Join the newest rage: save money!
May 1, 2009 by Richard Sand
Ever since being a child I have encountered the concept of “save for the future”. Then along came a concept called instant credit, specifically credit cards.
This was a counter-culture to the saving concept and encouraged spending. Spending money makes us “feel better”. And if we feel better, we spend even more. And if we use credit for the purchase we typically spend 30% more than if we used cash.
Now that banks are failing due to excessive lending, we see credit being tightened and a new lifestyle emerging. The concept of saving has returned.
And herein lays the trap. A day does not pass where I do not see articles on how to save money. A booklet just reached my desk and the lead article was “ideas for saving your family money”. But the approach was all wrong. Inside was nothing but ideas for spending money but a discount coupon was offered with each idea. That is not saving money. You are still being enticed to buy things you do not need.
If you truly want to save money, consider doing without many of the things you consider necessities. Necessities can be described as those things essential to provide basic health, food and shelter. And we all have habits which exceed basic needs.
The following is a sample of changes which could place over $5000 in your pocket.
Let’s start with cell phones. The average cell phone bill exceeds $100 a month. Fifteen years ago cell phones did not exist and we did just fine without them. Savings = $1200+ per year.
Get rid of the extra vehicle(s). Savings will occur from not paying insurance, licensing, repair, gas etc. And let’s not forget the monthly payment. Easily saving another $1-3,000 a year.
And here is another novel concept—eat at home. A “meal deal” at any restaurant will easily cost $6. You can make the same thing at home for less than $1. Opting for grilling a steak at home will save over $10 a meal. Savings will exceed $2000 a year for most families I counsel.
You are in a personal war with the government and industry. They are encouraging you to spend. The government needs the tax dollars generated and industry is always trying to develop products you do not need.
Why do you think you got a stimulus check last year? You were given “seed money” in hopes you will also spend some of your own. They need you in the stores and continuing your wasteful lifestyle.
Now is the time for some very hard decisions. So, are you joining the new savings rage or will you continue to wastefully spend your income? Believe me when I say your future depends on your answer.
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I agree, most money saving articles that I have read talk about how to save money by spending money. Most Americans have more than they need, now is the time to shift through the trash at home and find all the valuable stuff you never used. I wish this article had more money saving ideas. First, I have a cell phone which is part of a family plan with my family, it cost me $22.00/month. I have no 2nd vehicle. Eating out is expensive, I’ve cut way back. Also learning how to buy good food that improves your health so that you don’t have to go to the doctor and run up your medical expenses. Most people don’t know what they knew in ancient times: Food is Medicine. Nearly all modern medicines are made from herbs. If you eat the herb you avoid the side effect and helps keep you away from the doctor. Use cash, studies show that people who use credit/debit spend 200 - 300% more then if they were to use cash. Will power doesn’t work, I keep my debit and credit cards at home in my fire proof safe whenever I leave the house. This keeps me from any impulsive spending. I take enough cash for what I plan to buy. Stop contributing to your 401K plan, the stock market is no where near the bottom. Be debt free, own your own home, car and enough land to garden and have a large savings before you put extra money into the stock market. Claim 2 on your tax form, not 0. Many of us like the forced savings and the rebate check back from the government. We also are afraid to owe any money come April 15th because we have no savings. Claim 2 and take that extra money to start your savings. Stop giving our spend happy government extra money, they may not be able to give rebates next year like some states couldn’t do this year. Grow a garden, every ounce of food you can grow is food you don’t have to purchase. Get books and DVD’s from your library. Paying off Debt and Saving Money are two ways to keep government from getting more money to spend. Move towards being debt free, interest from credit cards, car loans and even mortgages all raise the cost of your purchases which means more money out of your pocket.
Rayme, that’s a lot of good advice. I strongly disagree with only one of your suggestions, though. As someone who has been an investor for over 40 years, I would advise to NOT stop contributing to your 401(k). Most employers match a certain amount of your contributions, and up to this amount you are getting an instant 100% return on your investment. Beyond that amount, it is foolish to try and time the market by waiting for a “bottom”. When the economy recovers from recessions, historically the stock market recovers first, and very quickly. Those waiting on the sidelines miss out on those first big gains. Not to mention the advantages of deferring taxes on both your contributions and on their earnings. My advice to young people is to invest as much as you can in your 401(k) every year, and if your company offers a ROTH 401(k), that’s even better. No one else is going to look after your retirement security, (especially the government) so you need to make it a top priority early in your life. As far as money matters go, it will probably be the smartest move you can make.
Pay-go-cell phone is $9 per month if used infrequently, way cheaper than $25 landline or contract cell. Of course, then you have no ISP.
Do all wireless ISP’s prohibit sharing?
Is having a garden really saving money? My water bill is going up 30%. Plants need lots of water & equipment if you don’t already have it. The money used to build & maintain a garden or container crops might be better saved. Unless you have natural irrigation, cheap to free supplies, and equipment & fertilizers, insceticides, deer repelant, bird screens, pellet gun for hungry bunnies, etc..