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Make meaningful improvements to your finances every week.

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Make meaningful improvements to your finances every week.

Plug-spending-leaks-img

Plug Your Spending Leaks

 

You waste money, yes I said it! Instead of wasting your money, come learn how to find and plug your spending leaks. Money is a terrible thing to waste!

Money is a terrible thing to waste and chances are you are wasting money without even realizing it. I was too until recently.  Maybe you’re paying for HBO and never watching it or you signed up for the Dollar Shave Club and you’re not using your blades.  Whatever it is, you gotta find these leaks and stop them!

Saving money is really important and the easiest savings you’re going to find are when you stop paying for things you don’t actually want or need.  When you plug your spending leaks it could feel like you just got a raise!

Plugging leaks is a way of optimizing your spending and often times it still includes buying the things you want/need but paying a lower price for them.  There are a ton of potential leaks that you can have so we can’t go over each one. We will go over some common leaks and how to detect, then plug them.

Detecting Your Leaks

Ok, I’m going to assume you have a budget. If you don’t, you can follow my handy budget guide and you should have things rolling in no time!  I’m going to ask you to look at the past month or so of your spending and go down the list from most expensive to least expensive and look and examine where your money went.  Anything recurring month to month that is more than $50 should be seriously questioned as well as any spending you can’t explain.

In terms of reccurring payments, things like your cable TV bill can easily be reduced  First of all, I have no idea why you even have a TV bill to start with.  Want to watch live TV as much as you want, any channel with 20 hours of DVR space?  Try Aereo for $8/month.

You also have the ability to watch unlimited movies or TV shows on Netflix or Hulu for $15 a month each.  Hell, get all three of them and you’re still probably beating your Cable TV bill by $70 a month on average!

The point is, there are plenty of alternatives to the old school expensive take-all-your-money-and-still-show-you-ads services.  Google is your friend, use it to stop wasting your cash. Chances are there is a cheaper alternative out there and you just haven’t found it yet.

Next, we have your fear of commitment penalties.  This is the money that you throw away every month on services that you know you’re going to keep but don’t want to commit to an X month or year contract.

A perfect example is web hosting.  If you take my favorite hosting provider, Media Temple, and look at their Grid Hosting service (which can scale incredibly well) it costs $20/month.  However, if you buy it for a year, it costs $200.  That’s a 17% savings for doing nothing.  Sure $200 may be a lot to put up front but you need to make strategic decisions that will save you money in the long term.  If you’re only thinking about today then your F You Money is at risk!

Ways To Plug Your Spending Leaks

Nah, he's just peeling away his wasteful spending ;)

Nah, he’s just peeling away his wasteful spending ;)

When looking for ways to plug your spending leaks you need to look no further than the four C’s: Cancel, Challenge,Cut or Commit.

Like in my example above, Cable TV is a solid Cancel or at least Cut for a much cheaper service that serves nearly the same purpose, Aereo.   Most of your Cancels will be services that you no longer use but don’t realize you’re still paying for.

This is where your budgeting skills come into play because you’ll never find these charges unless you review what you’ve spent your money on (budgeting!!!).  Don’t under estimate this category, I’m a seasoned money saving veteran and I’ve found quite a lot of savings here time after time.  Sometimes you just forget about things you signed up for and that’s OK… as long as you realize and fix your mistake!

Challenging charges is a personal favorite of mine.  I remember when World of Warcraft came out you could get into the beta if you just signed up for a $15/month Game Stop account online.  $15 was a great price to get into the beta of a game I was going to keep playing so I did it!

The following month I forgot to cancel it and I was charged again. Now, that’s not a lot of money but I was in college and to me that was a loss of more than 6 beers, something I didn’t take lightly.  Long story short I called my credit card company, challenged the charge saying that I canceled the service (which I did before I called) and Game Stop didn’t fight it.  $15 saved!

From my experience, most companies which pull that crap move of making money off your terrible memory never contest the charge because there are plenty of people who don’t fight and that’s good enough for them.

Cut is something you can look at your cell phone bill, cable bill or even Netflix bill for.  Do you really need 5,000 text messages a month?  I know you’re an adult but do you really NEED the Playboy channel when you have the internet?  Free porn is what the internet was invented for! Sure Netflix is awesome but come on, two DVD’s at a time?  Most everything can stream!

I think you get the point.  If you’re not using something, cut the fat and save the cash.  A company will never remind you that you’re not using everything you pay for so it’s up to you to find those easy savings.

Finally, Commit, the hardest one, especially for us guys ;)  Like I hinted at up top, if you know you want or need something longer than one month, pay for it.  When you pay upfront you get a discount for your commitment and since you were going to use the service anyway the savings are free.  It’s easy, all you have to say is “I Do“…. or something like that.

Do Something With Those Savings!

Hopefully this whole exercise wasn’t too difficult for you. I bet that if you took a good hour and did some solid investigation you could find at least $100 in savings.

Now that you’ve either found those savings on your own or with my help, we need to put that money into action. A major difference between wealthy people and the rest of us is that wealthy people put their money to work. Wealthy people may go to work to earn money but every day their savings is also going to work for them earning them even more.

You could use simple set it and forget it services like Betterment or you can get a bit more involved. There is no best way, it’s just what works for you. If you’re interested in making those savings earn than definitely check out my No Effort Investment Strategy post!

Didn’t find anything or don’t think it’s possible?  Please leave a comment or contact me and we will get you those ever elusive savings.

Do you have any unique experiences with plugging some spending leaks?  Share your experiences with us in the comments!

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  • I like the picture. It reminds my of my spending habits when I was in my early twenties. Spending wasn’t a leak, it was a torrent! It took me years to control that and I’m now working on paying off my debt. I still have to fight to control the spending urge. The method that has worked best for me has been to ask myself whether the “spend” was something I “Wanted” or “Needed””. Invariably it’s always a want. Once I recognize that it becomes much easier to forego the purchase.

  • Pingback: The Wise Dollars Mid March 2013 Favorite Posts - WiseDollar()

  • More money you have more you’re going to waste. Just like time, more time you have, more time you’re going to waste. It’s amazing how we find all these leak in our finance when our money is tight.

  • Sleepless in Chicago

    What a great article and a ton of commonsense actionable advice. Ultimately, it is either making more or saving more. In the current economy, making more or even surviving at a work place might be a major issue. This said, looking into ways of saving money seems like a smart alternative. It is hard to fix all the spending leakages all at once, after years of spending in a society driven mad by consumerism. It is not an easy battle but oh so worth it.