Saving money: living within your means
Frugality is a virtue that can be taken too far. Here are a
number of pointers on how to find a sensible middle ground
between overly stingy and wasteful.
Frugality is a virtue that can be taken too far. You know you're
there when you're seriously looking into issues like recycling
dental floss or replacing hot showers with paper-towel and
rubbing-alcohol sponge baths. On the other hand, daily splurges
at Starbucks, late-night infomercial shopping and pet-spa
treatment for your dog will likely prevent you from saving
enough to ensure a comfortable retirement. In other words, we
need to establish some sensible middle ground where you can live
a normal life without going broke. Here are some suggestions to
get you started.
* Be a picky customer. Ask the credit card companies to lower
their rates. Call your auto insurance company and ask about
good-driving discounts, and whether they can give you a better
deal for consolidating all your insurance needs with them.
Compare the fees on your investments and threaten to take your
savings elsewhere if you don't get a better deal. Typically,
each of these calls only take a few minutes, but over the years
these small changes really stack up.
* Start making extra mortgage payments. You can shave years off
the life of your loan by paying an extra $100 a month now, which
is especially appealing for those who intend to stay in their
houses until retirement. Another option is to sign up for a
bi-weekly payment plan, in which you simply pay half your
mortgage in the middle and other half at the end of the month.
While the sum stays the same (former monthly payment divided in
two), the wonder of compound interest kicks in and takes years
off the loan.
* Don't change cars often, but when you do, buy used. Sure, the
'new car smell' is nice, but by the time it has worn off, so has
several thousand dollars in value. When picking your used car,
go with quality. In addition to the auto magazine ratings, do
your research online to get consumer opinions on different car
models. If hundreds of people sing the praises of model A as
being reliable while model B is said to break down weekly, it is
worth a little extra to get model A. If you keep the car, say 5
years, and you pay $1,000 more for model A now, you have to
weigh that against the likely repair bills for all of the 5
years if you had model B.
* Carpool, take the bus or bike to work. With gas prices the way
they are, you'll save a bundle even before counting wear and
tear on your car.
* Get online with eBay. Don't throw things away, put them up for
sale and see just how much others will pay for your old stuff.
It may be clothes, tools, bikes, CDs or paintings - anything
goes if the price is right. Shipping is on the buyer, so
anything above zero is a gain for you.
* Don't assume that all do-it-yourself projects are good.
Compare the potential income you could have earned in the same
time, plus material, and see if it's equal or more than a
contractor would cost. What good is saving $100 by doing
something yourself if you could have worked an extra shift and
earned $200 in the same amount of time? Then there are the
issues of quality and risk. A house improvement project that
looks like crud will bring down the value of your house, not the
other way around. Likewise, if you're accident prone and plan on
spending hours on an unsteady ladder while painting the house,
you should consider your potential for lost income in case you
take a fall and break your arm.
* You don't have to give up the foods you like to save money as
long as you go with generic store brands. It's easy to get stuck
in the habit of going with the familiar package, but look at the
ingredients and you'll likely find that it's a carbon copy of
the name-brand original - except the less glamorous package cost
10-30% less. This goes for everything from soda to crackers.
* Warehouse clubs can be great, but beware of buying stuff 'just
because it's cheap'. Enter the store with a shopping list, don't
buy more than you need, and compare packaging sizes - sometimes
that small box is cheaper than the big one!
* When going on road-trips, do an Internet search to locate
cheap but decent motels along your route and make note of their
address and phone numbers. Then you can call from the road and
check vacancies to avoid panicked, last-minute check-ins at some
hideously overpriced roachtrap because you have no options.
* Plan your vacations for the off-season. Guess what, the
Bahamas are nice year-round. By scheduling vacations in the
off-season you get better hotel rates, better service and more
bargaining power for anything you buy. And you'll avoid the
crowds, too. Save even more by flying out on a Saturday or other
low-traffic period when airfares are low.
You can find more information here:
http://www.tradingideas4you.com/finance-money/finance/finance.htm
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