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When it comes time for you to save 3-6 months of expenses in your emergency fund, you want your expenses low so you can have more travel money.
With all the everyday spending we’re trying to save on, the recurring expenses often get forgotten about. But they take the biggest chunk of our income!
I recommend reevaluating each of your monthly expenses at least once a year to make sure you’re getting the lowest price and that none of your providers are taking advantage of you.
Here are my top tips for saving on some of the most expensive parts of your life.
How to Save on Car Insurance
When’s the last time you negotiated your auto insurance? The average cost for a 30-year-old to insure a car for one year is $2078. That number varies by a lot of factors but hopefully, you’re on the lower half of that average. Negotiating your auto insurance policy once a year ensures you’re getting the lowest price possible. And I promise it’s not that hard.
First off, I don’t think you should go with the cheapest around just because it’s the cheapest. This is one of those cases where buying “the premium option” is worth paying a little extra if you have to. That said, we go with the cheapest option in our area and it’s a widely recognized company and we’ve been happy with the way they’ve taken care of us.
If you’re happy with your insurer and don’t want to take a chance with a new one, Ramit Sethi has some great scripts you can use to guide your negotiation. Here are some of my favorite tips he uses for negotiating your bill down:
- Stay positive. Make the person on the other end of the line want to do everything they can to get you a discount.
- Be prepared. Tell them you’ve been a valuable customer for X years with X accidents. Be honest if you can’t afford the current premium. If there’s a cheaper premium out there tell them about it and reiterate you want to stay with them but you can’t pass up that deal.
- Don’t give up at the first no. Your first answer will almost always be no. Keep politely pressing until you get a discount. Ask for a supervisor or, if you’re really willing to, to speak with the cancellation department.
- You can always try again later. Maybe this rep is having a bad day. Hang up, call again, and you’re likely to get a different rep.
- If you still can’t get a discount on your current policy then try digging for discounts. If you drive less than 12,000 miles per year or carpool to work you could be eligible for a discount. You can also get discounts for prepaying, bundling other insurance, increasing your deductible.
If you’re not happy with the lowest price they can give you or just prefer to jump ship and see what’s out there, here are some tips for finding the best deal on auto insurance:
- Direct Sellers like Esurance, GEICO, Hartford, and Progressive are cheapest because they bypass agents and sell directly to you. They usually have the cheapest prices so start there.
- If your driving record isn’t stellar then your next best bet is local agents for large national brands like Allstate, State Farm, and Nationwide.
- The negotiation tactics mentioned earlier still work here. Especially staying positive.
- If your car is worth less than 10 times the premium (ie: you pay $150 per month and your car is worth less than $1,500) then you can drop stuff like collision and comprehensive because it won’t be cost-effective.
- Skip the towing coverage. You can get AAA for as little as $59 per year which includes towing, and other perks like a locksmith, battery jump, and emergency fuel delivery.
- Check to see if your company or professional organization offers group insurance benefits (like AAA.)
How to Save on Electricity, Water & Gas
For differences that you’ll actually notice on your utility bill, try these tips.
- Turn off unnecessary lights and use natural light or lamps whenever possible.
- Keep your shower time to less than 5 minutes.
- Turn off the water when brushing teeth, washing dishes, shaving, etc.
- Unplug electronics while not in use
- Keep the house slightly chill in winter, and the fans running in the summer.
- Run full loads of laundry and wash in cold water. Consider air-drying them if you have space.
- Use a crockpot or toaster oven. They keep the house cooler in the summer and use less energy than the oven.
How to Save on Cable
I say cut the cord. Nowadays there’s nothing you can’t get on Netflix and Hulu and most of it is even better than cable. But if it’s non-negotiable for you, use the negotiation techniques mentioned earlier on cable providers. If you can’t get a lower price then cut back your services.
Roku is a great way to get free national broadcast networks and a bunch of other streaming option on any TV with an HDMI input. Sling TV gets you 30 popular cable channels for just $20 per month with the option to add dozens off channels a la carte.
How to Save on Health Insurance
Health insurance is a financial necessity. Healthcare costs are the number one cause of bankruptcy and can turn the best-laid plans upside down in a second.
If you have insurance from your employer it’s still worth checking around and seeing what the reimbursement is for taking outside insurance. And take advantage of a Health Savings Account if you have one.
If your employer doesn’t cover you, check to see how much you can get in subsidies from the marketplace. You might also want to consult with a Health Insurance Broker to see if there are better deals for you outside of the marketplace.
Finally, if you’re healthy and don’t see the inside of a doctor’s office except in emergencies then a Healthcare Sharing Ministry is a great low-cost option that is approved under the Affordable Care Act. These are intended for people of Christian faith but you can find more inclusive programs. Christian Healthcare Ministries is the cheapest and what we use. Liberty HealthShare is the most lenient on religious views.
How to Save Money on Housing
Rent/mortgage should take up less than 25% of your take-home pay. If it’s more than that then you’re going to have a tougher time making big payments to your debt or savings account.
If you rent, the easiest way to reduce your housing costs is to get a roommate. If that’s not an option consider moving. Yes, living outside the city for a few years is going to be inconvenient but it’s worth it if you’ll save a significant amount over the added costs of gas or public transit.
If you own, try renting out a room on Airbnb or raising your insurance deductible. If that’s still too much you might want to consider selling and downsizing or getting out of the city.
How to Save Money on Transportation
For most people, changing the way you get around town is a major inconvenience. But that doesn’t mean there’s no way you can change some small habits to save money.
To save on gas, accelerate gradually to your desired speed and put enough space between you and other cars to keep from braking excessively. Remove anything that makes your car less aerodynamic like bike racks and roof racks.
If you can help it, don’t let your car sit idle for more than a minute, ideally no more than 30 seconds. In the summer, buy gas at the coolest part of the day, early in the morning or at night. The cooler the gas the more dense it is meaning you’ll get more for your buck.
Proper maintenance can save you in the long run too. Correct tire pressure (checked seasonally), regular oil changes, and fresh filters improve fuel efficiency. If you really want to impact your transportation costs, start biking to work once a week, use public transportation, and skip the carwashes.
Finally, whatever expense it is, make a budget and always put bills on autopay. Americans paid $15 billion in overdraft fees alone in 2016. Not to mention late fees. Switch to a low/ no fee checking account and make a budget so you know when you have money to spend, and when you don’t.