Businessweek ran a cover story recently on the new age of frugality. Maclean’s magazine followed with its own cover story, which speculated that we could become happier and healthier if we had to live within our means.
As we head into tough times for the economy, it makes sense to start saving more than we do already. But where do we start? Can we pull back without causing pain?
There are two approaches to saving. The Latte Factor, popularized by author David Bach, involves cutting the discretionary spending on fancy coffee and everything else that makes us feel good but doesn’t add much to our welfare — takeout meals, cigarettes, candy, entertainment or sports. We all have a Latte Factor, even if we brew our coffee at home.
I prefer the second approach, which involves paying close attention to your monthly bills. I’m talking about bank and credit card statements, insurance, telephone, cable TV, Internet, electricity and gas or oil for home heating. Go through the bills to see what you’re paying for and whether you’re paying too much.
This means questioning all the charges. Are they correct? Mistakes are common, so call and ask if you don’t recognize something.
Then, ask if you have the best plan for your needs. Has a better plan been introduced? Can you bundle and save? Are there any areas where you can save money?
This might be enough to get you a better deal, especially when it comes to cellphone plans and banking packages. But if not, you have to start shopping around and looking for better deals elsewhere.
Once you locate a lower-priced provider, you can go back to your current provider and say you’re thinking of moving. Never threaten, but just suggest that you might be going elsewhere. Then, wait for your current provider to match or beat the deal you said you were going to get.
This kind of negotiation is best done if you can reach a company’s retention department. People working there are authorized to offer whatever it takes to keep you as a customer. That’s when you hear about ultra-low prices or free contract extensions that are unavailable when you call customer service.
Unlike the Latte Factor, which requires daily sacrifices, the get-out-your-bills approach needs to be done annually at most. Once you renegotiate your pricing, the savings follow through month after month.
Tell me about how you save money or practice the new frugality. I also want to hear examples of how you can get penalized if you don’t call the companies you deal with periodically to ask about how you can save money.
I’ll start the conversation by posting Linda’s list of money-saving tips. Then, I’ll post a story about someone who found her elderly parents were paying exorbitant long-distance phone rates because they didn’t know that better plans were available.