New money-saving idea: Pre-paying a year on select low-dollar monthly bills

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sanitation bill (2)
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If you’re following money expert Clark Howard’s advice and looking for every opportunity available to save money, have you considered prepaying a year on select low-dollar monthly bills to get a free month of service or a discount of some kind?

By taking this approach, you may only need to come up with a few hundred bucks to make a difference in your life.

RELATED: Save nearly $700 this year using couch change with the Penny Challenge!

Three kinds of bills that may offer ‘paid-in-full’ discounts

For years, I’ve watched my sanitation bill come in each month with an offer to get a free month of service if I’d pre-pay for 12 months in full.

I’ve never taken advantage of the offer until just recently.

In my town, my sanitation bill consists of three things: a trash can fee, a storm drainage fee and a street light fee. When you pay 12 months upfront, you get a free month of trash can service.

One month of trash can service for me is $22. Twelve months of sanitation service in total — including the $5/month storm drainage fee and the $3/month street light fee — works out to be a little more than $300 a year for me.

So by paying just north of $300, I’m able to get a return on investment of about $20. That’s roughly the cost of one month of trash can service.

It’s not a huge savings, believe me. But it is something. In fact, it represents a return of about 6.5% on my $300ish dollars. I challenge anyone to get a 6.5% return with no risk of capital loss in today’s rising, but still low, interest rate environment.

It’s like hitting a single when you’re up at bat. But you can turn a single into a double easily. Just use your savings to pay down debt or to build a savings cushion if you always find there’s more month than money in your life.

Or you could use it to invest for your future — did you know there are seven ways for you to start investing when you only have $100 or less?

Here’s another way to think about it…

If I decided to not prepay my sanitation bill and instead took that $300 and stuck it in a bank, do you know how much I would have after 12 months at a typical .01% interest rate?

A measly $300.03!

Or let’s be generous and say I stuck that same $300 in a high-interest online account and earned a 1.45% interest rate compounded monthly. I’d have a whopping $304.38 after a year.

So if I can take $300ish dollars and “earn” about $20 on it by getting a free month of sanitation service, I consider that a financial slam dunk.

Two other bills that might give you paid-in-full discounts

It’s little steps like this one that can help you get a toehold into a savings lifestyle.

Imagine if you could do this for every little bill in your life. Of course, you can’t. Just about the only other place I can think of where you consistently can do this is with your auto insurance.

Auto insurers will typically write your policy in either six-month or 12-month intervals and they’ll often give you a “paid-in-full” discount if pay the full amount upfront.

Bingo, that equates to more savings for you!

Finally, in some rare cases, cruise ship operators may offer you a paid-in-full discount. Of course, travel is discretionary and not really a monthly necessity like insurance or sanitation, but you get the idea.

Remember, when it comes to finding savings, one idea can lead to another and another…and pretty soon you’re finding ways to free up more and more money in your life.

That leads to a snowball effect of savings.

Isn’t it nice to be on the other side of the snowball and actually profiting — instead of facing a constant downhill onslaught of financial obligations in your life?

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Theo Thimou About the author:
Theo has co-written several books with Clark Howard, including the #1 New York Times bestseller "Living Large in Lean Times."
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