Save $5,000 a Year on Expenses Everyone Has

Most people spend more than they have to on the following seven commonly used products and services. In some cases, lower-cost options have only recently become available and are not yet widely known. In others, sellers intentionally put up roadblocks that make it challenging to get the best prices. Smart ways to save money on…

Cellular service. If you have a cellular service contract and/or obtain your service through a well-known provider, you’re almost certainly overpaying—possibly by more than 50%. The typical smartphone owner now pays upward of $110 a month for service, even though he/she could obtain virtually the same service for less than $50. That’s an over payment of more than $1,400 over the course of a two-year contract.

What to do: Sign up for a pay-as-you-go plan—a plan that doesn’t require a contract—through a lesser-known, low-cost provider. These lesser-known companies purchase access to the same cellular networks that the major providers use, so your quality of coverage should not suffer. Great options now…*

Straight Talk features unlimited talk and texts plus 2.5 gigabytes of data for $45 per month. (You will be switched to a slower data speed if you exceed that limit, but that’s unlikely—90% of smartphone users use less than two gigabytes a month.) Customers can choose which cellular network will provide access—all of the major networks are available.  StraightTalk.com

 GoSmartMobile offers unlimited talk and texts plus five gigabytes of data for $45 per month. It operates on the T-Mobile cellular network (either the 2G or 3G network, depending on the plan selected). GoSmartMobile.com

Republic Wireless features unlimited talk, texts and data for $25 per month on the 3G network or $40 per month on the 4G network. It operates on the Sprint cellular network and on Wi-Fi when available.  RepublicWireless.com

The only significant downside—you probably won’t get a subsidized phone. But smartphones now can be had for $100 to $200 or less.

Annual savings: $750 to $1,000.

Cable TV. Read the small print the next time you see a great deal advertised by a cable, satellite or fiber-optic TV service provider—the offer probably is available only to new customers. New customers often pay as little as $50 to $60 a month for services that would cost an existing customer $90 to $100 or more. Providers think that they don’t have to offer existing customers a good deal because few people bother to change TV service after they’ve signed up.

What to do: Every two years or so, call every company offering TV service in your area other than the ­company you currently are using. In addition to the local cable company, this includes DirecTV, Dish Network and any telephone company offering fiber-optic TV service in your area. Ask for the best new-customer rates and inducements they can offer you to sign up. Then call your current TV provider and say that you want to cancel your service. That should get you transferred to a ­customer-retention representative empowered to offer you much better terms than the other phone reps could. You even might be offered terms comparable to what a new customer would get—but only if you can cite a specific deal offered to you by a competitor. You probably won’t do nearly as well if you haven’t bothered to shop around first. If your current provider won’t match a competitor’s terms, go ahead and switch.

Annual savings: $300 to $500.

Car loans. Approximately 80% of car buyers who finance their vehicles obtain financing through the dealership—and pay hundreds or thousands of dollars more than they should as a result.

What to do: Shop for a car loan ­before you shop for a car. Many credit unions offer rates below 2% to qualified borrowers, for example. Dealerships sometimes offer very competitive rates, too—but only to consumers who already have a low rate in hand from another lender. Car buyers who haven’t already obtained a loan offer often pay around three percentage points more than necessary.

Savings: Three percentage points add up to about $1,300 more in additional loan payments on a four-year $20,000 loan.

Bank accounts. Many large banks have been quietly adding new fees and increasing existing fees. And many small banks that didn’t previously charge steep fees have been absorbed into large bank chains that do. This has left bank customers paying $5 to $10 or more each month for the right to have a checking account, something that used to be free.

What to do: Contact credit unions and small local banks to see if they offer truly free checking accounts that meet your needs. Only 25% of big banks still offer free checking with no strings attached, but about 70% of credit unions still do so. You even might be able to earn as much as 2.5% interest on your checking account if you’re willing to jump through a few hoops, such as using your debit card to make at least 10 or 12 purchases each month. To find a credit union in your area, go to MyCreditUnion.gov.

Annual savings: Often $60 to $120 or more.

Auto and homeowner’s insurance. Most people just renew their current coverage every year rather than shop around for better rates. That has left most policyholders paying more than they need to—sometimes as much as 50% more.

What to do: Every year, use an insurance-shopping Web site such as Insure.com, InsWeb.com or NetQuote.com to find the best rates available to you or contact an insurance broker. You might save hundreds of dollars in just a few minutes. Shopping around is especially likely to produce sizable savings if you have had one at-fault auto accident, speeding ticket or claim against your homeowner’s insurance policy in the past few years.

Annual savings: If you slash 10% to 20% from both your auto and homeowner’s insurance bills, that might add up to $150 to $400 a year.

Cars. Used vehicles haven’t been a particularly good deal lately, leading many drivers to ante up for pricey new cars. But used cars are likely to be good deals once again starting this year.

The financial crisis of 2007–2008 slammed the brakes on new-car sales and, especially, new-car leases. Because fewer new cars were sold late last decade, fewer used cars reached the market early this decade—and that lack of supply led to high used-car prices. But car buying and leasing rebounded strongly starting with the 2011 model year. Most auto leases last three years, so those 2011s are likely to reach the used-car market in big numbers in 2014, finally tilting the used-car supply/­demand balance somewhat back in ­buyers’ favor.

What to do: Watch for good deals on used 2011s this year if you’re in the market for a car. Prices could be as little as half what you might have paid for the same car new three years ago, even though three-year-old cars often have less than 50,000 miles on their odometers and perhaps even time left on their warranties. If you can wait a little longer to buy, the used-car market is likely to swing even further in buyers’ favor in 2015 and 2016.

Savings: You could save thousands of dollars buying used instead of new.

GO WHERE THE AIRFARE BARGAINS ARE

Most people first choose a vacation destination and the dates they would like to travel and only then shop for the best available price on airline tickets. If you follow that strategy, you’re likely to pay roughly twice as much as necessary for airfare.

What to do: Rather than choose a particular destination and dates, let airfare deals play a role in determining when and where you travel. Use discount travel sites such as Kayak.com’s “Explore” tool (located in Kayak’s “More” menu), AirGorilla.com andHipMunk.com to find low fares to appealing destinations. With Kayak, you enter the airport that you would depart from, and the lowest rates to destinations around the world appear on a map.

Example: I am treating my staff to a trip to Italy in March this year for just $635 per round-trip ticket. Had I decided first to take them to Italy for a specific week, it’s unlikely I would have found tickets for less than $1,000.

Estimated annual savings: Up to 50% or more of your airfare budget.

*Terms and conditions of the plans in this article may change. Check with the service providers.

Source: Clark Howard, host of The Clark Howard Show, a syndicated radio program about saving money. His latest book is Clark Howard’s Living Large for the Long Haul: Consumer-Tested Ways to Overhaul Your Finances, Increase Your Savings, and Get Your Life Back on Track.  ClarkHoward.com

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2 responses to this post.

  1. Informative post. My only complaint is now I have some homework to do!

    Reply

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