Recurring Expenses

Photo by Jp Valery on Unsplash 

Hello everyone.

I hope you are staying healthy and safe.

This second edition of Doing More with Our Money is about recurring expenses.

We all have them, and often we don’t pay as close attention to them as we should. Some are regular subscriptions, memberships or other ongoing costs that automatically hit our bank accounts and credit cards, others are due to our habits. Some are daily, that $5 latte on your way to work or $12 lunch in between meetings, and others are monthly or annually – insurance, cable, Netflix, mobile phone, etc.

Finding ways to reduce these recurring expenses can save you a ton of money and can go a long way in doing more with our money.

How best to approach these types of expenses? […]

1. Reset your perception of small dollars

Take a moment to think about small recurring dollar amounts from a different perspective. There are several ways to do it, so pick whatever works for you.

I like to add up what a recurring expense would total in a year. I then compare it to what I get paid for an hour of work, and how it relates to the cost of a case of my usual beer (~$40).

Photo by Adam Wilson on Unsplash

It’s easy to think it’s not worth taking the time to reduce a monthly bill by $5 – “It’s only $5!” But if you think about it over the course of the year, it actually adds up to $60, which equates to a case and a half of beer!

Also, if you make $50K a year, that equates to $24/hour. Why are you working 2.5 hours to pay for that unnecessary $5 a month expense? And we’re not yet even talking about bigger recurring expenses like that $5 latte on your way to work every day which isn’t $5, it’s $1250 (a year)!

Do some quick math to calculate what the costs are annually, your hourly rate, and/or think about something you want to compare it to that is easy and meaningful: whether it’s a case of beer like me, a dinner out, a new article of clothing, whatever works for you!

2. Identify and review

Identify and review in detail each recurring expense you have. Look back at your bills, your bank account activity and credit cards to find them all. This can take some time, but I assure you it will be worth it when you see the savings.

Look at everything, not only the examples I mentioned above, but anything and everything you possibly have as a recurring expense:

  • your car & house insurance
  • bank fees
  • gym membership
  • home security system
  • Costco membership
  • house cleaner
  • parking
  • daily/weekly habits (like that latte or lunch)
  • mortgage interest
  • credit card/Line of credit interest costs
  • utilities (hydro, gas, water, garbage pick up)
  • etc. etc. etc.

Look at anything and everything that costs you money on a recurring basis!

3. Eliminate temporarily or completely

Take a hard look at each of these recurring expenses to see what you don’t need or want anymore, or what you can reduce usage on.

Maybe that $5 latte can happen every other day instead; or bring lunch to work a couple of times a week.

Perhaps it’s time to dump that home phone in favour of just using your cell phone(s).

You may have to pick up other (hopefully lower) recurring expenses instead, but it may still be worth it.

How about Cable? I wasn’t watching much cable, mostly just Netflix and some other streaming services. When I dropped cable, I still needed to be able to watch baseball, so it was a trade off – no cable, but I had to start buying the MLB app.

I’m still saving a ton of money though, as the cost of the MLB app is significantly lower than what I was paying for cable!

Are you subscribing to Netflix every month, but finding you are running out of things to watch? Consider cutting it loose for a couple of months, then bring it back when a new show, or collection of shows/movies are added that you want to watch. Eliminate as many of those recurring expenses as you can and you will see big savings!

For Doing More with Our Money, I’m taking my own pictures wherever possible, to avoid having to pay Getty Images. Sure, I may be a crap photographer, but hopefully this blog won’t live or die based solely on the pics!

4. Downgrade what you keep

For anything you want to keep, look at options for downgrading that you would still be happy with.

If you must keep cable, is there a reduced package that would still work for you?

If you must have a house cleaner, could it be bi-weekly instead of weekly, or every three weeks instead of bi-weekly?

If you must keep Netflix, look at the different account options. Currently there are three Netflix account options in Canada (see image below). Personally, I am totally fine with standard definition when binge watching Gilmore Girls. And there is only 1 screen on in my place at any given time, so I’m on the $9.99 tier.

That’s two cases of beer saved!

5. Consider alternate payment plans.

For anything you do decide to keep, if you are definitely going to use it throughout the year, is there a better deal if you pay for it annually instead of monthly?

Netflix doesn’t have any deals for paying annually, but one of their Canadian competitor streaming sites, Crave TV does. I like Crave, and do want it every month, so I pay for the full year.

It’s $9.99 monthly, or $99.90 for the year, that’s half a case of beer saved!

One of my Martial Arts clubs charges $280 for 3 months, or $795 annually. Paying annually saves me over 8 cases of beer! Hopefully the workout offsets all that extra beer!

Now, this only works if you are sure that:

  • You will really use it for the full year. If I stop watching Crave or drop out of class after a couple of months, I’m wasting a lot of money.
  • Make sure you have the money to pay for the full year – i.e. don’t put it on a credit card with interest charges that negate any savings. If you don’t have the money yet, divert the savings you make from other cost saving activities towards this, to further increase your savings!

Make sure to scour all of your expenses looking for options to downgrade, not just the most obvious!

For example, in Toronto (DMWOM’s city), you pay a different rate for garbage collection based on the size of the garbage bin, which can easily be swapped out.

Garbage pick up for a small bin is $186 annually, $323 for a medium, $439 for a large, and $509 for an extra-large.

I made an effort to reduce my garbage, leveraging the green and blue bins as much as possible.

I downgraded from a large to small bin, saving (earning?!) 6 cases of beer!

Great $ savings by reducing garbage, plus it’s better for the environment!  

6. Measure your savings

Tally up what you have saved making all of these changes.

 It’s important to recognize your success, especially as it will lead to more success as we continue our discussions in Doing More with Our Money.

I’d love to hear about how much you saved from this exercise; whether it’s calculated in dollars, cases of beer, something you collect, whatever works for you!

7. Pick a future date/trigger to re-do this exercise

It’s great that you’ve just taken the time reduce your recurring expenses!

Pat yourself on the back, and also make sure to find a way to remind yourself to relook at it down the road:

  • perhaps a recurring event in your calendar every 6 months to review your recurring expenses!
  • and/or use renewal or price increase notifications as a trigger to relook at each expense.

 For example, I recently received an email from my laptop security program for the annual subscription renewal, at a cost of $99.99.

Instead of just letting it automatically renew, I did some research and saw they had a promotion for new customers.

I called in and convinced them to give me that promotion for my renewal, paying $39.99, saving 1.5 cases of beer!

 I also recently received a price increase email from my home security alarm company – they were increasing the monthly charge by a couple of dollars up to $36.70 per month.

I spent an hour looking at their competitors pricing, then called my company’s customer service. I was able to convince them to not only hold off on increasing my rate, but to bring it down to $22.60 per month.

See how many cases of beer saved on this one and the others in the image below!

Don’t worry if you aren’t comfortable having those types of negotiation discussions. We will talk much more about how to best approach negotiations like this in future Doing More with Our Money posts. For now, just do your best!

That’s it for the second edition of Doing More with Our Money.

Please feel free to send in feedback on anything you like, especially any suggestions, challenges or success you’ve had with reducing your recurring expenses. And if you have any other tips/tricks for saving money, send them my way!

Thanks for reading!

Mike

4 Replies to “Recurring Expenses”

  1. Great examples. Let me know if you need a drinking companion to share all those beers you’ve saved.

    Another example – we recently moved from Bell to Rogers for our TV, internet and landline services. In addition to that we had a separate cell phone contract and home insurance package. Instead of paying close to $400/month for all of these services we’re now paying about $150. Changing suppliers, as your home insurance example shows. Can indeed save you several cases of beer (or bottles of wine!)

  2. Great blog, Mike! I just called up the car insurance company to save some money for my parents during COVID-19. The long wait was a bit of a pain but it’s a monthly saving of $8. Not a lot but I’m comparing the saving not to beers, but to things within the spending power of seniors on fixed income, and suddenly that $8 seems more!

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