Episode 24: How to Negotiate Your Bills (and Save over Six-Figures!)
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On this episode of the personal finance podcast, we're going to talk about how you can negotiate your bills, and save yourself an additional six figures in retirement. What's up everybody, and welcome to the personal finance podcast. I'm your host, Andrew, founder of dollar after dollar.com. And today on the podcast, we're going to be talking about how you can negotiate your bills and save yourself an additional six figures. And negotiating your bills is something you have to understand takes a little bit of practice. And it takes a little bit of research beforehand to be able to do this. But there's a bunch of great benefits to negotiating your bills and as a bunch of reasons why you would want to actually take the time to do this. The first of which is, let's say you negotiate down a few bills, and we'll talk about some of the bills that you can negotiate down here shortly. But let's say you can negotiate down a few bills, and you save an additional hundred dollars a month collectively between all those negotiations. Now, I think you can save a lot more by negotiating your bills. But let's just say that you save an extra hundred bucks, well, that's 1200 dollars a year. And if that took you one hour, you just made 1200 dollars in one hour. But here's the bigger picture with the same action items here. If you invest 1200 dollars a year with an 8% rate of return, which is the average for an index fund over the course of 30 years, you're gonna have $135,000 just by negotiating down your bills and taking a little bit of time every single year to make sure your bills are on track and at the right pace that you want them to be at. And here's the crazy part over the course of 40 years, if you save an additional hundred dollars a month, at an 8% rate of return, that would accumulate to $310,000. So I don't know about you, but taking an additional hour, twice a year to look at your bills and make sure they're at the right pace. So that you can have an additional an additional $310,000 in retirement is a massive benefit for you. This is a massive massive action item to take. And that's just with a small amount of savings. Imagine if you could save more money. And if you save bigger amounts of money, you're gonna be saving even more money over the course of time. Let's just say for example, that you saved 20 $400 additional a year calculating that same number over the course of 40 years a $621,000. So if you save an additional $200 a month by doing this exercise, once a year, you're going to save yourself an additional $621,000 in retirement, that's over half a million dollars, you're approaching a million dollars with that action item. And that's why this is so important to do. And so important to keep on top of because it's gonna allow you a much bigger retirement and a much bigger nest egg over the course of time. When should you do this. First off, if you haven't looked at your big three expense items yet, and if you didn't hear the the episode where we talked about the big three expense items that you need to slash so you can spend lavishly on everything else. Those are transportation, housing, and food. So the first thing you need to do before you negotiate any bills at all, is look at those three action items and see if you can cut back now doing this is only if you're not hitting your savings goals. If you're not hitting your savings goals, and you have a plan in place and you want to save a certain amount of money. These are the action items you need to take the first thing you need to do is look at the big three. And then secondly, you need to start negotiating your bills down. Those are the first two action items, because those are the first things you can initially control. And then what you really want to do over time. And the big thing is, is not cutting back your expenses, the big thing is actually increasing your income. And we talked about this all the time, because that's we're going to make massive steps as well. So between doing both of these things, controlling those expenses, and increasing your income, that's how you build massive wealth. That's how you get massive wealth. And you can retire early and spend more time with your kids and do exactly what you want to do. So we're going to talk about today, how you can negotiate down your bills. So if you've already looked at your big three expenses, you slashed where you can on those big three expenses, then it's time to look at your bills and start negotiating with some folks out there. So let's get into how to negotiate your bills. So the first thing you may be asking yourself is what the heck is the time commitment to negotiate your bills, I don't want to spend my Saturday trying to negotiate down bills all day long. And what I found over time is I do this once or twice a year. But it takes about you know 30 minutes to an hour to research all your bills and just look at them and see what kinds of extra fees are on your bills or things like that that shouldn't be on there. And negotiation takes about 30 minutes to a couple of hours depending on your wait times. And if you call it the right times, you can find peak times to call or nobody's calling and it's usually right when they open early in the morning, then you have a better opportunity to be able to get through and reduce the amount of time This takes but just keep that in mind, because it does take a little bit of time every year, but it's worth it for those massive numbers, you're going to save over six figures over the course of your lifetime, just by doing this exercise. So it's absolutely worth every single hour that you spend. And it's going to be probably the highest dollar amount you make every single year. Let's say it takes you two hours to negotiate 1200 dollars a year, you're making $600 an hour. This is a very high money making activity, there's a number of bills that I want you guys to look at. And these are the types of bills that I like to look at to negotiate. One is your cable cable is number one. Now in a future episode, we're going to talk about how you can cut your cable, I've cut my cable, and I've had no cable for about seven years because I was tired of my cable bill being above 140 $150. So I cut the cord and I get all the cable channels just in a different way. And we're going to talk about how you can do that by cable is one to look at if your cable bill is massive, then look into potentially either cutting the cord or negotiating with them or switching carriers to get a better deal because cable is a massive one where you could you could save 3040 5060 bucks a month just by looking at your cable bill. And if you cut the cord, you can spend half the amount you're paying right now to be able to do something with your cable bill. And then the next one is your cell phone bill. So looking at your cell phone bill is a massive, massive thing that you have to do because a lot of times cell phone bills will add extra fees on there or add extra costs that you are not even using. So for example, I had a friend who went and got a new iPhone. And what they did was they did the rent until you can buy plan. So they're spending $25 a month renting the iPhone and then at the end of two years, they can go ahead and outright buy their iPhone for 200 bucks, or whatever it is, well they just kept the same phone and for four years, they were spending $25 a month. And so what this what happened here was they doubled the price of the iPhone over the course of those four years, instead of just stopping the $25 a month and paying $200 at the end when the contract ran its course to be able to just buy the iPhone back. So they spent almost additional thousand dollars on an iPhone, just because they didn't check their bill and look and see if they can negotiate that back down or just be able to catch that so they can purchase the phone outright. And a lot of cell phone companies will add on fees and things that you can negotiate off and you just have to discuss it with them. Maybe they give you additional tethering or data that you're not using. So there's all kinds of things that you can look at for yourself for your personal needs to be able to negotiate down. The third one is credit card interest. So if you're in debt, and you're paying credit card interest, you can go ahead and try to negotiate down your credit card interest or look at your credit card interest. And this is a high high value activity and maybe transferred over to a zero balance credit card. And it really goes for any debt. Think about your student loan interest rate or any of those if you refinance your student loan interest rate, you're saving thousands and thousands of dollars over the course of that student loan. So that's something you definitely want to look at. The next one is car insurance. Sometimes you have more coverage than you need. So if you look at your car insurance bill, talk to your agent and just talk through Hey, what do these numbers mean? What am I actually getting out of this. And if it seems too high to you, you can reduce your car insurance bill significantly, just by having this conversation, maybe you're driving a hoopty. But you're covered for a million dollar accident, well, you don't need a million dollar coverage, if you're if your coverage is 20 times the amount of your actual car value. So that's something else to just look at, look at your car insurance, Home Security, if you have a home security system, look at that, subscriptions to magazines, newspapers, anything like that either. If you don't use them, cut them out, if they don't bring you value, cut them out. Or if you use them, then negotiate the pricing gym memberships, I negotiated my gym membership down where everyone I know was paying $60 a month, I was paying $20 a month. So that's $40 a month savings over the course of time just by having a negotiation just by having a conversation, and then any other bundled services. So look at bundled services that you have, and see if you can negotiate down or reduce what you have. A lot of people have the $20 Netflix and they only need the $8 Netflix. And that's why a lot of times people just let these things ride. But collectively, if you look at all these items, collectively, you could save a couple hundred dollars. And that's what I'm talking about here. Because if you're not hitting your goals, and you'll look at all of these items and go through the list and go down and list out exactly what I said and just make a little checklist and go through each of these bills, you could save a couple hundred dollars a month, which could result to a few thousand dollars a year, which results as we just talked about, to well over six figures when you retire. And that's why this is so important. So let's get into the steps to take to be able to negotiate your bills. So the great thing about negotiating your bills is the research part is pretty simple. Because what you're just doing is doing a little bit of research online to see what your options are because knowing your options is extremely powerful in these negotiations. Because you have to know exactly what your option is if you have to walk away and be willing to walk Especially on a high bill that's not bringing you value, you're not getting the service that you want, be willing to walk away, because during that negotiation, your willingness to walk away can be powerful in the long run. We'll talk about that here shortly. So the first thing you want to do during your research phase is just to obviously sign in to all your accounts and gather the records to see how much you're paying, look down your bill, and you're going to start reviewing things. So for example, for your cell phone bill, you're going to start reviewing your data usage, how much data are you actually using? Do you have unlimited data, and you only use a few gigs a month? Well look at that, because a lot of times people are on their office Wi Fi, and then they're at home, they're on their home Wi Fi. And they're using way less data than they think they are. And this is a very easy way to save money, it's just looking at your data usage on your cell phone bill. But you can look at the same thing on your cable bill, do you have HBO or Showtime, you don't even use that on your package. look at things like that, to see if you have additional services that you don't need, and you don't want to use, because that's the quickest way to just slash things off right away, there's no negotiation involved, you just tell them, Hey, I don't use this, take it off my bill. And then the next thing you want to do is research the prices and packages that the company gives to new customers a and then that they also get to competitor. So look at competitors see what their prices are. But then also look at the company you're currently with, and see what kind of pricing they give to new customers who come in that sign up for their services. So a big one with this is cable, because cable gives a tremendous discount to new customers, especially if they sign a one year two year contract. But a lot of times now a lot of cable companies don't have contracts. So you can look at it a differential between say, a new customer coming in and paying 8999 for Wi Fi and cable, or you as the older customer paying $150 a month for the same exact service. So look at that, because you want to have that information ready to see if you have the opportunity to get that same pricing when you're going to walk away if you are willing to do that. And if their competitors prices are similar for a new customer and are the same that you always have that option to go to the competitor and be able to save that Chadha. So just be considering if you're willing to walk away from certain services. Now there's services that you love that you just do not want to walk away from, then fine, skip that one or go in and try to negotiate and just know in the back of your head that you're not going to walk away if they say no. And then just kind of get everything organized, write it down in a spreadsheet or write it down, jot it down on a piece of paper exactly what your plan is, for each bill. Just you have an idea and what and write down your options as well. So write down the competitor options, the new customer options, all those pieces just so you organize, you have the information right in front of you when you start this negotiation process. And then just keep an extra piece of paper and a pen right next to you. Because the key to this is writing things down and taking cues that these people are speaking about. As you're starting your negotiation, you're going to want to take notes when you're being talked to just so you remember the information, especially if you're doing a couple bills a day, you want to make sure that you write down the information. So you remember what exactly what they're talking about. And then the next piece is mental. So you just want to get in the right mindset. So the way you want to approach these negotiations is very simple. We're not doing this as a Harto, we're not trying to be hard with these people, we're actually going to go into it being extremely nice. But we're going to be persistent. So persistence with kindness is the is the recipe here, because what you want to do is having these conversations because customer service reps deal with jerks all day long. So if you're a jerk to them, they're much less willing to help you because they deal with jerks all day long. That's all they do is deal with people that are just yelling at them all day long. So if you show them a little bit of kindness, but also show them you're going to be firm and persistent to be able to do this, you're gonna have a much better opportunity. And then along the same lines we just talked about, just be ready to leave. If you're ready to leave, just be in that mindset and know that a similar competitor has the same pricing, yes, it may be somewhat of a hassle to have them come out and re hook up your cable, or switch over your cell phone plan. It's a little bit of a hassle. But it's going to save you a tremendous amount of money in the long run. And then the last thing you want to do is just keep in the back of your head, you're not going to ask yes or no questions, what you're going to do is you're going to ask open ended questions that don't allow a quick answer. So you want to ask open ended questions where they kind of have to elaborate because you can take notes as they're talking, and they're going to give you little cues to allow you to ask the right questions as you go along this process. For example, what can you do to decrease my monthly bill? That doesn't allow them to say yes or no, that just has them have to elaborate and tell you exactly what they can do or what they can't do to decrease your bill? Or what can you do to get me a cheaper plan, same type of question. So write those two questions down, because that's kind of how the open endedness needs to be. It needs to allow them to elaborate so you can take cues and be able to take those for yourself and help you in your negotiation. And so now you're going to get into the negotiation phase. So the what you're going to look at is you want to say upfront that you're considering cancelling your service and you want to be asked to transfer to the customer retention or canceled department. So if you're being transferred to the department that that does cancellations, a lot of times they have more leeway to cut a deal because their job is to retain the customer. And they're going to give you a couple of options to allow you to be retained. So you stay on because it's much more valuable for them to keep you obviously, than let you walk away. So for them, keeping you at a same price that is still somewhat profitable is in their best interest. So they're going to try to do that. So you want to be transferred right away to the cancellation department. And you could say something like, Hey, I'm thinking about canceling my service, because I just can't keep up with my monthly bill anymore. What can you do to help me out? So that's all you have to ask them. It's an open ended question, and just see what they say. And as they're talking, take notes, see what prices they offer you. And if that works for you, great, take it, you just saved money. But if it doesn't, then you can start busting out a couple of other extra things that we want to talk about here. So if you're not happy with their offer, try talking about your customer history. Now you can say something like I've been a customer for seven years, I've never missed a payment, look at my customer history. Can you help me out here because I just can't keep up with this bill. And this bill does not bringing enough value to keep. But if you can reduce this bill I can stay on. As you go through that process, you're going to listen to them, you're going to take additional notes as you're listening to them. And if they still aren't budging, then what you want to do is present the competitors offer. Now if a competitor has a much better offer than what you're paying right now, you want to present that to be able to show them that their offer is way higher than what you can go and get this is the key. And this is what works for a lot of people. A lot of people bust this out first. But you want to bust this out a little bit later on. So the way to say this is I've been looking at my other options, and they're giving new customers this deal, I also see that you are giving your customers a certain deal. What can you do for me here, that's the way you asked that question and it leaves it open ended to see exactly how what they're going to do. And if they don't give it to you and you're willing to walk, then that gives you the opportunity to walk. But a lot of times they're going to give it to you because you're already threatening to cancel service in a nice way. Now remember, we're trying to keep this as nice as possible. A lot of times what these reps will do, and they may do this is offer you an ancillary service, like six months of HBO or something like that, if that works for you take it, but we're really trying to do here is we're trying to save money to increase your savings. And so for most people, that's not going to work because you didn't call them up to add six months of HBO, you call them up to reduce the costs on your bill. So what you can say is thank you for your offer. But the problem isn't that I don't have HBO, it's that my monthly bill is just too high. What can you do to lower my bill. And a lot of times, what you can do is you can get your bill lowered. And since they offered you that service, you can also get that service added on on top. So you get a double benefit here. So you're going to get additional service and reduce your bill. So that's one of the double whammies that you can get when you're doing these negotiations. Now if all of us all out fails, ask them for a one time credit. So you can get a one time credit to see if they can reduce your bill, at least for one time until you figure out what you want to do next. Or if you know you're going to walk away, then you can go ahead and walk away and take a better deal. But if they do give you the deal, then just make sure you clarify the terms and talk through with the rep and make sure you have all the terms because sometimes they may try to lock you into, say a one year contract. So you want to make sure you know all the terms before you do something like that. In addition, you want to make sure that you get an email confirmation on terms as well, so that you can see the contract as you're talking to them. And then after you accept the deal, just confirm all the changes have been made to your account. And once you confirm all those changes, this is going to allow you to be able to write them down. And then again, ask for that email confirmation. You always want an email confirmation every time you have these changes come up. Now if you're unsuccessful, but you really want to stay with this company, you don't want to go through all the changes, then try another day. And see if you get a different Rep. And maybe that other rep will be more willing to help you or something may have changed a few days later, where they're allowing more lenient for customers who are going to walk away. But if you don't want to stay, then don't stay with a company that's not willing to negotiate with you that's offering other customers better deals but won't give you a better deal. Just go to the next company and move on. Especially if their service doesn't bring you much value that allows you to go through the process and say, Hey, alright, I'm gonna walk. And sometimes when you start saying that, that allows them to actually give you the deal that you're asking for. Sometimes they're playing hardball with you, which is fine, but what you're trying to do is just get that bill reduced. So you can do that any way possible, right before you leave a key thing here. And what a lot of people do is when they negotiate their bills, then they think they're done. But you have to do is two things first, every year, you're going to continually check your bills. And you're going to repeat this process because this is going to allow you to have the long term compound effects of this savings rate but the real reason and what a lot of people do is they save this money. And then they just save the money and then go about their day, they don't actually save the money that they just saved on these bills. So they just let it come in, go in your checking account, and then go buy more trinkets at Target, you're not doing this to buy more stuff at Target, you're doing this to increase your wealth for the long term. So what you want to do is once you save a specific amount of money, you're going to set up automatic transfers out of your checking account for that savings, and put it into your savings account or into your brokerage account. So you can start investing, preferably, you want to save it so you can start investing, if you have an emergency fund especially, you want to always start saving it for your investments because you want that money to compound and grow. So you can retain that six figures we're talking about. If you want to have that additional six figures, you have to invest that money. So make sure you set up automatic transfers that are going to allow you to keep the money that you just saved, do it right away, no matter how small it is, if you save 12 bucks, set up an automatic transfer, in addition to 12 bucks, and send it to your savings or your investment because making these small adjustments over and over and over again will add up to big numbers. And if you do this alongside looking at your big three, reducing your big three, saving a couple hundred dollars and your big three, then you save another $200 in negotiating your bills and you increase your income. Well, you're starting to change your saving rate by thousands of dollars a month by doing these things. And if you continually do this, and you're consistent and persistent with doing this, you're going to build massive wealth just by doing these action items. That's why this is so important. That's why this is so cool, because it can change your financial trajectory just by doing these action items. So make sure that you get that automatic savings transferred over to your brokerage accounts. Thank you guys so much for listening. If this is your first time listening, consider subscribing so you never miss an episode. 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