Whatever the Season, You Should Only Pay for Your Current Lifestyle
One pandemic money lesson is to proactively cut any discretionary expenses you don't need now. You’ll probably forget to even miss them.
Bobbi Rebell, CFP®
Personal Finance Expert at Tally
January 13, 2022
2021 became a turning point for many people. Some made big moves across the country, while others quit their jobs to join the “Great Resignation.” Others started families or expanded their families with pets. Changes in your life often also mean making thoughtful changes about where your money goes.
If we learned one thing from the earlier stages of the pandemic while we were all staying home, it’s that you should only pay for your current lifestyle. That meant re-aligning your spending habits to the now, rather than the past. For example, when many discretionary expenses became unavailable or unnecessary, many people took the opportunity to cut costs, reduce spending and stretch their money.
But just because the world is reopening and learning to live with COVID-19, that doesn’t mean you should automatically go back to your pre-pandemic spending habits. Instead, make it a priority to regularly reassess your non-essential expenses.
Here are a few simple things to do:
Did your spending spark joy?
If you’re like me, then a good amount of your spending goes on credit cards. And now that it’s time to re-evaluate starting some spending patterns back up, credit card statements are a great place to get the information to make choices for the life you want to live now.
Review all of your credit card statements from the last three months. Ask yourself: do your spending habits reflect what you value? For example, if you love eating out, does most of your non-essential spending go towards restaurants? If not, what’s eating most of your budget? If it is, is there anything you will do differently?
Likewise was there anything you purchased that you didn’t end up using much? Can you return it or sell it? This is also a good time to look at all your recurring subscriptions. Is there anything that you’re paying for but not using anymore now that you may be spending less time at home? Cancel them now. If in doubt, still cancel them. You can always resubscribe later. Specifically, look for any recurring expenses that you don’t need or aren’t able to use right now, like:
Remote gym memberships
Grocery delivery services
With so much else going on, it can be easy to forget about these recurring expenses. And don’t assume that you’ll remember to cancel before your account auto-renews. Some of these services won’t make it easy to get a refund for the current month, where your cancellation won’t start until the following month. Don’t be shy about calling and asking them to pro-rate. They won’t call you to offer, but if you ask, many places will give in.
Remember that some of these things are billed every 3 months, 6 months or even annually. If you know you have recurring expenses with various billing cycles, you may want to review more than just 3 months of credit card statements. And again, ask for a pro-rated refund. The worst they can say is no.
Scale back your digital subscriptions
Subscriptions are another common recurring expense. If you have not been using the service for a month or longer, just cancel it. If you’re on the fence, again, cancel it anyways. You can always re-subscribe later when you want to watch a specific show. Odds are you will even get a special discount offer to come back.
Be strategic. Compile a list of any streaming services, paid apps or other types of digital subscriptions you pay for. Look for overlap between them and consider canceling any redundancies. If you have multiple movie streaming services, it’s probably best to limit yourself to one while money is tight. Or choose one or two, watch them for a couple of months, then cancel and move on to another couple for the next few months. You can catch up on the few shows you love, and then circle back for a few months next year.
For any paid apps, determine whether you actually need the premium version. If there’s a free version available, you may want to temporarily downgrade before the next billing cycle. You may have to watch a few commercials but that’s really not a big deal, and you can always use a break.
Also remember that many news websites that have paywalls are offering all or at least part of their content for free right now. So, be sure to take advantage of those offers.
What should I do with the money I’ve saved?
Once you’ve cut costs for anything you aren’t using anymore, tally up the amount you’ll save into a single number. If you can, consider putting that money toward any existing debt you have or use it to build up your savings. If you have bills to pay, you’ll want to handle those first.
How to join our 31-day #FaceTheNumbers challenge
We’ll be posting each day’s activity on Instagram, Facebook and at meettally.com/facethenumbers. Follow along to learn how you can #TallyItUp and make 2022 the year you get out of credit card debt for good.
We hope you’ll join us and start the new year with the Tally crew!