Find extra cash for your monthly budget from these 4 sources. Call scripts included!
Switching Costs are the negative costs (monetary, psychological, effort/time based) a person incurs when switching suppliers. And many switching costs are in place for a reason; once companies have you as a customer they will do almost anything to keep you.
In both carrot and stick attempts at increasing the switching costs on their products, companies have instituted both early cancellation fees as well as promotional offers for signing you onto longer contracts. Perhaps you had to install a piece of equipment in order to get a supplier, and now you must make an appointment or return the equipment before cancelling a contract. Any sort of barrier between you and leaving your supplier is in the favor of the supplier.
These switching costs usually end up producing what I like to call a “mental barrier”. I know that I want to do something, I even know of the short-term and long-term benefits doing it could produce, but all of the complications have caused a muddy/cloudiness in my head towards it and therefore I don’t want to take any action on it today (turned into six months, one year, three years, etc.).
How long have you been meaning to shop around and switch your cell phone plan, cable, or internet provider? How many more service calls must you make before you are ready to take on the switching costs and get out of your current contract? I have been thinking about the difference a day can make to your finances. Not even an entire day, just four phone calls. If you knew that making just four phone calls would most likely lead to long-term financial gains for you and your family, would that be enough to work through your mental barrier and make you take action?How many more service calls must you make before you're ready to take on the switching costs & get out of your current contract? Click To Tweet
Phone Call #1: Cable/Internet/Home Phone
When was the last time you called your cable/internet/home phone service provider and asked for a discount? Sometimes you need to be sent to the cancellation department in order to get one, but the effort could save you a lot of money. In 30 minutes of my time, we saved $300 on our annual costs, were upgraded to the next set of channels for free for one year (with no further commitments), and were sent a $50 visa gift card!
Pay Per Half Hour: $350
Phone Call Script
Customer Service Rep: How may I help you?
You: Hi! I’m hoping you can help me. My promotional period has ended, and I am wondering if I am eligible for a new promotion? OR I cannot afford my current cable/internet package and need to know if there is any way that you can reduce the monthly cost. OR I recently received an offer from [company] for [amount of offer]/Saw an advertisement from [company] for [amount of offer]. Can you beat this?
Rep: Can I have your account number please?
You: Sure. It’s XXXXXXXXXXXXX. A pause while the rep looks into your current plan.
Rep: How about we give you some extra channels, or higher internet speed?
You: That is wonderful. Thank you. But I also need to decrease the amount of money I am paying each month.
Rep: I’m sorry, there’s nothing else we can do.
You: Okay. I appreciate your time. Can you please transfer me to a rep in the cancellation department?
Rep: Sure. Have a nice day.
At this point, you can be sent to either a retention rep, a cancellation rep, or someone who acts as both.
Cancellation Rep: How may I help you today?
You: Hi, I’d like to have my monthly payment lowered. However, the customer service rep was unable to do this.
Rep: I see. What if we offered you $XX.XX for cable/internet for six months?
You: Is that the best you can do?
Rep: How about I extend that to 12 months?
You: Fantastic. Thank you so much for your help! What’s my current bill now, and what is it after this new deal? Also, can I please have your name and Agent ID number?
Rep: $XXX.XX per month to begin with, and $XX.XX now. My name is [name], and my Agent ID Number is XXXXXXXXX.
You: Great. Thank you very much for your help!
Phone Call #2: Homeowner’s/Renter’s Insurance
I was once told by an insurance agent that I should shop around for insurance quotes every six months. He explained that each company can offer you a different price because their pool of insured customers is unique to them. This also explains why one company may offer you a price at a significant savings from another company.
Back in 2010 I shopped around for better homeowner’s insurance and was able to get comparable coverage for $739 less than we were paying before. This took me about two hours on the phone.
Pay Per Hour: $369.50 (total is $739)
Phone Call #3: Auto Insurance
The first thing that you should know with auto insurance is that if you combine your auto insurance with your homeowner’s/renter’s policy you should receive a discount. Doing this is one of the reasons why we received the $739 in savings in the example above. If you have already combined insurance policies, then call your company and ask them if they can do better. If not, shop around for better quote(s).
Phone Call #4: Escrow Account
Paul and I have a VA loan, so we are required to keep an escrow account. If you have a conventional loan, you might want to find out if you can ditch your escrow. The benefit to doing so is that you can then use your money to earn you money. Instead of giving your mortgage company an extra few hundred dollars each month that is earning them interest, you can keep this in your own savings account and pocket the interest. True, this might just be $50 or so per year. But wouldn’t you rather pocket that instead of a bank?
Depending on your lender, you will need to meet a few requirements in order to stop using an escrow account, such as: your mortgage typically has to be at least a year old, you have to show that you have made consistently on-time payments, and your loan-to-value ratio typically needs to be under 75%.
Word of Warning: Understand that if you get rid of your escrow account, you will need to be diligent in putting enough money into savings each month (and keeping it there) so that when your property taxes and homeowner’s insurance bills are due you have the money.
Don’t Be Discouraged by Contract Agreements and Not Having Enough Time
The two main obstacles I can see to prevent you from making these phone calls are your contract provisions and not having enough time. I want you to know that there can be ways around both of these problems.
- For cell phone contracts where there is an early termination fee, know that you can use sites like CellPhoneDepot.com and Cell Swapper to find a willing person to assume your contract. There may be a small fee to do this, but it will be much less than the termination fee. For cars that are leased, you can use services such as SwapALease.com where you can list your car and a buyer who is looking to take on your lease will hopefully find you. Note that you cannot do this without your lease company’s consent. A final way to get out of a contract for free is if your service provider changes its terms of services. Typically after they do so, you can void the contract within 30 days (this happens frequently so take a look at your last month’s bill for any indication that this has occurred).
- If you are crunched for time, know that you can outsource this task. Kyle from The Penny Hoarder discusses a service that will make these types of phone calls and negotiations for you for the price of keeping half of any of the costs that they save you. Fifty percent is a lot of money to keep, but remember, you would not have gained anything without having someone make these phone calls for you.
Hopefully your phone calls won’t all feed onto each other, causing you to have to make several other phone calls. But if they do, know that the agony will only last today, and that the financial benefits will keep paying you back month after month. And if you are not looking to save yourself money, then why not do this and donate the monthly savings gained to a charity instead?
If you take the time (or use a service) to cut your bills in a day, please share your progress, experiences (both good and bad), and any money saved in the comments below! It will be fun to see the total amount of money this community can save.