Saving money and Investing

Saving money and investing

In these harsh economic times, we all would like to save money. Most articles just explain how to save money, they neglect to tell you what to do with your economic boon. The ideas that follow not only help you save money, they allow a better quality of life and more financial freedom. Any companies or services listed are suggestions and should not be interpreted as an endorsement unless otherwise stated.

Beginning with the largest savings, the home; the trick is to ask your bank to lower the rate on a home equity line, or downsize. Why continue to pay loads of money to heat and cool a large home when a smaller one will suffice? You will also save on the rent/mortgage payment. Also, many states have renter/property tax rebates, be sure to file even if you think you will not get a rebate. Visit your respective states Department of Revenue website for current information. The monthly savings could begin around $250. That translates to a minimum annual savings of $3000.

The next item that drains many households financially is the automobile (s). I still see dozens of people everyday driving around alone in SUV's! Yes, running errands! Instead of trying to keep up with the Joneses, try living practically. Do you really need a large and new vehicle, when a smaller, slightly older one will do? Trade in your SUV's and get a more sensible vehicle (at press time, you are likely to take a loss in value for trade in, the market is not able to turn them over quickly). Over time you will save in fuel costs and environmental costs to make up the loss at trade in. If you own a vehicle a few years older your auto insurance is generally cheaper than for a newer vehicle. You want to be able to lower the payment or own it outright so as to not have a payment. Just by downsizing and paying less in insurance, your minimum monthly saving begins around $150. That is around $1800 per year.

Another huge expense for many households is credit card or maintenance debt. Though cliche, pay credit card debt first. Pay just an extra $20 per month on a $50 minimum payment and in just 3 months you will have saved at least $28 in interest alone, on one card! (This formula assumed a balance of near $1500, an interest rate or A.P.R. of around 11%.) Many of us have multiple credit cards, but to succeed at this part, we have to intend NOT to use them once we start to pay them down! This is where real savings and financial freedom start. Maintenance debt would be like student loans or automobile or boat payments. Pay as much as you can each year out of college; as of press time, you can deduct dollar for dollar any interest paid on your student loans up to $2500 on your federal return. This can significantly reduce your taxable income and reduces your student loan debt. Paying extra on other maintenance debt is generally not tax advantaged, except for the newer renewable energy home improvement credits. But paying extra on the car, boat, computer, etc., does reduce the amount you pay in the end. On amortized debt, you save a little in interest by making extra payments. Just paying the $20 extra on 4 credit cards per month and not using them can save you a minimum of $88 or a total of over $1050 plus interest, closer to $1250 in the first year alone.

Another major expense in any household is groceries. You can find a wealth of information on this subject but these are tips that anyone can follow; whether you are single, elderly or a family of 5 on a budget.

Use coupons! I get the Sunday paper in my city and clip the grocery coupons, every week. It takes less than 10 minutes and the paper costs $1.75 (some cities the Sunday edition runs around $3, you'll have to clip and use a couple extra coupons). Most publishers do not print coupons for holiday weekends (Easter, Independence Day, Thanksgiving, Christmas, etc.) so you can skip those weeks and save a couple dollars right there! Americans redeem billions of coupons every year at grocery stores and big box chains. They are printed for all of us, use them! The more we redeem the more manufacturers will print coupons. You can also visit your grocer's website or try coolsavings.com or similar sites.

Does the coupon redemption really add up? Yes. I save an average of $8, per visit, three times a month. I am a single male on a budget. This translates to a minimum of $24 per month $288 per year. If you are a couple or a family, you begin to do the math, and see that with coupons alone a couple can save over $560 per year and a family of 4 would save over $1100 per year. The couple and the family of 4 can actually save more because you can buy bulk or bigger quantities. Your per ounce cost is driven down the higher the amount you buy.

Although I do not advocate frequent use clubs other than airline miles, I do recommend grocery club cards and Sam's or Costco (wholesale clubs). Although you should note that if you go the Sam's/Costco route, you have to visit at least three times a year to save enough to cover your annual dues (around $45 in most states). A fourth visit will guarantee savings over your annual fee. Costco also offers fuel and is generally priced about 3 to 4% less than your traditional gas station. At the current price of gas (3/6/11, around $3.55) this could be savings of over $6 per week or $310 per year. Grocery chain club cards tend to offer a lot of "2 for 1" offers or discounts for bulk purchases or frequent purchases of certain items. Meat also runs cheaper at Sam's/Costco, so if that is a significant part of your family's or household's diet, you can save untold amounts this way. Realistically a family could save at least $15 per month just by buying meat at the wholesale clubs. That would be close to $200 a year for something you already buy, you are just shopping smarter. Note: Costco and Sam's Club do not accept coupons, Costco recently started mailing their own to members.

Make a list before you go to the store. Plan meals for a week. Stick to your list. Give yourself a time limit. Making a list gives you a definite guide to follow. Planning what you are going to make allows you to plan your list smarter. If you are going to make hamburgers and spaghetti in the same week, you can buy extra ground beef, because buying a larger amount gives you a better deal (lower cost per ounce). If you stick to your list you will not grab many "extra's." This would include candy, magazines, gum, lighters, nail files, and anything else they try to sell you by surrounding you at the cash stand. Allowing yourself a certain amount of time means you will allow yourself to spend only so much. Studies have shown that for extra time spent in a grocery store, or "wandering" does increase spending. It is also just good time management to limit your time in stores.

Coincidentally, if you are planning meals and making them, you can freeze your leftovers. If you are throwing a party or you have a large family, if you don't have a lot of time to cook each day, or you just want to save money, this is an easy way that many families overlook to save money. A great example is that my family loves Mexican food, so when we get together, we often make a taco night. We brown several pounds of ground beef and we also make chicken. We have soft shells and hard shells and we cut lots of vegetables. We are able to have taco's or burrito's for 2 to 3 days and all we have to do is reheat the meat for a meal. Anytime I make chili, spaghetti, pasta salad, lasagna, manicotti, etc., I make enough to freeze extra so I have ready made meals anytime. By not having to cook just one extra dinner each week you can save around $8, or $32 per month or $384 per year. This requires a couple minutes of planning each week and a couple minutes to manage the items in the freezer. Anyone can do this!

In these few steps you have gained many ideas how to save money. But why and what should I do with it? The why is for financial freedom. Being in debt is like being in prison, so do what you must do get out. Another why is so you don't have to think, "can I afford this DVD at Walmart?" or "if my auto breaks down, how will I pay for repairs?" We all ask ourselves these questions and we do not want to HAVE to use a credit card. It feels incredible to pay cash for something and not get a bill with interest three weeks later.

Having money and having control of your money are keys to having a great quality of life. For example, by saving enough from some of these steps you can take your family on a dream vacation or buy a new used car and pay cash for everything. You will never get a bill or notice from a credit card company if you pay cash!

What to do with your savings? In the end we all want our money to make more money so the wise thing to do is invest your savings in a manner that generates more income. Money market accounts, bonds, certificate's of deposit (cd's), stocks, annuities, etc. You can put away more for your retirement in a 401k or Roth IRA. Gold is a hot investment right now and has rarely "lost value" at any time in history.

You can buy life insurance or extra insurance. You can start a business, or since you should have more free time because you don't have to work as much, you can get a part-time job if you want to earn more. You can start an online business. You can take up a new hobby. You can buy the boat/snowmobile/ATV you've always wanted and not use a credit card, or you can pay it in full immediately. You can actually have some left over to leave to the kids and the dog.

You can save money if you really want to save. It is like a diet, you have to want to lose the weight and keep it off. Or like quitting smoking, you have to want to quit first before you can succeed. With money, you have to WANT to save and you have to WANT to be in financial control of your life.

The resources below (books and dvd's) give great advice on saving money, managing money, having a better quality of life and in some cases even green living.

Comments 5 comments

tim 5 years ago

Any money you put into a Roth IRA grows absolutely tax-free. You won't owe a dime now, nor when you cash it out in retirement.


CJamesIII profile image

CJamesIII 5 years ago from Minneapolis, MN Author

Thanks Tim. Great advice. My hub got a little long so I did not include actual details about investing, just options.


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bobbyarena 5 years ago from Brockton, MA 02301

It is diffucult to save money over the long term because most people save up to buy something that then costs them an additional monthly sum. Good Advice though anyone that can save and save for then long term and then keep the money has alot of discipline.


CJamesIII profile image

CJamesIII 4 years ago from Minneapolis, MN Author

This is the least read of all my hubs... Hmmmm! Does anyone want to save money and be in control of their finances or get ahead and be able to invest their hard-earned money? Read some of the books shown above, they are great resources!


CJamesIII profile image

CJamesIII 3 years ago from Minneapolis, MN Author

What are some other ways some of you are saving money each month that may not be as common as those listed here?

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