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Lower my bills, please! Phone, utilities, cable, internet, insurance

Peter Warden
Peter WardenThe Mortgage Reports Contributor

Trim the little things to save a lot

You hear it all the time: “If only I could lower my bills, I could…..” Take that vacation, buy that house, kiss student loans goodbye, or even just sleep at night. Well, you can rest easier by saving on:

  1. Telephone
  2. Utilities
  3. Cable
  4. Internet
  5. Insurance

Trimming these expenses can help you reduce your other debts or increase your savings. Let’s get started.

Verify your new rate (Oct 15th, 2018)

“Why should I lower my bills?”

We all love a bargain. And many of us spend hours getting more while paying less. In 2017, Americans saved $3.1 billion just by clipping coupons.

But for some reason, a whole lot of those coupon clippers fail to go after the much bigger savings they could easily make on their household bills. Most are missing out on hundreds of dollars. Some could be wasting thousands.

Related: How to buy a home on $50,000 a year

Three reasons for this failure to save spring to mind:

  1. Inertia/apathy — Meh
  2. Fear of the unknown — I’m used to my current supplier/deal. Suppose the new one’s worse
  3. “Confusion marketing” — Some companies actively deter comparison shopping by making it hard to differentiate between deals

Turns out those three factors are a killer combination. And consumers are missing out on countless billions.

Times are tough

Another reason behind the drive to “lower my bills” is that many are finding life financially challenging. McKinsey & Company found that 81 percent of U.S. households experienced flat or falling incomes between 2005 and 2014.

Related: How the global economy affects your mortgage rate

Are things getting easier now? They may be for some. But a growing gig economy and the painfully slow growth in real wages mean a significant proportion of Americans still struggle to pay their household bills.

The bills that are most worth lowering

Let’s assume you shopped around for the best deals on your mortgage, student loan, credit cards and auto loan. Where else can you make worthwhile savings?

Some obvious targets are phones, utilities, cable, internet and insurance. It’s here that confusion marketing often comes into play.

For example, how easy is it to compare phone plans when each offers a different bundle of calls, SMS and MMS messages, data usage and foreign calls (if you ever make any)? And buying auto insurance can be equally confusing: Are you’re comparing apples to apples and how come that one’s an orange?

Related: By the time they’re 30, average millennials spend over $100k on rent

There can be some work involved in these comparisons. You’ll need to make some judgments on what you want and need and then find the offers that best match your needs.

This includes your car — the type you choose really influences gas, maintenance and insurance costs. In fact, AAA found that average driving costs range from $6,354 for a sedan to $10,469 for a pickup truck. Shopping for insurance, re-evaluating your coverage and deductible could save hundreds or even thousands a year.

The time you invest in shopping around could earn you more per hour than your job.

Some general shopping and negotiating strategies

There are some common principles that apply whatever your comparison-shopping needs. Whether you’re dealing with an insurer, a cable service provider or a utility company, the following can help:

1. Know what you want and need

Dig out your last 12 months’ bills and statements and work out what you’re using and how much you’re paying. For insurance, check your policy documents.

For example, for a cellphone service, see how your actual activity is spread across call minutes, call minutes on international calls, SMS texts and data. If your current data limits are cramping your online life, add more gigabytes a month to your wish list. You now know what you need to get by and what you’d ideally like to get.

While looking back over your bills and statements, ask yourself about every line. Do you watch premium channels enough to justify that much on your cable bill?

2. Comparison shop

Some markets have plenty of comparison shopping websites that allow you to see tariffs and offers side-by-side. Remember, these sites may not cover the entire market and their owners may earn fees when you click through. Other markets require more legwork (or, more accurately, clicks) on your part.

Do an online search for “best cell phone plans,” “lowest electricity prices [add your state/area],” “cheapest internet service providers” or whatever If no comparison shopping sites appear, begin to work through the companies that advertise on that basis, looking for deals that correspond with your wants and needs.

Don’t ignore suppliers you’ve never hear of. New entrants to markets often offer the keenest deals. However, check them out with the Better Business Bureau and other online sources before you sign up.

Look out too for articles from independent, credible, consumer websites that might have done the hard work for you. Just make sure those articles are recent: you really don’t care who was cheapest in 2012.

For instance, at the time of writing, Consumer Reports compared several cell phone offers within the previous few months and that article was top-rated. Such articles sometimes tell you about more than prices and offers. They may include information the companies won’t typically volunteer, such as their customer service standards.

3. Make a shortlist

As you come across attractive offers, make a note of them and set up links so you can find them again. Most people want at least three on their lists, but the more you have, the better.

Don’t forget to check out discounts. Insurers will often give great bundle discounts if you insure your home and car with the same company. And cell phone service providers frequently have tempting multi-user family packages.

Once you have your shortlist, go back through each of those attractive offers and examine it in my depth. Is there a reason it’s cheaper? Is there a catch?

4. Get “retained”

You’re now armed to do battle with your existing supplier. Dial its call center and immediately ask to be connected to the “retention team.”

Retention teams have only one function: to stop existing customers like you from walking away. Team members usually have the discretion to negotiate better deals. And your short list can provide ammunition for your side of the negotiation: “But company y is offering me x! You need to beat that. Isn’t my continued loyalty worth that concession?”

Retention teams have only one function: to stop existing customers like you from walking away.

Sometimes, your existing supplier simply can’t match another deal on your short list. Well, you gave them a chance. Walk away, though first, you might want to call your new favorite supplier to see if you can beat it down a bit.

Whenever you’re engaged with a call center, remember you catch more flies with honey than vinegar. Being pleasant usually pays dividends.

Lower my bills: some specifics

Although the above is helpful in most situations, advice may vary by the type of bill you’re trying to reduce. So read on.

Utilities

Some states (14 at the time of writing), have deregulated their energy markets and some have deregulated water, too. However, you’ll still get the same power and water from the same source along the same cables and pipes.

So what’s changed? In effect, the different suppliers buy energy or water in bulk and then share some of their savings with you. Some are more generous than others.

When you compare electricity costs, you’re mainly looking at the price per kilowatt hour kWh. Check your old bills to see how much per kWh you’re paying now. You may pay for water and gas according to the physical volume you use.

However, some sneaky suppliers have low usage fees (by kWh) and make up for that with high monthly service charges. So work out what you’ll actually pay each month based on your past bills, not forgetting any taxes that will be levied.

Watch out, too, for cheap introductory offers that soon expire, charges that can vary more than their wholesale markets and contracts that lock you into deals for too long.

Oh, and don’t forget: the most effective way to reduce your energy bills is often to improve your home’s energy efficiency.

Phones

You need to bear in mind three things when selecting or negotiating a better plan:

  1. How you personally use your phone: calls, texts, data, international calls — Pick the bundle that aligns with your personal usage patterns most closely for the least money
  2. Whether you want a new phone and perhaps subsequent replacements within your package — It’s usually cheaper to buy your phone and just pay for usage (“SIM only”)
  3. Whether you’re willing to sign up for a long (maybe multi-year) contract, which may include variable tariffs — Spoiler alert: those rarely go anywhere but up

The market for phones is one of the fastest-moving and most competitive. So shopping around could save you a … well, a bundle.

Cable and Internet

You can often squeeze something from your cable TV provider, especially if it thinks you might switch to a different company. This is another cut-throat market.

However, don’t defeat your “lower my bills” goal by ending up paying more. Offering a package with many premium channels at an incredibly low price (but one that’s still higher than you’re currently paying) is a favorite retention tactic.

If you want, settle for free access to one additional premium channel for your current subscription price. Or see if you can get your internet service tariff reduced. At least with those you’re not heading the wrong way for your budget.

If you do switch providers (and you have the wiring already), you might be able to save yourself an installation fee by setting up your equipment yourself. But you need a bit of technical know-how to do that.

Insurance

Some insurers give you loyalty discounts that build over the years — and some don’t. But even the ones that do aren’t always the cheapest.

It’s worth comparison shopping each time your policies come up for renewal. Bear in mind these questions:

  • Am I getting the coverage I need? — Your home appreciates most years, and you’re probably always buying new stuff. It’s easy to under-insure
  • Am I comparing apples to apples? — Look beyond the cost of the premiums at the overall deal
  • Should I pay more for better protection — or less and shoulder more risk myself?
  • Am I comfortable I can afford these deductibles if the worst happens?
  • Am I getting all the discounts to which I’m entitled?
  • Would I be better off bundling my home and auto (and maybe other) insurances?

There are plenty of comparison-shopping websites for the insurance industry. And even more potential savings.

Verify your new rate (Oct 15th, 2018)