Avoid Complacency & Optimize The Easy Stuff

When I was on my Debt Free Climb, I developed a habit to start tracking my income and expenses closely. By tracking my money, I avoided complacency because I was hyper-aware of where my money was going. I analyzed spending trends which helped identify ways to adjust/eliminate waste in my financial life.

Due to my tracking habit, to this day, I still make myself aware of the best possible rates/deals on my reoccurring expenses (that I could shop around for).

I’m talking about expenses like my mobile phone, car insurance, internet costs, electric/gas bills, life insurance, home insurance,  mortgage interest rates, bank accounts, investing, etc. An expense or service that you sign up for with a contracted rate.

Although the reoccurring expenses I mention above aren’t necessarily my top monthly expenses (Housing, Transportation, and Food), added up together, they can be a significant percentage of my spending or lack of earning.

Targeting your recurring expenses is a worthwhile effort because they are the easiest (think low hanging fruit) and don’t take significant time to address. Just by being aware of these expenses, you can save yourself thousands of dollars each year for not that much effort. It could be worth hundreds or thousands of dollars of savings in a few hours of research. Talk about a high hourly rate!

Automatically remind yourself to check your rates and Optimize

As a general rule its an excellent idea to set up a calendar reminder to alert you to shop around for the best prices in each of your reoccurring expense categories. I use an app called “Todoist” and set up an alert to check my rates every six months.

Lets deep dive into each reoccurring expenses that I try to optimize.

Mobile Phone

Right now I have T-Mobile Unlimited plan through a discount through my fiancees work. I pay $17.50 per month ($210 per year). TMobile stands out for me because of there excellent service for traveling internationally. I turn on data roaming and my phone works in other countries for no additional cost. No $10 a day international plan or buying sim cards.

Admittedly, I lucked into this one because of my fiancee’s work perk. However, I think my advice would be first to check if your current employer offers any discounts for cell phone service. At my previous employer, I got a free phone and data plan for working there. The free mobile phone was a massive saving as I used my work line as my personal phone as well (and hardly ever received any work calls).

Before T-Mobile, I used Cricket Wireless for $35 per month (with autopay) – unlimited talk/text and 5gbs of data each month. I thought that Cricket was a great value and didn’t notice any significant service decline from other phone carriers I had in the past. 5 GBS of data was plenty for me as I am connected to WiFi the majority of the time.

Keep Mobile Phone Costs Low

I don’t see much value spending north of $50 a month for a mobile phone plan. Nowadays, many reliable options are low cost and provide you enough data to get by. I often see many people stick with their expensive phone plan because they believe they are getting superior service with the big names (AT&T, Verizon, Sprint). Another reason is they are unwilling to change because its “too much hassle.” As I titled this post, “Complacency is Expensive” – a few hours of research and an open mind to change can save hundreds of dollars per year.

Tip: If you buy a new phone every 3-5 years, save money via an automatic savings plan (I use CapitalOne360 savings*) and buy the phone outright. Typically, when you pay monthly, you are paying interest on top of the total price of the phone. 

Here are some other reliable options for low-cost mobile phone plans:

Mint Mobile – Plans to start at $15 per month (flexible terms, cancel anytime)

Republic Wireless -Unlimited Talk and Text for $15 + $5 per each gig of data (flexible term, cancel anytime)

Internet

The issue I have found with the Internet is that there are only a few viable options in my area. It seems that different parts of the country offer different rates and various other providers, so your mileage may vary.

Right now I use Spectrum Internet. In my area, it costs $45 per month for 400mbs of internet speed. That rate is locked in for two years. After two years, I will negotiate to keep the same price. Typically what happens is that the internet companies will try to bump my rate up significantly after the two years. After settling, the lowest they can go is $5 -$10 more than the original “promo” rate (based on 6 + years negotiating internet bills). To avoid this, I end up canceling the service and then create a new account under my fiancee’s name so she can get the latest promo rate.

I dislike the whole cable/internet industry, but the bottom line is there are thousands of people who don’t negotiate or even question their monthly internet bill each month and continue to overpay their bill each month.

Automate Negotiating

There is a service called Trim that will automatically negotiate your cable/internet bills, so you don’t have to. They take 33% of your yearly savings, but it could be worth it for people who hate to deal with negotiating. Personally, I would rather be on top of it myself and keep 100% of the savings.

Insurances

Car Insurance

I switched my Car insurance to Root in June from previously having Geico.

My current rate with Root is $233 for six months of insurance ($38 per month). Previously with Geico, I was paying $353 for the similar 6-month policy (I now get a few extra coverages with Root).

My Coverage is as follows:

Bodily Injury Liability: $100k/300k

Property Damage Liability: $50k

Personal Injury: $5k per person

Comprehensive: $1k deductible

Collision: $1k deductible

As you can see, I am saving $240 per year by going with Root for a similar coverage I had previously with Geico. Root is app-based, and it tracks your driving through the app for two weeks before giving you a quote.

I drive a used paid off car (2010 Toyota Rav4). I handle all the maintenance myself. I have an emergency fund, so I don’t need to have all the bells and whistles in terms of extra insurances and or car warranties. My Emergency fund is enough to cover any minor accidents, and I have root to cover me if anything significant happens.

Tip: Make sure to save yourself some money and pay for the 6-month insurance policy rather than monthly. I have a capitalone360 savings account that I save for every six months, so I never have to adjust my monthly cashflow for car insurance.

If your interested trying out Root – check out my referral link (you also get a cash bonus if you sign up) 

If you want to compare multiple Car Insurance Providers and rates, check out Policy Genius 

Home Insurance

My Home Policy is currently with the builder of my house but expires at the end of the year. Right now, my home insurance cost is very cheap – $36 per month. I’m not sure how much my policy costs will change at the end of the year, but I am expecting higher prices. I am already requested new quotes through Policy Genius to see what type of rates are available so I can be ready to go when the time comes.

In addition to my Home Insurance, I am also in the market for an Umbrella Insurance policy. Umbrella insurance is a supplement to an existing auto or home policy and it covers much more. Since I House Hack, having an Umbrella Insurance policy will provide me extra peace of mind, for a low cost. I received a quote from RLI Insurance for $1mil in coverage for $24 per month ($289 per year).

Life Insurance

Life Insurance is something that people often forget about shopping around for after they already have a policy. However, just like Auto and Home, you can cancel your existing policy if better rates are available.

I am currently shopping around for a Life Insurance policy for myself. I have found quotes for $28 per month via Policy Genius with Pacific Life and AIG for $900k in coverage.

Mortgage Interest Rate

When I bought my house in 2018 the mortgage rates were higher than they are currently. My interest rate on my house is 4.75%.

Now Mortgage rates are lower, so I am looking into refinancing. However, when you refinance, you still have to go through the closing process, which can cost in the hundreds to multiple thousands.

I have been comparing rates on Credible and the best price (for me) for a 30 year fixed mortgage was 4.25%. I could reduce my monthly payment about $45, but I would have to pay ~$1000 in closing costs, meaning it would take about 22 months to break even from paying the closing costs. At the moment, I’m going to continue to monitor rates and look for a deal where I could break even with closing costs in < 1 year.

Another factor I am considering is if I refinance my mortgage I am also restarting a new 30-year mortgage, thus increasing the length of the loan and therefore the amount of interest you pay over the life of the loan.

Investing and Bank Accounts

Bank Accounts

Nowadays, there is no reason to keep large amounts of cash in a bank account that doesn’t pay out a higher interest rate. A typical interest rate for a regular bank account is .01%. There are many solid high-interest banks that can earn you over 1% interest for keeping your money with them. It is easy to get comfortable with your current bank because you have been banking with them for years. You don’t necessarily have to cancel your current account, but you can diversify a chunk of your money and put in somewhere that will earn you more interest per year.

Here is a list of top High-Interest savings accounts from Doctor of Credit

I personally use CapitalOne 360 savings* at a 1% interest rate. There might be better interest rates out there, but I like CapitalOne360 because of the ease of use in creating multiple different “sub” bank accounts. I have numerous automatic savings plans for various short term and long term savings goals.

I also recently opened an account at Varo – at a 2.12% interest rate. They also offer a $100 bonus for creating an account and depositing at least $200 within the first 45 days.

Investing

Concerning the “Complacency is Expensive” mantra – you should have a clear understanding of what you are investing in and how much it costs to invest (fees or “expense ratios”).

Many (non-fiduciary) financial advisors and financial advisor companies prey on the uneducated and charge absorbent fees to keep their clients “assets under management.” I’m not saying all financial advisors are bad; however, the current landscape of the financial services industry is unpredictable. Consumers of these services should be aware of the hidden costs of what they are paying for. With that being said, I see a ton of value in hiring a fiduciary financial planner that you pay an hourly rate to help you with a specific financial plan. I’m not a believer in someone charging north of 1% fees to invest money for me especially when there are so many educational resources available to help people make wise investment choices nowadays.

Please be aware of your investments and how much you pay. 1% might not seem like a lot, but compound over decades could equal hundreds of thousands of dollars in fees.

Final Thoughts on Complacency and Optimization

It’s easy to be content about reoccurring services/expense because sometimes it’s “easier” to go with the flow and not optimize every aspect of your life. I feel like I have done a decent job of staying on top of finding the best value for me regarding these types of reoccurring services. Everyone values different things, but I want to cut back hard on items that don’t provide value and are mostly financial waste.

There is also something to be said for not always chasing the lowest cost, too. I think the important thing is being aware and intentional of your decisions around these costs. If you prefer to pay more for a service because you believe it provides you extra value, then I say keep doing what you are doing. My main point is to be aware of where your money is going and what value you receive from a service. There is a big difference between paying extra because you see value vs paying extra because you weren’t aware there were better options available if you took the time to research.

Question for you:

How do your reoccurring services/expenses compare to my findings?
What has been the service you were willing to pay extra for and why?

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Gary

Gary is the author behind Debt Free Climb, a blog that shows how to live intentionally, pay off their debt, build a side income, and travel the world

Gary's favorite free financial tool he’s been using since 2017 to manage his net worth is Personal Capital. Each month he uses their free Investment Checkup tool and Retirement Planner to track his investments.


His favorite way to save automatically is Capital One Performance Saving, a bank that allows him to create multiple high-interest savings accounts and create an automatic savings plans for each account. He uses these features to meet short and long term savings goals.

His favorite way to save money on car insurance is by using Root, an app-based car insurance service. He saved $240 this year after switching from Geico to Root

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