The Power of Letting Go: A Guide to Reducing Hidden Financial Drains

I host an annual holiday tea party for 10 - 12 friends.  Another friend started the tradition and when she moved away, I took over the hosting duties.  For many years, the tea party included a gift exchange where each person brought a gift worth less than $30.  During the game, we drew numbers to indicate the order that we will pick out our gift.  The problem is that the gifts must be generally pleasing to most people, so the gifts are generic - candles, mugs, scented soaps, food items, etc - and adds stress to an already hectic holiday season.  Last year, I finally convinced my friends to eliminate the gift exchange.  Instead, we had a ‘Buy Nothing’ table for gift condition items.  We all have a pile of regift items that someone else may love.  ‘Buy Nothing’ was a huge hit!  Most people found a gift they loved.  Even if they didn’t, they got rid of items cluttering their regift closet - which is a gift in itself.

Sometimes, you just gotta stop doing the thing that you’ve always done.  Get rid of it and give yourself time to get used to not having it.  And you may find that you didn’t need it after all.

Here are some ideas to negotiate your expenses or eliminate the expense completely.

• Housing

  • Mortgage/Rent - Mortgage/Rent may be most difficult - and potentially disruptive - to negotiate.  Refinancing your mortgage requires upfront costs and significant time commitment, but could pay off in long term interest savings.  Moving to a less expensive and/or smaller home could yield significant savings, but requires moving all of your stuff.  Getting a roommate is well…living with a roommate.  Even with these inconveniences and upfront costs, housing is generally the highest expense in most households and could yield the most savings.

  • Insurance - Shop around annually with quotes from at least three different insurers, bundle home and auto insurance policies, raise your deductible, and ask about risk reduction discounts.  For homeowners, verify that only the structure - and not the land - is insured.  I discovered this mistake in my own policy and was not happy that I was over paying my annual premiums by $1,000.

  • Security monitoring - When my contract renews, I research online for promotions and call customer support to negotiate pricing.  You may receive a risk reduction discount from your insurance company, but does the discount justify the increasing cost of security monitoring?

• Utilities

  • Internet - In addition to researching online for promotions prior to my contract renewal, consider downgrading speed tiers.

  • Mobile phone - When you research online for promotions, consider special pricing for certain customer categories.  For example, TMobile has lower pricing for a primary customer over age 55.  When we switched to TMobile, we made my mother the primary customer to qualify for the over 55 rate, even though I pay the entire bill for our family.

• Auto

  • Loan payments - Consider refinancing if your credit score has improved, interest rates have decreased, or another lender offers better terms. 

  • Insurance - See home insurance above.

• Entertainment

  • Subscriptions - Consider limiting yourself to one entertainment subscription service at a time or eliminating entertainment subscriptions altogether for three months to curb the habit.  What are alternative sources of entertainment - reading a book, borrowing DVDs from the library, using free streaming apps from the library, or free streaming services provided by your mobile phone or internet provider - although these are usually ad supported.  Xfinity provides a free ad supported subscription to Peacock.  TMobile provides a free ad supported subscription to Netflix or discounts on other subscription tiers.

• Gifts

  • Adults - Many of us own too much stuff already.  Consider discussing with your family and friends to limit or eliminate gift giving. 

  • Children - We host my son’s friends for a birthday party every year.  As first graders, I picked them up from school and spent the afternoon playing in the arcade.  When the rolls of quarters were gone, we ate pizza and enjoyed free play at home.  As teens, we took the boys to play Airsoft.  However, most years, they enjoyed playing football or soccer in the park followed by pizza and cake at home.  I included a note on every invitation that their boys’ presence is the only gift we want and no other gifts are requested.  It set a precedent so this friend group celebrated birthdays together - for over a decade and counting - without the added effort and expense of gifts.

• Other

  • Memberships - Are you using the gym or social club enough to justify the membership fee?  Or is it an aspirational purchase?  It may be time to let go.  

  • Medical - Prices for procedures and prescription drugs can vary widely between providers.  Research procedures on your insurer's website to find personalized, in-network price estimates, inquire from your insurer about your specific out-of-pocket expenses, or contact a provider for a Good Faith Estimate.  Similarly, contact pharmacies to compare prices for your prescription drugs.

Once you scrutinize your expenses, you may be surprised to find what is hiding.  Slash mercilessly.  And if you miss it, you can always add it back.