A family membership
costs almost $700 a year, but this comes out to a pittance when you
consider that at any given time our eight household members are
involved in at least one activity each. Give them a call if you haven’t
already. They offer scholarships and volunteer opportunities for
families who can’t cough up the annual fee. This leaves Netflix and
internet, which combined with the local library provide the lion’s share
of our family’s entertainment in the absence of local channel
reception. This was an acceptable arrangement—television is not,
after all, a necessity—but our internet provider sent us a flyer offering
a special deal that would give us the mondo-huge-cable-TV-package-
with-movie-channels for only $15 more than our internet bill. Since we
pay $20 a month for Netflix, it seems worth a try. We replaced Netflix
with cable for a savings of $5 a month.
My Annual Savings: $60
IV. Telephone. Like most families, we have a land line and a
cellular phone line. Our land line costs $35 a month for local service,
which seems shockingly high but normal for our area. I checked out
low-cost plans, but we earn too much to qualify. Our cell phone costs
$30 a month and is needed for emergencies and long distance calls.
However, our internet (and now cable) provider is offering another
special deal which will give us unlimited local and long distance for
$25 a month. I haven’t called yet, but it’s on the to-do list. This will
allow me to cancel our cell phone plan when the contract is up and
return to the Virgin Mobile pay-as-you-go plan that I previously used.
The minimum for Virgin Mobile is $25 every two months, bringing our
savings to $27 a month.
Annual Savings: $324
So lowering your bills is frugal, but can it truly be a habit? I say
definitely! It’s ridiculous to spend hours every week baking bread to
save a few dollars and not occasionally investigate ways to save
hundreds at a time. Always keep your eyes and ears open for a
better deal, and make an appointment with Google every few months
to explore.
Amount Saved: I will save $1224 annually. That's huge, especially if
it makes it to my savings account where it can bear interest.
Difficulty on Scale of 1-5: 2. Not difficult, but time consuming.
Time: About 4 hours
Check out the Frugal Habit of the Week Archives
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