How Inertia Can Cost You Big Time

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When most people receive bills, they dutifully pay them, no questions asked. But by sitting back and complacently paying bills as they’re presented, you’re probably spending hundreds, even thousands more dollars a year than you need to. What should you do instead? Be aware, and be a pain in the butt.

I spoke recently with Bob Sullivan, who writes The Red Tape Chronicles and has a new book out called Stop Getting Ripped Off: Why Consumers Get Screwed, and How You Can Always Get a Fair Deal. Sullivan says that while there are big forces out there taking advantage of people—gotcha clauses, misleading sales tactics, hidden fees, fine print no one can possibly read—there’s no excuse for how many consumers are ignorant of pretty basic details of their personal finances.

“I ask people if they can give me a snapshot of their financial lives,” he says. “How much have you taken out of your ATM account in the past week? What’s the interest rate on the credit card you use most often? How much money would it take for you live three months if you lost your job and no longer had income? A lot of people have no idea. They have no answers.”

An awful lot of people are also wasting money due to “bill creep,” the constant, sometimes seemingly negligible rise in fees and rates for everything from cell phones to auto insurance. No one wants to take on the “dreaded tasks,” as Sullivan calls them, of hounding Verizon or whoever each time a bill inches up 30¢. As an alternative, Sullivan suggests making a routine of tackling these various tasks—which you really shouldn’t dread, and which can save you a surprising amount of money with minimal effort.

“It’s not nearly as awful or time-consuming as people think,” says Sullivan. “There is a big payoff to doing a little legwork, by just making a few phone calls. I recommend that people do it on a lunch break, taking on one task per month.”

The idea is that once a month, you take an hour to get on the phone, do a little research, and otherwise brainstorm ways to lower one of your regular bills. Credit cards. Cable or satellite TV. Internet, land lines, cell phones. Auto insurance. Homeowners’ insurance. Newspaper and magazine subscriptions. Savings and checking accounts. And so on. Take an hour to scout out other options. Call up and question upgrades, service additions, and fees that might have jacked up your bottom line. The bundled $99-a-month cable-broadband-phone package you signed up for may have morphed, suddenly costing you $175 a month.

No one enjoys calling the cable company or requesting auto insurance quotes from half a dozen insurers, but this is the game you’ve got to play in order to avoid getting taken.

In Stop Getting Ripped Off, Sullivan describes some strategies for getting the best deal on pay TV, and a similar approach can be used on just about any service you pay for:

If you are paying $100 a month for television, I guarantee you have a neighbor paying half that. You should be angry. You should be so angry that you should grab your cable or satellite bill and find the billing department’s phone number. Go ahead … why are you still reading?

First, check your pile of recent junk mail to see if you’ve received any ads from competitors. If not, go online and hit all their websites—DirecTV, EchoStar, Comcast, Cox, Verizon. Enter your zip code to make sure the firms offer service in your area and read through the offers. Find a package that closely matches your current programming package. Don’t forget to include your current provider in this research. I know the ad will say, “New customers only,” but ignore that.

Now that you know the real market price of pay TV, smoke might be coming out of your ears. But do one more thing before you call: Get yourself into the frame of mind that you are committed to switching providers if you don’t get an answer you like. Pick a deal from an alternative company that you know will work for you and firmly install that in your head as plan B. This step is essential.

Why? For the same reason that the only way to get the best deal on a car is if you’re truly prepared to walk away. Well, actually, with a car, you probably do have to walk away a handful of times before a salesperson chases you down with the best-best offer.

You must approach these tasks like a job—because they can pay off like one.

What you accomplish may not seem all that impressive. In an hour’s time, you may succeed in trimming $10 or $20 off of a monthly bill. It doesn’t seem like much. It might not seem worth the aggravation. But over the course of a year, the savings add up to something more like $200. Add up the savings from tackling a few “dreaded tasks” and you could be up over the $1,000 mark. And each task eats up just an hour, maybe less, of your time.

“If someone told you that you could make $200 an hour, you’d take that job in a second, right?” Sullivan asks. “Well, you’re basically putting 200 extra dollars into your wallet by taking an hour to do a little research and make a phone call or two. So just do it.”

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