Cut Expenses and Create Your Own Travel Rewards Program
On the way to financial independence, I enjoyed cutting costs just as much as saving and investing. I still love new cost-cutting discoveries and tweaking them for my family’s lifestyle. Since there are so many aspects of the points and miles hobby which we do not control, it’s important to control those which we can. While I’ve previously described how I have taken more control through credit card earning and redemption, I want to talk more broadly about taking control to cut everyday expenses.
You can use the savings from cost cutting to meet different goals, including: increasing savings, living more freely, or, perhaps, starting your own travel rewards program. In my opinion, that sounds more fun than creating a travel fund or budget. Let’s go through a few cost-cutting measures which are easy to implement.
#1. Slim Down Your Wireless Service Plan
Given how connected our world has become, it’s easy to sense a (false) need to consume large amounts of bandwidth via smartphones, tablets, etc. While I’m out and about (albeit not currently with COVID-19 events), I consider that a reason to not be connected to the internet, rather than as a reason to increase my wireless bill. Unlimited data plans can be attractive, but the rates/bills aren’t that attractive. By lowering your data plan, you can save big.
Bigger picture, are you with the optimal wireless provider? Check for lower rates and increased quality with other providers. Changing services has become much easier, and savings are immediate.
As an illustration, I have held a Republic Wireless cell phone plan with 1GB of monthly data for the past several years. My monthly cell phone bill has been about $20. Recently, by making an annual advance payment for the next year, Republic gave the last two months of service free. This brought my average monthly payment down to approximately $16-17. This is primarily possible because I haven’t cared about a large data plan.
#2. Cut the Cord, or Streamline your Streaming
Many of you reading have already realized this cost savings by getting rid of old school cable. But if you haven’t done so, take the opportunity to close your cable and pay a lower rate via one of the TV streaming services. If you aren’t quite ready to cut the cord, at least call your cable company and ask for a better offer. Cable companies are getting more desperate, and they would rather cut you a cheaper deal than entirely lose you as a customer.
If you’ve already cut expenses on cable and currently stream, could you stream for cheaper, or completely free? Check out the strategies I previously laid out to simplify your streaming situation and save big money.
#3. Renegotiate Your High Speed Internet Plan
On an annual basis, I call my high speed internet provider to talk about improved promotions and determine if cheaper options are available. Most of the time, I either find something cheaper, or I manage to keep my existing promotional rate rather than being kicked up to the expensive standard rate. In the past, I’ve found agreeing to a 6- or 12-month period will bring rates down even further. Currently, I pay a month-to-month rate that is actually just as cheap as my introductory rate several years ago.
Also, don’t pay for what you don’t use. For instance, do you have an accurate understanding of exactly (or even generally) how much bandwidth you need based on your internet usage? Companies advertise fast, big numbers which look slick, sound great, and are way more than a lot of us need. Gigabit sounds great, but 100 mbps sounds better to my wallet.
#4. Make Insurance Changes
I want to eventually complete this article, and I want you to be able to read it all. So I won’t talk about all forms of insurance here. Let’s focus on car insurance, as making cost-saving changes there is pretty easy. First, since many of you are working from home given current events, you are most likely putting less miles on your car. Ask your agent to update your policy to reflect this and hopefully see your rates go down.
Second, do you really need collision and/or comprehensive coverage? Consumer Reports suggests that if your annual insurance premium equals or exceeds 10% of your car’s cash value, you may want to consider dropping this coverage. Doing so can save you big.
Third, if the above scenario doesn’t apply to you and it’s best you hold collision and/or comprehensive coverage, do you really need that low of a deductible? While I had a $500 deductible, I called my agent and determined a $1,000 deductible would decrease my premium. By betting on myself to drive safely, I saved substantially.
And of course, another step you can take is to shop around with difference insurance carriers to find better rates. In my opinion, auto insurance companies are an example of you get what you pay for, so be careful moving to the lowest bidder.
#5. Why Are You Driving?
Speaking of cars, ask yourself if you need to drive in a given situation. Could you walk or ride a bike? In normal, non-COVID-19 times, is public transit an option? If you need to drive, what other errands can you accomplish in the same area? By choosing not to drive or simply planning better, you are saving money on gas, car depreciation, and possibly parking or tolls.
#6. Cut Your Own Hair
I adopted this practice about 10 years ago, and it’s easily saved me at least $250-300 annually. Fortunately, I have a willing, creative home hairstylist (my wife). And when she’s not willing or feeling creative, I take the shears with a 2-guard and do it myself. Many online resources exist to help along the way; this is definitely an example of where YouTube is a beautiful thing.
#7. Cancel Unnecessary Memberships
It’s a no-brainer to cancel a gym membership or ask for a refund during the current COVID-19 situation. But before you go back, ask yourself if you really need it. Can you create a solid, long-term workout plan from home? If not, can you join a gym run by the city or county instead of paying for a higher-priced private gym membership?
I’ve been struck by the influx of subscription box services where members get a bunch of random stuff which may or may not be useful. Even if the stuff is useful, is it worth what you are paying? Are you actually using the stuff? If you hadn’t received the box, would you care enough about that stuff to go out and buy it on your own?
Delivery services, such as Uber Eats and Grubhub, have monthly programs which provide free deliveries and other small perks in exchange for a monthly fee. Are you using that service enough to justify the fee? If so, how much are you spending on these delivery services monthly? Are you okay with that number?
#8. Strategically Close Credit Card Accounts
A healthy financial practice is to periodically review your credit card accounts and close credit cards that are not providing a level of benefits beyond the annual fee. Mark recently wrote about how he is slaying the annual fee beast. Given the outsized value of credit card rewards, it’s easy to let annual fees get out of hand. Keep track of all annual fee charges and thoughtfully consider each card prior to paying the annual fee. Call the retention department of each card issuer to obtain a decreased annual fee, or, if no satisfactory offer appears, ultimately cancel the card.
Final Thoughts
Some of the above options may work for you to cut expenses; some may not. Regardless, I hope I’ve put you in a mindset where you can identify easy cost-cutting measures for your lifestyle. And put those expense cuts into saving, living more freely, your own travel rewards program, or a combination of all three! What everyday expenses have you cut? Has the adjustment been easy or difficult?
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I was able to reduce my Home Owner’s Insurance by having my broker run my FICO score.
Janice,
Thanks for the datapoint and reading!