Minimizing Monthly Expenses: A Key to Financial Freedom
Your regular monthly expenditures are the key to controlling your consumption.
In an earlier blog post, My Story of Frugality, Breaking My Economic Dependence on My Job, I described how I paid off my mortgage and slowly but surely lowered my expenses, allowing me to accept an early retirement offer. The key is to bring your spending in alignment with your values. I followed the program outlined in Your Money or Your Life, where I wrote down every penny I spent—and from there developed spending strategies that worked.
My monthly expenses were the biggest challenge to control. This post explains how I handled these routine items—and suggests ways you can lower them. Basically, I think extra carefully about any expense that will occur on a regular basis. If I receive a tempting offer, I calculate what it will cost me for the entire year. Unless there is a significant discount, I do not use automatic debits and/or credits.
Here are some specific strategies that might apply to you:
Negotiate with monthly service providers for lower costs. Most people believe this to be impossible, but here are some strategies that have succeeded for me and my friends:
- Find a competing offer. Tell the service provider that you will leave for a competitor. Some companies will match the offer. One company offered me a $10 gift card each month for six months.
- Explain that you need to cut back on your expenses. After a layoff, I called my local phone company. A representative lowered my phone expenses by $40 a month without cutting services. She found sneaky billing “errors,” services that could be bundled, and other interesting tricks.
Obtain a cell phone plan that charges by the minute. It’s a cost-effective approach for now, but I’ll switch to a monthly contract if my cell phone bill goes above the cost of a monthly plan for three months in a row.
Exercise at home and save on gym membership. A monthly gym membership would be in accordance with my values, because of the sense of community gyms provide. Most gyms require you to sign up for a year or more, though I did try two gyms using month-to-month plans. In the end, it was better for me to exercise at home in the morning. This also saves the environmental impact of my driving.
In short, make clear decisions about what you will spend routinely. Pay particular attention to utility and communication costs. Each month, make a choice about the expense. Should you continue it? Can it be lowered? If there is a contract, put a note in your calendar or a reminder in your software, so you can be aware of its end date.
I just made a tough decision: to remove a dedicated land line, which I used for a fax machine. I struggled with it month after month. I knew I didn’t need it, but I liked having it. And a lot of my stationary still has that number printed on it.
Last week, I bit the bullet and cancelled it. The savings was only $15 a month, but month after month, it will add up. And, more importantly, any money that is not usefully spent should not go to large companies such as the phone company.
Big corporations know how to exploit our human weaknesses. Their advertising “offers” ensnare us into signing up for repetitive monthly bills that automatically come out of our credit or debit accounts. They become part of the background of life. We forget the expenses are there.
But those expenses slowly but surely remove money from our pockets and into moneybags that might not meet our approval. It becomes a barrier to our financial freedom. Don’t let this happen to you.
Dale S. Brown works on a portfolio of projects that empower people both in personal growth and political power. She lives in Washington, D.C. and is a guest blogger for the Center for a New American Dream. She blogs about how frugality financially empowered her, enabling her to take an early retirement at age 50 and live on her income.
Earlier posts from Dale S. Brown: