How to Trim Your Household Overhead

How to Trim Your Household Overhead Em Capito, LSCW, MBA

Low overhead allows a business to quickly adapt to changing conditions and take advantage of opportunities. The same is true for your household overhead.

Ongoing expenses like your phone bill, mortgage, cable bill, and utilities can wreak havoc on your emergency savings, retirement, personal wealth, freedom, and overall quality of life. They’re like sneaky ninjas that slowly and quietly undermine your financial goals (especially if you have automated online bill pay).

The $80/month cable bill may not seem like much compared to your paycheck, but it adds up to more than $19,000 of losses over just 10 years, assuming you would have made 7% interest had you invested it instead.

All of us can trim some fat off the monthly budget, but if you can trim recurring expenses rather than just your coffee runs, the impact is multiplied exponentially. In the spirit of financial independence, here are some ideas from our own experiences plus several incredible resources that focus on frugal living.

How to Trim Your Household Overhead: 

Step 1: Do we really need that? 

Review your budget. (If you don’t have one, make one!) Highlight all of your recurring expenses and then honestly evaluate whether you need those optional ones. Some of the worst offenders:

The Cable Bill:

We were lucky enough to start off without a cable or satellite television bill, which made it easier to never drink the Kool-Aid. Nowadays, with a good internet connection you can enjoy a lot of quality entertainment online for free or at a very low cost. We utilize Amazon Prime for our television fix (and free shipping), which is $80/year rather than per month. Shouldn’t we be reading anyway?

Gym Memberships:

I used to work closely with a gym director who pointed out that they purposely oversell their capacity. Why? 67% of gym members never go to the gym. I personally get a lot out of workout classes, but I have to attend at least twice each week to make the monthly dues more economical than the per class fee, which makes me go. Make sure you are getting the value you planned on when you made the commitment.


We live on a dirt road and get a lot of snow, which means we have SUVs with 4WD. We’ve pumped as much as $600/month in gas back when I commuted into Salt Lake 5 days/week. We’ve brought it down to around $250/month lately, but that doesn’t mean we shouldn’t save up for an inexpensive older vehicle with great gas mileage for the summers, especially now that we have a 3-car garage. That’s exactly what we are finally doing. Dump the pump and ride your bike if you can. Workout plus saving money = good.

Gas and Electricity:

Louis CK has a funny bit about how white people must be aliens because we certainly weren’t evolved to live on Earth. Heaven forbid it’s not exactly 70 degrees at all times. You can have a pretty significant impact on your variable utility bills by making just slight adjustments. Changing the thermostat just 1 degree in the opposite direction of comfort can reduce your energy consumption (and your bill) by 8%. We tested our Christmas tree lights using the Kill-A-Watt device and just that string of lights costs 50 cents a day. Blow drying my hair? A couple bucks! So switch out your inefficient bulbs, turn off the lights, insulate, and adjust your thermostat.

Step 2: Research to pay less.

This is probably the most neglected of the steps because it’s tedious and often times we simply aren’t aware of the opportunity to save money. Review the remaining recurring bills and identify those where there is a competitive market. Research the other available vendors in the market.

Google is often not your friend here because only the big players in the market are going to pop up, and they are all going to be priced similarly. This is when you turn to your blogger friends who have done much of the research for you. A personal example will highlight the return on a small research investment:

The Hairy Wireless Bill:

We have been paying out the nose for Verizon Wireless for the past 16 months (since I left my corporate gig and lost the phone perk). We use under 1G of data per month and less than 1,000 minutes on our two smartphones. Our bill is $143/month and we are under contract with around $450 in early termination fees. Ouch!

Enter Mr. Money Mustache with an excellent series of posts on alternative wireless companies, namely Republic Wireless and Ting. We will be saving $71/month starting now – because the total cost of switching now, including early term fees, is just $438 compared to $770 if we wait until our contracts die and miss out on those months of savings. It’s also a great time to switch as Ting has a Bring Your Own Device program and has just opened service for iphones (which I am addicted to).

Step 3: Negotiate to pay less.

This one can be a bit awkward, but it can also be rewarding and fun (don’t attempt when stressed or tired). The straight forward and humorous Done By Forty blog shares excellent negotiation tactics that we have put to work with great results.

Home Internet for Less:

Internet is a pretty major staple, especially if you have a home business. We’ve been paying $43/month through CenturyLink for our home broadband and their system forces you to call once a year to re-up your contract to continue at the lowest rate. Generally they try to just slightly increase your rate or your service plan on that call, but asking sweetly and persistently for a discount can produce beautiful results. For us? A recent 5-minute call to CenturyLink lowered our rate to $33/month for the next year.

Step 4: Use what you save to pay off debt or invest.

Sometimes when I brag about saving $10/month on my internet bill, folks shrug it off as not much money (aka, not worth my time). That’s certainly true if you use that $10 to get two measly lattes instead of taking advantage of the magic of Step 4.

More than 67% of us have at least a mortgage, if not student loans, business loans, or credit card debt. When you shrink your household overhead and put it to use by paying down debt, the impact is substantial.

Let’s take the piddly $10/month internet savings for example. If we put that teeny, tiny extra $10 toward our mortgage principle each month until we pay our home off, we will save $4,248 in interest. That’s a 24.2% return on a virtually pain-free investment. The returns would be even larger if we didn’t have such a low interest rate. Want to run your own figures? Here’s a handy calculator.

Don’t have any debt? Use what you save to invest. The effect of compounding interest, especially if you have years to let it sit, is equally compelling. Invest that lame $10 per month at an average rate of 7% over 30 years and you’ll have more than $11,000 – a 31.8% return on the total investment.

What are you waiting for?

Imagine what the impact could be if you knocked $10 off of every bill and got rid of a few unnecessary ones. In just the last month, we’ve set ourselves up to save an average of $120/month in 2014. Put that amount toward our mortgage principle and we are paying off our home 4 years early and saving $42,146 in interest.

Isn’t it worth the initial and ongoing investment of time and somewhat uncomfortable negotiations if you can achieve financial independence? What if you could start having an even bigger impact at that point, perhaps changing the lives of your children or complete strangers? Trim your overhead today, do some good tomorrow.

  1. That’s what works for me 🙂 If I don’t go at least twice a week, I’m effectively losing money and that’s simply not an acceptable outcome. $99/year is a pretty great deal!

  2. We aim for the same kind of savings in procurement. It’s always nice to get a cost avoidance, of course. But if you can cut out a recurring cost savings out of your baseline spend, the positive impacts get reaped every year.

    I love all the examples you’ve mentioned, but have to admit that we’re adding in a gym membership again. It’s $99 a year, paid up-front. So I can get that sunk cost fallacy working in my advantage — my monkey brain doesn’t want me to waste that $99, so I figure I’ll go more often. 🙂

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