The sentence that could save you hundreds of dollars every month.

Personal finance advisor, New York Times Bestselling author and entrepreneur, Ramit Sethi, has a theory.

According to Sethi, saving money is less about going without, and more about having uncomfortable conversations.

Sethi contends that our biggest problem when it comes to money, is that we do not realise how much of what we pay is up for negotiation.

That includes phone bills, credit card fees, rent, fines, gym membership, television subscriptions and car insurance.

Mia Freedman, Monique Bowley and I discuss the negotiation tips that everyone needs to know on this week’s episode of Mamamia Out Loud. Post continues below. 

In the Western world, we’re not taught to negotiate. It’s not widely accepted to be part of our economy. But, according to Sethi, all you have to do in order to lower your bills, and wrangle your way out of fines, is follow his expertly formulated script.

With a phone bill as an example, Sethi says to start with the following sentence:

“Times are tough…”

Don’t add any more information. They don’t need to know your personal circumstances. And you’re not lying – times are always tough. This helps to justify the reason for your call.

“I’ve been a loyal customer for three years…”

It’s critical you don’t enter into a dialogue like this until you’ve done your research. Work out how long you’ve been a customer. Have you been a good customer? Have you always paid your bills on time? If the answer is yes – then use that as leverage.

Demonstrate your loyalty to their company with facts they can’t deny.

"I'd hate to go somewhere else... X is offering half that price..." 

Again, this is going to require some research. What are their competitors offering? Are there special deals that X offers? Compare them.

Sethi says that banks in particular invest tens of thousands of advertising dollars into acquiring you as a customer. Once they have you, they desperately don't want to lose you. Use that to your advantage.

It's the same with phone companies. They want to keep you happy rather than losing you to a competitor. What might seem like a significant amount to you ($25 less a month on a phone bill) is inconsequential to an enormous telecommunications company.

"What can you do to help me?"

This is the most important sentence of all, and alone could save you hundreds.

The trick is to ask a leading question, not something that could be answered with a 'yes' or 'no', which makes it too easy for them to shut you down. Don't ask; "can you remove that late fee?" instead, put it like this; "What can you do to remove the late fee?”

You're not being aggressive or overtly demanding, but rather you're asking them to help, and this conversation is not complete until they deliver.

Sethi is clear that not everything is up for negotiation, and we've got to be prepared to get shut down every now and then. But it's always worth having the conversation, because if you negotiate a lower monthly bill, the future savings are potentially endless.

On the subject of fines, Sethi says they are absolutely worth contesting, especially if you have a great history to back it up. If you've missed a credit card repayment and it's your first time, argue it.

If it's the first time you've exceeded your monthly data, you should be able to reason your way out of it fairly easily. If this is a recurring issue, however, you most likely won't be so lucky.

The key to negotiation is to keep your cool and stay respectful.