Unfortunately, some things — like your mortgage, car payments, and cell phone bills — are unavoidable. But there are some other sneaky little line items you can cut entirely from your monthly budget.
1
Cable TV
"Cutting the cable cord and opting for a streaming service provider like Netflix or SlingTV can help a family save big bucks," says savings expert Andrea Woroch. According to market research company NPD Group, the average cable customer pays $123 a month. By the end of the year, you're looking at $1200 or more to spend on other things.
2
Landlines
"Many consumers like having a landline for emergencies," says Woroch. "But at an average of $40 per month, it's a lot of money to dish out on a phone you don't use often." Instead, she suggests switching to a free Internet home phone provider like Ooma. "While there's an upfront cost to cover the device, it pays for itself in just two months. Opting for this free service will save youapproximately $480 annually."
3
Extended Warranties
When you're shelling out big bucks on a new television or home appliance, you may be tempted to cover yourself with an extended warranty from the store. Don't. "This warranty may cost you up to 20% of the value of the good and may not even cover the entire purchase," warns Woroch. "What's more, because most retailers contract third-party service providers, quality of service and timeliness of the repair aren't guaranteed."
Most experts agree the manufacturer's warranty is sufficient, and often credit card companies extend coverage for an additional year. Retailers often make a wide profit margin on an extended warranty and are often incentivized to sell them, says Rachel Rothman, Chief Technologist of the Good Housekeeping Institute. "For the majority of cases, you are better off saving the money you would have spent on an extended warranty and applying that to repairs, if necessary. Repairs may not cost as much as you shelled out, plus the extended warranty period may overlap with the included warranty."
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4
Auto Collision Insurance
Sure, you need car insurance. But you may not need to pay for auto collision insurance on top of that. "This insurance covers repairs to your car in case of an accident," explains Woroch. (Comprehensive coverage, on the other hand, covers damage from things like fire, natural disasters, theft, and vandalism.) "If you own your car, you are not required to have it and those who have enough money in the bank for such emergencies can eliminate this coverage." It helps to do the math: Collision coverage comes with a deductible, so you'll have to pay out of pocket for some of the damage anyway (usually up to $1,000). Factor that in, along with the actual cash value of your car, and calculate how much you're paying in collision insurance each year. Is the bill worth the potential risk?
5
Modem or Router Fees
Internet bills seem to have a way of adding up slowly. There are all sorts of additional fees and taxes. Plus, if you rent a modem or router from the service provider, those come with additional monthly charges. Anna Newell Jones, blogger behind And Then We Saved, recently called her internet company to find out how she could lower her bill. "We ended up going through every single line to see what we were getting charged for, and how we could reduce or eliminate the expense," she says. "I got a few deals and eventually decided to go get our own modem." By the end of the call, she was able to cut the monthly bill by about 33%.
6
Credit Card Fees
Sure, you might not be able to pay off your entire bill each month. But there's no reason to pay steep interest charges. Consider transferring your balance to a lower-interest card. This often comes with a small fee to transfer, but many credit card companies waive the fee for new customers. Or, call your current card's customer service and see if they will give you a lower interest rate. Also be wary of other hidden charges like cash advance fees for withdrawing cash from an ATM or at a bank. Before taking a cash advance, factor in the amount of the fee and decide if the convenience is worth the cost. And cash equivalents — items like money orders, casino gaming chips, wire transfers and foreign currency — also come with a fee on most cards. And there is really no excuse for getting late fees. "Late fees are basically equivalent to throwing your money in the trashcan," says Newell Jones, author of the upcoming book,The Spender's Guide to Debt-Free Living. If you find yourself paying them often, take action. "That could mean setting up automatic withdrawals, putting due dates in your calendar, or getting all of your bills set up with the same due date — so you can pay them all at once rather than having them scattered throughout the month."
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7
Private Mortgage Insurance
If you have less than 20% equity in your home, then you are required to get private mortgage insurance (PMI). But if you've passed that mark, then "paying for private mortgage insurance is just about the closest you can get to throwing money away," says Monica Ma, a spokesperson for Trulia. "Unlike the principal of your loan, your PMI payment doesn't go into building equity in your home. It's not money you can recoup with the sale of the house, it doesn't do anything for your loan balance, and it's not tax-deductible like your mortgage interest." To remove PMI, see what you can do to pay the mortgage balance down to 80%.
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