How do You Save Money in The Recession: Part 1
We all could save some money during these tough economic times. A few dollars saved here and there quickly accumulates into hundreds, if not thousands of dollars over time. Here are some simple, yet possibly overlooked ways to start saving right now. All that is required is a little discipline and the determination to stop wasting money. Before you continue reading, ask yourself some questions: "What are my financial goals and priorities?"; "Do I know where I currently stand financially?"; "Am I spending money mainly on things that I need or on things that I think I need?"; "Do I tend to shop when I am feeling lonely or upset?". Be honest with yourself in order to make an accurate assessment of your situation. An attitude adjustment and a few lifestyle changes may be in order. Here are some ways to save money that I have found helpful.
1. Pay cash for small ticket purchases when possible. The reason for this is quite simple. When you pay cash for something, you avoid the interest and finance charges that accrue on loans, credit cards, and other forms of financed purchases. With few exceptions, not paying in cash could be an indicator that you can't afford the purchase.
2. Avoid using debit cards for small ticket item purchases. If you are not very good at balancing your check book, you run the risk of putting your checking account into overdraft. This of course, would result in hefty overdraft fees. It is much better to set some cash aside for your smaller purchases. I am sure you would agree that it is foolish to pay a $30-$35 overdraft fee for a $10 purchase at the local grocery store. Good luck trying to convince your bank to remove overdraft fees.
3. Pay off the balance every month on all credit cards. If you can't pay the entire balance, then try paying more than the minimum payment due each month (as much over the minimum as you can). This will reduce both the principal and the interest that accrues on the amount owed. Paying more than the minimum payment will help you get your balance paid off quicker, and with less interest charges. It goes back to that formula we learned in middle school, i=prt. That is, interest equals principal, multiplied by the interest rate, multiplied by time. The longer it takes you to pay off a debt, the more you will end up paying in interest in the end. Remember to pay your credit card bill on time. Don't fall into the trap of paying even a minute late (literally a minute). Some credit card companies charge hefty late fees.
4. Try to negotiate interest rates on your credit cards. Your credit card company may be willing to work with you if you pay your credit card bill on time every month and your account is in good standing. Shop around for good interest rates and terms on credit card with competitors. In this way, you can dangle a threat of leaving to do business with another credit card company.
5. Shop around for the best and most competitively priced car insurance. I have personally saved hundreds of dollars a year by making comparisons of rates and services between insurance companies. All you have to do is call the insurance companies and ask for a free rate quote. I previously carried auto insurance with Progressive. For no logical reason, Progressive raised my monthly premium dramatically, at the time for the policy renewal. I was confused since I had no car accidents or tickets. I was not about to pay an extra $100+/month, so I shopped around. Fortunately, Allstate Insurance came to the rescue, and I obtained full coverage insurance for much less than I would have paid with Progressive Insurance. Asking your insurance agent to increase your insurance deductibles may decrease your insurance premiums, also.
6. Plan ahead for your meals. This lessens the chance of impulse spending and/or buying fast food when you're on the go and hungry. Not only is it much more economical to prepare your own meals at home, it is more sanitary. You don't have to worry about how some stranger may handle your food when you "brown bag it". Make a meal plan for the week and a grocery list before you go grocery shopping and stick with purchasing only the items on the list. Some people take the additional step of planning their meals around the current grocery store sales.
7. Related to number 6, make your own coffee. I admit to loving coffee and other related drinks such as espresso and have spent my share of good money on them. Consider this, it costs about $1.50 (maybe more) for a cup of coffee these days. Why not buy a bag of coffee grounds or beans and prepare your own cup(s) of coffee? It is cheaper over the long haul. Hypothetically, a cup of coffee at $1.50 everyday for a year adds up to $547.50. You do the math.
8. Use coupons and take advantage of store sales. It may seem a bit of a hassle to carry around coupons, but there is the potential to make great savings this way. Check your local Sundays newspapers for coupons on your favorite products and on those products and brands that you are willing to give a try. The Sunday newspapers usually come with manufacturer’s coupon inserts from Smartsource, Redplumb, and (once a month) Proctor and Gamble. In most cases retailers will allow customers to use store coupons along with manufacturer’s coupons for additional savings. Some retailers have double or triple coupon days, where the face value of the coupon is multiplied. Keep your eyes and ears open for sales and review store circulars before shopping. You can do coupon match ups with sales for even greater savings!
9. Buy in bulk and shop at discount and wholesale clubs. Sam's Club, Costco, and Walmart are excellent places to find great deals. So far, I noticed almost a $1 price difference on some food and cleaning products when comparison shopping between retailers like Winn-Dixie and Walmart. Keep in mind that you should still do unit price comparisons in order to determine whether you are getting a good deal. A membership may be required to shop at Sam's Club or Costco.
10. Last but not least, implement a budget. This will help you to be more conscientious about what you are spending every month and where the money is going. Don't beat yourself up if you overspend on some items in the beginning. With time, you will develop the healthy habits and discipline it takes to live within your means.
One great book that I recommend for the financially challenged and the financially savvy alike is The Total Money Makeover: A Proven Plan for Financial Fitness by Dave Ramsey. It is a very no-nonsense and practical read for anyone who is trying to devise a plan to overcome financial problems and achieve wealth. Dave Ramsey also hosts his own talk show. You can visit www.daveramsey.com for more details about his talk show and other information.
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