Finances: Control Your Money — Budget for the Year, Not for the Month
Are we really in control of our finances? We have the choice to spend money on things that matter or to waste it. We see the advertisements all of the time:
New Car: Only $399/month!
Cell Phone Service: Only $80/month!
Cable: Only $69.99/month!
What if there was a different way to look at these expenses? The companies that want to sell you goods and services only look at the monthly costs, in the hopes that you won’t look any further. One way, however, to view these expenses is to multiply by 12 and see what you’re spending for the entire year:
New Car: $399/month x 12 months = $4,788
Cell Phone Service: $80 x 12 months = $960
Cable: $69.99/month x 12 months = 839.88
Let’s take a look at each expense in turn…
New Car:
You may want a new car. Maybe you want something more reliable. However, do you really want to spend almost $5,000 a year? Yet, that’s what happens: The average car payment in the United States is $400/month!
Alternative: Used Car
Spend $5,000 – $15,000 on a reliable used car. Even with maintenance, you stand a better chance of pocketing that $5,000 instead of just giving it to the car company!
Cell Phone Service:
Contrary to popular belief, a smartphone is a luxury and not a necessity. You don’t need unlimited data…not when you probably spend a good portion of your day within range of Home, Work, or Starbucks…all of which probably have Wi-Fi.
You probably don’t need the best cell phone coverage…not when the more inexpensive services get you decent cell coverage for calls, and texts don’t rely on great signals at all.
Alternatives: Many
Here are a couple of alternative services:
Walmart Family Mobile w/5GB data — $39.88/month
Republic Wireless w/2GB data — $30/month
You may need a new or used smartphone to go with the service, but you can look at cutting your monthly expense in half.
(For the record, I’m with Republic Wireless and pay about $20/month for their 1 GB/month plan…and most of the time I only use half of the data.)
Cable:
Cable is awesome! Great pictures, so many channels, and movies!
Until you realize that most of what you watch are on 3 channels…and that’s assuming that you watch those channels religiously. Have you heard of the phrase, “There’s nothing on?” That is what I remember thinking when I had cable! Is it worth $839.88 (or more) per year to not watch anything?
Alternative: Netflix, Hulu, etc
Although it’s not perfect, but you could pick up Netflix for $11.99/month. That would give you a savings of $696 per year…and you can actually find something to watch when you want to watch it!
Conclusion:
All in all, this doesn’t mean that you have to make major changes right now…You may be perfectly happy paying for the goods and services that you have! However, with a little bit of work, it’s possible to reduce your monthly spending by quite a bit! Just look at the bigger picture (the annual amount) and don’t necessarily look at the monthly amount!