Feeds:
Posts
Comments

Posts Tagged ‘use cash’

Here are some suggestions for saving money.  While “cash is king” now with the high level of consumer anxiety, these tips can and should be used any time.

 

1.) Pay Yourself First:  This is the best advice that any consumer can take to heart. It works through any and all environments.  Set aside a certain dollar amount each pay period to savings and investment.  When you receive a pay raise, increase the amount going to savings, investment or your 401k to include a good portion of the raise.  Money is like water.  It fills up the space provided and the more available cash someone has, then the more likely it will be spent.  By directing it to savings (or an auto investment like a 401k) the less temptation there is for someone to use it on “wants” versus “needs.”

 

2.) Start an auto-investment savings and investment plan:  This is related to the first step.  Direct a portion of your savings into a separate savings account for your emergency fund.  Direct a portion into your company-sponsored retirement plan. 

 

3.) Bring Your Own:  Whether it’s bagging your own lunch or brewing your own cup of java, this will add up.  Eliminating just one cup of special mocha grande latte (or whatever they call it), you can save nearly $5 per cup.  Add that up:  Over the course of a year, eliminating just one cup per day on your way to work can save at least $1,200.  Over the course of five years, that money put in a FDIC-insured account might be worth $5,000 to $6,000 – a tidy sum for some other more worthwhile endeavor (maybe a vacation, maybe a home improvement, maybe college savings).

 

4.) Use Cash:  When buying gifts or even a night on the town, use cash instead of credit cards.  Cash seems more real.  It is more immediate.  When the amount in your wallet drops by the cost of four movie tickets and jumbo drinks, it stings a little more than putting it on plastic. 

 

5.) Avoid Unneeded Insurance:  Don’t skip needed coverage on your auto, home, income or life.  And review these types of policies at least annually (or when there is a life-changing event like a birth) to make sure that adequate coverage is in place.  But skip the extended warranty coverages on small ticket items.  For instance, a cordless phone that costs $20 at Radio Shack may offer a 2-year extended warranty for replacement at $5 but that’s just increased your cost now by 25%. And it is more than likely that if and when the phone gets fried, you’ll be able to simply replace it at the same current cost with even more fancy features anyway.

For big ticket items, it may make sense to have some type of insurance in place:  a computer used for work, an expensive plasma TV.

 

Speaking of insurance.  Deal with a reputable Property & Casualty insurance agent who has access to many carriers.  Be sure to call and review your coverage.  Going for the lowest premium is not a way to save money.  Example:  Owning a home with a replacement cost of $400,000 and having outdated coverage up to only $300,000 exposes you to all sorts of risks and out of pocket costs if there is a damage claim since you’ll only get a proportion of the loss covered by the insurance.  Why?  Because you did not have full replacement cost coverage.

And it’s a good idea to insure only that portion of the risk that you are not willing or able to bear.  So consider increasing your deductibles on things like your auto and home insurance policies.  A policy with a $1,000 deductible will cost less per year overall than one with a $250 deductible.  And with the savings you’ve established from Step 1 above, you’ll have the deductible covered.

 

Example of being penny wise (i.e. annual premium) but pound foolish (i.e. larger out-of-pocket outlay).

 

6.) Save the Planet – Reduce, Reuse, Recyle: There is a bumber sticker out there that says “Think Globally, Act Locally.”  Here you can do your part to make the world a little more green while putting some green in your pocket as well.   There are a host of ways that one can cut back without too much impact on lifestyle.  Your mom’s advice here works: Shut off the lights when not in a room, don’t keep the refrigerator door open so long that you could paint a picture, wash your clothes in cold water instead of hot, unplug battery charges when not in use.   To reduce water consumption consider shorter showers (a challenge with teenagers, I’m sure) and don’t let the water run constantly while shaving or brushing teeth. And consider reusing plastic packages for other storage instead of simply tossing them.  And if your community has a recycling program, use it.  The more your community recycles, the lower the garbage collection tipping fees.  And that may mean one less excuse to raise your property taxes.

 

Hope that this helps.

Advertisements

Read Full Post »

%d bloggers like this: