The Ultimate Guide to Personal Finance – Part 3:

Tap into “hidden income”
– money you're throwing
away every month

Now that you have your money automatically going where you want it go, let's get some extra cash flowing into all of your accounts.

You can have more money to save and invest (we'll cover investing next) by spending less on the things you're already paying for.

Instead of strict budgets or extreme frugality, this section will show you how to free up your cash so you can jet off for the long weekend, buy that new jacket, or get to zero faster on your credit card balance.

This is how you can gain an unfair advantage when saving money. (Hint: It starts with money you're sending out the door every month.)

Fundamentally, there are two ways to have more money. You can either earn more money or cut costs. Negotiation skills are the most powerful tools to have in your "hidden income" toolbox, because if you know how to negotiate you can do both (by negotiating a raise at your job or negotiating a lower rate on every bill you pay).

Instead of cutting back on the things we love, we can save on the things we hate by paying lower prices using the negotiation strategies I've outlined below.

Bank & Credit Card Fees

Car Insurance

Cell Phone

A few one-time, 5-minute phone calls can save you thousands every month.

I'll teach you, in detail, some easy ways to save money on bank and credit cards fees, your car insurance and your cell phone bill – all potentially worth thousands of dollars each year – no willpower needed.

Download the free PDF: “The Ultimate Guide to Personal Finance: Money Management Made Simple”

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This video covers the exact steps
to call 5 companies and save thousands

(Including some of the word-for-word scripts)

Your turn: Beat these companies at their own game

How to negotiate lower car insurance

Most of us pick a rate for our car insurance once, then never look at it again.

But if you do, you can save hundreds of dollar each year

  1. Coverage options

    First, you'll want to check to see if you have the right amount of coverage. Nobody teaches us about this stuff, so when you bought car insurance, you may not have known which coverage options to choose.

  2. Your current plan

    Second, figure out what kind of coverage you currently have and how much you're paying. Don't be lazy — do this. If you don't have your current info in front of you, how can you hope to save? Either call your car insurance company or use their website.

  3. Shop around

    Third, it's time to start shopping around. I prefer the phone because I can usually sweet-talk the rep into telling me about other deals that the websites don't offer. Computers, however, seem to be immune to my charm.

    I made it easy for you. Here are the phone numbers of the big insurers:

    Geico: 1-800-861-8380
    AAA: (866) 539-8033
    Allstate: 866 704 9900
    Progressive: 1-800-776-4737
    State Farm: You can get to their auto insurance site here.
    21st Century Insurance: Don't use this worthless insurance company. I used to use them, but they sent me multiple envelopes in the mail EVERY SINGLE WEEK until I finally canceled them. The rates were great, but the hassle wasn't worth it.
  4. Ask these questions:

    Fourth, be an expert caller by asking these questions.

    With each call, you should say, “AAA (or whoever) is offering to insure me for $XXX less” (silence).

    See what they do. (Note: Negotiating lowering insurance using this technique is much harder to do with car insurance companies than banks, so don't expect very much from this.)

How much would I save if I insure my car and house with you?

What about renewal discounts?

How long have I been a member with you? What can you offer me as a discount for long-term membership?

Can I save money by pre-paying my entire year up front?

I know other firms offer discounts for features like anti-lock brakes. What about you?

What kind of low-mileage discounts do you offer?

If I enrolled in a defensive-driving course, what kind of discount would you offer? Oh, really? Which courses qualify?

What about discounts for my employer? (Tell them the specific name of your employer?)

Some insurance companies offer discounts for low-risk occupations (engineers). What kind of competitive rates do you offer?

Am I paying for roadside assistance?

What other additional “benefits” am I paying for?

Can you walk me through the deductible changes I could make to save money?

AAA, Costco, credit cards, large employers, associations (AARP, teachers' union): Many of these offer discounts on car insurance. Log onto their website and browse to “perks.”

It seems like a lot of work, but the savings are substantial.

“Negotiating” lower car insurance is mostly about keeping up with the changing rates and making sure you're wringing every last benefit from your policy, so set a calendar reminder to do this once per year.

Cut your cell phone costs

Cell phone companies have this wildly curious business model of acquiring tons of customers through very expensive means (e.g., national advertising), then churning through them by treating them horribly. Yet even they know that it's cheaper to retain an existing customer than to acquire a new one. You can use this “customer acquisition cost” in your favor.

Here's how:

  1. Find comparable plans for your usage on other cellphone networks.

    For example, I'm with AT&T, so I'll investigate Verizon, T-Mobile, and Sprint by going to their websites. Write down how much they each cost, how many minutes you get, and any other benefits.

  2. Call your current cellphone company.

    To make it easy here are the phone numbers:

    AT&T: 1-800-331-0500
    Verizon: 1-800-922-0204
    T-mobile: 1-800-T-MOBILE
    Sprint: 1-866-866-7509
  3. First, be nice. Ask them what
    better plans they have to offer you.

    You: “Hi, I was looking at my plan and it's getting pretty expensive. Could you tell me what other plans you have that would save me money?”
    Them: Blah blah same plans as on the website blah blah
    You: “What about any plans not listed on the website?”
    Them: No, what we have is listed on the website. Plus, you're on a contract and have an early cancellation fee of $XXX
    You: “Well, I understand that, but I'd be saving $XXX even with that cancellation fee. Look, you know times are tough so I'm thinking of switching to [COMPETITOR COMPANY]. Unless there are any other plans you have…? No? Ok, can you switch me to your cancellation department, please?”

    Note: What you really want is to be switched to their “customer retention” department, which is the group that has the ability to retain you by giving you a bunch of free deals. You can either ask to be switched directly to the customer retention department, or play a game and hope that by asking for “cancellation,” you're actually transferred to retention.

    Play around with a few phone calls and see what works best.

    When you get to the customer-retention department, ask for the same thing. This is when you pull out your competitive intel on the other services being offered. If Verizon is offering something for $10 less, tell them that. That's $120 savings / year right there. But you can do more.

    You: “Listen, you know times are tough and I need to get a better deal to stick with you guys. You know and I know that your customer acquisition cost is hundreds of dollars. It just makes sense to keep me as a customer, so what can you do to offer me this plan for less money?”

Use this technique on virtually any subscription you're paying. Businesses want to keep customers and are willing to negotiate – but since most people don't, they're leaving money on the table.

Notice that you didn't say, “Can you give me a cheaper plan?” because yes/no questions always get a “no” answer when speaking to wireless customer-service reps.

You also invoked the customer-acquisition cost, which is meaningful to retention reps.

Finally, it really helps if you're a valued customer who's stuck around for a long time and actually deserves to be treated well. If you jump around from carrier to carrier, you're not a worthwhile customer to carriers.

One final thing: People get scared that if they go to the cancellation department and try to negotiate, they'll get their account canceled without really wanting to do that.

There are two things to remember about negotiating your wireless bill:

(1) You have a MUCH stronger position if you're actually willing to walk away and switch to another plan, and

(2) your account will never get canceled until you say the final word. You can negotiate for 3 hours and walk away if you want.

Get yourself out of credit card debt by
negotiating with your bank.

Use the tips in this video to pay a lower rate on your credit cards

When it comes to paying off debt, one of the best ways to make a huge dent in it is to pay a lower rate. Even saving just a few percentage points on your credit card bills can be worth thousands over time.

The key? Most people don't do this, but it can make all the difference if you do. You'll not only be able to pay off your debt faster (with the same size payments) but also you won't be losing nearly as much money to interest.

Do this once and reap the rewards for years to come

A simple way to negotiate bank fees. Yes, you really can – and here's how

Ramit: “Hi, I just saw this bank charge for overdrafting and I'd like to have it waived.”
Bank rep: “I see that fee…hmm…let me just see here. Unfortunately, sir, we're not able to waive that fee. It was [some excuse about how it's not waiveable].

Bad things to say when negotiating bank fees:

  • “Are you sure?” Don't make it easy for the rep to say no.
  • “Is there anything else I can do?” Again, imagine if you were a customer service rep and someone said this. It would make your life easier to just say “NO”. As a customer, don't make is easy for companies to say no.
  • “Well this Indian blogger dude told me I could”. Nobody cares… but it would be cool if 1,000 customers called their banks and said this.
  • “Okay.” Don't give up here. Despite what you learned in sex ed, “No” does not mean “No” when it comes from a bank.
Biggest mistake customers make when negotiating: making it easy for the company to say “No”
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Try these techniques to negotiate
bank fees instead

Ramit: “Well, I see the fee here and i'd really like to get it waived. What else can you do to help me?” (Repeat your complaint and ask them how to constuctively fix it.)
Bank rep: “Hmm, one second, sir. I see that you're a really good customer… I'm going to check with my supervisor. Can you hold for a second?”

(I've been with the bank for many years, which you should always use to your advantage when calling to complain. Banks pay hundreds and sometimes even thousands of dollars in customer-acquisition costs and don't want to lose you.)

Bank rep: “Sir, I was able to check with my supervisor and waive the fee. Is there anything else I can help you with today?”

Key Takeaways:

Mistakes happen, but don't be dumb and overdraft consistently.

When complaining, have a clear goal and don't make it easy for companies to say “no“ to your complaint.

“No“ is the beginning of the conversation.

I actually have a whole FREE course on negotiation that you can join

It includes everything from how to get over the fear of negotiating to my word-for-word scripts to put thousands of dollars back into your pocket.

I've even included a special section that shows you what you can say to get a raise and get paid what you deserve.

Check out my full 1-day free negotiation mini course here.

Yes, I want more tips on negotiations and join the free mini-course.

Tap into “hidden income” – money you're throwing away every month | The Ultimate Guide to Personal Finance