How to Save $6386 a Year by Getting Smart With Your Bills
My guess is you spend more time dwelling on your Facebook status than your financial one… planning your Pinterest board than your interest hoard…linking in than stopping money leaking out.
But it is. And the irony is that technology is making the flow faster.
A growing phenomenon I’ve dubbed Digitally Induced Laziness sees us blithely ignore all the automatic payments that come out of our accounts each month – allowing oh-so-convenient to become oh-so-conned.
Providers of everything from utilities to financial services rely on their bill-DIL existing customers to fund big discounts to entice new ones. You may even find your deal gets slowly worse.
Here is where you’re likely to be losing the most money.
The big banks are exploiting your electronic inertia big time. The difference between the standard variable rate offered by the Big 4 and the most competitive mortgage on the market has swelled to a shocking 1.42 percentage points. Historically they’ve only skimmed 1 point or so off the top. Today you’ll pay 5.91 per cent versus just 4.49 per cent, which means you could save on the average $300,000 mortgage a massive $75,000 in interest.
Possible saving: $250 a month; $3000 a year. BUT it’s possible to take this total interest saving from $75,000 to $122,644 without paying an additional cent… you simply need to maintain your repayments at their existing level. This means you’ll also clear your debt more than five years early, after which your money is your own. And your big-bank lender may even agree to match this if you threaten to leave.
For all the talk about big increases in the price of electricity, and some areas have seen hikes of four times the rate of inflation in the past five years, you can actually make huge savings. A family can save a big chunk by moving to a better offer; you just need to be wary of contracts that commit you for a period of time as you may end up stuck on an increasingly uncompetitive deal.
Possible saving: $386 a year, says Market researcher Energy Watch.
You could probably be paying 15 per cent less on every single general insurance policy – think car, home and contents. The potential savings could be even higher with risk insurers like life or income protection providers, but because of age or health history it can be trickier to change. You could also save a truckload on your health insurance – and bear in mind that laws designed to keep health insurance competitive dictate that you do not have to re-serve waiting period for hospital cover.
Possible savings: More than $2000 a year.
New players are massively shaking things up when it comes to your mobile phone and your data plans. Look into signing up with a new provider as soon as you get off a phone contract; you’ll be stunned by the savings now on offer. Consider also bundling your internet into the deal to save a bucketload more.
Possible saving: Maybe $1000 a year (and that’s assuming you’ve already been tech savvy enough to get on to Voice-over Internet Protocol like Skype for overseas calls).
Screen time of a different kind could yield big results if you’ve inadvertently become a bill DIL. In fact, swap Instagram for an hour a month for probably an instant grand.
Fess up – how much time do you spend each month dealing with your finances?
Nicole is the founder of TheMoneyMentorWay.com and developer of the 12-Step Prosperity Plan, an achievable and even enjoyable blueprint to take Aussies from worry to wealthy. Nicole’s writing has earned her top personal finance awards in both the United Kingdom and Australia. Her career credits include founding and editing The Australian Financial Review’s Smart Investor magazine, and reporting and editing for the magazine arm of the UK’s Financial Times. Author, qualified financial adviser and Fairfax’s Money Matters columnist for the last decade, Nicole is a regular on television and radio. She talks money without the mumbo jumbo. Follow her on Twitter at @NicolePedMcK.