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The Importance of Saving Money



September 04, 2014 – Comments (0)

It was once said:

annual income £20 + annual expenditure £19 = happiness

annual income £20 + annual expenditure £21 = disaster

OK, so how do we get to £19? If I read one more article recommending that we give up our morning latte, I think I will scream. The truth is that bringing a thermos of coffee to work in the morning is not going to make you rich.

BUY A USED CAR. A local consumer reporter, whose parents were in the car business, is constantly giving this advice. He points out that a substantial % of a new car's vanishes the second you drive it off of the dealer's lot, and this continues for a couple years. So, make the new car buyer's loss your gain: buy a car that is a 2-3 years old. Today's cars are reliable and of high quality. So, you can buy a car of your choice for a fraction of the cost of a new one.

DON'T CARRY A CREDIT CARD BALANCE. You are probably paying something like 25%. So, a $1,000 balance is costing you $250 per year. It is like flushing money down the toilet.

DON'T USE A PAYDAY ADVANCE PLACE. Just don't. I realize there may be a point in your life where you feel that this is the only way out of a tough situation. However, many people do not just use it once but start to roll over the balance over and over again. You are paying interest rates perhaps 50% or more. Do your best to find a different solution, no matter how painful.

THE $1 STORE. There are 3 different chains (perhaps 2; I am having trouble keeping track). When I first walked into one of these stores, I was surprised at how much of the stuff was of reasonable quality. The one in my neighborhood is a good place to get: personal care items, cleaning chemicals, party decorations and favors, stationery, cookies, plastic containers, pills (aspirin, allergy, cold), and frozen food. So, if there is one near where you live, make it a habit to stop by on your way to the supermarket. You might be surprised at how much of your shopping list you can fill for only $1 each.

GENERICS & HOUSE BRANDS. I hope everyone already knows about this. They are functionally equivalent to the name brand version. In fact, it might have been made in the same factory as the name brand one right next to it on the shelf. However, this is not always true. For example, Tide laundry detergent really is a superior cleaning product. Off-brand sodas usually taste different from the big names.

BUY STUFF ONLINE. I have saved piles of cash thanks to this one. You have to watch the shipping charges, but my favorite (whose name sounds like a very big river in Brazil), waves the shipping if your purchase is at least $35, which is not difficult to do. I buy vitamins, batteries, clothes, electronics, kitchen tools, books, DVDs, and about a gajillion other things at fabulous discounts to a B&M.

BUY OUT OF SEASON. For example, electronics are heavily discounted on Black Friday. I bought my laptop on this day. It has an i3 CPU and 4GB. I was able to dogpile several discounts and paid $200 + tax. There are websites that will guide you as to what to buy and when.

HOME APPLIANCES. Some careful writers will offer you a comparison between different brands or models within the same brand. You can save $100s. However, I know that some of you are very fussy about name brands and models. Since you will be interacting with it daily for many years, this is not unreasonable. In this case, it is OK not to buy the cheapest choice.

YOUR HOME. There is a lot of $$$ to be saved here. I have read recommendations that you move into a smaller home or an apt. However, if you like your home and the town you are living in, or have a job you like and wish to keep, moving to a smaller house in a different state to save $50,000 might not be a viable option.

VACATIONS. This is one you should probably ignore. I have read advice like: take fewer of them, vacation closer to home, go on day trips to the beach or park, do a staycation, or go camping in your backyard (no, I am not kidding: someone actually said this). Vacations help us keep our sanity. Conversely, you should be paying for it with cold, hard cash. This means you will have to save up out of your daily budget. If cannot afford the vacation you want, then you will have to alter your plans accordingly.

ENTERTAINMENT. I have read suggestions like: do not go to the movie theater (wait a few weeks and rent the DVD), do not go to concerts (watch their music video or listen to the CD), do not go to ball games (watch it on TV), do not go to fancy restaurants (prepare gourmet meals at home), and do not sit on a bar stool guzzling down expensive craft brews (buy a six-pack at the supermarket and enjoy a frosty adult beverage on your couch). However, these are little guilty pleasures that help make everyday life a little more pleasant. This is another one you might want to ignore.

CUT THE CORD. Hey, look: you can save $1,000 a year, and $10,000 in ten years! Well perhaps. If, like me, you rarely watch cable, then canceling it makes sense. However, if you enjoy it for several hours at the end of your workday, then this one is a nonstarter.

SAVING—THE NEXT GENERATION. The reason I have spent so much time explaining every money-saving trick I can thick of is due to this advice: take 15% of every paycheck and put into an investment account. Force yourself to live on the remainder. The advice above will help you make ends meet at the end of the month, especially those of you who tend to live paycheck to paycheck.

Take the time to have some fun in your life.

As always, if I have missed something, do let us know in the comment box below.

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