100 Ways to Save a Dollar without Lowering Your Lifestyle
Copyright 2011 by John Stilwell
Smashwords Edition
The artwork and images in this book were
created by and all rights owned
by John Stilwell
Other books:
The Puppy of Doom and Other Stories, 2011
In the Image of Gods, 2012
Death Is…, 2012
This book assumes that what you want are several easy to understand, practical ideas that you can use to start the saving today without decreasing your standard of living. No matter who you are, I guarantee that there will be at least one idea here that will pay for this book the very same week you read this! If this isn't enough incentive, conserving food, water and energy is going green.
The key to a healthy financial life is a balance between how much you make, how much you spend and how you invest. This book focuses on how to spend more efficiently. In the bulk of this work, I will present to you an example budget then walk through each bill and offer several ways to save money. Using multiple ideas, you will be able to significantly decrease your spending. In many cases I will tell you how to find resources on the web. All that is needed from you is the willingness to make minor changes in your habits.
A budget is like a pair of pants.
No matter how appealing it looks,
if it's too tight, you won't wear it.
If you don't have a budget it's a good idea to create one. A budget is not about telling you, you can't spend. It's about letting you know when you have spent more than you realized. Below are the topics in a typical budget. As each of you make a different amount of money I have listed the typical topics but not a dollar amount for each. I have left out potential bills such as child support and retirement. The rest of the book will provide strategies for making financial decisions and one hundred and twenty five tips organized by the below categories. I will start by presenting several decision strategies.
Decision Strategies
For a given set of decisions in your life you will make a fixed amount of money. It is likely more than you realize. For an adult who makes $35,000 per year and works 30 years, before taxes will earn $1,050,000. An amazing amount of this money ends up being wasted. It is wasted on fees and interest that with a little forethought, didn't have to be paid. It is wasted on rash purchases that a couple days later didn't matter if the money had never been spent in the first place.
The secret to creating wealth
is not how much you make but the difference between the
amount you make and the amount you spend.
1. Wants vs. needs.
You need to know the difference between a need and a want. It's very simple but many people get it wrong. You must spend your money on needs first. If there is any money left over then you can spend it on a want. If you get this right then the worst that can happen is that you get bored. Get this wrong and you can find your car being repossessed, you being evicted or worse. Some people are their own worst enemy. This is one of the most powerful ways they get it wrong.
You need food.
You want steak and lobster.
You need shelter.
You want your own house on the water.
You need transportation.
You want a sports car.
You need entertainment.
You want an 80" 3D high def TV.
You need some time off.
You what to fly to the islands.
You need to save for a rainy day.
You want to spend it all now.
"Wants" you can put off until you can afford them or do without completely. "Needs" can't be ignored or there are consequences. If you tell yourself that you "deserve" something then it is likely a want and not a need.
2. Avoid loans. Save then buy.
If you don't need it now then put away money until you have enough. Then buy it. It will be cheaper because you didn't have to pay interest on the loan. Also it cannot be repossessed should you fail to pay your bills. With credit card rates as much as 20% and higher, this alone can be a significant savings.
A friend once bought living room furniture for $2000. She was paying the minimum charge on her credit card plus $5 per month. I ran the math and by the time she would have paid off the bill, it would have cost her $22,000! That's the price of furniture and a tip the size of a new car for the salesman!
Spend as little as possible on interest on loans.
That much more will be left over for necessities and luxuries.
Save for a TV. Get a loan for a house. If you buy the TV with a credit card and don't pay off the credit card every month, it's a very expensive loan!
3. Buy one item at a time.
You can only do one do-it yourself project or play with one toy at a time. So, buy one and when you are done, then buy the next.
I had a friend who loved computer games. He would buy several at a time. Once he even bought ten. He spent $500. He would play one game for several weeks before finishing it then started the next. By the time he was half way through the stack of games, the remaining five were untouched, were old and he was no longer interested in them. He had wasted $250.
So, don't buy it until you are ready to use it.
4. Sleep on it.
Everything that sparkles, you want right now. It's how we are wired. When you see something that you want and feel that you can afford it, go home and wait until tomorrow to decide. Once time has passed you'll make a better decision.
Now that it is the next day you need to ask yourself if you need it or want it? Once you bought it, will you still what it a couple months later? Can you afford it? Can you buy it elsewhere cheaper?
Rash purchases are the most likely ones you'll regret.
5. Organize like possessions together so you don't keep buying the same thing.
Sometimes you have to re-buy things because you can't find them when you need them. How many umbrellas do you have?
My wife has many pairs of winter gloves. It is not that she collects gloves but when she needs a pair, she can't find any. So she buys several new pairs every winter. We have many copies of a lot of things. We have countless flippers and snorkels. We have four bicycle tire pumps. I even bought a new air compressor recently because when I needed to inflate my car tire I couldn't find the one I had bought three months before. I just know my first one is lost somewhere in the mountain of junk in the garage.
The solution is to store together everything that is alike. All the camping stuff goes together on one shelf. All of the bike stuff goes on the shelf next to it. All of the winter jackets, gloves and ski pants go in the same closet. The extra computer cables, CD's with the original software all goes in the same box. The tools all go in one corner of the garage. Always, always put it back when done with it. This way you don't have to go buy something because you really need it now and can't find it.
One day my wife wanted to go camping on the spur of the moment. She wanted to go right now. We drove home to change clothes and pack food and for me to round up the camping gear. Since I had it all in the same place, I had the car packed in ten minutes. She was amazed how fast I was. I was delighted that we didn't have to stop at the camping store.
6. How many do you really need?
My wife has five ironing boards. I don't know why. I've asked her and she says we need them all. An ironing board strikes me as a need. We have one in our bedroom and another in the hallway for the boys. Three are in a closet collecting dust. None of us like to iron. We're good about washing our clothes then pile them on the ironing board and walk away.
I think we only need two ironing boards. Yet we have five. How much do ironing boards cost? Do they wear out?
I once had two cars. I had a Mazda sedan and a Toyota station wagon I inherited when my mother passed away. I no longer had to rent a car on the rare occasion my regular car was in the shop. It felt great. I almost never used it. Then one day I realized that the car was constantly being used. My friends were the ones who had a need for an extra car. I was paying the cost for the tags, insurance and maintenance for everybody else's benefit. So, I sold the Toyota to one of my friends who needed a car. They got a great deal. I got $3000 to spend on stuff!
One day I rented a jet ski at the beach for $75 for the hour. I had a great time. I just had to own one. A week later I drove past a good as new jet ski second hand for $3000! And it had a trailer! Awesome! I could have a trailer hitch added to my car and I could use it all I wanted and not pay $75 and hour anymore!
Once I'd slept on it I considered that I had no place to keep it except in the street in front of my house. The home owner's association forbids trailers in the street so I guess it would have to be in the driveway. I'd have to keep my car in the street. I didn't like that.
I also had no idea where I could go to put the jet ski into the water. I didn't live on the water. The first few places I looked at were residents only and I wasn't one. I did find marinas but they charged money. So, once I bought the jet ski I'd still have to pay to use it. This wasn't going to be simple. I slept on it again.
I then wondered when I would be free to use it? Probably not that often. I realized that for as often as I would actually use it, it would be cheaper to rent at $75 per hour. In the past fifteen years, I have spent about five hours on a jet ski. That's a cost of $375. I saved $2625 by renting instead of buying.
I have similar stories about parachuting, hang gliding and scuba diving. Knowing myself, once I get to a certain level of proficiency, I lose interest and move on to the next hobby. I'm the type that is usually better off renting even at inflated prices.
Only consider buying expensive toys if you are the type to stick with a hobby for many years.
7. Think savings per year, not per paycheck.
Forcing yourself not to buy is never fun. So when you are making an agonizing decision as to whether cutting your spending this way or that is worthwhile, ask yourself how much money will I have in my pocket at the end of the year. Most people think in terms of the next paycheck or about two weeks. Thinking in terms of a year sometimes will surprise you.
My rule of thumb is if it will save me $20 a year then I probably don't care. If the savings is $200 over twelve months then I am suddenly interested. I can do something with $200!
8. The closet of unwanted stuff.
We all have it. It is a closet full of things we absolutely had to have, only to be used once and never touched again. But how can you determine if your next super cool great deal will end up in the closet? Do what I do. If you are really into something like wood working then you know that that super cool great deal of a tool will be useful to you over an over. You've been into your hobby for a long time and likely will for a long time to come. So if you feel you can afford it then perhaps this purchase is OK.
When you are buying something for the first time, you are at risk of adding something new to the closet of unwanted stuff. In this case, I recommend buying second hand. I bought my first camcorder for $150. At the time, a brand new one cost $1000. I used it for a year before I knew it wasn't going to end up in the closet any time soon. I also learned what features I did and didn't need in a camcorder. I was then able to buy a new one with the confidence that I would look back on the purchase as a good idea.
I did this same trick with my first hot tub, several power tools, and pieces of furniture. Purchases like second-hand exercise equipment ended up in the closet of unwanted stuff. In those cases, I had wasted only a fraction of the money I would have had I bought it all new.
Useful but rarely used power tools collect dust. I never replaced them with new ones because the second hand ones do the job when they are called on.
Great places to buy things second-hand are yard sales, Craig's List, Goodwill, the Salvation Army, local Pennysaver fliers, and bulletin boards at grocery stores. Some items like trampolines, hot tubs and exercise equipment are frequently "you-haul". If you have a friend with a pickup truck, you can have stuff for free! My first hot-tub was a free you-haul. The owner was tired of looking at it and just wanted it gone!
9. Throw Your Money At The Highest Interest Rate.
From time to time you will have some extra money that you could use to pay down a loan or invest. How to decide? Line up the interest rates of all of your loans and investments you are considering. Put the money towards the one with the highest interest rate!
10. Spend less than you make.
This is as much a goal as a strategy. If you make less than you spend then you are headed towards financial disaster. How to tell? You need to track your finances on a year to year basis. Determining your cash worth can be as simple as once a year adding your investments together and subtracting your debts. The ideas in this book will do a lot to get you in ship shape. As long as on average you spend less than you make you are on the road to a happy financial future. If you are having trouble achieving this then you have to also consider ways of increasing your income. This means a new job or a second one.
It is normal to have a negative cash worth when you are twenty one. This is when you buy a car, house and have school loans. If you aren't at least close to zero by thirty you need to try harder. If you don't have a positive cash worth by forty then you are in trouble.
If you need more sophisticated help because of complex crushing debt, I recommend "The Money Class" by Suze Orman. The focus of her book is to live within your financial reality. She goes into serious detail on many subjects including retirement planning with a lot of legal got-ya's.
11. Only buy with cash.
I love credit cards and will tell you several ways to use them to increase your buying power. But some people end up hanging themselves. Since it is easy to spend more than you should, you can easily accrue a debt in a month that can take you years time to pay off. For some, this happens every month until they are in significant financial trouble. This can be yourself, your spouse or child with whom you share your credit card with.
For any reason, if you cannot exercise control of your spending with a credit card then you need to get rid of it and pay all of your bills the old fashioned way. Pay by cash or check. Have a credit card for emergencies. An emergency does not start with, "I want" or, "I deserve." It starts with, "I will lose my job or house if I don't". If necessary, ask the credit card company to set your credit limit to a low amount. Pick a number that is useful to you but won't be disastrous if you have to charge it all.
Banks and Investments
1. Shop and Compare.
You should keep at least some of your savings in the bank. But the interest rates paid to you and fees charged can vary wildly. Banks including online banks, such as Orange, sometimes offer money and presents for opening a new account. It could be an easy way to make an instant $50. I once received $75 for opening an etrade.com account. My credit card was issued by Chase. The sleeve of the envelope that came with my latest bill offered $150 if I open a Chase checking account assuming I qualify. The fine print did have a long list of exclusions.
Savings and Loans are FDIC insured just like banks and typically pay higher interest rates on savings accounts.
Visit all of the banks and Savings and Loans that are convenient to you and ask the following questions. One will likely leap out as a better deal than the rest.
What is the minimum savings balance before being charged a fee?
What is the interest rate for a savings account?
What are the ATM fees?
Do they offer free checking?
Does their checking account pay interest? If so, how much?
What are the overdraft fees?
Are there any unusual fees such as a charge for using a teller or checking your balance online too many times?
Are there any special promotions?
2. Avoid ATM fees.
Generally, to avoid ATM fees you have to use the bank's ATM. If the bank with the best benefits doesn't have any ATMs (Automatic Teller Machines) near where you frequently need the service there is an answer. What banks have ATM that are convenient to you? Open an account with that bank and only deposit enough money to cover your ATM transactions.
I like savings and loans as they have the best rates with the lowest fees. So this is where I prefer to have the bulk of my savings. However, there is not one near my house. So, I have an account at a convenient bank with enough money deposited that I can use my ATM without paying fee's.
3. Your children's account may be losing money.
If you have savings accounts for your children, you could be losing money and not know it. Most banks charge fees if the accounts are below a minimum. They are waived if the account is designated a "Children's Account". It is a good idea to make sure this was done properly. You could be paying fees for several years on an account and not realize it. It happened to me.
One day, I opened a savings account for my daughter. She was very young at the time. It was below the minimum balance and slowly growing. On occasion I'd gather up my loose change and her spare allowance and take her to the bank and have her deposit it. Years later I discovered that the bank had not properly designated it as a children's account and had been automatically deducting a penalty. It took a while to get it all straightened out.
4. There are better interest rates than with savings accounts.