(Previously posted via Tumblr July 13, 2015)
STEP 3: IT’S TIME TO START TRIMMING THE FAT.
Hopefully you’ve started tracking now where your money is going by documenting EVERYTHING you’re spending your money on and recording HONEST, ACCURATE information. Don’t worry. It’s okay if you bought that pair of shoes you didn’t really need. Record it anyway. I downloaded three old school albums and a few additional songs from iTunes last week… but I documented it. Remember, the point of tracking your spending is to notice patterns/trends in your spending habits. As mentioned in my last blog, after a month of tracking my spending habits, I discovered over $500 was being wasted on “eating out.” YIKES!!! It’s under control now. TRUST ME.
If you have decided to track your spending habits for the month, here’s how you can get a head start on becoming “financially fit.”
IT’S TIME TO START “TRIMMING THE FAT.”
Now you may be thinking, “How can I start trimming the fat if I’m not done tracking my spending habits for the month?”
START WITH YOUR HOUSEHOLD BILLS.
You should already know your monthly mortgage amount unless you have an ARM (Adjustable Rate Mortgage) and if you do, RUN TO YOUR BANK AND REFINANCE QUICK!!! I’ll cover mortgages as the weeks progress. I want to focus on household bills such as electricity, telephone, satellite/cable, and additional household services that can be negotiated. It’s a good practice to sit down and re-evaluate what amounts you’re paying for these services each year. Take your satellite/cable service provider for example. I believe bundle packages (cable, phone and internet) being offered is a great idea, but have you stopped to look at what you’re paying for? Think about it. Do you REALLY have to have the “premium channel package” that includes every movie and sports channel known to man when you only watch a handful of channels that are more than likely offered in the company’s “standard channel package?“ Is it necessary to have “turbo speed” internet connection? Is the information you’re uploading/downloading work-related which would require faster speeds when working from home? These are features that can save you money. I recently switched back to DirecTV and am paying a bill much lower than I was before I left them for Time Warner Cable. Take advantage of satellite/cable company offers. It’s been my experience there’s usually a 12 month commitment which I don’t mind since I don’t plan on going anywhere and if I move I can move the service with me thus, no interruption. By switching back to DirecTV, I am saving approximately $75/month. If you are satisfied with your current provider and do not wish to switch companies, you can always re-negotiate. My favorite line is, “I can’t afford cable anymore, is there anything you guys can do to help me out because I REALLY don’t want to disconnect my service but I may have to.” The satellite/cable providers DO NOT want to lose your business so trust me, they’ll do everything in their power to keep it. Customer Service Reps usually have a lot of leeway and can offer you lower prices on packages and services, BUT YOU WON’T KNOW THEY’RE AVAILABLE UNLESS YOU ASK. The same works with your electricity provider because you can negotiate a lower price per kilowatt hour, for example, lowering your price from 12.4 cents per kilowatt hour to 10.9 cents. It may not seem like a big difference, but every little bit helps. Try it. You’ll be surprised.
NOTE: I prefer to use “average billing” with my electricity provider. This way my bill is the same amount each month. I like to see consistent numbers with my monthly household bills. It’s just a personal preference.
Household services can be negotiated, modified or terminated if necessary. As much as I loved the cleaning service who came every two weeks, I knew if I wanted to save more money, I could no longer keep them. So guess who’s doing the cleaning now? The same person that was doing the cleaning BEFORE someone else started doing it for me. As far as the pool cleaning service I use, I couldn’t let them go however, I’m investing in a pool cover. This way I can save approximately $1200 each year. I should have done this when I first moved in my home, but I just recently started getting REALLY SERIOUS about building up a nice nest egg.
What about your landscaper? I don’t know what you call yours, but I call mine “the yard man.“ At one time, I used to cut my own yard and it looked just like professionals were maintaining it, but that got old pretty quickly. My current landscaper charges me $25 to cut the front and backyard (which is a lot of yard by the way.) But here’s the catch: He’s been my landscaper/yard man for the past 15 years. Bottom Line: Relationships are important. If you have a landscaper you’ve been using for a while, ask to re-negotiate. If you have a great relationship with them, they shouldn’t have a problem coming down on the price.
The household expenses mentioned in this blog were expenses I felt were most basic and necessary to discuss (and were based on my personal re-evaluation/re-negotiation.) Until you get a better picture of your spending habits/trends after the first week of August, you’ll be ready to trim even more fat. It’s gonna get ugly, SO GET READY!!! Let me know how the tracking of your spending habits is coming along. I appreciate the Twitter feedback from @whois_atiya regarding last week’s blog posting. I’m so glad I was able to offer information you found useful. Keep that feedback coming!!!
As always, I hope you benefitted from this posting and I do appreciate you reading it. Your commentary is also important so ALL FEEDBACK IS WELCOMED. If there is a specific topic you’d like me to talk about regarding “Financial Fitness Boot Camp” on this blog, feel free to shoot me an email at Andrea.Coleman@TheFinancialHack.com. Don’t miss a posting so be sure to follow me at http://www.thefinancialhack.com.
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~The Financial Hack ©2015