Updated on 09.17.08

The Least Important Bill

Trent Hamm

allRecently, I happened to be leafing through Elizabeth Warren’s worthwhile personal finance book, All Your Worth, when I stumbled across an interesting statement on page 244: “If things get really tight and you don’t have enough to cover all your expenses, pay the most important bills first.”

Obviously, Warren intended this advice to be given to someone who’s really struggling to pay all of their bills – and it’s great advice for that situation. Make absolutely sure your essentials are covered – your home, your transportation to work, your food. Those are the things that you need and thus they take priority over everything else.

But my mind tends to work in the opposite direction sometimes. When I read that passage, my mind immediately moved to the least important bill.

Play along with me for a moment. What’s the least important bill you pay each month? It’s not that easy to answer right off the bat, so I encourage you to just make a list of all of your monthly bills. Your mortgage or rent. Your car payment. Credit card bills. Phone service. Food. Electricity. Internet service. Netflix. Maybe even your World of Warcraft bill.

Got that list? Now, cross off the ones that cover your life’s necessities, such as your mortgage, your food, your electric bill, and your car payment. Next, cross off the bills that, if left unpaid, will detrimentally affect your other bills, such as your credit cards and other debts.

What you’re left with are your nonessentials, things like your cell phone, your Netflix subscription, your cable subscription, and other such things. Now, rank them. Which is the most important to you? What’s the next one?

Eventually, you’ll be down to one bill – your least important bill. And now comes the soul searching. Do you really use whatever that bill pays for? Does that service really provide any value for your life? Could you not easily replace that bill by regularly visiting the library or getting a digital converter box or finding a non-subscription game to play?

Then think about this fact. If you cancel a $20 monthly bill and instead apply that $20 to your credit card bill (that has a balance of $5,000, a 12% interest rate, and a $100 minimum payment), you’d turn 302 payments of $100 a pop into 55 payments of $120 a pop (I used the minimum payment calculator to get this number). Your credit card balance would disappear in about four and a half years instead of twenty five years, just by getting rid of that Netflix account.

What about my least important bill? My least important monthly bill is easily my emusic account. In the past, I’d already eliminated my Netflix subscription, my World of Warcraft subscription, and downgraded both my cable bill and our cell phone bill. Even though I get a lot of enjoyment from emusic, I think of it this way: if I take the value of my emusic subscription and apply it to my remaining student loan, I’d shave several months off of the repayment period, bringing debt freedom that much closer.

I’ve already saved $50 a month shaving away some of my “least important” bills – applying that savings to overpayments on my wife’s student loan (along with a healthy dose of our debt snowball) eliminated my wife’s student loan almost six months earlier than planned (and years before it was finally due).

Will I eliminate emusic? I haven’t decided yet whether I’ll downgrade or eliminate it. I listen to music roughly nine hours per weekday as I always have music playing in the background – and almost all of it comes straight from emusic. In other words, after cutting away some of the fatty monthly bills, I’ve reached the point where I’m starting to get close to the meat of the matter.

But without that consideration, I’d still be paying a student loan bill that’s now paid off. And I’d be paying it for quite a while yet.

Spend some time thinking about your least important bill. Is it actually important enough to hinder your debt repayment plans or your investing goals?

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  1. em says:

    maybe you could try pandora instead? it’s free

  2. Shoji says:

    If you are near a computer with internet access during most of the day (given your job I think this is highly likely), you could listen to Pandora for free.

  3. Jane says:

    WOW, This is really food for thought, $20 extra each month turning 302 payments of $100 a month into 55 payments at $120 a month. It can really boggle the (my) mind. I will have to figure how much interest that saves, but it has to be a lot. Thanks for posting this information.

  4. Mark says:

    I’ve used Pandora, as the first commenter suggests. I’m also a big fan of Slacker radio (which has free and premium services), and I’m currently listening to Jango, which I’d consider the most flexible I’ve found so far.
    The only music service for which I’ve ever paid was Yahoo music, and I gave that up after I found Slacker.

  5. Michelle says:

    I’ll second the use of Pandora. I absolutely love it. When I’m not near my computer I rely on songs I already on that are on my Ipod. All of my new music I listen to via Pandora. You really should check it out.

  6. Mister E says:

    It would basically come down to cable TV, phone service and internet access for me.

    First to go would be cable, I’m not entirely sure why I pay that one anyways since I hardly ever watch TV. A close second would be internet, as much as I enjoy banking online and reading this blog I’m pretty sure I could tough out the trip to my local branch and I think I’ve got a pretty good handle on the finance thing at this point.

  7. Miranda says:

    Great post!

    Another thing to remember is that some folks are paying their credit card bills before they pay their mortgages. If it comes down to such a choice, it is important to pay the mortgage first — or consider selling your home if you can’t really afford it.

  8. Kristen says:

    Have you considered Playlist.com? That is a free music site that allows you to stream your favorite songs. That might save you that e music subscription.

  9. Deetso says:

    Another vote for going with Pandora… i love it!

    cancel that emusic account!

  10. Jessica says:

    I was going to suggest Pandora as well. I absolutely love it and it’s FREE!!!

    It’s funny you write about this today because I had just been thinking about the same thing. I called Comcast and downgraded my cable bill about an hour ago. lol Not only did I get rid of the “bonus” channels we never use, the lady I talked to was really nice and gave me a promotional rate on cable for a year and internet for 6 months! I cut that bill in half! Even when the promotional periods expire I’ll still be saving about $30 a month. I plan to use the extra money to pay off my credit card (only about $250 left!) and then stash it into my savings account.

  11. Ryan says:

    Very interesting math. Quite shocking, actually.

    Although, one needs to remember that $20 a month may save them years on a debt, that same $20 a month may help them get through those years with a little enjoyment. Absolutely drop services that you do not use or do not fully utilize… but people, remember to live life and enjoy it. Even those little things like the occasional night at the movies.

    I personally spend $15 a month on Netflix and $15 a month on Zune… that’s $1 a day for a little entertainment. Not bad when you break it down, not bad at all.

  12. Adam says:

    I thought I’d be the first to mention Pandora, but, oh well.

    A GREAT site with an amazing number of songs. Perfect for a casual listener or a music lover. Also, if you have an iPhone or iPod touch, you can add Pandora to your device as a free application, but it works the best with Wi-Fi, not Edge.

    A wonderful post!

  13. Jeff says:

    My Blockbuster account definitely qualifies as my least important. We do get movies that way that we can’t get at the stores, though, so I’m loathe to drop it. But that 302-month to 55-month example really has me questioning that.

    I’m already about as low as I could ever get with the cell phone ($20/mo), and I watch enough TV to keep the cable (that’s almost as low as I can get around here – I don’t even have digital yet) – though given this year’s shows, I might rethink that.

    These cuts start hurting more when you already feel like you’ve trimmed the fat.

  14. I love the example you gave with paying off the credit card so much quicker if you just contribute $20 more each month.

    I suppose you could say the price of freedom = your least important bills.

  15. Kenny Johnson says:

    I guess for me it would be:

    Internet (DSL)
    Phone (Vonage)

    Netflix is definately the least important of the 3. I need internet to even have Vonage. My cell phones are pre-paid, so not really bills (but expenses).

    I pay under $10/mo for Netflix and it’s essentially our only entertainment expense. Sadly, we don’t really do much that costs money (in fact, I still have free movie passes we haven’t used).

    Could I live without it? Yeah. But I already dumped cable, so this has been my one media / entertainment expense I’ve been willing to keep.

    As for emusic… you know you can cancel and rejoin any time you want? That’s what I do when I’m looking for some cheap music. I sign up and get my tracks. Download what I want and then I cancel. Rinse, Repeat.

  16. I’m thinking that my wife’s cell phone should go to pre-paid because she rarely uses it – maybe 3X per week for a couple of minutes.
    Also, I’m re-thinking the “bundle and save” option that my internet/phone/cable provider offers. Maybe switch to Skype for phone and switch cable/internet providers to get a promotional rate???

  17. Jeff says:

    I did something similar to this earlier this year. By a landslide, my least important bill was XM Satellite Radio. The bad thing about this bill was that I paid it yearly, so I didn’t think about it as a monthly expense, per se. Anyway, I got rid of it, but was still able to keep the XM Online account and listen to it at work for free. All the references to this Pandora thing seem intriguing though….I might have to check it out.

    We were also thinking about downgrading our cable, because it cost an arm and a leg for cable and internet. I started poking around on the Comcast website a few weeks ago and found the exact service we were already getting for about $40 less per month. All I did was add the service to my account, and I was able to take care of everything online. Now that extra $40 is headed for my student loans.

  18. Rebecca says:

    Thanks for an interesting perspective on the question. However, I’d be careful deciding that cell phones are on the list of unnecessary/discretionary expenses. I, like many 20-somethings, have no landline. I certainly downgraded my cell phone plan a few months ago, but it’s my only means of telephone communication.

    My cell phone is my local, long-distance, home and oftentimes work line, and I can call friends and family at a reasonable East Coast hour when I’m leaving work on the West Coast, or set appointments when I have a moment (which is rarely.)

    I like what you had to say, but I bristle when personal finance folks say a cell phone isn’t a necessity. It really depends.

  19. liv says:

    my least important bill is my netflix. if i have a lot of time, i get the 18/mth subscription, if i have no time, i downgrade to the 5/mth subscription.

  20. Jennifer says:

    Have you tried Pandora? It is a free music website. You could stream all day long without paying a cent. Just a thought. :)

  21. Anne says:

    I’m with the other commenters, that 302 to 55 comparison was just evil. True. But evil.

    After rent, power, credit card (working on it), and student loans my only other bill is a cell phone and that’s my only phone. I do have bi-annual renters and car insurance bills but those are small. My current debate is whether or not to upgrade my current $30/mo + boring flip phone to $80/mo + shiny, shiny PDA with internet capabilities. I’m paying 3x the minimum on the credit card and not using it. So is an extra $50/mo enjoying life a bit more or wasteful want spending? Decisions! 302 to 55! Thank bob Android isn’t coming to Sprint first.

  22. Probably Netflix. I’ve already got it down to one at a time thought. I think that’s good enough.

  23. Ryan McLean says:

    This is an interesting post. My least important bill is probably my credit card bill…haha. I don’t REALLY need a credit card but I want to have one just so I can learn how to use them effectively.
    This is a really interesting bill and a great twist on what the book says

  24. Mo Money says:

    The Bankrate minimum calculator is a bit misleading. The calculator does not make a $100 payment each month, instead the calculator reduces the monthly payment each month. If you make a payment of $100 each month for the length of the loan, it would be paid off in 70 months.

  25. Mia says:

    I will third the suggestion for Pandora. We listen to nothing else when we are at home, as we are usually near the computer. And best of all, it’s free!!

  26. Megan says:

    I’m in a bit of a pickle trying to get rid of my least important bill. It’s the car payment on a second car. I don’t need it, I don’t want the payment anymore, but I can’t find anyone to buy the car from me. Sadly, I’m stuck with the payment until I can push it off on someone else.

    Anyone looking for a car? :-)

  27. Bill says:

    In lieu of emusic one could try XM online for $4.99 per month. Also if one has a digital cable box odds are there are music channels on there as well.

  28. Dana says:

    I also consider telephone extras such as call waiting or caller ID nonessentials. We also save on dental visits (we don’t have dental coverage) by only getting x-rays every 2-3 years. Although dentists prefer you to have one yearly, our dentist allows us to skip because we keep up with our 6 month checkups and have healthy teeth. Good article!

  29. Kevin says:

    Ours is probably DirecTV, followed by DSL. Actually for me it’s probably DSL since I can get online anytime I want at work. But the wife doesn’t have that option. I would have a hard time getting rid of DirecTV because I love watching hockey and a majority of the games are on Fox Sports.

  30. Interesting post. We don’t have much to cut down on. Our “non-essential” bills are cell phone, phone and internet. Otherwise all of our bills are things like health and car insurance, utilities, rent, credit cards, and student loans. We don’t have cable, Netflix, or anything like that. I guess hubby does have a $10/month program that gives him extra weather data on his radar program, but he’s involved in weather pretty heavily. It’s not an absolute necessity, but it makes things easier for him.

    Another site for free music is musicovery.com It’s kind of fun to play around with, but doesn’t seem to work as well in FF3 as it did in FF2. You pick the mood and style(s) of the music you want to listen to.

  31. ha'apai says:

    A version of what you suggested was tremendously helpful when I was digging myself out of a nasty hole. I was looking at a bare bones budget that excluded all irregular expenses and had a very small “diff”. I got to thinking about what I would cut if a big irregular expense occurred. I scanned the budget for what would be cut under such circumstances and nothing easy came to mind. The euphemistically named “medical expense” caught my eye and I actually considered it for a moment before shuddering at my own idiocy and greed. Prioritizing the rest of the bills came pretty easy after that scare. I found something to cut and made the cut.

    About a month later, I had no problem buying desperately needed windshield wipers. My hair was a little shaggy, but I wasn’t endangering myself and others by having to eat ramen for a week before replacing the wipers.

    FWIW, I saw the blurb and just shuddered. It does not surprise me at all that the best idea that you got out of the book was 180 degrees away from what the authors had written. I was not impressed by that book. I found it extremely vague, maddeningly weak on math, and dangerous to the casual reader. It’s very easy to read that book and come to the conclusion that your finances are sound when they are not.

  32. Karen M says:

    Thank you, Mo Money, for clearing up the math for me! I know that compound interest is a beast but that seemed a little too out there. It is very important to understand that the twenty five years is years of minimum payments only, in which the minimum payment decreases with a decreas in the balance of the card, and not $100 per payment, every payment.

  33. gr8whyte says:

    @ Mo Money : Bankrate’s min-payment calculator isn’t really misleading — it’s simply using the larger of 2% of the amount owed or $10 for the minimum monthly payment. What’s a bit misleading is Trent’s “… and a $100 minimum payment” as this is only true for the first payment. If $20/month was paid in additional to the “real” minimum payment, it would be paid off in ~125 months.

  34. Another vote for Pandora! It’s hard to believe it’s free. Anyways, I’d actually work to eliminate/reduce the big ones. I just cut the rent by 66% and eliminated the water bill. I’m currently trying to find out what it would take to get rid of the electricity bill in terms of solar panels. Still getting used to having $1000+ extra each month.

    PS: I think my “littlest” bill is a subscription to BusinessWeek. I just don’t have the time to read it anymore, so they’re just piling up :-(

  35. reulte says:

    I don’t think I have a “least important bill”.

    No cable (We only watch DVDs from swapaDVD),
    no cellphone,
    no Netflix/Blockbuster (Swapadvd),
    my telephone runs about $5/month,
    no computer – I use the ones at work, library,
    no iPod/MP3 so no downloads, I listen to old favorites in the car (cassettes) and home (CDs on the DVD player) and occasionally check out music from the library
    One paid-for car; fill up about 1x/monthly (I’m close to work and to grocery stores)
    No magazine subscriptions or new book purchases (library, paperbackswap)
    No gym – I have a forested area a block behind my home as well as an active dog.
    I don’t go out often – usually to a potluck and board games/cards evening; stay home watch DVDs with the boy or teach him to play board games.

    Well, I could switch my housekeeper from full time to part time since my boy is now in school all day (I’m a single mom) but other than that . . .

  36. ~M says:

    How about getting music from the library that you enjoy and putting them onto an MP3 player?

    After a while of paying per download, I decided to check out our local library. I can get CD’s from the entire state sent to my local library. I put the CD’s on the computer and then transfer them over to my MP3 player.

    This is just an idea…even if you use it for half of the music you listen to throughout the day.


  37. Kevin says:

    Hey guys, thanks for turning me on to Pandora. I hadn’t heard of it before.

  38. Someone says:

    I don’t figure my “credit card bill” as one of my monthly bills any more than I figure a bill arriving by mail to be a monthly “post office bill”.

    I have bills for whatever I buy with the credit card that come via the credit card statement, but I’m not paying for the credit card itself, therefore I can’t really rank “credit card bill” on my list of monthly expenses.

  39. Todd says:

    Great post. Try Magnatune instead of emusic. There is some great music there. You can stream all of it for free, but you also get the option of buying something you really like. If you are using Ubuntu (or any other linux), magnatune is built in to rythmbox and amarok.

  40. Mark B. says:

    Listen to the radio, it’s free, 24 hours a day.

  41. Sunshine says:

    @ Mark B. Yes, but it is sure annoying. Even NPR can get redundant after a while.

  42. Catherine says:

    Last.fm is amazing too – and also free!

  43. shanereiser says:

    I love how you highlight the power of throwing “just a little bit more” at your debt – and I agree that it can be achieved by eliminating a bill. However, once you eliminate that bill, then you now have a NEW “least important” bill. Should you eliminate that one too? My point – you also have to live. Some poeple live so frugally that they do not enjoy life “in the moment.” I recently put so much time and energy into my budget that I realized i was miserable just for trying so hard to save a little bit more.

    There is a balance you must achieve: it may mean cutting that least important bill, or it may mean you can’t live without NetFlix. It’s up to everyone to be honest with themselves and find their own balance – I just wouldn’t recommend compromiseng your happiness.

  44. IRG says:

    What is essential, is always subjective and personal.

    As someone who is self-employed, and works from a home office, I’m fascinated by how many people list “internet access” as unnecessary and rank it low on their lists of must-have, must pay for.

    Broadband is essential for my business (a fact driven home by the times when it goes down)on a daily basis.

    I guess a lot of people don’t pay for such access at home because it’s easier and/or cheaper to go online courtesy of their employers who are often subsidizing their access.

    I also think you have to view costs for entertainment, for example, in the context of what you get for services such as Netflix versus what it would cost you elsewhere in your community.

    I live in a major city. To just get the basic TV channels, it still costs a lot. (And, again, for biz, we need ongoing access to the media.)

    We don’t do premium or pay per view.

    Even when we factor in costs of broadband, TV cable, basic netflix, we’re still spending far less than most people we know who go out to the movies (Tickets are $11 a pop here. Only one cheap theater.)or even who rent DVDs locally.

    It’s all usage and it’s all about how you calculate what you get for your money–and how you categorize. For us, there’s entertainment, information, edutainment and more in the $$ for cable, broadband and NetFlix.

    Online downloading, for example, is NOT free. You have to pay for your broadband to get access. But when we factor in all that we have access to online (not to mention convenience), with TV shows, movies, documentaries, current news, etc. , broadband, for example, becomes a deal, depending on how much you avail yourself of what’s online.

    We pay $9.74 for netflix a month and rent four to eight DVDs, plus watch four to six movies online. If we do 12 a month, that’s about $.81 to entertain our family and friends in an evening. A buy compared to the cost of regular rentals or going out to a movie. Or the library (see below).

    Yea, it’s really easy to get carried away on “entertainment” spending, but depending on where you live, netflix and even some online music subs can save you a bundle–compared with what you get for your time and money elsewhere.

    We also use the library, in person and online, for books, DVDs, music. Again, having broadband, we can access free TV shows, dvds, audiobooks and music online from the library. (But it’s NOT free, cause again, there is the broadband cost.)

    To get to the library here, it’s a minimum of $4 per trip on public transportation. None are in walking distance. DVD rentals are for one week only. So in 7 days, we actually pay $8 to get a “free” DVD. It only works when we can “stock up” on a visit and given the unpredictable inventory, that’s usually not possible. (Yes, you can order some things, but they don’t all come in at the same time.)

    When we realized how much we were paying for “free” library DVDrentals, we signed up for netflix.

    And for our monthly netflix sub, we get the equivalent of 12 or more nites out at $11 per person. So, to us, this is a good return on the investment of our $$$.

    So, yea. We could give up netflix. But it would cost us so much more to entertain ourselves and our friends.

    I do wish we had more broadband options and cheaper ones. No matter how you buy (individually or a bundle), you are laying out a lot. But again, we need to be clear on just how much you get.

    For a little over a $ a day, it’s huge access.

    FYI: I do not work for any of these companies and I have my own share of gripes about our RoadRunner cable service, but all in all we see value for our choices.

    And, yes, you could make a good case for us dropping TV cable and watching stuff online, including news. But unfortunately our business lives require daily monitoring.

  45. Carol says:

    Reulte – considering how frugal you are with EVERYTHING, I found it shocking you have a housekeeper! Quite extravagant and couldn’t you do your own housekeeping and include it under *no gym* category. Also, try flylady.net website for housekeeping help.

  46. tYLER VS says:

    Here’s another vote for Pandora. I also enjoy my local public radio station over the airwaves or through the Internet stream.

  47. BonzoGal says:

    I’m lucky enough to work someplace where most of my coworkers are into music and have big CD collections, so we loan our CDs to each other all the time. (Yes, we’re kiling the music industry by uploading each others’ music!)

    My least important bill would have to be magazine subscriptions. I used to subscribe to about 8 magazines, and then realized that was ridiculous for mostly throwaway reading! I cut that down to two (Saveur and The New Yorker, both of which I read cover-to-cover) but could get rid of those if I really needed to.

  48. Brandon says:

    Trent, Have you looked at Pandora or playlist.com?

    I use both at work and love them. Nothing is better than shutting my door and rocking out to my Classic Rock station when something awesome comes on!

  49. One reason I keep cable is to use the ExerciseTV channel. Saves gas and gym fees! I would like to get rid of the landline but cell service is spotty inside my house. I need a reliable connection for my home based business. Any ideas?

  50. Robin says:

    Here’s a big vote for cutting cable. My husband and I got a nice shiny HD TV for Christmas last year, and we figured we had to get cable to enjoy it. But after some research we decided to try an antenna. We have a smallish Terk that we paid about $60 for, and we get over 15 channels, including probably 8 HD ones.

    We live in a small city(Waco, TX), too, in an apt. If you live in a big city or can put an antenna on your roof, you’ll do even better.

    So those of you that are saying “It’s expensive to get even basic channels….” It’s NOT!

    Also, when looking for an antenna, don’t be afraid to try several. We went through 3 or 4, always being careful to take care of the box and repack them carefully, so we could take them back.

  51. i stopped buying condiments and only use what i steal from fastfood joints. this monthly savings has shown me the light to prosperity!

  52. Kelli says:

    Seems like a no brainer when you have access to free sources like a good old fashioned radio, internet radio, and your CD collection.

  53. Georgia says:

    I also put my vote in for Pandora. I have about 35 “radio” stations on it from Roger Miller to Trace Adkins to Glenn Miller to Mario Lanza.

    I also have a radio that plays am/fm, CD’s, audio tapes (of which I have a couple hundred), and all my old records (I have about 150 30-50 y/o 33 rpm records. They are great, even after being stored for over 30 years stacked on top of each other. It will also play 45’s and 78’s, but you don’t want to listen to 78’s without a record changer.

    I watch so little TV nowadays that I gave one of mine away-the newest one with it’s VHS player, recorder. I lowered my cable to basic.

    But I got out of all debt when I retired, except for my cc, which I pay off in full each month.

  54. reulte says:

    Carol (#45)
    Believe it or not, I don’t consider myself unusually frugal; merely in an extremely thrifty circumstances at the moment – i.e. grocery store, library and post office are all on the way to work. I have no debt (paid off last school loan last month – yea!) and am in a position to save 50% of my income – which I am doing. In fact, I could probably push that up to saving 60-70% if I consistantly packed lunch for myself (which I’m working on) and shopped more frugally. In fact, since I started reading TheSimpleDollar last summer, I have saved up over $26,000 (about 1/2 my annual salary) and I fully believe that having the savings for emergencies, long-term goals, short-term goals has freed up money in my everyday life – if that makes any sense. I believe that is the goal of Trent’s version of frugality; to have money to spend as you wish . Thanks, Trent for the consistantly thoughtful and encouraging posts to both earning more and spending less.

    I occasionally browse through FlyLady.net and really enjoyed the tips I get. The housekeeper is mostly there to pick up my 6 year old off the school bus and watch him in the afternoon/evening until I get home. However, since she’s there, I have her do minor shopping on her way in, stay at the house when repairmen are expected as well as the light housework and cooking for the boy. I don’t pay her by the hour, I pay her by the month. She knows how much money she can expect and can plan for it (she lives with and looks after her elderly mother) while I know that I can call her anytime since she is essentiall on-call for me when I am at work. For this reason, I probably will not change her to part-time hours.

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