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A simple price comparison can save you thousands.

thWhen it comes to saving money, pick the lowest-hanging fruit first. A new survey from Insurance.com compared the per-minute value of tactics such as changing cellphone carriers, carefully pricing new vehicles and seeking a better car insurance rate.

Shopping for insurance won quite handily, with a value of $54 per minute.

A cynic would call that pretty convenient, since Insurance.com has an auto-insurance rate comparison tool. But the fact is that consumers often benefit by using a tool like this.

In part that’s because a change in circumstances – reaching the age of 25, getting married, moving, taking a job with a shorter commute, even improving your credit score – can mean better rates. But it’s also because even reasonably intelligent people wind up overpaying from the get-go and fail to do anything about it.

I know this because I overpaid for car insurance myself. Way overpaid. For way too long.

 

More on that later. For now, it’s back to the survey.

Of the 2,000 people surveyed, 65 percent had comparison-shopped for a new vehicle, saving an average of $1,054. Impressive, huh? Except that it took an average of 13.6 hours to do this, so the per-minute value worked out to $1.29 per minute.

Cellphone service was another popular category, with 58 percent comparing services among an average of three carriers. The average monthly savings was $14.94, which translates to $1.86 per minute. For cable or other television services, the average was $20.67 per month for a per-minute savings of $1.72.

 

Saving smarter

The same group was asked how much they’d be willing to spend comparison shopping for things like children’s toys, a new laptop, clothing, airfare, pet food, prescription drugs and cigarettes. The responses ranged from about 16 minutes to about 68 minutes.

Which brings me to my next point: When searching for savings make sure you prioritize the potential for annual gain. Money saved on things like car insurance, a cellphone plan or television/Internet service represents savings that make a continuing impact on the bottom line.

Getting a good price on an airline ticket or a laptop is swell, but these were the two categories that took the longest (almost 68 minutes) – and more to the point, the money saved is a one-time deal. For example, saving $200 on plane fare is sweet but getting the better cell deal works out to $179.28 per year.

There’s no reason you can’t do both. But if time is an issue, go for the biggest gain first.

Ideally we’d shop around for the best deals on all purchases. However, not everyone will take that much time. Or should, if that time is limited or has a real dollar value attached. (Besides, sometimes paying a little more is worth it.)

Note that even an annual savings might not be worth it. For example, I found a recipe for homemade laundry soap that would save me eight cents per load. Since we do so little laundry I’m simply not interested in going to the trouble of shopping for the ingredients and mixing them together to save 50 cents or so per month.

You might not be, either, given that a website like CouponMom.com or an app like Favado can point you towards significant detergent savings.

Give your budget a checkup

Redirecting some of your current frugal hacks can help you work your way down the price-comparison food chain. Suppose you spend three hours every Saturday cooking for the coming week. Take a Saturday off from the kitchen and spend that three-hour time period doing some focused price-shopping.

Maybe you belong to a book group. Skip one month and use the time you’d spend reading the book and attending the meeting in a search to save money. If you tend to sit in front of the TV every evening after supper, take two nights off from that.

I understand why sometimes doing that kind of research just feels too daunting. I also know why it’s important to find a way to do it anyway. After leaving my marriage and moving to Seattle, I was so exhausted and fearful I just signed up with my sister’s car insurance agent.

Although I had the nagging suspicion that I could do better, life was hectic enough that I let “get a quote” languish toward the bottom of the to-do list. Five years later I finally used an auto insurance comparison tool. The good news is that I saved a ton of money.

The bad news: I’d been overpaying by almost $700 a year for five years. Additionally, I found that I didn’t have coverage I needed (uninsured driver) and was paying for insurance I probably didn’t need (collision).

But what really makes me want to do a headdesk? The fact that I thought I didn’t have time to price-shop, yet somehow found the time to do things like:

  • Walk to the library rather than pay a $1.75 bus fare
  • Pick blackberries to freeze and turn into jam
  • Turn in empty printer cartridges for $3 credits at office-supply stores (using the scrip to buy Sweet’n Low)

If I’d used just a little of the time I spent doing those things for an insurance price comparison, I would have saved myself almost $3,500 over five years’ time.

Just as you see the doctor for an annual wellness visit, give your budget a checkup now and then. Suppose you really could save hundreds (or thousands) a year on your cable or cellphone plan or, yes, your car insurance. Think about that money being used toward consumer debt, an emergency fund or a retirement plan, instead of just being spent needlessly each year. Talk about opportunity cost.


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14 Comments

  1. Tina in NJ

    When my son leased a car, he needed his own insurance. While researching a good rate for him (at 21, no less!), we found a much better deal for us. Of course, getting him off our plan helped, too. We still contribute to his insurance (for now), but we’re still saving, although we lost the multiple-policy discount at the old company.

  2. Julie

    I can’t imagine it taking 68 minutes to compare a few airline prices unless you are still using dial-up internet service or unless you call their customer service number and wait on hold. I can compare 3 carriers in five minutes and save hundreds. The first step is finding what airlines have a hub in the city, and of course I always compare with Southwest and JetBlue. I travel more than once per year so savings are substantial. Plus multiply the savings by 5 family members going on vacation are you are talking a lot of money.

  3. Janine

    What is a good website to look for term life insurance for turning 60 years old.

  4. Ro in San Diego

    I frequently check my budget for holes that can be plugged. Over the years I’ve saved a lot of money on insurance, Sirius Satellite Radio (a guilty pleasure I get for way less than the sticker price by threatening to cancel every year). Cable insurance/phone/internet are bundled and a lot more reasonable now. I’ve taken my savings and am using them to help my niece graduate college since her parents can’t/won’t help her.

    • Donna Freedman

      What a great thing to do for your niece — and a good example of the “save where you can, spend where you want” idea.

  5. Diana

    Donna, it doesn’t look like we can use this tool in Alaska. When will places realize we’re part of the country too??? Thanks for the info – good read!

  6. I like analysis like this – low hanging fruit in terms of $/hr of time is really quite incredible.

    I try to value all my actions in terms of $/hr so that I can prioritize appropriate tasks accordingly.

  7. Punkin Pye

    Since I am on dialysis and not working, I consider price comparisons for most everything we buy my “job”. It is extraordinary how much you can save. I keep an excel spreadsheet on my savings. Between couponing and bargain hunting I save anywhere from $500 to $1000 a month in tax free money.

  8. Lisa O

    I spend about an hour week on finances. I make sure bills are paid 2 weeks in advance and pick one or two to see if I can haggle and get it down. I current pay Verizon $27.00 a month for phone and .09 for all out going calls…my bill is usually $27.00 a month cause we use our cell phones. I would love to get rid of the land line but love the security. The cable bill is approximately $159 and I always call to see if promotions can be placed on my account…I usually get it down to $121 for 3 to 6 months because of a promotion they find. Sirius radio is another…I let it expire and they call asking me to come back for about $4 a month for 6 to 12 months. I am now in the process of checking insurance for the cars/house and seeing if there is a big savings waiting for me 🙂 I am hopeful cause I love saving money 🙂

    • Donna Freedman

      Regular checking is a great idea, especially if you can lower your cable bill by $38 each time you do it. Haggling is hard for some people (including me) but it can pay off.
      Thanks for reading, and for leaving a comment.

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