The other day I was helping a friend sort through her expenses as she tried to save herself from an impending job loss. Things were going well until I got to her Internet expenses. She was paying $40 per month for high speed Internet at home. She was also paying another $50 per month for unlimited Internet access on her cellphone. Added on top of that, she had recently begun paying another $30 per month for Internet access on her iPad. All of that combined for a total of $120 per month for Internet access. I asked her if she was aware of exactly how much she was paying for this one service per month.
“No. I didn’t realize that. These things just add up. I got a phone and signed up for Internet. Then I got the iPad and did the same thing. It seemed useless without it, you know?”
“But do you really need all this connectivity?” I asked.
“I guess not. Most of the time I use the Internet at home or at work. It’s only when I’m on vacation or stuck waiting somewhere that I use the Internet on the phone. And I usually use my iPad at home, where I can use that connection.”
She decided that she could definitely drop the access on the iPad. She’s willing to use free hotspots if necessary. She’s also scaling back her phone plan to a limited bandwidth amount per month which she’s not likely to exceed.
As we went on, we discovered that she had similar duplicate charges for telephone service (landline and cell), but “I only use my cell phone,” she said. She was also paying through the nose for movies. She had Netflix, four premium movie channels on her satellite, and many rentals from iTunes and Amazon. She also bought a lot of DVD’s. “But I never have time to watch what I rent and buy,” she admitted. More duplicates followed. She had AAA but her insurance also provided roadside assistance, and the roadside assistance contract for her camper also covered her cars. She could easily drop the landline phone, drop AAA and the roadside assistance on her insurance, and pare down her movie charges to Netflix alone. Dropping all these duplicate and unnecessary charges freed up about $300 per month in her budget. Once we got her finances sorted out she shook her head and said, “I just never realized how all those little charges added up.”
It’s a common problem. We add new services and agree to pay the new fees, but many of us rarely stop to think about other, similar services we already have. The iPad is so cool and fun that you think nothing of adding Internet access. You buy a cell phone and forget to consider whether you still need your landline. You start renting movies from Netflix or Amazon and don’t think about whether you still need your premium cable channels. Before you know it, you’re paying hundreds of dollars per month in duplicate services or services that you hardly use. Those “little additions” to your budget have added up to serious money.
This is a problem unique to the times. It used to be that you had a landline phone and that was your only choice. You didn’t have to worry about cell phones, too. In the early days of cable, there weren’t movie rental stores and online services that could also suck money out of your wallet for movies. When the Internet first arrived, you could only have access in your home or office. Now you can have Internet everywhere, at a hefty fee, of course. These days there are so many services and conveniences vying for your money that it’s easy to get carried away and sign up for too many things.
How do you avoid this trap? The best way is to stop and think before you sign up for any new service. Ask yourself if you already have this service and whether or not you really need it. Likely you already have Internet at home, so do you really need mobile Internet? If you do, do you already have it on your phone meaning you don’t need it on your iPad? Your auto insurance may already include roadside assistance, so do you really need AAA? Look at your existing services and see if you’re already getting what you need.
You should also periodically review your services to make sure you’re not duplicating and that you’re getting full value out of what you’re paying for. Don’t wait until a financial crisis forces you to pare down. Keep the excess out of your life by reviewing, combining, and eliminating fees and services as necessary. The money you save could be invested for the future or put toward a goal like a new car or a vacation.
There’s nothing wrong with paying for services if they make your life easier, more fun, or more convenient as long as you can comfortably afford them. But when you’re carrying a lot of unnecessary and duplicate services, you’re throwing away money that could be put to better uses. And if financial crisis ever strikes, as it did my friend, you’re going to deeply regret wasting all that money and you’re going to be searching for ways to cut those extras anyway. So don’t wait for a crisis. Stay vigilant and keep your services pared down to the minimum as you go along. Not only will you save money, you’ll save yourself the headaches of managing and paying all of those bills.