Christmas is less than a week away, and, if you’re like me you have blown your Christmas spending budget. You are going to need to cut some spending somewhere to get your finances back on track as soon as possible. Nearly half of Americans rack up credit card debt over the holidays (source). If you’re one of them, you will need to pay that debt off as quickly as possible. You don’t want to be part of the 15% of Americans that are still paying off their holiday spending 11 months later.
Below are 7 changes you can make today to wipe $50 off your monthly expenses. Potentially, you can free up $383.13 to pay off your holiday purchases. Or, if you’re able to permanently eliminate these expenses, and you save the money every month, after 30 years you could have $575,000!!!
#1 Change your cell phone
Before the release of the iPhone XR, the iPhone XS Max 256gb was the most popular selling iPhone (source). That phone has a monthly cost of $52.08 paid for 24 months. If you switched to the Samsung Galaxy J7 smartphone, you could pay $5/month (for 24 months) with Verizon, or buy the phone outright for $120.
There is obviously a big difference between those two phones and their capabilities. But if you are just using the phone for internet browsing, occasional videos, social media, and picture, the J7 is a solid phone.
Not to mention you are saving $47.08 each month for 2 years. If you just saved that amount in a low cost index fund for 30 years, you would have over $70,000! That’s 1-2 years of retirement expenses. How many people do you know that upgrade their phone to the newest version every 2 years? If you include the rising costs of phones, you can easily see that 30 year figure balloon to over $100,000.
#2 Change your wireless plan
While we’re on the topic of cell phones, there is a boat load of money that can be saved here. Verizon offers shared data plans that have flat rates plus additional costs for each phone. The 8gb plan with 2 connected phones is $110/month before all of the taxes and fees (we pay ~$19 in fees each month).
Switching your phone plan to Republic Wireless can save you ~$45 per month with 2 phones each with 4gb of data. Taking that monthly $45 savings and putting it into a low cost index fund will net you another ~$65,000 over 30 years. (J$ over at Budgets are Sexy wrote a review of Republic Wireless a couple of years ago that you should check out if you are interested.)
#3 Buy store brand groceries
I’ll put a disclaimer in here that my job deals with retail store brands, and I’m passionate about “off-brand” products.
The average family of 4 spends ~$900 on their monthly groceries (source). Average store brand sales already account for 17% of groceries (source). That leaves $747 monthly grocery dollars spent on name brands each month.
A pricing study found that shoppers can save an average of 35% on their grocery bills by switching to store brand (source). But switching exclusively to store brands is not easy to do (our family is probably around 85% store brand). But, if you just doubled the amount of store brand items you purchased each month (from 17% to 34% of your groceries) you would save an additional $53.55 each month. If you went 100% store brand, you may find yourself spending $260 less each month.
When you extrapolate those amounts out over 30 years (investing the savings into a low cost index fund) you end up with ~$80,000 (by doubling your store brand purchases) or ~$390,000 (changing to 100% store brands).
#4 Cancel your home phone
In this day and age, the reasons for having a land line home phone are few and far between. An unlimited land line through AT&T that has unlimited nationwide calling (nationwide like what you get with a cell phone) for $64/month.
That monthly $64 could be put into a low cost index fund would be worth ~$95,000 after 30 years of compounding that savings.
#5 Cut Cable
I’ve written a post about cutting cable (this post). Depending on how much cable you are currently paying for, you could end up with as much as $200 in monthly savings (we saved $160/month when we cut cable). Just a $100 monthly savings invested into a low cost index fund will grow to ~$150,000 over 30 years.
So what are you waiting for? Call your cable provider and cancel it. Buy a Fire TV Stick and enjoy not missing cable (or the big monthly bill).
#6 Turn your thermostat down and bundle up
In the winter specifically, you can always add layers to keep yourself warm. Every degree (Fahrenheit) you lower your thermostat saves 3% on your heating bill (source). If you are keeping your home the toasty 72°F, you can expect to spend ~$1,000 heating your home with electric this winter (source). By cutting your thermostat down to 65°F, you will save an estimated $210 this winter alone. $70 in monthly savings for 3 months each year.
If you make these changes every winter and keep your summer months the same, after investing the difference, you will have over $26,000 after 30 years. Enough to buy 1,300 Snuggies in case you get really cold with a thermostat set to 65°F.
#7 Pool streaming services in your family
The monthly savings you may find here is due to how many services you currently use. Sharing services with your family (or someone you trust more than family) is a way to cut those services costs’ in half. Here is how much you will save per month by splitting the service with someone else:
Netflix – $7/month
Amazon Prime – $5/month
HBO Now – $7.50/month
Hulu – $6/month
Showtime Streaming – $5.50/month
CBS All Access – $5/month
YouTube TV – $20/month
All of those monthly savings when invested in a low cost index fund could be worth over $84,000 after 10 years. Here is an article from TechHive with a lot of great information on how to do it.
These changes can be made today if the money is really needed.
Fortunately for us, we won’t have to carry any credit card debt because of our holiday spending. We have 4,212 days to hit our retirement account goal; your savings goals could be sped up significantly if you took any of the recommendations I mentioned above