How to reduce your Household bills

By Jenny Hughes

Special to the Financial Independence Hub

The average American has close to $40,000 [US$ throughout] in non-mortgage debt, also known as “bad debt.” This debt will cost them close to $250,000 in lifetime interest and more than three quarters will die with unpaid balances.

It’s a tragic statistic, and it’s getting worse, which is why so many Americans [and many Canadians too!] are looking into programs like student loan debt relief, tax debt relief, and debt settlement, among others. But as effective as these programs are, the best money-saving methods begin at home.

In this guide, we’ll show you some ways to reduce your household bills, potentially saving hundreds of dollars a year, all of which can go toward clearing your debts.

Get rid of unnecessary subscriptions

North Americans are wasting vast sums of money on subscription services, most of which are underused and unnecessary. It’s such a prevalent issue, that we guarantee everyone reading this will have fallen into the same trap.

Don’t believe us? Here’s a quick test:

Without looking at your bank statements, calculate roughly how much you spend every month on digital subscription services, including TV services, online services, etc.,

If you’re like the average American, you probably calculated a total of between $50 and $80, which is respectable, but probably false.

Did you remember to include Netflix, Amazon Prime, Hulu? What about web domains, Xbox/Playstation subscriptions, loot boxes, and cloud storage services?

The problem with digital subscriptions is that they often cost just a few bucks and are purchased on a whim. The average consumer doesn’t think twice about purchasing them because what’s an extra $5 or $10 a month? But as more of these services are added, that extra $5 turns into $50, and before you know it, you’re spending $600 a year on services you don’t need.

A 2018 survey asked the same question to 2,500 participants and found a massive 84% grossly underestimated how much they spent on digital subscriptions. And this is just the tip of the iceberg, as there are also gym subscriptions, grocery deliveries, and countless other subscriptions that leech money from your bank account every month.

The trick is not to think about the monthly cost but to calculate the yearly one. $5 a month seems like a sensible choice for a new media subscription, especially if it means you can watch that new series everyone’s talking about. But what happens three years down the line when you forget to cancel and only ever watch one episode? You’ve just wasted $150 to consume 45 minutes of TV.

Make your Home more efficient

Install energy-saving lightbulbs, low-flow toilets and shower heads; fix leaky faucets; insulate your doors and windows, and stop relying on costly air conditioning units. All these tips can reduce your monthly bills, but they’re just the tip of the iceberg.

American and Canadian households are filled with electrical devices — TVs, video gaming consoles, computers — and most of these are either active or on standby. They constantly draw a charge, which means you’re paying for them around-the-clock, and those charges can add up.

When a device is not in use, turn it off. This also applies to your heating, cooling, and lighting.

Watch those Food bills

The average family spends close to $3,000 on takeout and restaurant food, and roughly $7,000 on groceries. That’s $10,000 on food, and while it’s a necessity that can’t be avoided, how that money is spent desperately needs to change.

40% of the groceries we buy end up in the garbage. We buy more than we need, cook more than we can eat, and spend far too much on junk food.

Here are a few ways you can save on your food bills:

• Serve smaller portions and freeze the rest for another day.
• Swap regular restaurant visits for family picnics. You’ll save money and use excess groceries that would otherwise be wasted.
• Buy more frozen vegetables and fruit.
• Create a shopping list and stick to it.
• Don’t buy foods you don’t like and probably won’t eat just because they’re on sale.
• Never shop when you’re hungry.
• Buy a water filter and reusable bottles to save on bottled water.

 Focus on Yourself

It’s never a bad idea to give to charity. There is always someone who needs it more than you do. However, if you’re struggling with masses of debt and don’t have a lot of free cash, you might want to rethink donations to services like Patreon, Twitch, and Kickstarter.

While supporting your favorite artists and projects is an honorable thing to do, when money is tight, bills are high, and debts are escalating, it’s time to put those donations on hold.

The average donation across the aforementioned platforms equates to $36.70 a month or $440.40 a year. That’s a car payment or a credit card payment!

Challenge yourself one weekend a month

Make a commitment to go an entire weekend every month without spending any money. No eating out, no coffee shops or bars. Swap theme parks and other expensive excursions for free museums, picnics, and visits to the park.

You don’t have to spend money to enjoy yourself, and if you can abstain from spending for just one weekend a month, you could save hundreds over the year.

Summary: Be reasonable

Adopting a frugal mindset is great when you’re looking to save money, but you can be too frugal.

We’ve seen money-saving tips that include separating two-ply toilet paper and reusing cheap teabags. The problem is, the money you save is negligible and you’re sacrificing practicality to do it: who wants to use super-thin toilet paper and drink super-weak tea?

Be realistic, focus on the big stuff first, and work your way down the list. Your energy bills are a great example of this. Don ‘t waste your time running around the house turning off lights when you can be focusing on bigger and more important savings.

If you’re using energy-saving bulbs, lighting will cost you just $25 a year on average, which means you could save $1 or $2 a year by being more diligent. On the flip side, heating costs over $600 a year, dryers cost over $130, and water heating costs $300+. By turning the thermostat down, adjusting the daily schedule, and using the elements more (drying clothes outside, opening windows to cool down) you could save over $100 a year.

Jenny Hughes is a freelance writer, specializing in Personal Debt and Financial Management. Her work has featured in numerous magazines and on hundreds of personal debt websites, and she is a keen advocate of debt settlement, consolidation, and other debt relief practices.