Shut the Front Door!

Open front door.jpg

No seriously, “Shut the door! We aren’t trying to cool the whole neighborhood!” Does that sound familiar? If I had a dollar for every time Momma Bagwell yelled at me about leaving the door open, the lights on, or, by far the worst offense, standing there staring into the refrigerator with door open hoping something delicious would magically appear, I would be a very wealthy man! The point is, utilities can be expensive, yet somehow, we have decided that they are a necessity so we don’t worry about the cost. When is the last time you did a self-audit of your utility costs to see if you could save a few bucks here or there?

Chances are it has probably been awhile, but it can be a great exercise when you are trying to be a good steward of your money. Power, water, gas, cell phones, cable, internet, car and home insurance, credit cards (interest specifically) are all areas that you can review to fight for your money. Listen, it may seem trivial but finding an extra $50 per month that could be used for other goals could be huge. An extra $50 per month applied to principle on a $150,000, 30 year mortgage at 4% would allow you to pay off the house 42 months early and save $14,371.75 in interest!!! Or $50 per month put into a retirement account that averaged 8% rate of return for 30 years is over $74,000 extra for retirement!!

So audit your monthly expenses. Write down all your reoccurring expenses and what they cost you each month now. Then ask these three questions:

  • Is this expense a necessity or desire? (Note, I’m not saying they all must be necessities, I just want you to have a truth talk with yourself)
  • Is there a cheaper option of this expense that I could live with? (cough cough, cable)
  • Are there other vendors that I could get a price from that could be cheaper for the same service? (car insurance, cable/internet, credit cards)
  • Can I make an effort to keep cost low? (turn off lights, take shorter showers, adjust the thermostat)

After you have audited, reviewed, and answered these questions, write down your new totals (estimated or actual) and see how much you have won by fighting for your money.  Then make a plan for it. DO NOT, I repeat, DO NOT let that money magically disappear in the next month’s expenses after you have done all this work to fight for it. Increase your retirement savings, college savings for kids, or increase your monthly payment on your mortgage, but do not be unintentional about your raise. Small changes can lead to big impacts on your financial situation and puts you in control of your money.  Let me know if I can help or just motivate you to get started.

Sources: Commonwealth Financial Network’s Mortgage Payoff Calculator
Commonwealth Financial Network’s Compound Savings Calculator