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A fixed expense is an expense that does not change or increase for a given time frame.
Common examples of fixed expenses include rent and car insurance. A fixed expense like rent or a mortgage payment does not change. Variable costs like utility bills and grocery shopping might fluctuate wildly from month to month.
However, fixed does not mean they can’t be lowered.
Can You Decrease Fixed Expenses?
You can decrease fixed expenses, but it will take some effort. Fixed costs are generally not easy to change. Not easy does not mean impossible, though. Early termination fees, negotiations, and finding new options for similar services could be involved.
Here are 11 ways to lower your fixed expenses:
1. Buy or Rent a Smaller Home
For most of us, housing is our most significant expense. When you reduce your housing costs, it will often have the biggest impact on your wallet. Downsizing is one way to do that.
Moving into a smaller house or apartment can save you a lot of money. Smaller homes generally cost less to buy or rent, have less space to fill, and consume fewer utilities.
2. Reduce Your Property Taxes
Taxes are unavoidable. That doesn’t mean they aren’t subject to change. You might be able to lower your property tax liability by challenging your town’s property tax assessment.
An appeal can be worthwhile if your home is assessed significantly higher than comparable houses in your neighborhood or surrounding area. You could lower your real estate taxes with a revised assessment.
Every town has its process for having your home reappraised. For example, you might have 45 days from your assessment date to submit a written appeal. Check with your local government for the procedure.
3. Negotiate a Rent Reduction
Many people don’t realize rent is negotiable or feel funny about haggling. Your landlord is running a business. They might go for it if you can offer some value in exchange for lower rent.
Here are some ways you can offer value that might get your rent cost reduced:
- Prepay – Offer a few months of rent paid in advance in exchange for a rent discount if you can afford it. Landlords hate chasing down tenants for money. It increases their operating costs and disrupts their business.
- Stay Longer – Empty units create cash flow problems for rental property owners. If you plan on staying long-term, see if you can get the rent lowered. If you stay for 18 months or two years instead of a standard 1-year lease, you might be able to negotiate a lower rent.
- Offer Your Services – Is there a duty you could perform that could save your landlord money? Repairs, cleaning, painting, lawn care, and snow removal are expenses landlords typically have. If you could save them some money on these types of services, you might be able to pay lower rent.
- Refer Friends – Some apartment complexes, property management companies, and landlords who own multiple properties offer cash incentives for referring new tenants. It won’t be as consistent as negotiating a lower rent amount, but it’s relatively easy money if you know people looking to move.
4. Compare Child Care Providers
We all want the best for our children, and childcare can take up a large chunk of your monthly budget. Daycare and preschools are shockingly expensive.
But you can’t choose a childcare provider based on fees alone. There’s so much more to the decision than price. You’ll have to balance what you want for your kids and what you can afford for a preschool or daycare payment.
If your kids need looking after, there are ways to lower your costs. You could:
- Find an Employer with childcare benefits – If you’re in the market for a new job, find companies with childcare benefits. Some companies pay part of your costs and offer discounts with selected providers; some have low-cost, onsite daycare.
- Get Tax Breaks – If you can access a flexible savings account through your work, you can use pretax dollars to pay for child care. You might also be eligible to claim the Child and Dependent Care Credit, worth up to 35 percent of your qualifying costs for dependent care. In some states, you can also claim additional dependent care credits on your state income taxes.
- Reach Out to Family – If you have relatives nearby, ask if they’d be willing to help. Making arrangements with family saves you money. You also get peace of mind in knowing that your kids are with a trusted family member.
- Work from Home – More and more employers are embracing remote work. It cuts costs and keeps employees happy. Saving yourself a few days of daycare expenses monthly is worth bringing up the idea with your employer.
5. Avoid Car Payments
Not having a car payment will save you a lot of money every month. Here’s how you can ensure you never have a car payment:
- Buy the most dependable car you can in cash
- Start saving for your next vehicle
- When it’s time for a new car, sell your old one
- Buy the most reliable vehicle you can afford with proceeds from the sale along with your savings
You can repeat this process with every vehicle purchase, so you never need a car loan.
6. Shop Around for Insurance
Comparing multiple insurance quotes is essential with all the monthly payments you make for insurance (health insurance, car insurance, home insurance, renters insurance, life insurance, etc.). Otherwise, you could end up overpaying.
You can sometimes lower your insurance premiums without reducing coverage by switching insurance companies. Shopping around when your policy is up for renewal or when you experience a life change could save you hundreds of dollars a year.
Find lower insurance rates by using an insurance comparison website like Insurify or calling multiple insurance providers and asking for quotes.
7. Find a Better Mobile Phone Plan
Cell phones have become necessary, so you want to ensure you have the best phone plan for you and your family. Wireless providers are coming out with new plans and offering customers statement credits to switch providers all the time. Chances are, there’s a cheaper cell phone plan out there for you if you look for it.
Call and negotiate with your cell phone carrier if you see them offering new plans cheaper than what you’re paying. If they don’t want to play ball, there’s probably another cell phone company that will give you a better deal. A simple internet search could turn up significant monthly savings.
8. Stop Upgrading Your Phone
Frequently, upgrading your phone is expensive and unnecessary for many people. Upgrading is tempting when Apple releases a new iPhone or flagship Android phone. If you only use your phone for talking, texting, emailing, and taking the occasional photo, you don’t need an expensive smartphone with cutting-edge tech.
If upgrading or adding an additional phone to your plan adds an extra $20 to $50 to your monthly expenditures for the next two or more years, ask yourself what you really need in a phone. Determine what features are most important. Shop for a new cell phone based on your personal use case, not based on keeping up with the fanboys.
9. Cut the Cord
Are you still paying cable bills but using streaming services like Netflix, Hulu, and Amazon Prime Video more and more? You can get rid of cable altogether in favor of online streaming options. If you can’t give up live TV, a YouTube TV subscription might save you some money.
The cable company isn’t the only game in town anymore. You could also downgrade to a cheaper package if you’re paying for channels you don’t watch but want to hang on to your favorites.
10. Cancel Unused Memberships and Subscriptions
We all spend money unnecessarily occasionally. An unnecessary single expense is one thing. Paying for unnecessary expenses every month in the form of services we don’t use is wasteful.
If you’re not using your expensive gym membership, find a cheaper one or cancel it. Exercise at home or go for regular walks. Find other ways to stay in shape that don’t involve paying monthly for something you never use.
Go through your credit card and bank statements. Reconsider anything you’re paying monthly fees on. You might even spot something on your statement you forgot about.
Do you need to pay a monthly fee for a phone app that helps you meditate? YouTube is filled with free guided meditations. There are also free alternatives to popular subscription-based software tools like Microsoft Office and Adobe Photoshop.
Try another option if you use your software, online subscriptions, or apps sporadically. Or ditch the monthly expense altogether.
11. Get Rid of Your Storage Unit
According to storage marketplace SpareFoot, almost 11% of U.S. households rent a self-storage unit. With an average monthly cost of $89.12, renting space to store stuff you’re not using is expensive.
Before you can get rid of your storage unit, you must get rid of your stuff. That could mean cutting down on clutter, selling old furniture and other oversized items you have stored, or having a garage sale to eliminate unnecessary items. By keeping less stuff, you save more of your money.
Reducing Fixed Expenses
Fixed expenses are predictable and consistent, unlike your little daily spending decisions. That makes a fixed expense much easier to budget than a variable expense like utility bills or a discretionary expense like entertainment.
The good news is that your fixed expenses might not be as fixed as you think. It’s not as easy to reduce your fixed costs as it is to cut your discretionary spending. It might require finding a new place to live, driving a cheaper vehicle, or switching service providers. Still, it can significantly improve your finances, especially in a single-income household.
With careful evaluation of your fixed monthly expenses, some legwork, and a willingness to negotiate, you can lower your fixed costs and free up some extra bucks for putting toward your emergency fund, getting out of debt, or making progress on your other financial goals.
