Wednesday, February 19, 2014

Those nagging recurring monthly fees

I wrote an article the other day about home automation where I mentioned how much I absolutely HATE recurring monthly charges/fees.

The biggest detriments to a healthy budget and frugal living are hidden or automatic costs. While it's super convenient to have your electric bill just auto-debit from your account each month, you tend to disassociate the actual cost from the number that you see coming out of your account.

Ever wonder why there's always a bunch of hubbub about "reforming the tax code", but nothing is done? Income taxes are one of those hidden and automatic costs, being deducted from your paycheck before you even get it. Therefore, you don't feel the cost unless you pay attention to your 1040 form during tax season.

In the name of financial health and freeing up money for the house, I've been on a crusade. I've been looking for any costs to cut, and any turnips to bleed. What I found was appalling!

  1. Memberships that are hardly being used - Between all the gym and other memberships, we are spending $34 a month. This isn't that bad, and we actually pay some of them because we got such good deals that the few times we use them pays off. Lauren gets exponentially more use out of both of her 2 gym memberships than I get out of mine, but for $10 a month, I have access to a dedicated gym with a racquetball court for when I have the hankering to move around. This could be eliminated if we really needed it, but $35 a month for all of the memberships is hard to complain too much about.
  2. Electric bill - It's amazing how quickly the electric bill can get out of hand. Here in TX we have multiple electric providers that we can choose from, and it's a yearly battle to find the best deal. I love using to compare rates.This has the potential to reach $100 a month in unnecessary spending if you are not on top it. Companies tend to give consumers a sweet promotional rate, hoping that they stay on after the contract is up and their prices start climbing. I once saved almost $150 month over month for the same amount of electricity simply by switching companies.
  3. Internet, Cable, and other Utilities - Where we are, the city takes care of the water, sewer, and trash, so there is no savings to be had besides conservation. Thankfully, the prices are reasonable enough that we're not sweating it. Internet and Cable, on the other hand, are a mess. They get you on the internet, so that the cable doesn't feel all that bad. I'm not at all opposed to completely cutting the cable, but at this point it would only save $30 give or take, and Lauren loves her Olympics. I do, however, like the FiOS service that we get, We only pay another $20 a month above what we used to pay for DSL, and the better service is completely worth that! I think that we may have to seriously think about cutting the cable once the Olympics are over. $120 is just way too much.
  4. Cell Phones - This is the worst of the recurring payments, and I have developed a love/hate relationship with my cell phone. Lauren and I are on separate plans, both locked in for a while longer. However, at $150 a month, and with Lauren's phone acting up, we're looking at alternatives. I'm a huge fan of the pay-as-you-go model that is espoused by Boost Mobile, Net10, StraightTalk, and other "secondary" providers. We could potentially cut our costs by $50-65 a month, depending on which carrier we went with. This is definitely priority #1 for reforming our "recurring budget" woes.
In the end, some of these expenses will be cut, but I just found it amazing how much money was flowing out of the account without us internalizing what was happening. We had a spot on the budget with each of those numbers, but when confronted with over $475 per month in automatic expenses, it made me seriously rethink each and every one of them. Are there any hidden or automatic expenses that you take for granted each month?

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