As COVID-19 spreads across the globe, there’s much uncertainty about what its full impact it will be. But it’s clear that it will change our lives in many ways, including our short-term and long-term personal financial situations.
An economy lurching in the throes of a pandemic will cause hardship for a lot of people. Recent studies show that many Americans are living paycheck-to-paycheck.
Cutting back will be a necessity for many people to make ends meet. Reducing overall spending is one tactic, and in this time, it may be easier to give up extras and luxuries, clip coupons, shop sales and take advantage of rewards programs.
But it’s also a smart idea now to examine your recurring expenses. Monthly bills may seem rigidly fixed and inflexible, but there are often ways to cut many of them down to size—or eliminate services that are unnecessary expenses now—to lighten your financial load every month.
Start by figuring out what you’re paying now, suggests Attorney Leslie H. Tayne, founder of Tayne Law Group, P.C., in New York, and consumer and business expert concentrating in debt management, debt resolution and bankruptcy. “If you’re not already tracking expenses, start now.”
Shopping around might take some time, but it’s the best way to research accurate prices and compare what you get for what you pay, says R. Joseph Ritter, Jr. CFP® president and founder of Zacchaeus Financial Counseling, Inc., in Hobe Sound, Florida, a non-profit organization serving low-income households and households in financial crisis. “This applies to cable television, cellphone packages, car insurance and many other ongoing services and recurring payments,” he says.
Blogs, books and websites that list prices and deals may provide some limited help, but remember they are “third-party sources,” Ritter says. “They should not be trusted to accurately represent a company’s position.”
First, trim the fat
To get started, check your current bills and plans for redundant services, Tayne suggests. “For example, if you are paying for a cellphone, do you really need a landline as well? If you have a Netflix and Hulu account, do you think you can make do without cable?”
Are you paying monthly fees you could eliminate? Most people lease the modem that provides their cable-internet service, at a cost of up to $100 a year, says digital technology expert Kim Komando. “You can buy the same modem outright for $100” and save that annual expense in the future.
If you get overage alerts from your cellphone carrier, take a close look at how the phone is being used. When Komando checked her son’s cellphone, she found the overages came from accessing YouTube on his cellular line instead of sticking to WiFi. “It’s set up by default that way,” she says.
And all those Facebook notifications use cellular data that you could save money on if you turn off notifications while you’re roaming and wait till you’re back on WiFi.
Also, re-evaluate the services you’re using to see if there’s anything you can get rid of. “My family and I ‘cut the cord’ and rid ourselves of cable TV,” says Dennis Restauro of Baltimore, Maryland, who blogs about technology at Grounded Reason. “It’s a great way to bring in an extra $100 a month, and my family and I don’t miss it at all,” he says.
Next, seek out cheaper alternatives
Cable TV vs. online options. “A lot of folks are looking at cutting cable because the bills are so high,” Komando says. This is especially eye-opening when people realize they’re paying for tons of channels they don’t watch. On average, people watch a total of about 11 channels, even though most packages include roughly 200 channels to choose from. Or you may realize you’re actually not watching much TV at all.
There are a lot of options now to replace expensive cable TV packages. For example, HD antennas that pick up over-the-air broadcasts can extend from as little as a few miles up to 30 miles from the transmission antennae, Komando says. Before you buy an antenna, she recommends checking TVfool or a similar service to find out which channels you could get, how far you are from transmitters, how strong their signals are, which direction to point your antenna and other helpful details.
Streaming gadgets such as Chromecast, AppleTV, Amazon FireTV and Roku connect your TV to the Internet. Prices start around $35, but you may be able to find discounts at retailers such as Best Buy when you shop through SEIU℠ Click & Save.
After your gadget is connected, you subscribe (at an additional charge) to services such as Netflix, Hulu or Amazon Prime, depending on what your gadget carries and what programming you want. Many streaming services offer free trials that can save you a little more money to get started.
Sorting out the options can be confusing, even to a tech expert like Komando, so she created a streaming media devices comparison chart that she keeps updated along with a streaming service comparison to help you cut the cable cord.
To access the streaming services, you may not need a gadget if you have a smart TV, she notes: “The reason they’re called ‘smart’ is that they are directly connected to the Internet.”
Komando recommends making a list of what you like to watch and then seeking out a solution where you can access it. For example, if you like first-run movies, Amazon Prime, Amazon FireTV or AppleTV will be a better choice for you than Netflix.
“Look before you buy,” Ritter cautions. “Hulu, Netflix, Amazon and others show you on their websites the television episodes and movies they offer.” Make sure the options really are suitable replacements to what you have now and cost less than your current subscription.
Although cost is a factor, make sure your decision will fit what you and your family want, need and will be happy with. And your preferences may change with time: “As your family grows, you may find you need more G-rated channels than sports channels,” Tayne says. Reassess your priorities each time you’re considering a change.
Cellphone contract. Cellular service can add a whopping $110 to your monthly bills, Komando says.
A no-contract phone could save you a lot of money. It used to be that your only choices were a low-cost bad phone or an expensive good phone, but today there are good options, Komando says. When you’re shopping for cellphones and service, first figure out how many phones you need and how you and your family use them, she says. Then you’ll be able to determine which kind of plan you need.
Insurance policies. You may love your current insurance agent(s), but if you need to lower your bills, contact other offices for quotes, Ritter suggests.
“This is one area where doing your homework really pays off,” Tayne says. You may qualify for one of the many discounts insurance companies offer but don’t advertise. For example, your auto insurance may offer a discount if you take a short online course or if you maintain good grades in school. You might save 5 to 15 percent in annual premiums by buying two or more policies from the same insurance company, such as auto and home insurance.
Ask for a better deal
“Don’t assume you already have the best deal,” Ritter says. It pays to shop around because prices change and companies offer limited-time deals.
Try to negotiate a better rate with your current service providers, Komando suggests. Find out if competitors are offering better rates. Then call your current company and “explain to them that their costs are too high and you need to start saving,” even if that means switching to their competitor who is offering better rates.
Ask if they offer any discounts for veterans, seniors or educators, Tayne says: “You would be surprised what discounts you may be eligible for if you take the time to ask.” Check to see if they have a budget plan or a discount for automatic “paperless” payment.
Read the fine print
Sometimes saving “is just a matter of switching providers,” says Tayne. “More often than not you may discover that a different cable or cellphone provider will offer you the same package you have now for less, but it is important to always read the fine print to make sure you are aware of the terms or any locked-in-rate periods.”
The bottom line
You have to invest the time and effort to make any saving strategy work. It takes homework, investigation and comparison shopping, but you can do it—and you’ll be the one to reap the benefits. Little cuts here and there will add up, and every little bit you can save now will help ease your monthly financial obligations.