Posted on 02/29/2008 4:59:13 PM PST by RKBA Democrat
For larger items (appliances, jewelry) save up money towards the purchase and pay CASH after a year or so. Save even more by combing the nearby malls and stores for sales before you buy: such as gold chains after Christmas, or scratch and dent on washers, driers, and deep freezes.
Blockbuster and/or Netflix are much cheaper than going to the theater -- and popcorn at home is much less expensive than the partially hydrogenated oil and salt mixture at the cinema.
Walking is cheaper and more relaxing than joining a gym -- and it puts less stress on the knees than running. A good pair of shoes will be yours for the price of one month's membership. And you will save time too by not having to drive, park, dress, and shower while at the gym.
Cheers!
Perhaps you could recommend smaller steps for those not as advanced as yourself?
Or better yet, explain how you got to the condition where you can easily speak of increasing net worth by $120,000 per year. A very good goal, but lacking in practical details.
Cheers!
The Millionaire Next Door disagrees with you.
Cheers!
I got one about three weeks ago. Love it. Free Telephone. No more regular land line.
Another great phone tip is Boost Mobile Unlimited. For just $55 a month you get unlimited calling all over the U.S. with NO Contract.
Here is the link to MagicJack in case anyone does not know what it is.
magicjack works great. You use a regular phone. Just plug the magicjack into your computer USB slot. The other side of magicjack is a regular phone jack. Just plug in the phone.
We have been using it for three weeks. I told Verizon to take a hike. No more land line bill. It is great!
Bump for a later read!
There isn't a single word in the article about the actual way to save money, which is to save money. Not forgo an expense, not eat sawdust, not live in a hovel and sew your own clothes. You know, savings account, balanced mutual fund, 401k, IRA, etc.
You want to save 10% of your income, minimum. If you are starting late, 15 or 20. You are thinking, no way I can do that, I don't have the discipline and besides I can't afford it. So don't rely on your discipline, rely on somebody else's self interest, same as you do for any other service. And as for not being able to afford it, you can't afford not to, but you can also get there pretty painlessly. I'll tell you how.
First get a savings account that pays interest, ING is fine as the article says, anything with 3-4% these days. But it has to have no minimum balance, and no fees. Now, sign up for *automatic contributions*. If you are paid every week, every week. If you are paid every 2 weeks, every 2 weeks. If... you get the idea. Pay yourself first. That is what this is. Start small, $50 a paycheck is fine. But start immediately.
Next, if you have a 401k or 403b available at work, use it. Go see your human resources or benefits person, or talk to a co-worker already using it. You fill out one form and say how much to contribute, and it comes from pretax dollars. Most employers will provide some kind of matching contribution as well, which along with the tax benefit makes this simple the best investment money can buy.
Put it in a balanced mutual fund. If you only get single type choices, put half in stock and half in bonds to keep it dirt simple. Don't get fancy, the choice of assets has *nothing* to do with successful saving. You just want to get the average, so get something broad, diversfied, representative.
Now the amount. Start with 6%, that is the level most employers will provide a match against. It will only "feel" like 4-5% because of the tax aspects. To make this easier to take, do it right after you get a raise, if you like, but don't put in off more than a year.
These contributions will be automatic and they will earn real money over time. Automatic means disciplined. Moreover they are behind a tax consequences wall, you won't touch them.
If you don't have a 401k at work, then use an IRA. I recommend a Roth IRA for the flexibility. You can contribute up to $4000 a year to one, but think of that as $150 per pay period or $75 per week. Use a no load mutual fund company - I recommend Fidelity or Vanguard, the biggest and for most purposes the soundest. They will generally have minimum investments, but will lower them for IRAs and regular contribution plans, with $200 a month being a typical starting level.
I said save at least 10% of income and then told you to start lower than that. Well, sure, but I said "start". So here is the secret kicker than makes it all work. It is blindingly simple.
Just raise the amount you contribute 2% per year. For the IRA or savings account cases, make that $25 more per time, instead.
Last item - do not overpay for a big house, but do make a mortgage payment rather than a rental one. Get a fixed rate conventional mortgage. If you have to borrow beyond that or pay mortgage insurance on top of it initially, then get that paid down as you can. If rates drop 2% refinance, still fixed, otherwise ignore market blarings in the matter.
Always work, and be grateful and respectful to your employers and patrons.
You can use the savings account, only, to pay off CCs and major purchases. You can use the Roth IRA and savings both, to make a house downpayment, if currently renting. Do not touch the 401k under any circumstances, until retirement.
Wait 5-10 years. You will be liquid, a saver, have no CC debt, and on your way to a comfortable retirement.
You can drink coffee if you like coffee, you don't have to eat sawdust or sew your own clothes. Just save, by paying yourself first automatically, decision out of your hands. Start small but start tomorrow, and ramp the amounts continually, every raise you get.
The way to save money, in short, is to --save-- money.
A friend told me about a couple she knows who were making tons of money as fast as they could fill out the forms. They were mortgage brokers. I wonder how that couple is doing now? Not too well, I bet.
Sometimes we call people misers, if the shoe fits. I do understand the idea of saving for retirement or saving for an emergency. And, it’s a good thing to keep some cash in reserves. That said, I know folks who take this to the extreme. Save that cash to do what? Spend it later? So what’s the dif. Spend it now or later. You don’t live forever.
Looks interesting. Thanks for the tip!
I have found some odd side and freelance jobs for photo and video work thanks to Craigslist.
Thanks for that great link! As a mom of four little ones, we need all the help we can get stretching the food dollar (especially since we have 2 in Catholic school and live off one income). I am always on the lookout for meal ideas that my kids will eat and don’t break the bank.
Can you get incoming calls?
One tip I learned from a Neal Boortz book: “Somebody’s Gotta Say It”, is to never spend a dollar bill. In other words, only use 5 dollar bills and up, and when you get change back in dollar bills, put that aside for savings.
‘
Of course, longer-term it would work itself out and the country would move forward on a firmer financial footing. But the short-to-medium term economic dislocation caused by a return to the values of 100 years ago would be horrendous.
Soon to be the talking points of the Obama campaign (Especially after he, a presidential candidate yacked about how to raise children)
If you have a 30 year mortgage, switch your mortgage to the
Home Ownership Accelerator. It is the only mortgage in the USA which pays principal first. I have been in this mortgage for 6 moths and have paid my $126k mortgage down to $114,000 this is amazing at how efficient it is.
“The way to save money, in short, is to —save— money.”
I view this a little differently. There are two sides to saving money; maximizing inflow (i.e through job and investments) and minimizing outflow. This article and thread speaks to minimizing outflow.
In finding articles to post to the “surviving socialism” pinglist, I look for articles that address both sides. The reality, though, is that financial writers tend to specialize. So I look for a variety. You work with what’s available.
Your advice is rock solid. I have a few articles in the queue addressing the maximizing inflow side which I hope you’ll post to.
“If even a significant minority of Americans started living this way, the Dow would crash below 5,000. You would lose as much in retirement funds as you saved in out-of-pocket expenses. ;)”
Been to a shopping mall lately? If there has been a sudden cultural shift toward frugality, I haven’t noticed it.
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