The $1,000 Challenge, Part 2: Turning Down Your Utility Bills

Electricity Meter, Close Up
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In the first installment of The $1,000 Challenge, we tackled the easiest spending category of all to cut -- junk spending on things you won't miss because often, you don't even know that you're paying for them.

And cut we did.

How easy was it? One reader, Kristen, commented that she found an overlooked monthly charge that will save her nearly $225 a year. Another reader cut more than $120 a year by canceling an old email account. And when I originally did the experiment on my own "miscellaneous spending," I found $132.89 a month that was easily cut.

This installment -- utilities spending -- might take a bit more effort, but it's still a fairly easy place to find big savings without a lot of pain. Basically, if it comes out of a wall in your house or apartment (or in through the electromagnetic spectrum), we're going to try to cut how much it costs you this week.

The biggest savings will come from things like cable, Internet and cell phones. The companies that provide these services are in competitive industries, and new bundles, plans and options are being introduced all the time.

Sometimes, All You Have to Do Is Ask

One easy and often-overlooked method for saving on theses services is to just call your current providers and ask for cheaper plans. In our case, I'd signed us up for the minimum package of cable channels when we moved to Detroit; but a few years later, the company had introduced a new, cheaper option. In the case of cell phones, it was the same thing: we'd signed up for the basic calling plan, but a new one had been introduced since then that was cheaper.

If you go a little further and do some comparison shopping, you can find even more savings, but make sure you sort out introductory specials from long-term, ongoing rates. When I tackled my utilities, I received more than $600 in temporary price breaks and rebates, which was great. But we're focusing on finding permanent, ongoing savings for your budget. Don't get fooled by a super-low intro-rate deal that will actually cost you more per month when the initial discount expires.

You should also consider bundles. You can get cable, %VIRTUAL-WSSCourseInline-884%Internet and phone service in one package, along with some nifty extras, such as digital video recorders or a built-in WiFi network. There are no extra charges for long-distance calls (though people in blackout-prone areas may want to keep a conventional land line, which will work during a power outage). Just grab last month's bill or look up what you're paying online, and start shopping.

The only reason to check more than one month's worth of bills is if you're sometimes charged for time, text or data overages on your cell phone plan, if you have varying long-distance charges, or are paying extra for on-demand movies and videos. In those cases, look for a plan that can give you those extras at a discount. If all your movie-viewing is from on-demand, maybe it's time to cancel your premium channels and consider renting movies from Netflix or other services -- or borrowing them free from the library.

Call Me Thrifty

Will cell phones, you provider can offer an analysis of your usage, and there are online comparison sites, such as, which can analyze your calling patterns and recommend alternatives. (I didn't find to be entirely accurate in estimating my costs, though, so double-check any calculations against a few of your recent bills. The recommended plans did, however, save me about $40 a month.)

Also check out prepaid cell phone plans, especially ones that will let you roll over any unused minutes from month to month, which can make sense if you aren't a heavy caller. If you're really looking to save, cut down to just one phone, either a land line or a cell.

How aggressive you get should depend on how much you want to save. You can cut down to one prepaid cell phone, use library Internet access, borrow DVDs from the library, and cut out a lot of costs right there. You don't need cable or satellite service to go with an HDTV; you can receive high-definition broadcast signals over the air with an HD antenna. The Consumer Electronics Association has even created a website designed to help you figure out which type of antenna you need.

Some folks are cutting their cable altogether and in favor of streaming services. Using one of these will require you to keep Internet access, possibly at a higher speed than you're paying for now. There are streaming options over the Web, such as Hulu, and there all manner of little black boxes that will connect the Web to your TV and give you access to most -- but not all -- programming for a monthly subscription charge. Apple TV is one; TiVo Premiere service offers most cable channels; and there are gizmos available from Roku, Vizio, Simple.TV, among others. You also have options through Amazon, iTunes and even game systems such as Xbox and Wii. Be careful that you don't end up spending more than you'll save buying cables, boxes and other gear.

Water Works and the Electric Company

When it comes to major utilities, such as water, gas and electricity, you don't have as many options. Some states have competitive electricity markets, %VIRTUAL-article-sponsoredlinks%and you can price piped-in natural gas vs. propane, but that's about it. Your best bet for savings here is conservation. But don't install $5,000 worth of insulation if it's only going to save $12 a month on your bill. Many power companies will do home energy audits to give you savings ideas, including some that can be pretty cheap.

Many electricity providers also offer a discount if you shift some of your power usage away from peak hours. But in most cases, finding savings on those old-school utilities means fixing leaky faucets, insulating windows and closing the heat registers in unused rooms. And while it won't cut your overall costs, subscribing to level billing -– which averages your annual utility spending and gives you a fixed monthly payment -– does make it easier to plan and budget during the year.

It goes without saying that if you are severely crunched for cash, check out all your options for help, from home heating assistance in your state to discount cell phone plans for folks on public assistance. Start with your local human services agency and the United Way.

Overall, I bundled our Internet, cable and phone, cut out my long-distance service, and found a few suspicious extras that mysteriously had been added to my phone bill, and saved $139.39 a month, after all the rebates and temporary discounts.

You can find more detailed suggestions in my book, "The $1,000 Challenge." Make sure to post your ideas, tips, strategies and how much you find to save here in the comments or share them on the Facebook page. Just grab a bill and start today.

Originally published