In order to eliminate my credit card debt, I had to re-evaluate how I managed all aspects of my finances. The first step in my journey was to cancel subscriptions I no longer used. When it came to freeing up my income, unused subscriptions were the low hanging fruit. As it turns out, I accumulated charges for unused products and services to the tune of $85 per month. That comes out to $1,020 per year! By canceling these, I was able to take the saved cash and throw it at my debt. The next step I took was to identify opportunities to reduce expenses on the “necessary things”.
“Necessary things” are services that are must-haves in day-to-day life but could be scaled down a bit to free up some income. Scaling down didn’t seem very attractive at first, but once I got started looking for opportunities, it was a no brainer.
If scaling down sounds scary to you, don’t worry. It’s actually a whole lot easier than it sounds. Similar to canceling subscriptions, reducing expenses is another low hanging fruit in your journey to paying off your debt. And remember, scaling down doesn’t have to mean making drastic changes that will significantly impact your lifestyle. Although such changes are sometimes necessary, it’s important to identify the small opportunities that might be lying around ready to be capitalized on. I’ll take you through a handful of services that I personally scaled down in order to free up cash to speed up my debt busting efforts.
Reduce expenses: Internet
Ah, the internet. Our gateway to the outside world. We use it to work, connect with friends and family, stream our favorite movies and TV shows, play games, shop online, pay bills, as well as a host of other things. When it comes to the internet, there are usually many different packages to choose from. There are plans for the person who occasionally sends an email or two all the up to the hardcore movie streamer and online gamer.
Choosing the right plan isn’t always the easiest decision, especially when you see the benefits included in the higher-tier plans. This is largely due to FOMO, or fear of missing out. But trust me, you might not even need or ever use those “high-end” benefits. Take a step back and look at what you actually use your internet for. For example, I was paying for a super-fast internet connection that I really wasn’t using to its potential. I used the internet to browse the web, read the news, and stream Netflix. That’s it!
So why was I paying $80+ per month for a supercharged plan when I could get the same enjoyment out of a plan that was half the cost? So what did I do? I called my internet provider and stepped down my internet package a couple of levels, saving myself ~$40 per month. That’s $480 a year of savings. And guess what? I was still able to stream movies, read the news, send emails, and browse the web without any noticeable change in my experience.
The moral of the story on this one is to take a step back and ask yourself whether you need all the bells and whistles. Do you even use them? I sure didn’t. Once I realized this, I took action to settle for what I needed and pocketed the rest. This left me with an extra $40 a month I could use to tackle my debt. This got me wondering where else could I save money.
Utilities
Next up was my utility bill. I live in Arizona which, as you probably know, is known for its brutal summers. High temperatures during the summer are often 115F+ during the day and mid to high 80s at night. Needless to say, air conditioning is a must. And running that AC unit all summer long gets expensive. As it turns out, many utility companies will offer you discounted rates if you reduce your energy usage during certain times of the day. Reducing energy use during peak hours not only helps people like us with electricity costs, but it also helps the utility company manage capacity. I switched to my utility company’s 3 pm – 6 pm plan and reduced my energy usage during those hours. This resulted in a noticeable drop in my bill.
I also took their advice and saved a lot of my high energy demand chores, like doing the laundry, for the weekends when rates are typically lower. By becoming more cost-focused, I was able to pocket more of my income instead of hand feeding it to the utility company. So if you haven’t done so already, check with your utility company about what rate plans are available to you. Who knows, a small change in behavior can leave you with more money in your pocket.
Phone bill
Next up on my journey to reduce expenses was my mobile phone bill. Every wireless carrier out there offers a multitude of plans that fit the needs of nearly anyone. After reviewing my usage, I determined I was paying for more data than I was using on a month-to-month basis. By reviewing usage and comparing it to what my plan offered, I was able to identify an opportunity to save money. It turns out I was leaving money on the table for years. All I had to do was look. I downgraded my plan and reduced my bill by $15 per month with no change in how I used my phone or service. Easy enough!
That simple exercise of comparing usage to what I was actually paying for saved me money. I then redirected that additional cash to pay down my debt. See the trend here? Find opportunities to save money, take the savings, and throw it at your debt. This doesn’t involve putting in more hours of work or making big sacrifices. It’s money that’s sitting in plain sight.
Auto insurance
Another reduce expenses opportunity I was able to identify was with my auto insurance. As it turns out, I was paying for a plan with a very low deductible. If you aren’t familiar with a deductible, it’s basically the amount you are responsible for paying out of pocket in the event of a claim. The lower the deductible, the more expensive the plan typically is. In my situation, it made sense to bump up my deductible a bit. This resulted in more money in my pocket each month.
When reviewing my insurance plan, I also noticed that I had previously mentioned I made long commutes to work every day. This was true when I last reviewed my plan, but I had since moved closer to work and my commute was now only a few miles each way. By adjusting my reported mileage to what I actually drove each day, I was able to save money.
One other money-saving opportunity I was able to find when reviewing my insurance plan was the college discount. As it turns out, many insurance companies offer discounts for good grades and attending college. I earned my bachelor’s degree years prior but never reported this to my insurance company. I immediately ticked the box and started saving. Once again, the opportunities are out there. You just have to find them.
Banking
The last example I’m going to leave you with is banking. There are more banking options available to you today than ever before. But not all banks are equal. Some offer free banking services, while others nickel and dime you at every opportunity. If you have your money with a bank that charges account fees, look into other options. The last thing you want is fees gobbling up your hard-earned income. By eliminating fees, you’ll have more money to direct towards your debt busting efforts.
Wrapping it up
In conclusion, there are a lot of ways you can reduce expenses without drastically changing your day-to-day life. Above are just of handful of examples I used to cut back on my expenses, and there are many more. All you have to do is look for opportunities. And best of all, I didn’t have to put in extra hours at work to come up with more money. I simply compared what I was paying for to what I was actually using. By aligning my usage to what I was paying for, I was able to free up cash that I could then use to more aggressively tackle my credit card debt.
So if you haven’t done so already, start looking for ways to reduce expenses. Remember, a dollar saved is a dollar gained. And don’t forget to put that dollar gained to work by using it to pay down your debt.