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5 contracts you should review each year

Reducing the cost of major bills like car insurance and cable TV is an easy and effective way to save money.

By MSN Money Partner Mar 20, 2012 11:19AM

This post comes from Jim Wang at partner blog Bargaineering.


Image: Piggy bank (© Corbis)Reducing your monthly fixed costs is one of the most impactful ways to save money. That's because one small change, which can take as little as an hour, can yield big results over the course of the year.


Think about how much you spend on cable television and Internet each month. Is it $100, $150? More? If you trimmed that by $10 a month, that's $120 in savings. That's worth more than 40 cups of coffee. Instead of focusing on not buying 40 cups of coffee, look for recurring monthly costs that can be reduced.


Here are five worth looking at:


Cable television

The cable TV business is remarkably cutthroat, because the marginal cost on the cable system of adding a new customer is negligible. A Comcast salesman was going door to door in my neighborhood trying to sign up new customers. We talked briefly about my current Verizon FiOS plan and he was able to offer a slightly better plan for about two-thirds of the cost. If I didn't have a year left in my contract, I would've signed up right then and there.


If you don't have a contract with your cable provider, start shopping around. If you see a better offer, try to get your current provider to match it. If they match it, you get better service for less without having to waste a day on installation. If your cable provider doesn't match the offer, switch providers. (Post continues below.)


The typical cellphone contract is two years and is typically binding, meaning you can't cancel without paying an early-termination fee. They do this because they usually take a large loss on the device, like an iPhone, with plans to recoup that, and more, over the life of the contract. Nowadays, early-termination fees are prorated across the life of the contract, so a $300 fee over two years drops $12.50 each month.


If you are no longer on a contract, you should be checking to see if you can get a better deal elsewhere. This could mean getting unlimited data, a cheaper plan, a better handset, or even going to a prepaid phone because you realize you're overpaying for minutes.


Auto insurance

You should be reviewing your auto insurance each year to see if another insurance provider can offer the same level of protection for less. There are plenty of auto insurance comparison tools and I recommend using a few of them to find a better rate.


What's nice about auto insurance is that you can change your insurance whenever you want. You might have been billed for a year or for six months, but you can change your insurance midway without penalty, unlike a cellphone contract.

Two potential gotchas:

  1. Loyalty discounts. Check to see if your current insurance provider offers a loyalty discount for policyholders who have been with them for several years. If you've been insured for four years with the same company and a discount kicks in after five, take that into consideration.
  2. Avoid too cheap. I'm wary of no-name insurers that offer cut-rate coverage because you never know how much of a headache submitting a claim can be (or more importantly, getting that claim paid). Saving a few dollars on your premium is not worth additional hours trying to get a claim approved.


A few of my friends are landlords and they always rave about their best renters: They are clean, they pay on time, and they renew their lease every year (sometimes for multiple years). Predictability is any business's best friend. If your lease is nearing its end, negotiate better lease terms with your landlord.


This idea was very popular several years ago, so these two articles -- from Forbes and from Software Advice -- should give you a good idea of how to proceed.


If your landlord doesn't budge, try to find a better rate elsewhere. Most apartment complexes offer great deals for new renters, such as a month's rent free, and the only way you'll find them is if you do some shopping. Moving can be a pain but sometimes it can pay off financially.



If you are a Netflix subscriber, how often do you use Netflix? Or any online service like Hulu Plus or Spotify? If you love the service but don't use it that often, consider pausing or canceling it. If you're not at the base subscription level, drop down to match your actual use. Netflix has several levels of membership. If you are currently receiving three DVDs but watch only one a week, drop down to one and save yourself $8 a month ($96 a year).


If you aren't watching any, pause it temporarily and see if you miss it. If you realize you don't, cancel it.


These five are only the beginning. I chose the plans we are most likely to have, but there are hundreds of others out there. Last year I canceled a pest-control plan we had ($25 a month) and we haven't seen much of an impact (just annoying ants in the spring).


Have you done this recently. If so, how much money have you saved?


More on Bargaineering and MSN Money:




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