Millions of Americans live paycheck to paycheck, with more than a quarter of Americans having no emergency savings at all and almost three-quarters not having enough savings to cover six months of living expenses, according to a recent survey from Bankrate.com.
For those with no savings, monthly bills represent a huge source of stress, with money flowing out to cover payments just as fast as people can earn paychecks.
If you want to declare independence from your bills, the best strategy is to find ways to reduce how much you owe and make those payments more manageable. To celebrate Independence Day, let's take a look at five ways you can save on your bills so that you can get your financial freedom back.
Declare Your Independence From Your Bills
Declare Your Independence From Your Bills
Mobile-network companies do everything they can to pull you in the door, with smartphone offerings that often come with no upfront cost. Even the most popular models are available at big discounts, with most providers offering large subsidies in order to lock you into two-year contracts.
Once you're locked in, though, costs for monthly data, text and voice plans can run well over $100 a month.
That's fine if you actually use everything you're paying for, but many people don't. One Illinois consumer advocacy group found that state residents wasted as much as $1.4 billion by signing up for more-inclusive plans than they actually needed. Threats of overage fees lure subscribers into paying for more than they use. But look at your actual usage and then see if a cheaper plan would serve you just as well.
Speaking of phone service ...
Cellphone use has become nearly universal in the U.S., with a Pew Internet study finding that 91 percent of American adults have a cell phone. With plans that include unlimited or large amounts of minutes for use either locally or for long-distance calls, cellphones increasingly serve all the telephone needs people have.
In that light, paying for a landline is of limited use. The main advantage is that landline phone service often continues to work during power outages when cellphone use fails, but an average landline bill of around $30 a month is a fairly hefty price to pay for that security.
Like cellphone providers, cable companies have pushed customers into larger packages than many people want. Without a-la-carte options to pick and choose channels, many customers have to buy expensive tiered packages to get the channels they actually want.
With the rise of streaming alternatives like Netflix (NFLX) and Hulu, some former cable customers have successfully cut the cord, replacing monthly cable bills of $100 or more with much lower subscription payments. Also, look into cheaper package options that cable operators must provide. They're often not advertised, but they can be much less expensive than typical standard cable packages.
As summer heats up, cooling costs are on the rise, but one solution that covers both heating bills in winter and air-conditioning in summer is a programmable thermostat. By letting you tailor your energy use to times when you're actually at home, you can cut your total bills by 10 percent a year or more, according to figures from the U.S. Department of Energy.
One downside of programmable thermostats in the past was that they didn't handle unexpected changes in plans very well. But advances in technology make it even easier to use programmable thermostats, with some devices linked to the Internet and controllable using a smartphone. That way, if you're going to be home an hour early, you can reset your thermostat remotely in advance.
Mortgage rates have been on the rise recently, but some homeowners might still benefit from refinancing their home loans. Even with 30-year mortgages having gone up by more than a full percentage point in just a couple of months, rates of around 4.5 percent are still well below historical average levels.
Refinancing comes with upfront costs, so it's important not just to look at monthly savings but also at how long you plan to live in your home and whether you can avoid or reduce costs associated with refinancing. Given how big a part of your overall budget your mortgage payment is, though, even small percentage savings can add up to a nice boost for your finances.
Monthly bills can put a big weight on your shoulders. But by taking these simple steps and looking at other ways to trim your budget, you can go a long way toward escaping the bonds of paycheck-to-paycheck living and declaring your own financial independence from your bills.