Reduce expenses with The Tempest Challenge

PUERTO REAL, CADIZ, SPAIN-JUL 15: Graffiti of unidentified artist on the first tournament of Graffiti of Puerto Real on Jul 15, 2011, in Puerto Real, Spain

Hi everyone! So today at the Serious Coin I wanted to talk about a money saving technique that I heard about years ago, called the Tempest. I don’t know how it got its name (see below!) but it has been part of my financial arsenal for many years, and has helped many times over, so I wanted to share it with you.

Now I feel I should start by crediting whoever came up with this, but the problem is, I can’t remember where I read about it, and even Mr Google can’t help me locate the source! So please, if you’re reading and you know who wrote about this and who I should credit, please let me know!

Reduce expenses: The Tempest Challenge

So what is The Tempest Challenge? At its heart, it is a very basic principle: Review every fixed expense you have and aim to cut it by 10%.

Review every fixed expense you have and aim to cut it by 10%

Sounds simple, right? Well, in essence it is. But its power really shines through for two reasons:

  1. All of those little 10%s add up. If you’re lucky you may find ways to shave even more than 10% off some of your bills
  2. It gives you control back over your situation. Feeling in control makes things seem easier and less overwhelming.

So the tempest is a simple procedure, but it gives you a sense of control and helps you make a plan. It provides little ways to take ‘bites of the elephant’ and start improving your finances.

Ok, enough about the why – let’s get started!

Challenge Accepted! How it works

Step one

🍏 List all your expenses. If you have a budget then you can shortcut this one and use all the expenses listed on your budget.

Step two

🍏 Take the first expense on the list, look at how much it costs you each month and give it a priority – choose either Essential, Important, Optional. Repeat for all other expenses.

Step three

🍏 Review the Optional and Important expenses – do you really need them right now?

  • Could you take a temporary break from these things to take the financial pressure off and start again when money isn’t so tight?
  • Could you look at dumping them completely for a free or lower cost alternative?
  • Are there any creative but cheap ways to get the same outcome?

Optional expenses will vary from person to person.

For me, a gym membership is optional. I like to run, walk, hike and I have a favourite yoga instructor that does free YouTube videos. For others, a gym membership will be an essential and their main outlet for exercise and sanity!

🍏 Switching and replacing?
Take some time to think about what you can switch out and replace. Maybe combining two things can get you a savings.

For example, meal services (like My Food Bag, Hello Fresh, etc) are expensive when you compare them to your groceries, but they are really cheap if you compare them to getting takeaways or a restaurant meal! So consider how things fit in for you and what you’re replacing them with. If you have a family of four who eat out two nights a week, and stop doing this when you buy a meal service, it will save you money. If you’re weighing up buying a meal service against regular groceries, then it probably works out more expensive per meal. Maybe you could get the meal service less often to save some money but still get an occasional injection of new recipes!

Step four

🍏 Start with all the expenses listed as Essential.

I’m picking these to be things like power, gas, rates, insurance, etc. These are bills you have to pay, but maybe you could be getting a better deal.

🍏 Note down any expenses that are on a fixed term, or that you couldn’t change or cancel early.

There may not be much you can do about these right now, but put a note in your calendar for the future when these end dates come up.

📆 Set a reminder on your phone calendar. You want to remind yourself that when these review dates come up, you can try to get a better deal, or move to another provider that has a better price.

Examples: Fixed phone deal for 24 months, fixed mortgage end dates

A note on rent: Rent is usually the one thing that can’t budge much with the Tempest Challenge, short of moving house, taking on a flatmate, moving in with family, etc. These are pretty big moves that you may be considering but are probably outside of the scope of the regular Tempest Challenge.

Step five

🍏 Any Essential expenses that are not on a fixed term are now up for grabs.

It’s time to invest in some Googling and look at other providers of the same things, and how their prices compare, get quote if you can, look for new customer offers and deals. Are there any schemes or organisations that you’re a member of that offer deals to members?

Make sure you’re comparing apples with apples – you don’t want to compare your full car insurance with a third party budget deal. Consider each expense independently, what you’re getting for your money, what you actually need.

Examples:

Mobile phone: I’m paying $50 per month for a mobile plan with lots of data. Looking at my actual data and call use, I find I’m only using around 1Gb per month, and hardly any actual calling minutes and texts as I mostly talk to my friends and family on What’s App and Messenger. Shopping around, I find a $19 prepay plan that has 1.5Gb data and a small allocation of calls and texts, which is probably all I actually need. As it’s prepay, I can always opt for a bigger plan the next month if I find this isn’t enough.

🍉 Saved $31/month, which is $372 savings per year. More than 10%, yay!

Internet: I’m paying $95 per month for unlimited broadband which includes Spotify premium. If i switch to a different internet provider, I will pay $70 per month for unlimited broadband, and I can still opt for Spotify premium on top of that for $14.99. My monthly total will be $84.99, saving $10 per month.

🍉 Not a huge savings here and less than 10%, but it still adds up to an extra $120 per year in my pocket.

Step six

🍏 Contact your current provider and tell them you’re looking at reducing costs. Tell them about the deal you’ve found and ask if they can match it. Worst case scenario is that they just say no.

If it’s a yes, woohoo! Not much work there and a lower bill.
If it’s a no, then start looking at what would be involved in switching to a cheaper provider.

Step seven

🍏 Consider the practicalities of the things you’ve discovered above. If it comes with a crazy amount of hassle, maybe park for another day.

But if it’s doable and you need to get your bills down, then put a reminder in your calendar to call/email/filling the quote form and get the process started.

This could take some time, but you want lower bills right?

Picture how neat it would be to have that money in your pocket to save or spend or have a little treat. Put yourself first and make it happen.

You could set some time aside to work through this – forms and applications, phone calls etc. or just try to do one each day or each week as you have the time.

🎯 But whichever you choose, make a list of the actions, and schedule each one in your calendar. Set up phone reminders and get those tasks done.

Step eight

Finally:

  • Make a list of all the ways you’re going to save, and
  • Write down the total amount you’ll save each month
  • Total them over a year

🍏 This will help with motivation, because you can see how much your hard work is going to pay off.  You may have moments when you don’t feel like chasing the savings is worth the effort, because each saving individually might be small like $10 here or $15 there. If you can see the total amount you’ll save, it will help you keep going!

🍉 You might get a very nice looking total that will give you some financial breathing space, leave more money in your pocket for something you really want, or go towards your savings plan.

How I reduced expenses with The Tempest Challenge

Here’s how my numbers stacked up when I did the Tempest Challenge in 2020.  I usually try to do it once every couple of years, so there were a few things I couldn’t go lower on.

Here’s how my savings worked out:

Power:  Saved $25/month
Internet:  Saved $10/month
House insurance:  Saved $20/month
Groceries:  Saved $50/month
Gym:  Saved $45/month
Kids after school activities:  Saved $10/month

This works out to $160 a month saved, or $1,920 per year! I definitely can’t wait to have that back in my pocket!

Note: I didn’t list things I couldn’t save on at this point in time. For me it was mortgage, rates, some insurances, childcare, petrol. I’m hoping to save on my mortgage next time it rolls around to be re-fixed.

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