This post is part of our series 7 Weeks to Your Best Finances.
This series is meant to serve as a 7-week path to improving your finances. It will cover all the important topics like starting a budget, saving money, making money, investing, and more.
To find out more and see all the tips and ideas for improving your finances check out the dedicated 7 Weeks to Your Best Finances page.
Cutting your expenses is a great way to almost instantly start saving more money. When considering cutting your expenses, it’s easy to think about the variable expenses that change each month like dining out, transportation, groceries, entertainment and so on.
However, today we’re going to be talking about various different ways to cut your fixed expenses which can prove to be more significant and make a big difference in the grand scheme of things.
The best part about cutting your fixed expenses is that you only have to do it once (instead of every month), then you can enjoy the benefits of being able to save more and have less of a financial burden.
Here are some real ways reduce 7 common fixed expenses.
1) Refinance Your Mortgage
A good rule of thumb is to not allow your total housing costs to exceed 30% of your income. While there’s nothing wrong with wanting to have a nice place to stay, you have to consider your other living expenses and how you’ll afford them as well.
If housing costs are too high, you should consider refinancing your mortgage. If rates are lower now than when you took out your mortgage, you may be able to save money by lowering your interest rate and/or your monthly mortgage payment.
Refinancing does come with some expenses attached like closing costs, fees etc. so make sure you compare offers and do the math to see if refinancing will actually help you lower your housing costs and allow you to save money over time as well.
2) Move to More Affordable Housing
If you don’t have a mortgage and still want to lower your housing costs, you could consider moving to a more affordable place. Moving can be a huge process though so it might not be worth it to you but again, calculate how much you could potentially save.
You don’t have to move far away either. When I moved to lower my housing expenses, I found a much better deal elsewhere but it was also in the same neighborhood so I didn’t have to go far. After it was all said and done, I only had to move once and I saved a ton of money by doing so.
If you’re not interested in moving, you can always get a roommate to lower your housing expenses, or rent out part of your house if you’re allowed.
3) Ask Your Internet Provider for a Discount
Sometimes it doesn’t hurt to ask for a discount. If you use the internet a lot and want to try a new company, be sure to ask if they have any introductory promotions that you can take advantage of to lower your bill.
If you’ve been a customer for a while, see if the company will offer you a discount based on your customer loyalty and the fact that you’ve continued to pay your bill on time.
Some companies raise their prices over time which I don’t think is fair, but I always call and ask for them to lower the rates again. I compare the costs with other companies and ask for a discount based on what the competition is saying.
If you do this, odds are, you will receive some type of discount on your bill because your internet provider would rather you stay with them than go with another company.
4) Compare Insurance Rates
How much is your insurance costing you each month and what benefits is your plan providing you with? It’s best to compare insurance rates every now and then to make sure you’re getting the best deal.
After you’ve been with an insurance provider for a few years, they don’t really have much of an incentive to keep offering you the lowest rate. This is why there’s no shame and choosing a different insurance company if they will provide you with the benefits you need at an affordable rate.
You can also see if you can get a discount by bundling your insurance packages as well. I have auto and insurance and renter’s insurance with the same company and they offer me a discount as a result.
5) Get a New Cell Phone Provider
If you’re still paying a crazy amount for your cell phone bill, it’s time to start looking at other options. I’m not a fan of getting locked into 2-year contracts because I like to be able to change carriers if I find a better deal.
Many prepaid cell phone companies have been improving their service over the past few years and offering unlimited talk and text plans so there really isn’t a major reason to sign up for a contract with a large well-known company.
I’ve had Republic Wireless for about 2 years now and I really like the service and the price. I only pay about $30 per month for my cell phone bill for my smartphone. I’ve also had Straight Talk and I’ve also heard that Net10 and Boost Mobile are really good too.
6) Get Rid of Cable
If you haven’t already, be sure to get rid of cable this year. There are so many other more affordable options you can take advantage of so there’s really no need to have a cable bill anymore.
According to The Motley Fool, the average American pays $64.41 a month for expanded basic cable but many people admit to paying $150 or more per month for their cable services.
Needless to say, there are much cheaper alternatives to help you save money including streaming services like Netflix, Hulu, Amazon Prime, Sling TV and more.
You can also rent movies and television shows at the library or use YouTube for free. If you’re not yet ready to cut the cord, you could always ask your cable service provider if you can downgrade your service but think about what you could do with an extra $1,000-$1,800+ annually if you got rid of cable once and for all.
7) Refinance Your Student Loans
With $1.3 trillion in outstanding student loan debt in the United States, many feel the impact of their student loan payments dragging down their finances month-after-month. DC and his wife graduated with $100k in student loans and it largely was the motivating factor behind his website and book.
Because of how much student loan debt there is in the United States, there are companies like SoFi that offer student loan refinancing. They are willing to refinance all your debt at a lower interest rate so that you can save potentially thousands of dollars that otherwise would have gone towards interest.
This can be a great option for people who are looking to pay off their student loans faster and/or are looking to put less towards interest and more towards the balance of their student loans.
The Key to Cutting Fixed Costs: Focus on Shopping Around
Shopping around and comparing prices is one of the best strategies to implement when you’re trying to lower some of your fixed expenses.
Since fixed expenses are constant, it’s pretty easy to get comfortable with them year after year and forget about trying to get the most bang for your buck.
Switching your cell phone provider or refinancing your mortgage make a big impact on your finances allowing you to spend less and save more.
Whenever you can, lowering the interest rate on your debt you are going to save money. For many people interest rates are what keeps them in debt, especially when it comes to high-interest debt like credit cards. With so much going towards the interest on debt it can be tough to find the money to put towards the balance. Shopping around for lower interest rates can be a big win from a fixed-cost perspective.
Finally, one of the big benefits of renting instead of owning a home is that you are not as tied down to the property. Even better is that in many metro areas there are hundreds or thousands of options for places to live. If you currently rent, do yourself a favor and shop around before you sign that lease renewal.
Will you try to cut any of your fixed expenses this year? Do shop around for the best deals on a regular basis?
Check out all the 7 Weeks to Your Best Finances posts for more tips on improving your finances!
Check out some of our favorite personal finance resources:
Are you getting the best credit card rewards? Check out the top cash back credit card offers (updated daily)
Make extra money: 15 ways to make money from your computer
Get the First Chapter Free!
Join our online community and get the first chapter of the book Student Loan Solution absolutely FREE!
All awesome ideas. I’ve personally seen great results with shopping for new auto insurance and cutting my cable. And you’re right these savings will add up month after month.
Yes same here. I make it a habit to always shop for around for the best deals on auto insurance. Since I’m younger, I find that people like to try to rip me off.
great tips I’m totally agree with the entire post:D
Thanks for reading Giulia!
Awesome piece Chonce! Looking forward to reading more of your work.
Thanks Chadene! I appreciate it :)
Hey Chance, great to have you posting here and thanks for the tips..
What you’ve really highlighted here is that there are a heap of ways you can save and cut expenses..
It’s really about doing a deep dive into a spending plan and then cutting away :)
Keep up the value you’re adding here!
Hey Jef, yes it’s all about looking at your spending as a whole, then going line by line and seeing what you can cut. Thanks for reading!
We just refinanced our mortgage last year to get into the 4 percent range and I also changed our car insurance too. It definitely added up to a nice little extra sum to throw towards debt and to add to our savings. Great tips, Chonce.
Nice Article Chonce!! We can cut our expenses to some extent as we maintain our day to day life style. Seasonal cost are also other things we never count at the time of planning. Yes, discounts from service providers can be lower down our monthly expenses little bit.
We cut our cell phone expenses drastically by using prepaid phones and buying minutes when there are sales on them. The holiday season is one of the best times to buy minutes. Our phones cost $5 each; our monthly service cost for two phones totals $15.