One of my hobbies is optimizing every budget item to provide most benefit at smallest cost. The emphasis here is on value and not on cheapness, although somehow I still get an occasional “cheapskate” remark. Of course it bothers me a bit because, in my opinion, this is the only reasonable way to live. Efficiency is something worth pursuing. I’ve heard the cheapskate comment from family, friends and my wife although it’s always in a joking manner. As in “oh, he’s not gonna wanna do that because it’s expensive” – which sometimes is true but only if a quick calculation in my head tells me that there’s a better value for my money. This calculator never sleeps 🙂
Take my latest phone purchase for example. My friends upgrade their phones every year and here I’m tooling around with something that’s 5 years old. Buying a new $250 phone today has as much of a financial impact as buying a cup of coffee back when I was in college. It’s a blip that would barely nudge our monthly savings rate. Yet I couldn’t bring myself to do it.
Was I being a cheapskate? Personally I don’t think so because I don’t see much value in upgrading to a newer model with marginally better specs. It took 5 years of technological progress to finally say yeh, this new phone is so much better that it’s time to get one! The Cost-Benefit was finally heavy on the right side.
This calculation is different for everyone. Price, time, convenience, hassle, enjoyment are just some of the variables that will make the value proposition highly personal. But the fact is that whenever it’s time to spend money I always search for the best value – for me. New phone, computer, insurance, internet service and pretty much anything else that drains my wallet gets scrutinized. It’s harder than just blindly swiping a credit card but you don’t pay off a half a million dollar mortgage in a few years without constantly examining your priorities! So go ahead and call me a cheapskate – but only if you show me your net worth first 🙂
A special level of scrutiny is reserved for recurring expenses such as insurance and internet service. Insurance and cable companies are notorious for jacking up their rates at renewals so there is huge potential here for saving money. Just recently I noticed that the high-speed internet bill went up by $20 per month – instead of the usual $50 I was charged $70.
I immediately recalled that a promotion Verizon offered for switching from Comcast has expired. I signed up for Verizon’s 50/50 FIOS service this time last year to take advantage of a free home wiring offer and the service has been great… but certainly not $70 per month great.
I called Verizon to see if they could lower the price. After a 40 minute wait they told me that the best they can offer is a 25/25 internet service for $63 per month while also removing the HBO-GO access. So half the speed and fewer features for more money – makes perfect sense!
The most annoying part is that they continue to offer the same $50 promo to the new customers. Comcast does the same thing. Google knew I was interested in internet service from my searches and this ad kept popping up everywhere I went on the internet:
The same service advertised today at the same price. Just give that to me and I will stay!
Threatening to cancel didn’t work with Verizon FIOS people. They kept repeating that they do extensive market research and set their prices accordingly. More importantly, they can’t offer promotional rates to existing customers at renewal.
But I wasn’t just bluffing about cancelling. I had an ace up the sleeve – the house was already wired for both Verizon and Comcast. Not only that, but a couple of years ago I specifically RE-wired my house (insourced, of course) to make switching from Verizon to Comcast and Comcast to Verizon as painless as possible. You can read a bit more about this quest for cheap internet here.
With my TV receiving free over-the-air HD programming and my HTPC recording independently from a cable service provider all I have to do is switch one wire in the crawl space and then call Comcast or Verizon to start the service. I already own both a Comcast-compatible modem and a Verizon-compatible modem so there is no need to “return the equipment” or pay rental fees (why would anyone do that?!).
And that’s exactly what I did. Comcast always offers great specials to new customers – defined as anyone who hasn’t had service in their name in the last 90 days. Since most specials from Comcast and Verizon last one year this makes it easy to qualify for new customer promotions by switching.
I ended up signing up for Comcast’s 25/25 internet promotion for one year at $30 per month. It actually includes local TV channels as well but since I’m more than happy with our free over-the-air HDTV I didn’t bother with the TV portion of the deal. The 25/25 internet speed is perfectly fine for everything we ever do including streaming movies on HTPC so the switch from Verizon’s 50/50 service had no negative effect.
Thanks to Verizon’s customer retention fiasco we are now saving $40 per month. That’s $480 saved ($680 earned before taxes!) over a year for about an hour worth of work. If I can only find a consistent way of making $680 per hour we’d be financially independent in no time!
It was a bit of work to get to a place of cable provider independence. Rewiring the house for over-the-air HDTV antenna, waiting for Verizon’s one-time free service installation special, investing in Verizon’s and Comcast’s modems, setting up the HTPC and just generally trying to figure out all the details that make cable provider independence possible took some time and thought. But as most things that contain the word independence the end result is well worth it.