Spring Cleaning Your Expenses

Ahhh…springtime.   The weather starts getting warmer, the birds are chirping, the flowers are blooming… and it’s time for a little spring cleaning.  This year don’t just spring clean your house; we want you to clean out those unnecessary expenses! 

I want to start out by saying my objective with this article is to not tell you to sit inside all summer and save money, that would not be a very fun summer.  But there is a long list of monthly items the average consumer pays for and does not realize full value.  There are a lot of ways to spend zero money and have your free time booked with fun activities, but that is another article in itself…. I will save it for later.

One great way to understand the full impact of you spending habits is to bring up your most recent bank statement.  Categorize your spending activity and multiply that number by 12 to see what you are spending in a year.  Things like upgraded cable, fancy gym memberships, high data limits on your phone, or any type of monthly recurring cost. 

Now I’m big on the “value” aspect of spending.  Analyze your habits a little, how much of a product do you use?  In the example of cable, cell phones and gym memberships you could save yourself a good chunk of change on an annual basis.  Are you watching all the programs you’re paying for? Are you using all your data? Could you use Wi-Fi to save on data at work or at home? Do you use all the facilities/classes at your gym?  Of course anytime you sign up for these things the sales representatives will always upsell you on the “value” of more, but who is getting the value? 

Personally I don’t watch much TV, only a select few of channels, so I would opt for the basic package.  For my cell phone, I try to download everything to from a Wi-Fi network to avoid using data when streaming content.  At the gym, I go for a basic membership at a large chain (pay all up front) and print out different workouts online to follow instead of hiring a personal trainer. 

Next take a look at any direct debit expenses; these are like a virus to your savings.  Direct debits are classified as giving a company authorization to take money out of your account without you initiating each month.  Not good.  Most companies love to set this up so they can get paid without you actually having to physically shell out any money or even think about shelling out the money.  I would cancel anything you have setup this way in order to evaluate the value of the product that is being paid for on a monthly basis.  You want to be in the driver’s seat of your spending, not the backseat.

Before the summer starts take a step back and study your monthly spending, categorize it and annualize it.  Then take a step back and think about the “value.” Is Starbucks coffee worth $1,000 dollars to you?  Maybe it is, but I guarantee you that you will find some items that are not worth the total yearly spend you are currently dishing out. 

If you find some expenses you don’t want, cut them.  Use this money to pay down debt (the mortgage is not classified as debt here).  If you are debt free and this puts you ahead of you budget (because you need to have a budget), then spend it on something you value.  Life is not all about saving and the goal of a budget is to stick to it, so if you beat your budget I would suggest you spend the difference because you worked hard to beat your budget!

What expenses can you clean out this year?  Eating out every day for lunch? Getting Netflix instead of paying for cable?  We want to hear your ideas!