Cash Saving Advice

Here's a simple summary of what I've learned from all my personal finance reading and the dear school of experience.

Just in case you imagine that you have no willpower to change your thinking or actions, consider the fact that in our area it is possible to live without work, even while young and healthy.  Those healthy people may not live as well as working people, but the non-working have food, shelter, clothing and some medical care.

You may have developed the habit of going to work on a regular basis as well as an addiction to paychecks.  Will power is just a habit.  You already have it and you can develop it further.  

Shiny Nuggets of Technique

·        Pay yourself first.  Save for your retirement and an emergency fund of three to six months income first.

·        Diversify your investments with savings bonds as well as stocks and money market accounts.  The interest paid is more reliable and stabilizes your portfolio. There is no sales charge when you buy US savings bonds.

·      Save at least 10% of your income.  You'll have a comfortable retirement.

·       You don't have to start at 10%.  Gradually work your way up by starting with whatever amount or percentage you can afford.

·        Start with pocket change.  Save or invest your pay raise money, overtime, small windfalls, rebate checks or gifts for example.

·        In addition to your pension plan set up an IRA (Individual Retirement Account). If you expect to be earning the same amount of money or less after you retire consider the tax deductible and tax deferred IRA.  If you expect to be in a higher tax bracket when you retire you might consider the Roth IRA that gives no tax deduction but when you decide to take money out the withdrawals are tax free, since you've already had it as regular income.

·        Save pocket change and deposit it in a bank account every four to six months.

·       Easily accessible money in the bank is cheaper than easy credit.  Easily accessible money makes money for you.  Easy credit costs you money.

·         If you must have a credit card use the Internet to shop for low interest and no annual fee deals.

·         Assuming you're already making minimum payments: Pay off the credit card with the lowest balance first.  Immediately after finishing paying off that card begin using those payments, in addition to the minimum, to pay off the next highest balance credit card.

·        Assume breakfast, lunch, and soft drinks bought at work costs $5.50 a day five days a week. At 49 weeks a year, with three weeks off, you could save $1347.50 a year if you brought these things from home.

·        If there's food left over from previous dinners use it for lunch.

·         Fix large amounts of food at once and freeze and/or package it to eat easily for future meals.

·        Remember the long-term gains.

·        Balanced billing for electricity allows you to plan your budget better.

·        If you have four of your utility bills automatically withdrawn from your bank account you'll save $1.36 a month in postage, or at least $16.32 in 12 months of postage.  You may be afraid that you don't have a high enough balance in your bank account at the time a bill comes through.  Mailing the payment doesn't tell you exactly when the payment will arrive nor does it tell you when the check will be cashed.  You can select the date you want to pay the bill if you do it through the e-mail payment options available with most utilities.

·      If bounced checks are a serious problem perhaps using money orders or cashier's checks would help.  These types of payments are more expensive than regular checking but they're cheaper than bounced check charges.

·        You can get really good buys on books at used bookstores.

Smelly Lumps of Experience and Observation  

·          If it sounds too good to be true it probably is.  

·          Used bookstores pay you next to nothing for your books.

·        They're always nicest to you just before they rip you off.  For example, a tailor made suit at Neiman-Marcus includes a waiting lounge with television and free soft drinks.  The clerks at the food stamp office don't smile much at all.

·       Imagine you're on the board of directors of a large non-profit organization and one of your main buildings needs a new roof.  The first bid to repair it is outrageous.  The second bid is highway robbery.  The third bid is completely out of your league.  The fourth bid is half the price of the lowest of the other three and the contractor has answers to all your questions.  Do not.  I repeat.  Do not take that fourth bid.  It is a rip off and you will be left with next to no roof and most or all of your money gone.

·        Good work costs good money or a lot of work finding good and cheap.

·      The founder of Pearlman Productions in Houston TX told me he could create any TV commercial I wanted.  He could produce it good, fast, and cheap.  But I could only have two of those qualities in my ad not all three.

·        Most good things require some sacrifice.

·         Even good actions have bad results.

·       The bad thing about the bank, where I'm building my emergency fund, is that it's clear across town and I can't write any checks against it without a lot of work.

·     The good thing about my bank is that it's clear across town and I can't write any checks on my emergency fund without a lot of work.

·          Your life is much more than any amount of money.

·      Who is responsible for making your way in life?  Is it your creditors, your parents, your government, your children, or your spouse?  I hope that your final answer is you.

·        No load mutual funds claim not to have any sales charge.  What they have instead are fees, although the fees may be less costly than loaded mutual funds.

·       If you make the minimum on a credit card bill you can expect the total cost of the original charge to more than double.  For example a $100 dollar item on a charge card will cost at least $200 if you don't pay it off as quickly as possible.

·      Get your loans, especially credit card debts, paid off - long before you retire.

·     Paying for meals for large groups of friends, and dining out three or four days a week are not necessities.

·           This year's newest, flashiest car is not a necessity.

·        Rent to own stores, pawnshops, finance companies, tax refund loans, and auto title loan companies have the highest interest costs.  With fees and penalties their effective charges range between 200% and 700% interest per year.  Some businesses are helpful catfish other businesses are unfed sharks.  Know whom you're swimming with.