Seven bills and seven ways to reduce each one

The other day, I opened my mailbox and what I found inside was painful.

I found an energy bill and a mortgage statement and a phone bill and a water bill and an insurance statement and an internet bill. As I looked through them, I could just see the money leaving my accounts, floating through the ether, and winding up in the pocket of some company somewhere.

That experience stuck in my head that entire day. Why did I really spend that much money all at once? Did I really need to?

It was only in the evening, as I was talking to my wife about this experience, that it really clicked: almost every household in America has something of the same experience.

I sat down at my desk that very evening and made a list of all of the bills I have and all of the bills my parents have, figuring that the two lists would make it very clear what bills are common for many American families. I came up with a list of seven.

To keep it all symmetrical, I came up with seven money-saving tactics for each of these bills. Most of these tactics are one-time things you can do to reduce each of these bills – do them once and your bill will go down for the foreseeable future.

This might just be a checklist for the remaining winter weekends.

Energy

Air seal your home. This simply means reducing the air flow in and out of your home so that you’re losing less heat to the outdoors in the winter and less cool air to the outdoors during the summer. This can be a weekend-long project and can involve a bit of expense, but it’ll help your energy bill all year round. Check out this guide on air sealing your own home.

Put devices on a timer. There’s no need to allow devices to eat up phantom energy while you’re in bed, such as your television on standby mode or your cable box. Put them on a timer that causes them to lose power at a certain time each night, saving you money by eliminating the phantom energy drain.

Install energy-efficient lighting in some areas. I don’t think CFLs or LEDs are the answer for all outlets (yet), but I do think that they can be incredibly valuable options. Use these types of bulbs in out of the way places and areas where you don’t need intense lighting, such as closets and hallways.

Turn down your hot water heater. Lower the heat level on your hot water heater to the point that the full-on heat in the shower is the temperature that you prefer when you bathe. This way, you’re not wasting tons of energy keeping your water hotter than you would ever typically use it.

Rewire things for outlet switches. Outlets that operate on a switch are a wonderful thing. Change the cords of your electric devices so that as many of the devices as possible are attached to switches, making it easy to power down lots of devices just with a flip of the switch.

Make your ceiling fan more efficient. Hacking your ceiling fan use can go a long way towards reducing the energy you spend on heating and cooling your home. The key move is to make sure that the blades are running in the correct direction for the season so that you’re actually helping with heating in the winter and cooling in the summer.

Install a programmable thermostat. A programmable thermostat allows you to set a nighttime temperature and a daytime temperature for your home so that your furnace and/or your air conditioner are not running while you’re not at home or when you’re sleeping, automatically. These devices are easy to install and generally easy to set up as well.

Mortgage/rent

Don’t buy more home than you need or can afford. The biggest mistake that homeowners make is purchasing more home than they can afford, using a mortgage to cover it. Later on, they find that the monthly payments are crippling. If you’re looking to buy, avoid this mistake. Buy something small, build up some equity, and buy something bigger later if you find that you need it.

Cohabitate. Share a home with other members of your family. Have a boarder live in your basement. In either case, you’ll be bringing in some extra income to help offset the cost of the mortgage. Splitting that mortgage bill with someone or collecting a few hundred dollars each month from someone utilizing your otherwise-unused basement can make a huge difference.

Refinance. The interest rates on home mortgages right now are near all-time lows. This is a perfect time to look into refinancing your mortgage, particularly if you can shave a full percent (or more) off of your interest rate. A reduction of your interest rate from 6% to 4% can knock 30% off of your monthly house payment.

Make biweekly payments. Instead of paying $2,000 a month for a mortgage payment, pay $1,000 every two weeks. This not only helps you by getting payments in a bit earlier (thus reducing the number of days your higher balance will accrue interest), but it also results in a single extra payment at the end of the year made to your mortgage. You’ll pay off your mortgage far more quickly by moving to this type of system.

Automate the payment. Being late on a mortgage payment can lead to some real devastating problems. Your best move is to automate such payments. Have your bank automatically pay your mortgage bill for you at a certain time each month (or each week, even).

Use the Making Home Affordable program. Many people who have a mortgage payment that’s devouring half of their income can get some serious help from the federal government thanks to the Making Home Affordable program. This program helps you to modify your mortgage in such a way that you’re able to make payments without sacrificing your life for them.

Utilize payment holidays. Some mortgage systems offer payment holidays that can be particularly useful in times of hardship, helping you to avoid late payments during a job transition period, for example. Find out whether there are such holidays available for your mortgage and put them to work if you’re ever in a pinch.

Water

Install low-flow showerheads. A good low-flow showerhead uses several tricks to make you not even realize how much less water the showerhead is providing you in the shower. If you can reduce your water usage by a gallon per minute and your household sees eight ten-minute showers a week, you’ll save eighty gallons per week – forever. That will gradually have a significant impact on your water bill.

Install faucet aerators. These are perfect for faucets where you do things like wash your hands or brush your teeth, because they reduce the water flow by putting some air bubbles into the stream. It doesn’t help if you’re trying to fill a pot with water, but in a bathroom sink, it can certainly help improve your water efficiency.

Put a full plastic water bottle in your toilet tank. Put three or four stones in a empty water bottle, then fill it with tap water. Put this bottle in your toilet tank in an out-of-the-way corner. This way, you’ll use a bit less water each time you flush, putting money right back in your pocket.

Do only full laundry loads. Washing machines are designed to handle a load of a certain size. Using less laundry than that means that the washer runs inefficiently, wasting both water and energy. Always try to make a full load whenever you’re considering using the washing machine.

Similarly, do only full dishwasher loads. A similar logic exists for the dishwasher. The device is optimized for a full load, so it runs inefficiently when you don’t fill it up. Use your dishwasher optimally and you’ll use less water and energy per clean dish.

Water your lawn less frequently. Rather than just watering your lawn on a set schedule, use your own eyes and water it when it genuinely looks dry. This can save a tremendous amount of water. For example, I have a neighbor that waters his lawn daily during the summer (when it’s not pouring) and his lawn doesn’t look any greener than anyone else’s.

Water your lawn and garden in the late evening. This reduces the heat level and direct sunlight hitting your garden, reducing the evaporation of the water and improving your chances of having your garden and lawn actually utilizing the water. Never water things during the middle of the day when the sun is beating down.

Internet

Share it. When my wife was in college, she lived in a large boarding-style house with several other college students. All of them shared a single internet connection. If you live in such a situation, don’t pay for your own connection. Instead, seek out a shared arrangement where all of you can benefit.

Facilitate your television needs through your internet connection. By this, I mean services like Netflix and Hulu which provide television-like service straight into your home. We watch Netflix on our own television (through our PlayStation 3) and it provides the vast majority of our television consumption needs.

Cancel it and utilize other internet sources. If you don’t use the internet much, cancel your service and utilize internect access at the library, at work, or at the home of friends. The need for internet access varies a great deal depending on your own uses and on how you communicate with others.

Handle your own wireless. Rather than paying your internet provider for wireless access, buy your own wireless router and hook up the line to that router. This way, you can get wireless service without paying the extra $10 a month that your provider may charge you.

Utilize it to access low-cost resources. Because of the internet, I can use services like Craigslist and PaperBackSwap at home as a first line of defense for shopping. Services like these have saved me a great deal of money over the years.

Bundle it. You can often bundle internet access with your cell phone bill, your landline telephone bill, your cable bill, or your satellite bill and save a significant percentage by doing so. Ask your other providers if they have any internet access packages and how much you would save by using them.

Utilize it for comparison shopping. Whenever you buy anything of significance, use the internet for comparison shopping purposes. Making this your standard routine means never overpaying for something in a store ever again. I won’t buy anything over $20 without spending some time researching and shopping around.

Cell phone/telephone

Get your phone service through your internet connection. There are many services that piggyback phone service over your already-existing internet connection, from Skype to Vonage and MagicJack. For me, Skype has outright replaced the need for a business line.

Cut down on your total minutes and text count. Keep careful track of how much you actually use your mobile phone. Review your bills and keep a running average, plus a “maximum” (the largest amount you used in a month). Use those numbers the next time you’re shopping around for a new phone.

Shop around as soon as your contract is up. Usually, the promotional benefits of your contract are long gone at this point, so shopping around is almost sure to benefit you greatly. It’s well worth considering a jump to another company, as they often offer incredibly good deals to entice you to jump.

Look at pay-as-you-go phones. If you’re a very low user, a pay-as-you-go phone might be the best option available to you in terms of monthly cost. I’m actually right on the cusp of this, as I’m a fairly low mobile user (I keep mine turned off intentionally quite a lot).

Use Skype. If you’re just chatting with a friend while you’re both near a computer, use Skype instead of a phone service. It’ll save minutes, plus it’ll enable you to video chat if you so wish. Not only that, it’s free.

Ditch your land line. If you’re consistently using your cell phone and rarely pick up your land line, close it. The only reason we still have a land line is that our provider has made a basic land line incredibly cheap for us to have, amounting to literally a couple of dollars a month. Which leads to another tip…

Again, bundle it. If you can get free or nearly free phone coverage (cellular or land) with an internet and cable package, there’s no reason not to dive right into a bundled package (after shopping around, of course).

Insurance

Raise your deductibles. This is always a good option for saving on your monthly bills. All it really does is somewhat increase your need for a healthy emergency fund, as you’ll be responsible for more of the cost in an actual emergency. However, if your emergency fund is strong, a higher deductible is almost always a net win.

Don’t overinsure. When considering how much insurance to get, remember that insurance is there to cover just the worst case scenarios, not minor things that you could handle yourself. Find a package that takes care of you when the chips are really down and don’t overpay for something you could easily do for yourself.

Keep only liability insurance on older vehicles. If your vehicle is more than six or seven years old, don’t carry comprehensive insurance on it. The amount you’d get from such insurance in the case of a total loss is likely not worth the amount you have to pay each month. There’s a decent case for comprehensive insurance on a newer model, but not on an old one.

Shop around. There’s nothing stopping you from shopping your auto insurance and homeowners insurance regularly. My wife and I do this annually, seeking out the best deals on each of the things we insure. We often find that there is no “best” company for these insurances and the one with the best “bang for the buck” changes regularly.

Bundle your policies. Shop your homeowner, renter, and auto insurance together and see what kind of rates you can get as a bundled package. Again, this almost always ends up with you taking home significant savings on the deal.

Keep your credit strong. Insurance companies take your credit into account when considering what rates to give you when you’re shopping around. Sometimes, they even adjust your rates depending on recent changes to your credit score. Keep your nose clean and keep your bills paid.

Improve your home security. Installing a few smoke detectors in your home (if you don’t have any) can drop your homeowners insurance rate by as much as 5%. Installing a burglar alarm can drop your rate by 10%. These types of improvements can quickly pay for themselves.

Car payments

Buy used. Never buy a new car unless you can write a check for it. If you’re going to have to go into debt to afford a car, buy used. Avoid leases like the plague unless they’re for a business.

Make car payments to yourself. Instead of making car payments and celebrating when they’re finished, keep making those payments straight into a savings account. In the long run, this will make a huge positive difference in the cost of the next car you purchase, as you’ll be paying the cash you saved plus the interest you earned. Without it, you’ll be paying interest to whoever finances the car loan.

Do the research yourself before stepping onto a lot. Know exactly what you’re looking for before you ever visit a car lot. Figure out what you need/want, research cars that match those requirements, and know what you should be paying for those vehicles. All of this can easily be done online.

Shop in alternative places. We purchased our 2004 Honda Pilot off of Craigslist and got a bargain much better than what we were seeing at car dealerships. The seller undercut the dealership but got much more cash for his car than they would have ever given him. We both won.

Trade down. If you’re having difficulty with your car payments, sell it and get something lower end. Even if you have to sell the car you have now as a break-even or even as a small loss, you’ll be ahead in the long run by having a car you can actually afford.

Carpool. The best way to extend the life of your car is to reduce the miles you put on it. Most of the miles that people put on a car are due to routine driving, such as the work commute. A carpool can drastically reduce the amount of commute driving that you have to do. Not only does a carpool save on gas, it extends the life of your car and slows down the maintenance schedule on it.

Keep up with the maintenance schedule. Speaking of maintenance schedules, most car breakdowns occur because people ignored the maintenance schedule printed in the car’s manual. Follow it faithfully. The small costs incurred by following the maintenance schedule are much lower than the huge costs of a major car repair if you ignore them.

Seven bills, seven ways to save on each one. Good luck!

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