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Get Your Spending Off Autopilot: How one woman is saving $845 every month

Impressive results occur when you take a systematic, deliberate approach to your finances.

Every week, I send out a money tip and an action step to the people on my mailing list. In my last newsletter, I talked about how to save money and the related problem of putting your spending on auto-pilot, particularly for larger items.unhappy Asian woman holding wallet with money flying out of it, overspending concept

For example, you grumble about your mortgage and insurances, but you renew them anyway. Cable and telecommunications packages are on auto-pay. When your car becomes a bit long in the tooth, you automatically start looking for a new one.

Big dollars disappear from your wallet without so much as a second glance.

However, when most people want to save money, they focus on stuff that belongs in the nickel-and-dime bin: They cut out the weekly latte; they spend hours perusing sales flyers and checking for coupons for $0.50 off butter and $3.00 off chicken; they buy cheaper versions of staples.

In other words, they focus on small, inconsequential stuff – like saving $0.25 by reusing Nespresso capsules! – rather than on things that will actually move the needle forward.

My email really hit home. Here’s what one reader said in response:

This is a fantastic post! I love your writing… you always provide much food for thought and taking action.

The part about the Nespresso pots made me groan, then laugh. Every point you made was right on target for me. It is amazing how we distract ourselves into coma with the smallest, most toxic detractors away from the great joy of the bigger picture of possibility that transforms. 

I always look forward to your posts. Hugely helpful, encouraging and inspiring. Thank you.

I love the way she expressed the main point – distracting ourselves into a coma with small, irrelevant details. YES! That’s exactly it.

We delude ourselves into thinking we’re taking action, breaking our backs to save pennies, while letting dollars slip away.

There is a fix for this.

My challenge for the week

I issued a challenge to my mailing list: Take a look at your bigger purchases – mortgage, insurances, credit card charges, cable, cell phone packages, car costs and so on – and ask a series of questions (which I provided). Then, tackle every item that may be costing you too much based on your answers to the questions. Finally, email me to let me know how much you save.

I pointed out that I have yet to work with a single person who has not uncovered hundreds of dollars of unnecessary spending, at minimum, when they use this approach – overcoming the Status Quo Bias – to their finances.

The results

Well, Holy Hannah, my readers knocked my socks off! There were some seriously cool stories of savings. Here’s one of my faves (shared with permission).

The timing of this week’s Money Tip is amazingly spot on. My mortgage needs to be renewed. I left it kinda late (it comes due in the new few weeks), but that gave me the fire to get moving on it and make decisions.

First, I checked out the posted rates at the bank that holds my mortgage. I was not impressed. I currently have a 5-year variable rate mortgage with a rate of 3.45%. So I decided to investigate what other banks would offer.

I contacted my assigned advisor to ask to meet her to discuss the renewal. We met on Monday and she offered me 3.18% for a 5-year closed or 3.36% for a 5-year variable rate mortgage. Noticeably lower than the posted rates, but not equal to what another bank offered me: 3.04% for a 5-year closed and 3.15% for a 5-year variable rate mortgage. When I met with my advisor, I informed her of what I was being offered at the other bank. She was not authorized to match this on the spot, but did send it to the bank’s mortgage centre requesting an exception to their offered rate.

On Wednesday, she told me they would not match the other bank. Not dismissing 3.18% out of hand, I asked what the bi-weekly payment would be, thinking it might be worth it to not go through the hassle and paperwork of transferring the mortgage. She told me the payment would be approximately $690, with an 18-year amortization. Well this was $12 less than what I am currently paying (at 3.45%) and $100 more than the other bank was offering (at 3.04%). The current bank has held my mortgage for ten years. I have no other accounts with them. But I also do not have any products/accounts with the other bank.

I have decided to transfer my mortgage to the other bank. It will cost me nothing as the fees (legal, appraisal) to transfer will be covered by their current cash back offer for transferring. By moving the mortgage, I will need to borrow more so that I can pay the line of credit that is attached to my current mortgage. I did my number-crunching and have determined that even with the higher mortgage amount + a bit more to pay off my credit card debt (I only have one at 5.99%), I will be able to save $390 bi-weekly: lower mortgage payment + no more payments to my line of credit or my credit card. Some of that extra will go back to my mortgage principle.

Next up, reviewing my home insurance. Annual renewal is around the corner. And renegotiating my phone/internet services.

What she did right

Kudos to this woman! I love what she did for many reasons. Let me count the ways:

  1. This reader actually took my advice and followed the steps I shared. It’s great if you read my blog posts for entertainment; but if you’re on my mailing list, I sure as hell hope that you’re doing something with the information, tips, and action steps I share. That’s how you get better financial results!
  2. She did her homework by shopping around for quotes on her mortgage. She included both variable- and fixed-rate options.
  3. She asked for specific details – this is SO important – about what the rates would mean in real dollars and cents. Hearing that you’ll pay 3.18% is meaningless for the purpose of evaluating the impact on your finances. You need to know what this means in terms of dollars out of your pocket ever month, or bi-weekly in my reader’s case.
  4. She consolidated corrosive debt (i.e. credit card debt and Line of Credit Debt) into a much lower-cost payment.
  5. She is making plans for the savings and rerouting some of it back into the mortgage to pay down the principle. Having a plan for future savings makes her a rock star.
  6. She’s not done. It would be easy for her to rest on her laurels, but she’s not doing that. Instead, she’s turning her sights to her home insurance and going from there.
  7. She will not incur one more dime of corrosive debt, so no more money lost to credit card interest. (Right, Ms. Reader?! Otherwise consolidation becomes a sort of trap.)

I cannot wait to hear how much she ends up saving when she’s done reevaluating the big expenditures in her life.

Here is how much she is saving, so far: $390 bi-weekly = $845 every month = $10,140 every year. That’s more than $10,000 in savings per year! What would you do with that money?

I’ll tell you something: You’ll never save ten grand by cutting out lattes, even if they do come from Fourbucks.

Focus on the stuff that matters and make deliberate financial choices. Then, share your wins with our community. Your actions will inspire others.

By the way, if you’re not on my mailing list and you’d like to start receiving my money tips, scroll up to the purple bar at the very top of this page and sign up now. I look forward to joining you in our community of people rocking their finances.

 

Photo by Quan Le on Unsplash

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2 Responses

  1. You mentioned “ask a series of questions (which I provided)”. Would you please tell me where I can find a copy of this? Thank you!

    1. Hi Beth, Can you point me to the text that you quote? I’m not sure what you’re talking about. Send me more details and I’ll point you in the right direction!

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