Holiday gift-giving season and extravagant J-Term vacations are fast approaching. With all the expenditures you’re incurring, it’s probably no surprise that your wallet is hurting. While you may not have the time now to reevaluate your budget and to make minor and major cuts in your spending habits, one site I highly recommend you check out before you make any money-saving New Year’s resolutions is www.BillShrink.com. I had the pleasure of interviewing Schwark Satyavolu, one of the co-founders and visionaries behind this money saving and comparing website. Below he shares with me how to shrink your bills for good.
SAINI: What is the concept of BillShrink?
SATYAVOLU: We spend $100 every month. For the vast part of America, a significant proportion of our income is paying for regular services. Everything from our cell phone, bank account, mortgages, etc. Often times there is no real way to raise issues about the services if you are frustrated. So sometimes, as consumers, we end up remaining unsatisfied. We are convinced we are being ripped off, but we don’t know what to do about it. And this consumer frustration is what we were looking to address with BillShrink.
The reason it is complicated is because these services are not the same among providers. For example, depending on your cell phone plan, “600 anytime minutes” can vary. What does “anytime” mean exactly? “Anytime” varies from one plan to the next. Depending on which phone provider you call, the number of “anytime” minutes varies for the same flat rate. Plans are hard to compare. The real way to compare the plans is if you, the consumer, tells us how you really view these services.
BillShrink is a platform that helps this. It asks you to provide the answer to questions and it will tell you what the right plan is for you. It’s effectively a personalized decision engine that helps you understand what the impact is of your usage and what it’s going to cost and what all the options are in the marketplace.ÿWe also do an analysis on performance, which is very helpful when looking at cell phone plans. If you live in Massachusetts you could get very different coverage than if you live in New Hampshire but still have the same phone. In short,ÿBillShrink answers the “it depends” question.
SAINI: How exactly does BillShrink save people money?
SATYAVOLU: BillShrink analyzes the way YOU use a variety of everyday services (like cell phone plans, credit cards, savings accounts, and even gasoline) and finds out exactly how much that specific pattern of usage would cost on EVERY product in the marketplace. We also take into account the plethora of optional add-ons where applicable to find the lowest possible cost for that pattern of usage.
For example, in wireless, we take into account which phones numbers you call, exactly what times you call, etc., to make sure we can actually tell you if T-Mobile’s Fave5 or the Verizon’s much valued IN-network is better for you. The net result is a recommendation that is in fact the BEST plan for you to be on for that specific pattern of usage. You change the inputs on how you use your phone, card, bank, etc., and the recommendation changes to suit that changed need. Also, BillShrink will automatically monitor every new product in the marketplace (and your bill if you so choose) and notify you whenever there is a better choice in the marketplace for your specific usage.
SAINI: How much money has BillShrink saved its customers?
SATYAVOLU: We have found more than $1 billion in potential savings for customers across our Wireless, Credit Card, and Gas verticals in just the second half of this year. Of course, the Credit Card and Wireless verticals have really high potential savings.
SAINI: Most HBS Students aren’t penny-pinchers. Who exactly is the ideal audience?
SATYAVOLU: Our audience is the smart shoppers (that would rather spend their money at restaurants over the weekend than pay the cell phone companies more money than they deserve). It’s also folks that are looking for some relief in this recession. BillShrink helps people spend less without changing their lifestyle. Our audience is evenly split between male and female, and skews to the more highly educated. This profile is typical of students and online savvy shoppers.
SAINI: How can graduate students, specifically, HBS students benefit from your site?
SATYAVOLU: Graduate students are well-known for their frugality – maybe not so much at HBS though! However, everyone understands that they could get two extra beers this weekend, if they were able to pay less for their cell phone plan. Some of you at HBS may even have pulled up Excel and crunched some numbers to figure out what you should be doing for yourself. Most of you are web-literate and are used to leveraging the web applications to do your work for you. Now there is an application that can make sure that you pay as little as possible for the services you need, WITHOUT changing your lifestyle (except for the extra beers).
SAINI: Why is it that most MBA students don’t understand personal finance?
SATYAVOLU: Personal Finance is like going to the gym – everybody knows it is good for you and something you should do. In practice, however, almost no one ever does it. So the problem is rarely that people do not understand its importance. It is more driven by two factors: 1) time and 2) pain. It takes more time than most MBA students have.
Secondly, not that many people enjoy pouring over numbers that show how poorly they are doing financially. It is just too painful to look at all the time. Hence, the philosophy behind BillShrink is not to make personal finance fun, but to get rid of it as soon as possible. To help people forget all about worrying about being ripped off by your biller (cell phone company, credit card company, etc.) – if there is a better option, your inbox will have a notice from BillShrink letting you know what you should do and how much more you could save on that option.
SAINI: What are your three favorite Money Saving Tricks?
SATYAVOLU: 1. Pick the best credit card for your spending patterns – I don’t carry a balance, so picking the right card would get me the most points. I just travelled to Europe for two weeks and stayed in nothing but the best hotels everywhere I went – FREE – courtesy of my Starwood AMEX card.
2. Saving money is like dieting. It is only as good as long as you stick with it. Save money on the biggest expenses that you have annually – find a better student loan, find better insurance providers, etc. and don’t sweat the small stuff. That makes it a lot easier to stick with it – forget about the little-drops-make-the-ocean philosophy.
3. You will probably make more money over your lifetime in the growth that comes off the money that you put in, than the money you put in to start with. So lay off of the high depreciation purchases, and instead invest that cash in instruments that have a good LONG TERM return instead.
SAINI: What money saving trick do you have difficulty incorporating in your life?
SATYAVOLU: The dieting part I mentioned earlier – sticking with a diet is the most difficult part. I probably look at my finances once or twice a year, but then they deteriorate for the following two years! This was part of my inspiration for BillShrink – to take it out of my purview, and have someone else do my work for me – automatically!
Good luck shrinking your bills, and have a safe and Happy Thanksgiving!
Your HBS Money Honey,
Mia Saini is a born and raised California girl. She is earning her MBA at HBS. She graduated from MIT and went straight to the sales floor at Goldman Sachs. She honed her journalism skills at CNN, WB, CNBC, and as a TV reporter at Jim Cramer’s www.TheStreet.com. She is the founder of HBS TV and is a video host for MBA PodTV on www.mbapodcaster.com. Each week she writes a “Money with Mia” column about money, business, and personal finance, so email HBS’s Money Honey your questions, story ideas, and feedback.