# 31 Days To Fix Your Finances, Day 22: Evaluating Your Expenses – Monthly Services

The Simple Dollar offers a month-long plan for fixing your finances. All you need is an open mind and an hour each day.

Most of us have a set of monthly bills that we pay as part of our regular routine. They constantly chip away at our monthly and annual budget, eroding how much we can spend on a regular basis. Some of these are essential (electricity), while others are maybe less essential (Netflix). Today, we’re going to take all of these monthly expenses and see whether or not any of them can be reduced or eliminated.

First, make a list of every monthly bill you pay. Cell phone, cable, internet, electricity, mortgage, rent, insurance, and so on. Write the approximate amount you pay each month next to them, but leave some space over to the right for some more calculations.

Once you’ve made this list, cross off the ones that are fundamental for day to day life. Electricity is fundamental, while internet access is not. The mortgage is fundamental, while Netflix is not. Loan payments are fundamental, while cable or satellite television is not.

Now multiply each of the remaining elements by twelve so that you can see how much the bill is costing you in a year. You should also multiply that yearly amount by 1.025 (2.5% more, in other words), because that’s how much you’d have if you put that bill amount into savings each month. Multiplying out the bill amount like this can often make a reasonable bill seem crazy. For example, if you pay \$19.95 a month for Netflix, that’s \$245.39 a year towards your life dream that’s going away. Spend \$50 a month on cable? That’s \$615 towards your dream gone forever. Got a \$200 country club membership fee? \$2,460 a year goes poof.

At this point, go through each item and ask yourself whether it’s worth what you’re paying for it. It might be worth it to you right now, or you might realize that it’s something you rarely use so it’s not really helping you build towards your dreams. Most likely, you’ll find ways to reduce that bill without eliminating it. Maybe you can go to a cheaper plan on Netflix (\$61.50 saved a year), or you could eliminate \$15 worth of premium channels from your cable bill (\$184.50 saved a year), or you could get a less expensive calling plan from your cell phone provider.

It’s important to remember that even though each cut seems tiny, if you’ve been following the plan this month, you’ve trimmed away a lot of fat from your budget without really affecting your way of life all that much. Depending on your choices, you may have dropped ten percent of your expenditures already; if you take that ten percent and use it to pay off debts now and later invest it in your dreams, you’ve literally taken a dream that seemed impossible and transformed it into something possible.

Tomorrow, we’ll look at some effective mechanisms for battling bank fees.

Ready? Let’s continue on to the next day.

### Trent Hamm

Founder & Columnist

Trent Hamm founded The Simple Dollar in 2006 and still writes a daily column on personal finance. He’s the author of three books published by Simon & Schuster and Financial Times Press, has contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and his financial advice has been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.