American households in major cities spend an average of $984 a month on bills. But one financial coach says there are ways to pay less for some of these monthly expenses.
A new report from bill pay service doxo analyzed the nine most common recurring monthly expenses paid by residents in the 25 largest U.S. metros, excluding rent and mortgage payments. The analysis is based on data from 2.5 million users making payments to over 45,000 businesses.
Across the different cities, the most expensive bill that people pay on a monthly basis is an auto loan. This typically costs an average of $376 per month, followed by auto insurance payments that average $238 per month.
For those without a vehicle, the biggest expense is utilities, which costs an average of $237 a month. This includes bills such as water, sewer fees, waste and recycling services, gas, electric, heating oil and propane, says Jim Kreyenhagen, VP of marketing and consumer services at doxo.
Overall, Americans in major cities typically spend about 17% of their annual income on these nine types of bills, according to doxo. That amounts to roughly $11,800 a year.
"Paying your bills is a universal problem, whether you're a millennial or older," Kreyenhagen tells CNBC Make It.
Yet you may not need to spend so much on certain monthly bills, personal finance author Ramit Sethi says. This is especially true when it comes to cable, cell phone and internet services. "These companies want to keep you," he tells CNBC Make It. "Work with them."
Sethi, the best-selling author of "I Will Teach You to be Rich," says that many times, it's cheaper for companies to keep you as a customer rather than spend to attract a new one. You can use that to your advantage to negotiate down the price of these services if you feel you're paying too much.
However, "negotiations should not be adversarial," he says. Instead, "come prepared with the length [of time] you've been a customer, other offers that competitors are offering, and be prepared to walk away if you don't get the deal you want."
First, do your homework, Sethi says. Before calling up your internet or cable provider and demanding that they lower your bill, research the going rate for those services in your area so you have some leverage.
If you find a cheaper rate, then it's time to jump on the phone.
When you call your provider, you'll want to start by asking the customer service representative if they have any better plans or pricing they can offer you. If they don't volunteer any, you can then say you're thinking of switching to a different provider because your current bill is too high.
At this point, Sethi says your goal is to be transferred to the "customer retention" department. This is the unit that "has the ability to retain you by giving you a bunch of free deals," he says. You can either ask to be transferred directly or talk through your request with the customer service rep and hope they transfer you when you bring up cancelling your service or moving to another provider, Sethi says.
Once you're on the phone with someone from the customer retention department, Sethi says it's time to share your research. Mention that you've found a better price with a competitor and bring up that you know it's cheaper for the company to keep you as a customer. Both of those points should help steer the conversation in your favor.
Here are some other helpful tips can help make your negotiation go as smoothly as possible, from Sethi:
- Always be polite and patient.
- You'll have more leverage if you're actually willing to walk away.
- Avoid asking yes or no questions because you're more likely to get a "no" answer.
- You'll have more success if you're a longtime customer with a good track record of paying bills on time.
Even if you only get your cable company and cell phone provider to drop your bill by 20%, you're still saving $40 a month off the average cost of these bills.
"Any recurring expenses like your cell phone, cable and insurance, you should be looking for ways to get lower plans at least once a year," Sethi writes. "That means picking up the phone and negotiating."
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