When you read various personal finance websites you will find that a lot of them are packed full of tips on how to save money. Items like, unplug your electronics when not in use, turn the water off while brushing your teeth (does anyone actually let it run?), drive slower, don’t use your air conditioner, chase interest rates from bank to bank, skip that latte and retire a millionaire, and so on. While some of these are decent tips, they are not going to save you much money. And if you are letting your house get to 90 degrees because you want to save $7 on your electricity bill, are you really living life? I prefer to take a different approach. I prefer to focus on the big things, and splurge on the little things. Keep in mind, I am not out there wasting water, electricity, and the like, but I am not sacrificing my standard of living by only letting one light be on at a time.
The Big Wins
In fall 2012 I refinanced my house. In fact, this was the second time I refinanced. When I purchased the house in 2006 I took out a mortgage for the entire $143,000 at 6% interest for 30 years. My PIMI payment came to right around $1,200 per month. In 2009 I refinanced to another 30 year mortgage at 4.5% and dropped my monthly bill to $985. I saved $200+ per month by spending about 3 hours gathering papers together and talking to a lender. In 2012 I refinanced another time for two reasons. First, interest rates were incredible, and second I wanted to get rid of that ridiculous private mortgage insurance. I locked in a 15 year loan at 2.75%, and although my payment went up to $1,065 per month, the length of the loan cut in half. In fact, by paying just $50 extra per month, I will knock the loan out in a total of about 13 years. The point is: that first refinance saved me more than if I skipped a latte per day.
I don’t carry a balance on my credit card. However, I know many people who do, and they are paying upwards of 20% on the amount of their loan. If you have a $5,000 balance on your credit card, and you have an interest rate of 20%, you are paying about $80 per month for that loan. Opening a 0% balance transfer card will take you less than an hour and save you $1,000 per year (more if you carry a higher balance).
A few years ago my internet service was provided by Bresnan. Bresnan had a deal that for your first 12 months you would get top of the line service for just $30 per month; after one year that rate bumped up to $49. I quickly discovered that if I spent 10 minutes on the phone asking for a lower rate, I could get that promo rate for an additional 6 months. I set a reminder in my phone to call back every 6 months and reinstate the promo rate. 20 minutes per year saved me $240.
Have you looked at your car insurance coverage lately? Maybe you could put a vehicle in storage status if it only is driven a few times per year. I do that with my work truck that is only used in the summer and it drops my rate $20 per month. As long as you are going 3 weeks or longer between uses, most companies will let you do this.
Do you really need 4 GB per month of data on your phone? Take a look at your bill and see how much you really use. Most people use less than 1 GB, so you might be able to drop your plan down and still enjoy the same coverage, the same phone, and the same network.
Wrapping It Up
The list goes on, but the concept is the same. Take a look at all of your monthly expenses, and see if you can cut back on them. Most of the time you can get your interest rate lowered, your bill reduced, or your coverage changed with an easy 10 minute phone call. Those 10 minutes will save you hundreds of dollars. Alternatively, you could spend 3 hours making your own laundry detergent and save 48 cents per month.
I have to agree with you; the bigger things ( I would say anything that would save you more than $5/month, unless you have a ton of little $3/month expenses that you could cut back) are much more valuable to focus on. I try to lower my bills every year, by calling the companies and talking them down. I review my insurance coverage and try to get a better deal, and we are even considering cutting back to one car in the next month or so. These are all things that are super helpful but the tiny, penny savings? Not so much.