Saturday, March 6, 2010

Dissect Your Budget - Part 3 - Telephone, Television, and Internet

Tip #239 - Dissect Your Budget - Part 3 - Telephone, Television, and Internet. In this series we are going beyond just writing up a budget but actually analyzing each line item in your budget in order to reduce your spending in some areas. In the first part we tackled housing, and then we tackled utilities. Today we'll discuss optional utilities such as telephone, television, and Internet. Before we do, I just want to add to the last discussion that you should make sure your appliances such as your refrigerator are running optimally. They should be kept clean and not over or underlaoded. Make sure your freezer and refrigerator are not keeping your food too cold. If so, you can lower the temperature. Dishwashers should be fully loaded before being run. you might be able to cut down on the amount of detergent you use and you can avoid things like heated dry.

Now on to telephones, televisions, and Internet. One hundred years ago these items were not expenses on anyone's budget. And just 50 years ago, people weren't paying for two of these items. Twenty years ago, we weren't paying for one of these. But suddenly all three are "must have" items on most people's budgets. But unlike housing, heat for warmth, and power for cooking food these items are truly optional. As such, we really need to take a deep hard look and figure out if they are really necessary in our budget depending on our financial circumstances. Obviously, if you are a web designer and you do some work from home, fast Internet access is necessary. And it would be rather difficult to convince someone in the United States that they do not need a telephone. But how many do we need and at what cost? Are some of theses services overlapping? Do you pay for long-distance on your landline but also get "free" long distance on your cell phone? Can you do away with a traditional landline and just use your cell phone or perhaps use Skype or Magic Jack? It's not 1985 anymore, and we have more choices than just Ma Bell.

Take a night to sit down and analyze the plans that you are on. Call around to competitors and find out if you can get on a cheaper plan when yours end. Or ask if you can bundle your plan with your current carrier. Consider getting rid of one of your telephone plans. Eliminate any options that overlap. Be honest with your needs. Do you have to have Caller ID? Are you paying for cheap calls to Canada that you do not use? Are you wasting all of your long-distance minutes on your cell phone and paying for that capability on your landline phone, as well? Chances are, there is a way you can reduce line item in your budget.

Finally, let's talk about the television bill - whether it's cable, sattelite, or other. Is this a necessary expense? If you are trying to save money, ask yourself if it's really worth it to pay $1 or $2 per day to watch t.v. Could you get away with some rabbit ears and watching videos on the high-speed Internet that you are already paying for? Could you save $40 per month by renting videos or borrowing them from the library? If your cable bill is $50 per month then you are spending $600 per year for television or could that money be put to better use in a college or retirement fund? Maybe you don't want to take such a drastic step. Maybe you can cut some of the extras such as digital video recording or HBO or the extra sports pack. Again, be honest with yourself and how often you are taking advantage of these extras that you pay for.

Remember, your budget is supposed to work for you. You have a limited amount of funds that needs to be spread around many different categories. The ones that are most important to you should get the funds. Necessities should come before wants. And wants should be prioritized. Within each category, try to get the best deal that you can and be efficient so you aren't paying for duplicate items or services unnecessarily. Your optional budget items are where you can make the biggest changes. Analyze them carefully.

In Real Life (IRL)
- I am fortunate (or unfortunate) to live in a very populated part of the country. While it may be bad for some things, it is good for getting the latest and greatest technology pretty early. Along with these changes have also come competition. Years ago we had combined service for our telephone and Internet, but our cable was from a separate company. Then 3 years ago Verizon FIOS (fiber optic technology) came to our neighborhood and by bundling all three services - phone, Internet, and television with them, we would pay about $30 less than having separate cable. Two years later, we have added a second phone line to our house through Magic Jack for only $40 per year.

We are not efficient as we can be, though. We get free long-distance on nights and weekends on my husband's cell phone (which is paid for by his company), yet we also pay for this service on our landline phone. We also get "free" long-distance on our Magic Jack phone. Clearly, there is room for improvement on our part for this line item. However, we are locked into a contract now and it's not worth it to break it for this change. But when the time comes up to renew, we will need see if there is a better plan for us so we aren't paying for the same service twice.

As far as television goes, I'd be quite happy getting rid of it altogether, but my husband would have nothing to do with that. And while I would be happy spending the money that goes for television elsewhere, we are not not saving money because of this unnecessary "extra." If you are not as financially secure as you hope to be, however, please consider cutting down or at least optimizing the deal you get on these optional luxuries.

No comments: