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Evaluating and Eliminating Monthly Expenses

Almost everyone has monthly fees of some sort, and if you don’t, then we should be the ones reading your blog.

From a mortgage and car insurance to gym memberships and pet health plans, monthly expenses are one of the major factors keeping us from saving money.

There are only two ways to get rid of your monthly fees, and only one of those ways will make a substantial impact on your ability to save.

By continually and thoroughly evaluating your monthly fees, you will be able to decrease your expenses, allowing you the freedom to utilize your money more effectively.

Ways to Eliminate Monthly Expenses

1. Pay in advance. One way to get rid of monthly expenses is to pay for things completely in advance. This will often save you a small percentage because you won’t have to pay monthly service fees and interest, which can be big drains on your bank account.
2. Eliminate the services associated with those expenses. This is the method that we will focus on because it deals more with a permanent lifestyle change. It is sort of like curing the problem, whereas paying in advance is just covering up the symptoms.

Example #1 – Gym Membership

Most people I know have some kind of gym membership, so this example should be applicable to almost everyone.

Once upon a time, before getting married and starting a full time job, I would go to the gym around five times every week, which equates to about 20 times a month on a $30/month membership. So each time I went to the gym it was costing me approximately $1.50. This was a relatively small price to pay for the facilities and services they offered. I eventually got so busy that I would end up going only once or twice a month, and instead started P90Xat home. I got the DVDs from a friend, so there was no cost associated with the transition.

So now that I was only going to the gym a couple times a month, the cost associated with each visit became $15. For some people, that may still be worth it, but I decided that the $30 could be better spent elsewhere, especially since I could get a workout that was just as good or better at home.

I canceled my membership and continued to pursue my new home workout. I saved $360 annually and hours of driving to and from the gym every week.

Example #2 – Cell Phone Plans

Everywhere I look I see an iPhone. I have one, my friends have one, and my cats have one, each. This is an example where the monthly fee is justified, because in my case, I need the capacity to send and receive e-mails, check out different websites, and utilize the features of the many apps for my businesses.

The unlimited data plan for the iPhone costs me $30/month. I am able to give clients time sensitive quotes directly from my phone when I am away from a computer, which has allowed me on multiple occasions to come away with a winning bid. The money I’ve made with the features on my phone have more than paid for cost of the phone and calling plan. In this case it is obviously worth the price.

Example #3 – Cable Internet and TV

Here’s what many people subscribe to:

• Digital Cable – $60
• HD box – $8
• DVR – $10
• Premium channels like HBO, Showtime, etc. – $10
• 15mbps cable internet (around 1.8 Mbytes/sec. downstream) – $60
• Total cost – $148/month

Here is what we have:

• Local HD channels on antenna – FREE
• 3mbps cable internet (around 375 Kbytes/sec. downstream) – $29
• Total cost – $29

That is a difference of $119/month. Like I mentioned before, that does not necessarily mean that everyone should downgrade or cancel their services. It all has to do with how much value you find in them. If you watch TV and online video two hours a day for a whole month at a rate of $148/month, you could say that each hour costs you around $2.46, whereas if you watched only one hour per week, it would cost you $37 an hour. It’s safe to say that in these circumstances, the logical thing to do would be to downgrade or cabcel your services and put your money to better use.

On top of the time and cost associated with just watching TV, you also have to consider what you would be doing with your time otherwise. You could spend it hanging out with friends, earning even more income, or traveling. Simply by downgrading your service, that $119 in savings every month would add up to $1,428 (or more in an interest bearing account) over the course of a year. Now the decision becomes, would you rather have premium TV and Internet, or would you rather take a 4-day, all-inclusive cruise to Mexico once a year?

Looking even further into the future, if you put $1,428/year into a 10% investment opportunity, you would have over $25,000 after just 10 years.

The Overall Effect of Evaluating and Eliminating Monthly Fees

When you look at the big picture, you start to see the massive potential for evaluating and eliminating your monthly fees. If you manage to live without some of the services you are used to, you can increase your savings potential to a level you never thought possible. By eliminating multiple monthly expenses and compounding the savings towards your future, you will begin to see progress that you thought was simply out of reach.

It’s not all about making more money, it’s about how you spend the money you have. Learn to live with that attitude no matter how much money you’re bringing in.

When are you going to evaluate your monthly fees? What are some things you have eliminated already or refuse to give up? Share this article or leave a comment below.