Last time, we started looking at the average American family budget, going through each category and examining how one could trim the cost of typical expenses in that category. Here’s the “average American family budget” that we’re looking at, along with links back to the earlier entries on those specific areas:
Housing – $10,080
Transportation – $9,004
Taxes – $7,432
Utilities – $7,068
Food – $6,602
Insurance (including things like pensions) – $5,528
Debt Payments – $5,252
Healthcare – $3,631
Entertainment – $2,564
Cash Contributions – $1,834
Apparel and Services – $1,604
Education – $1,138
Vices – $775
Miscellaneous – $664
Personal Care – $608
TOTAL – $63,784
For now, we’re going to skip taxes and take a look at utilities, the next item on the list.
What’s included in “utilities,” you might ask? Utilities covers the monthly bills for maintaining many basic home services: electricity, water, heat, trash pickup, gas, heating oil, cable, internet, and telephone. If you pay a bill regularly for a basic home service, it’s probably part of this “utility” category.
The best part about utilities is that there are many, many ways to cut back on your spending in this area, both large and small.
Exercise #10 – Cutting Back on Utilities Spending
The rest of this article consists of a long list of specific tactics that you can use to trim your annual utility costs. Given that everyone lives a somewhat different life, some of these tactics are going to seem useful and sensible to you, others will seem like a stretch to you, and still others won’t apply at all. That’s okay. Ignore the ones that don’t apply. Make an effort to adopt the most sensible ones. Then, give the others a trial run and see if it’s something that can work for you. Commit to some of the challenging ones for thirty days and see if they work, or apply them during the relatively rare situations when those costs come up.
Remember, your overall goal is to cut back hard on the areas of life that are less important to you – the shallows – so that you can afford the “deep” areas of your life both today and tomorrow. Keep that in mind as you read each tip. Is this tip cutting back on something that’s really important to me, that amounts to a core life value? If not, why not cut it so that I can afford those things that really matter?
Let’s dig in.
Cut your cable or satellite. A combination of free over-the-air television that can be picked up by a normal inexpensive antenna the wide variety of offerings on Netflix and free video services like YouTube can provide almost infinite television programming for less than $10 a month (provided you have internet access). Given that the average cable bill is , that means that such a switch will literally save you almost $100 each and every month on average.
When looking at changes like this, it’s easy to get fixated on the things you’re giving up, but instead look at the things you’ll have in abundance. Even the most avid television watcher doesn’t have enough time to make it through the abundance of great series on Netflix, both the original ones and the others that they provide. You’ll also have the over-the-air networks like CBS, NBC, ABC, Fox, and PBS, and often several different versions of those with different programming. This can provide you with a ton of sports and news programming, especially during key news moments. Focus on what you get for $9 a month instead of what you’re losing by saving $90 a month.
Cut your landline phone. If you live in an area with good cell phone coverage, there’s no real reason to keep a landline phone. (In fact, the only reason we have a landline phone is that it’s literally free with our internet service and we don’t save anything by cutting it.)
Simply eliminating this service and relying on your cell phone for phone service can easily save you quite a bit of money each month, depending on the services and packages available to you.
Install energy efficient light bulbs. LED light bulbs that replace 60-watt incandescent bulbs use only 13 watts of energy to produce the same light and last 20 times as long. Over the course of that bulb’s lifetime, you can easily save as much as $150 via saved energy costs and fewer replacements, even with the higher initial bulb cost.
Even other bulb alternatives like CFLs can produce a significant savings over incandescent bulbs by using less energy and lasting longer.
Install (and program) a programmable thermostat. A programmable thermostat will automatically turn off your furnace and air conditioning during the weekday hours when you’re not at home and the nighttime hours when you’re asleep, saving you money on the cost of running those expensive appliances. This can easily save you a large fraction of your energy bill during the peak of winter and summer (though the savings are much smaller in the spring and fall).
The device is simple. It simply adjusts the temperature of your house – and turns the furnace and air conditioning on and off – according to the instructions you give it. Many programmable thermostats have a weekday and weekend setting, allowing you to set different programs for each, so you’ll just set a weekday program where the air conditioning and furnace are off from 8 AM to 4 PM (for example) and from 11 PM to 5 AM (for example). Your weekend program might just include the 11 PM to 5 AM stretches. That way, you’re not paying for your furnace or AC to run during those periods when you’re not at home or asleep.
Air seal your home. Air sealing your home means making sure that there aren’t any gaps around the edges of windows and doors through which air can flow. Air flowing through those gaps can cause you to lose the coolness of your home in the summer and the warmth of your home during the winter, and since you’re likely running your furnace or air conditioning, that means you’re watching money flow out of those cracks.
The procedure is pretty simple. Just look for places where you can feel air flowing in your home out of a window or a door frame, then caulk the edges of the window where air is flowing and install weather strips around your door to keep air from flowing there. Those two steps alone can significantly reduce your energy bill if your home is drafty.
Another useful strategy for reducing the loss of warm air in the winter is to improve attic insulation. It’s incredibly easy to add a few sheets of insulation up there if you don’t have much, and doing so can prevent a lot of warm air from escaping through your attic. (This is a great strategy in the northern United States and Canada, but perhaps less useful in the South.)
Make a nightly “energy sweep” part of your bedtime routine (and maybe a similar sweep before you go to work). Before you go to bed (and, maybe, before you go to work as well), walk through your house and make sure everything that should be turned off is turned off. Turn off light switches, fans, electronic devices, and anything else that makes sense as you go through the house before bed.
Any device that you leave running for no real purpose ends up draining electricity, which adds to your energy bill. A single light bulb left on overnight can add a quarter to your energy bill, which you can save with just a flick of a switch. Other devices left on to gobble power can devour even more. A simple house walkthrough where you turn off several devices and hit a few light switches can actually save you several dollars each time.
Set your water heater at 120 F. This is such a simple move that saves a ton of energy and will cut your electric or gas bill by a surprising amount. Simply go to your hot water heater and set it to 120 degrees Fahrenheit. Most hot water heaters have a simple temperature dial; all you have to do is turn it.
Doing so means that your hot water heater will burn a lot less energy keeping the water in that tank hot for your use. You’ll likely have to change how you typically mix water in the shower, for example (you’ll need more “hot” water now), but during all of that time where water just sits there in the tank being kept hot by the heater, the heater will use far less energy and that will save you money.
Get a reusable HVAC filter and clean it regularly. In order for your furnace and central air condition to run properly, you need to keep a fresh filter in place and change it according to the life of the filter. While it does add to the long term health of your HVAC and improves how efficiently it will run, replacing that filter constantly can really add up.
The solution is to buy a reusable filter, one that you simply clean once a month and slide it right back into place. The initial cost can be a little pricy, but after that, there’s no more expense. Just mark one day a month on your calendar as the day to clean your HVAC filter and you’ll never spend another dime on it again, while keeping it clean will maximize the efficiency of the air flow in your home. You’ll save on the filters and save because your heating and cooling systems aren’t running as much.
Keep your ceiling fans running in the right direction. Having your ceiling fans running in the correct direction for the season can allow you to run your thermostat a few degrees lower in the winter and a few degrees higher in the summer. Proper ceiling fan direction pushes warm air down from the ceiling in the winter while gently moving air around the room to provide a cooling effect in the summer.
How do you do this? When the weather starts to get cold, turn on your ceiling fan and stand right underneath it. If you feel air blowing gently down on you, you’re already in the correct winter mode so you don’t have to do anything. If you barely feel anything moving at all at first, then it’s in summer mode, which means you need to look for the directional switch on your fan and flip it. The reverse is true for the summer – you’ll want the more subtle air flow around the room rather than having warm air pushed down in the middle of the room.
Hang your laundry outside. Running a dryer eats up a lot of energy, even with an energy efficient dryer. This is especially true during the summer months, when the heat produced by the dryer adds to the heat in your house, causing your air conditioning to run more frequently. You can solve both problems by simply hanging up your laundry outside.
For a single person, a simple line strung across your balcony can easily do the trick. If you have a larger family, you may need to permanently install a line in your backyard. In either case, hanging out clothes for a few hours, especially whenever there’s a breeze, will dry your clothes incredibly well.
Run your dishwasher and/or dryer and/or oven in the evening before bed. Regardless of the season, the truth is that the temperature outside is lower in the evening and night time. That means that, if you’re trying to cool your house because it’s summer, your air conditioner will do less work during the night, but if you’re trying to heat your house because it’s winter, your furnace will do more work during the night.
In the summer, then, you don’t want to add extra heat to your house during the hot daytime hours, and during the winter, you do want to add extra heat to your house during the cold nighttime hours. In both cases, it makes a lot of sense to run your dishwasher and/or dryer and/or oven in the evening when you need to use them so that the excess heat that they produce actually helps with nighttime heating during the winter and doesn’t negatively impact daytime cooling during the summer.
Wash your clothes on cold water mode. Almost all garments that you put in the washing machine clean up perfectly well when you use cold water instead of warm water, so set your washer to do just that. The only difference that you’ll notice is that the clothes are perhaps a little colder when you pull them out of the washer and either hang them out to dry or put them in the dryer.
Using cold water means that you’re not spending energy to heat that water, which can save you money on the energy used to heat it with no real drawbacks.
Dust the back and underside of your refrigerator each year. Your refrigerator is one of the biggest energy-guzzling appliances in your home. One of the biggest reasons for that is dust on the coils, which drastically reduces the energy efficiency of your refrigerator. Refrigerators work most efficiently when their coils can efficiently exchange heat with the outside air, and when those coils have dust on them, the dust acts like an insulator, which means that the coils are far less efficient. The end result? Your refrigerator runs a lot more and it’s an energy hog.
Once a year, slide your refrigerator out and dust the coils off on the back. If there aren’t any coils back there, you may have to look underneath it and dust off the coils on the bottom. Regardless of where the coils are, simply cleaning them off can cause your refrigerator to run far less, which not only will notably benefit your energy bill, but will also extend the life of your refrigerator.
Stick a thermometer in your refrigerator and freezer. Put a thermometer in a spot in your freezer and refrigerator that’s nowhere close to the air vent and let it sit there for a while to get an accurate gauge of the temperature. Your refrigerator should be somewhere around 38-40 degrees Fahrenheit, while your freezer should be around 5 degrees Fahrenheit. Anything colder than that is a waste of energy; your refrigerator and freezer are simply running more than they need to be, gobbling down energy.
So, after that simple test, adjust your temperature dial accordingly in your freezer and refrigerator. You want to shoot for those target temperatures to keep your food cool without wasting energy. The first time I did this with our refrigerator, for example, I discovered that it was running at about 34 degrees Fahrenheit, which explained why items would sometimes freeze near the vents. Adjusting the temperature a bit caused the fridge to not run quite so much, which saved us some cash.
Use the microwave instead of the oven or stove top when possible. Your microwave is far more efficient at cooking tasks that center around boiling water than your oven or stove top is. If you need to boil water, do it in the microwave. If you need to simply heat something, do it in the microwave.
Save the stove top for things that don’t work in the microwave (like caramelizing onions) and save the oven for deep baking that also doesn’t work in the microwave. Those are tasks that need actual heat, not just hot water.
Never run partial loads. When running a washer, a dryer, or a dishwasher, make sure that you’re running a full load instead of a partial load. Those machines are designed to be maximally efficient with electricity, heat, air flow, and water usage when you run a full load, so do everything you can to make sure that you’re washing a lot of things at once.
This can be difficult at times if you’re a single person, so use your smarts. Wash bed sheets or towels in with other items to fill out your laundry loads. Wash things like dog toys (in the top rack) or toothbrushes or rubber boots or golf balls in the dishwasher to fill up a load.
Again, the key thing to remember when considering all of these options is that your overall goal is to cut back hard on the areas of life that are less important to you – the shallows – so that you can afford the “deep” areas of your life both today and tomorrow. As you consider each tip, give some serious thought as to whether or not that particular tip affects something that’s truly one of the “deep” areas of your life or whether or not you’re just acting reflexively. Is this thing really important to you, especially when compared to the things that are most important in your life?
Next time, we’ll keep digging through the categories in that average American budget.
31 Days to Financial Independence: The Complete Series
- Day 1: The Shallows and the Deep
- Day 2: Finding Direction in the Deep End, and Cleaning Up the Shallows
- Day 3: Finding Daily Direction and Meaning
- Day 4: Figuring Out Your True Hourly Wage – and What It Means
- Day 5: A Living Budget
- Day 6: The Big Boost
- Day 7: Cutting and Minimizing Debt
- Day 8: Trimming Your Spending — Housing
- Day 9: Trimming Your Spending — Transportation
- Day 10: Trimming Your Spending — Utilities
- Day 11: Trimming Your Spending — Food
- Day 12: Trimming Your Spending — Insurance
- Day 13: Trimming Your Spending — Healthcare
- Day 14: Trimming Your Spending — Entertainment
- Day 15: Trimming Your Spending — Apparel and Services
- Day 16: Trimming Your Spending — Education and Miscellany
- Day 17: Integrating Cost-Cutting Measures Into Your Life
- Day 18: Improving Your Income at Your Current Job
- Day 19: Getting Promoted at Your Current Job
- Day 20: Finding a Better Job
- Day 21: Starting a Side Business
- Day 22: Using ‘the Gap’ and Avoiding Lifestyle Inflation
- Day 23: Investing for Retirement
- Day 24: Investing and Saving for Education
- Day 25: Investing and Saving for Other Goals
- Day 26: Considering Insurance
- Day 27: Handling a Crisis
- Day 28: Handling the Long Valley
- Day 29: Handling Changing Goals
- Day 30: Getting Your Family and Friends on the Same Page
- Day 31: Bringing It All Together