The $1,000 Challenge, Part 1: Find $100 a Month in Your Financial 'Junk Drawer'

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Junk drawer
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In the introduction to this series of columns, I promised that many of the cuts to your spending in The $1,000 Challenge would be easy and painless, so let's start by knocking out some expenses you won't miss –- and may not even know you have in the first place. I am talking about the metaphorical junk drawer of every family's finances: miscellaneous spending.

These are the odds and ends that pile up, unseen or at least unconsidered, usually on credit cards or via automated checking account debits. The best part is that since you probably don't think about them, you won't miss not paying them. But you will enjoy the extra money you find.

My real kitchen junk drawer is filled with useless stuff I haven't gotten around to throwing out: broken rubber bands, dried-up tubes of Krazy Glue, and a spare trunk key for my long-gone '76 Plymouth Volare. When I first did this cost-cutting experiment, my financial junk drawer included an unused subscription to Weight Watchers Online, a forgotten e-mail account, an old life insurance policy, a subscription to an online baby-sitter directory, legal insurance, and a storage unit that hadn't been opened since Geraldo ventured into Al Capone's vault.

What they all had in common was that they were automatically charged to my bank account or credit card. This made them easy to overlook each month. I expected that would also make them hard to cut, requiring lots of phone calls and paperwork. But I was wrong: Cancelling them was simple, and I easily eliminated more than $130 a month in spending.

Where You Should Begin

Start by digging out your most recent credit-card bills and bank statements. Comb through them, looking for things like the gym membership you haven't used in three years or the automatic renewal on your subscription to Cat Fancy, even though it's been two years since Fluffy went to that Great Scratching Post in the Sky.

Get as much data as you can, and scan every charge, asking yourself whether what you're paying for is something you actually use.

If possible, go back for up to a year. If you didn't save the paper copies of bills and statements, you can go online and view the PDFs of your credit-card bills, or your online ledger for your checking account (though the access your bank offers your online may not go back a full year).

Get as much data as you can, and scan every charge, asking yourself whether what you're paying for is something you actually use. If not, it's out. If you do use it, is it something you can get more cheaply, or even for free? They get Cat Fancy, at the library, you know. (Plus you can pick up DVDs of your favorite shows and movies there, and cancel your Netflix account or avoid those cable on-demand charges, too.)

Also, look for charges such as credit monitoring services or credit life insurance (which pays off your debt if you die). You can get a free copy of your credit report from each of the three major bureaus once a year at www.annualcreditreport.com (and nowhere else). And credit life insurance is expensive and pointless. If you croak, let your estate cover your bills with the proceeds from cheaper term life insurance (or any workplace policy you have), or let the card issuer write off your debt.

Gym or health club memberships, in some cases, can be very difficult to cancel. If you find that to be the case, contact your county or state consumer affairs agency, or your state banking regulator or attorney general's office. They can help you.

It's harder to stop an automated debit to your bank account, in many cases, than to a credit card. Credit cards offer much more protection, so it's wiser, in the future, to have any automatic charges put on a card, not debited from your checking account.

What You Don't Notice Can Hurt You

It can make you feel a bit foolish when you see some of the stuff for which you've been thoughtlessly paying each month. For me, the worst was an old email account I'd kept open after I moved, in case any previous freelance clients wanted to contact me. I'd planned to maintain it for a year, but I hadn't even looked at it for more than 2 years –- at $25 a month.

If I had been getting a bill in the mail every month for that e-mail account, and had to sit down, write a check, dig out my nifty return-address labels (I know they're around here somewhere), then find a stamp, I would have cancelled that account ages ago. But the charge went directly onto a credit card, where it was easy to overlook.

There was plenty of other unnecessary spending in my family's budget, which I detail in my book, "The $1,000 Challenge: How One Family Slashed Its Budget Without Moving Under a Bridge or Living on Government Cheese." Getting rid of those charges was easy, and you can find cheaper options for the things you do use. Make a pact to go walking with a friend every day after dinner, and cancel your rarely used gym membership. In the case of Weight Watchers, I was already attending meetings at work, so I didn't really need the online subscription.

Give it try: I bet you'll find some substantial monthly savings.

And, remember to come back and post your comments and results. And look for part 2 of this series next Tuesday, when we'll tackle another spending category where you're sure to find easy savings: your utility bills.

A Note to Our Readers: Due to popular demand from our readers after we published our preview of this series Sunday, we choose to publish this article -- the first full installment of our 10-week, $1,000 Challenge -- early. The remainder will arrive on Tuesday mornings.


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22 Comments

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amyliving

This sentence boggled my mind: "But the charge went directly onto a credit card, where it was easy to overlook."

Easy to overlook?!? Well, sure, if you pay your credit card bill every month without even looking at it, but do people really do that? Don't you even check to make sure the charges are valid? I just don't see you could possibly pay a bill for a service you weren't using \every single month/ for over two years and never even notice it.

September 30 2014 at 10:23 AM Report abuse rate up rate down Reply
Viviangel

Hi, Brian, and thanks for sharing your wealth of knowledge! Here are a couple of ideas: When I bought my new car, I was given a free six months of a program that is quite similar to On-Star. When the six months was up, and I saw how expensive the program would be to keep, a little investigating on my part revealed that I already had many of these features on the car at no charge! And what wasn't already on the car was covered by the automaker's service plan or accessible via my cell.. Also, when my 'free' three month radio subscription ended, I didn't renew it; standard radio works fine for me.

January 15 2014 at 5:23 AM Report abuse rate up rate down Reply
tfarnon

Nope. My only monthly charges are for my internet service provider and an automatic deduction to a mutual fund. I don't have any of these pricey subscriptions I failed to cancel. But then, I've already pared my unnecessary spending about as far as anyone can.

January 12 2014 at 3:51 AM Report abuse rate up rate down Reply
alfredschrader

Operating your affairs like the contents of the drawer shown is expensive.
You would be surprised how many people are at Office Depot or the Hardware Store right now buying things because, they know they have a hole punch, but they can't find it so they have to buy another one wasting $10.00 and $3.35 for gas.
Also, time is money. If you have to spend 10 minutes searching before you achieve a task, it will take you forever to do anything.
Drawer and cabinet organizers are inexpensive.
That $10.00 bill will be a lot happier in your wallet than in the Office Depot cash register. It stays warmer in your wallet.

January 07 2014 at 7:40 AM Report abuse +4 rate up rate down Reply
homeimps

As a long-time landlord, I see tenants all the time who struggle to pay the rent but squander money in countless ways. I've come to see the connection between wasting money and a feeling of entitlement. I've often said that my struggling tenants usually have two things I don't have: A bigger TV and a newer car. I just had a tenant who had to break her lease because she lost her (lucrative) job in the same week she informed her boss she was pregnant...again! In that same week she found that her bank had charged her $120 in the previous month for NSF and other fees. However, I also knew her grandfather gave her money whenever she needed it so hey, easy come easy go, right? There's that sense of entitlement...

January 07 2014 at 6:09 AM Report abuse +4 rate up rate down Reply
Samantha Elizabeth

I hope the next set of advice is actually helpful for those who are actually aware of their financial surroundings. Unused gym memberships and email accounts?? I wish it was that easy....

January 06 2014 at 6:28 PM Report abuse +4 rate up rate down Reply
2 replies to Samantha Elizabeth's comment
Skai

I agree - who has these things? I certainly dont have anything like this,

January 06 2014 at 7:24 PM Report abuse +3 rate up rate down Reply
theycallmeroy3

Its never about the advice. Its about how we respond to advice. And you immediately identified with it, in your last sentence.
You know... it won't be easy. If it were easy, everybody would be doing it.
And that's the bone-crushing reality. Its not easy, in fact, its the hardest of the hard, because its asking one to change...how they think...about...everything.
Rick Warren's book, 'The Purpose Driven Life' starts out with , " It's not about you."
When it comes to money and finance? " Its all about you."
And it has ghost that stay with you. The financial ghost of, past, present and future.
Its not fun to confront things that stand in our way to financial freedom.
It can be people in our lives, memories of things unpleasant, and the worst?
Actually having to confront what we really want. Its a journey, for sure. And the cool part comes when one finally understands, its not about money. Its about you.

January 06 2014 at 7:54 PM Report abuse +1 rate up rate down Reply
SPQR

I just checked all my old statements and saw I spent $2500 on dining out with my girlfriend. I sent her an email and said no more dining out or we are breaking up. She broke up with me and voila I am now saving 2500 a year ! I am putting that money in a new account and will use that to go fishing !!!!

January 06 2014 at 6:27 PM Report abuse rate up rate down Reply
SPQR

He overlooked one big item. Take that picture of the junk drawer and put it on ebay, it is easily worth 9.99 and 4.98 shipping.

January 06 2014 at 6:24 PM Report abuse +1 rate up rate down Reply
Rebecca Stapler

Brian,

I'm so happy to see you writing this series. Your book made me literally laugh out loud! We have already taken the steps you outlined in your book (I read it 2 months ago), so I know that readers participating in your challenge now will get a lot out of it. Good luck everyone!

January 06 2014 at 5:24 PM Report abuse rate up rate down Reply
1 reply to Rebecca Stapler's comment
Brian O'Connor

Rebecca - Thanks for reading -- and commenting!

Can you post some examples of the savings you found, and how you dug it up? Let me know over at our Facebook page: https://www.facebook.com/1000DollarChallenge

January 07 2014 at 11:05 AM Report abuse rate up rate down Reply
MadHatrix

This stuff is always on my mind, I just never act on it. I recently got a new job, so I discontinued a learning site that doesn't offer skills for my current job ($25/mo). I also had an online coding editor for $5/mo that I haven't been using much since the new job. I stopped reading this blog to take care of that quick. I just thought of a bank account that has a service charge of $8 a month I could probably take care of.

January 06 2014 at 5:16 PM Report abuse +3 rate up rate down Reply
1 reply to MadHatrix's comment
Brian O'Connor

Mad -- Two words: Credit union. You shouldn't be paying for a basic checking account. That's nearly $100 a year right there!

January 07 2014 at 11:06 AM Report abuse rate up rate down Reply