Cutting recurring costs: How to save $5,000 in one day

It started at our kitchen table. My wife and I decided that we would go into “grind mode” and spend a couple of years seeing how much we could possibly cut, save, earn, scrimp, steal…okay, that’s where we drew the line, but you get the point. A natural first step in our quest to reduce our spending was to take a look at how we were spending and see if we could go about cutting our recurring costs. We weren’t yet ready to take on the entire task of overhauling our whole lives, so we thought we would start with the low-hanging $10 bills (because I hate that phrase when used with fruit).

We sat down together with a glass (okay, bottle) of wine and two computers. I was outwardly excited and inwardly terrified. My brain kept telling me that this was the first of a series of dangerous steps that would end with a large savings account and my wife and I eating ketchup sandwiches in a freezing cold one bedroom apartment with the lights off on a Friday night. I pulled up my online bank account and reluctantly started hunting for unruly expenses that I could cut.

About 35 minutes later, we had a list. We took a look at it, did some quick math and realized that we had just saved ourselves $5,636 over the coming year, while impacting our lifestyle by roughly 4.2% (estimated). Here are the items that we identified that we could eliminate to save money without significantly affecting our lives:

  • Eliminate cable TV
  • Cancel an unused gym membership
  • Cancel our Spotify Premium subscription
  • Cancel two Sirius XM satellite radio subscriptions
  • Cancel Audible membership
  • Remove the private mortgage insurance from our home

These six items totaled a whopping $5,941 when stretched out over the course of the year. It has been about six months since we cut these items out, so I’ll give you a bit of a post-mortem on how these have affected our lives.

Cutting cable (annual savings: $1,851.84)

We had traditionally spent $154.32 per month on cable television. When we addressed this line item, I am a bit embarrassed to say that neither my wife nor I had any clue how much we were actually spending on cable. To make matters worse, in that very month, our two year contract had ended and our rate had increased to over $240 per month. We realized that we watched about one or two hours of cable per week and that entertainment void could easily be filled with Netflix binges and a Hulu Premium subscription (both of which we were already paying for). Since we canceled, we have not run into a single moment where we have regretted it.

Canceling the gym membership (annual savings: $1,188.00)

While we are both active people who try to stay in shape, this was an expense that we were not fully taking advantage of. This was a particular gym that one of us had signed up for, used for a month or two, then failed to attend frequently for a few reasons (classes were always full, preferred other types of workouts, wanted to sleep in, etc.) We have kept an eye on it and found that we actually work out more after getting rid of this membership, without the constant feeling of guilt that we are not taking full advantage of an expense that ran us about $100 per month. Plus, now we workout together more, which is also a cool benefit.

Canceling our Spotify Premium membership (annual savings: $129.48)

I’ll admit it. This one was on me. I got suckered into feeling like I needed to be able to access my playlists online or offline, mobile or desktop at any moment without having to listen to commercials. Since getting rid of this subscription, I have continued to listen to Spotify at my normal rate, with the only inconvenience being that I have now memorized the entire “Napa Know How” advertisement in addition to my favorite songs. Spotify is awesome. Paying extra for it is not.

Living without Sirius XM (annual savings: $359.76)

This was another tough one for me. I spent an inordinate amount of time listening to Fantasy Sports Radio, E Street Radio and Backspin (odd combination, I know). I actually started to talk myself into the belief that having access to Fantasy Sports Radio was an investment because I would win all of my fantasy football leagues and it would pay for the cost of the subscription (I got 2nd place in one league…damn you, Le’Veon Bell!) My wife and I decided that we would both cancel our subscriptions and find other sources of entertainment during our commutes. As shocking as it is, I was able to find a way to keep my mind occupied during my 11 minute commute to work without the luxury of premium satellite radio. My wife has also recognized a similar lack of pain after this cancellation. An added benefit to canceling Sirius XM is that I now spend more of my commute listening to audiobooks, which makes me smarter (more on this later).

Removing private mortgage insurance (annual savings: $1,928.00)

This is the big boy. When sitting down for our money saving pow-wow, we decided to take a quick look at our largest expense, our home. I pulled out our most recent statement and realized that decent chunk of our money was going to our private mortgage insurance (PMI) each month. I will address this in detail in a future post, but the reason that we had PMI is that we wanted to save some of our cash when purchasing our home, so we did not put a full 20% down, thus requiring an additional payment on our mortgage each month to cover that difference. We had remodeled our house and prices in our neighborhood had increased, so we came to the realization that if we got our home appraised again and the value came back at a number where our equity in the home exceeded 20%, we would no longer have to include PMI. We paid $400 for the appraisal and saved $2,328.00 per year on our payments, netting us $1,928.00 per year in savings.

Replacing Audible (annual savings: $179.40)

I read a lot. A few years back, I actually challenged myself to read 52 books each year and I am now on my third year of keeping that streak alive. One of the ways that I am able to do this is by using small bits of down time to read books instead of finding other “mental bubblegum” methods of keeping myself occupied (smart phone games, social media, etc.) One of the times that I have found to be most efficient to read books is while I’m sitting in my car. This is when Audible entered my life. If you are not familiar with Audible, it is an Amazon product that allows you to purchase audiobooks, then access them from your phone at any time. It’s fantastic! I have read about 35 books on Audible over the past couple of years. However, it was costing me $14.95 per month and quickly became one of those hidden expenses that I found it easy to ignore. I started researching alternatives to Audible during our kitchen table savings sesh and found that the best option was one that I should have been thinking about all along, but wasn’t. The public library! My 9 year old self would be shaking his little bowl cut sporting head at me. I went down to the public library one day after work, got signed up and borrowed my first audiobook on CD. Later that night, I realized that there are apps like OverDrive and Hoopla that allow you to check out audiobooks, eBooks, music and movies and enjoy them any time you’d like for FREE. Since I cancelled Audible, I have completed one eBook and four audiobooks using Hoopla without spending a dime.

Life after cutting expenses

All in all, these changes have had next to zero impact on our quality of life and the expenses would have remained largely unnoticed if we had not sat down to take a look. We now plan on revisiting cutting recurring costs quarterly to see if there is more hidden money that we can save. By simply examining where your money is going, you can save literally thousands of dollars per year. Very few activities have the same return on your time that auditing your expenses can have. After you spend some time with this, let me know in the comments how much you saved or what other hidden expenses you uncovered. Happy hunting!

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