Why Are Fixed Expenses Difficult to Reduce?

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 your rent or mortgage payment does not change for the life of the contract. Variable costs like utility bills and grocery shopping might fluctuate wildly from month to month.

Fixed does not mean they can’t be lowered, however.

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. There could be early termination fees, negotiations, and finding new options for similar services involved.

Here are 11 ways to lower your fixed expenses:

1. Buy or Rent a Smaller Home

For most of us, housing is our biggest 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.

If your home is assessed at a significantly higher value than comparable houses in your neighborhood or surrounding area, an appeal can be worthwhile. You could lower your real estate taxes with a revised assessment.

Every town has its own process for having your home reappraised. For example, you might have 45 days from the date of your assessment for submitting a written appeal. Check with your local government for the procedure.

3. Negotiate a Rent Reduction

A lot of people don’t realize that rent is negotiable or feel funny about haggling. Your landlord is running a business. If you can offer some type of value in exchange for lower rent, they might go for it.

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 2 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 fairly easy money if you know people looking to move.

4. Compare Child Care Providers

We all want the best for our children. Child care can take up a large chunk of your monthly budget. Daycare and preschools are shockingly expensive.

You can’t choose a child care provider based on fees alone, of course. There’s so much more to the decision than price. You’ll have to find a balance between 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 a Good Employer – If you’re in the market for a new job, find companies with child care benefits. Some companies pay part of your costs, have discounts available with selected providers, and some have low-cost, onsite daycare.
• Get Tax Breaks – If you have access to a flexible savings account through your work, you can use pretax dollars to pay for child care. You might also be eligible for claiming the Child and Dependent Care Credit, which can be 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 every month 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 car 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

With all the monthly payments you make for insurance (health insurance, car insurance, home insurance, renters insurance, life insurance, etc.), comparing multiple insurance quotes is important. Otherwise, you could end up overpaying.

You can sometimes lower your insurance premiums without reducing coverage by simply 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 a necessity, so you want to make sure you have the best cell 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.

The mobile phone industry is highly profitable and highly competitive. Cell phone companies are all interested in outdoing each other and poaching customers.

Call and negotiate with your cell phone carrier if you see them offering new plans that are 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 big monthly savings.

8. Stop Upgrading Your Phone

While you’re at it, you could probably live without the latest and greatest cell phone. Frequently upgrading your phone is expensive and unnecessary for a lot of people.

When Apple releases a new iPhone or a new flagship Android phone comes out, upgrading is tempting. If all you use your phone for is talk, text, email, and 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.

For example, most gyms don’t limit the number of memberships they sell. Gym owners know that a significant number of their customers will stop coming, but keep paying their membership fees every month.

If you’re not using your expensive gym membership, find a cheaper gym membership or just 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 use it on a regular basis? Is there a free or lower-cost alternative?

Do you really 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.

If you use your software, online subscriptions, or apps only sporadically, try another option. Or ditch the monthly expense completely.

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 need to get rid of your stuff. That could mean cutting down on clutter, selling old furniture and other big items you have stored, or having a garage sale to get rid of unnecessary items. By keeping less stuff, you keep 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 for 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 expenses 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, but it can significantly improve your financial life, especially if you’re a single-income household.

With some careful evaluation of your fixed monthly expenses, some legwork, and a willingness to negotiate, you can lower your fixed expenses and free up some extra bucks for putting toward your emergency fund, getting out of debt, or making progress on your other financial goals.

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