Renegotiate or Cancel Everything!

Hey all you future financial masters! As we start this journey into financial freedom, I’m going to break up the first few blog entries into parts. Otherwise, it’d turn into a novel and who the hell wants to read that? So, for part one, I’m going to say….

Renegotiate or Cancel Everything!

The first step to financial freedom is getting control of ongoing expenses. I’m never going to tell you to cancel your cable tv, gym memberships, or cell phones, because as cool as it is to be saving money, quality of life is important. If you’re miserable by the cost cutting you won’t stick to it. I’d rather make small sensible changes and as the good habits grow, the rewards will be reinforcing to your actions. You’ll see the change… and you’ll want more.

What I will say is that every 6 months or so you should take a hard look at those ongoing monthly expenses and ask yourself, “Do I really need this?” For example, do I need internet?  Hell Yes! Everyone needs internet. How else are you going to read this blog? But do I need the fastest 5000 Mbps speeds? Probably not. Do I need the latest and greatest smartphone, or can I make do with a phone that’s a few years old? How about a flip phone… those were badass in the day. What about those ongoing subscriptions?  Everything from stock investment subscriptions (for those of you who like to pick stocks), to that AAA membership, to that Sirius XM Radio. Everything that takes money out of your pocket should serve a damn important position in your life, otherwise it’s waste. So with that in mind… here is some research I’ve done that helped my family and I get control of our expenses, hopefully it’ll help yours.

Cell Phones: Republic Wireless

There’s a huge variation in the cost of cell phone plans. I think this company epitomizes what it means to have a cell phone, but not be locked into an expensive plan. A quick cruise to their website and you’ll see their plans (shown above). Now compare that to Verizon….they don’t come close to those prices. Wait… I can already hear it…. “but Verizon has the best coverage”, “seriously only 2 phones to choose from at Republic?”, “what about the 10,000,000 apps available from the iStore?”. All good arguments. If Republic’s coverage doesn’t cover your area, then your question is answered. If you have a deep aversion to all things Motorola, maybe this won’t work for you. No one is forcing you to change carriers…. I just want you to think about it for 5 minutes. That’s really all it should take to decide whether you can or can’t live without your current plan. In my opinion, if I could save $50 per month by just doing a quick cell carrier switch, it’s a no brainer. Especially when I can take that $50 and invest it using the strategies I’ll cover in future blog posts (you’re on the edge of your seat aren’t you?). You’ll realize very quickly that it’s not just $50, it’s thousands of dollars of future earnings potential.

Cable / Satellite
With the proliferation of online streaming, it’s getting harder and harder to stick with that same ole cable or satellite provider. It reminds me of that great song, “57 Channels (and Nothing On).” Although maybe today it should be “200 Channels and Nothing On.” It just doesn’t quite have the same ring to it. Who doesn’t love The Boss? Seriously! Just check out how cool he is.

I digressed, but it in all seriousness, between Netflix, HULU, Amazon Fire (w/ Prime), Roku or even Sling TV you can save a crap ton of money. Check out their basic rates below (most come with a free trial as well).

Netflix: $7.99-$11.99 / month
HULU PLUS: $7.99-$11.99 / month
Amazon Prime: $99 / year
Roku: Prices range from $40 and up for the device + you’ll pay any relevant subscriptions costs.
Sling TV: $20 / month

My recommendation:  Netflix ($9.99) for all the classic movies and original content, coupled with Sling TV ($20), where you’ll get a small subset of popular channels. Hell, with Sling TV you’ll get the Food Network and AMC. What else do you need? A little Chopped and a little Walking Dead. BOOM!

Okay fine, if you just can’t cut the cord yet then my next recommendation would be to ensure you’re on a promotional deal with your provider. They like to try and say that the deals are only for new customers, but if you threaten to leave, they’ll cut you a deal almost every time. I’ve listed the customer service numbers of a few of the major cable/satellite providers. I urge you, just take 10 minutes and call them (10 minutes of God time, more like 30 minutes human time). Tell them your bill is getting to high and you’re considering switching to online streaming. Then ask if they can put you on a promotional rate for a year. I never had a single company say they wouldn’t work with me, and I saved an average of $30 per month with this 10 minute phone call. I did it every year, as soon as the current promotion would expire I’d call them right back. 

Brighthouse :  1 (855) 222-0102
Comcast/Xfinity: 1 (800) XFINITY (1-800-934-6489)
Time Warner: 1 (800) 892-4357
Dish Network: 1 (855) 318-0572
Direct TV: 1 (888) 777-2454
 
Subscriptions:
Finally, think of those annual subscriptions you may be keeping. Individually they may not be much, but combined they add up quickly. Some obvious ones:

HD Satellite Radio - A nice to have, but throw some music on your phone and you’re good to go.

AAA - Although it’s a great service, most people have it for the roadside assistance, which you can generally get through your auto insurance provider for cheaper. For example, at GEICO I can get roadside assistance for less than half of what AAA costs for the year.

Investment Subscriptions – You’ll have to make the call on these. I have maintained a premium stock investment subscription because I think it has helped make more money than it has cost me. However, I’m always on the lookout for promotional deals with competitors and I won’t hesitate to switch for equal service at a lesser cost.

Amazon Prime: I personally love this service and I think it can offset its own cost enough to justify having it. The two day shipping is just the cherry on the top. See the Amazon site for a total list of Prime benefits, but for me the best money saving benefits are:

• Streaming video – I would argue that their streaming titles rival that of Netflix. You don’t need both. In fact, Consumer Reports did a great comparison of Netflix vs Amazon Instant Video. In the end they were rated almost identical.
• Prime Music – I’m a music lover and being able to listen to it advertisement free is great. The music catalog is consistently being updated as well. There is never a shortage of good music.
• Lending Library – Being an avid reader, it’s nice to have access to such a large library of books available from free or discounted downloads.
• Amazon Family – Diapers aren’t exactly cheap. With this service you can get discounts on family-oriented products and more importantly, 20% off diaper subscriptions.
• Unlimited photo storage – Being that smart phones have turned us all into photographers, you probably have 10,000 photos stashed on your computer. No worries, with Prime you can store them all on the Amazon Cloud for free.

In the end, if you can save even $75 per month by renegotiating or canceling unnecessary expenses, you’ll have cash flow to start or add to investments. Just remember… compound interest is a gift from god… seriously! At a mediocre 5% annual return, $75 per month turns into over $30K in 20 years. At 7% return you’re looking at almost $40K.