Preview: When working your monthly budget, be sure to question what you think are “fixed” expenses. You might be able to save money in those categories as well!
Of all the good money habits I’ve adopted, budget meeting has been the most powerful. The budget worksheet we use to keep track of our spending has the words “Question Everything” in big, bold letters at the top.
[2023 update: my ex and I are now divorced, amicably co-parenting our children, and I consider him a friend. I now do budget meeting as a single mom.]
“Question Everything” reminds me that nothing is sacred when it comes to spending.
A recent example: our internet service provider. I’ve been a happy Comcast/Xfinity customer for 15 years. I’ve never had any problems with their product or customer service. However, slowly our monthly bill rose from $80 a month to over $130.
Ridiculous.
Hence, I made a call to Xfinity, asking for a deal. I shared that their competitors are offering $50/ month for the same service. I was expecting to be transferred to another rep to (respectfully) restate my position: that I would cancel if they didn’t offer me a lower monthly price. This is precisely what I’d done in the past, and it worked. I’d get an introductory offer for another year.
However, that’s not what happened this time. And I’m totally fine with it!
I did some research to find out what ISP has high ratings and low prices in my area and turned up EarthLink. Incidentally, I was a customer of theirs in the early 00’s after they purchased Mindspring, an Atlanta-based ISP.
Switching to EarthLink from Xfinity will save us $80 a month, $960 a year. I spent under 20 minutes affecting this change. That’s an hourly rate of $2,880.
“Question Everything” reminds me that there truly is no such thing as a “fixed expense”.
One can downsize, take on a boarder, or refinance their mortgage to lower their housing expenses. After my divorce, I began “house hacking” by renting out a basement apartment to my son and daughter-in-love, as well as an accessory dwelling unit on my property. This effectively lowered my housing costs to a fraction of my mortgage. When our septic system imploded, we found it quite easy to cut our water usage in half out of necessity (worrying about a poop explosion in the tub will do that!)
(Note: don’t have a septic issue during a pandemic. It took a year to get it resolved because every contractor, from private to public, took months to show up due to a backlog. After talking with the ones who did, it appears that there aren’t nearly enough soil engineers or plumbers to meet the needs of the public. Who knew?)
It’s fast and fairly simple to save money on utilities and wireless as well. The utility company will even help you with ideas and tools for free! See: energy audit.
Using the term “fixed expense” might close the mind to possibilities. The definition according to Forbes is:
…an expense in your budget that you can expect to stay the same, or close to it, over time. When you sit down to make your monthly budget, you don’t have to guess how much you’ll pay toward fixed expenses. You can simply carry over those amounts from last month’s budget.
Forbes
But if we expect the expense to stay the same, our brain will try to make that belief true. If you go into the conversation with the expectation that expenses can always be lowered, your brain will go to work proving that true. (This is what the smart kids refer to as confirmation bias, a neat little trick our brains use to conserve calories. Even your brain wants to be frugal!)
Periodically, I systematically attack one budget line item and see how low I can comfortably get it. I also ask, “Does this spending reflect my values?”, and “Did it make me happy to spend this money?”. More important questions to address in a budget meeting.
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