Posted: September 2nd, 2011 | Author: Joe | Filed under: spending | Tags: Frugal, save money, Spend less, Tips | 7 Comments »
Saving money is always a good thing and with the recent recession, more people are casting an eye on their expenses in the hopes of cutting back. It’s not just a good idea during recession. If more people became more watchful of their spending, then the country as a whole would be in a much better place financially.
Here are 7 things that many people spend too much on, as well as some tips for cutting back on that spending.
1. Bargain traps.
Buying cheaper isn’t always better. For expensive and inexpensive items alike, there are often a multitude of options to choose from. The cheapest is not always going to save you the most, but the most expensive is usually not the best either. Be sure to weigh all the aspects of the item and choose the trade off in quality vs. price you can live with.
Also, beware of “spend x and save y” type bargains. Spending $50 more than you planned, just to “save” $10, still leaves you with $40 less.
2. Going warehouse when you have a small house.
My wife and I love the local warehouse store. We buy many things in bulk: diapers, paper towels, dish detergent, laundry detergent, etc.. with a 5 person household and 3 growing kids, we go through that stuff pretty quickly. But buying in bulk rarely makes sense for a single person or even just a couple living in an apartment. Saving on large quantities doesn’t help much when you have no place to store them and can’t use them before they spoil.
3. Buying what you can borrow.
Why buy a single-use new tool from Home Depot when your neighbor already has one? Use social networking, or just ask a neighbor if you need a tool for a job that you know you’re unlikely to ever use again. Just remember to return it when you’re done. 
4. Suffering from sticker-price tunnel vision.
Don’t focus solely on the sticker price of a car (or other big-ticket item). Look at depreciation, cost of ownership, repair, upkeep, etc..
For example, the base model Chevrolet Malibu costs about the same as the Honda Accord but their service and maintenance costs, average fuel cost and depreciation are quite different.
5. Jumping on the “new” used car.
Buying a used car is a great way to save money on an auto, and most used cars that have been on the lot for more than 30 days receive at least 1 price drop. Buying too soon can leave that extra savings behind on the lot. When looking at a used car, find out how long the car has been on the lot and don’t make an offer until it’s past the 30 day mark. One caveat to this is if the you’re having a hard time finding a used car that suits your needs. One of the results of the misguided Cash for Clunkers program was that the clunkers (i.e. used cars) had to be destroyed. This has created a scarcity of used cars, and driven prices and demand up. Also, certain vehicles, like minivans, hold their value well and always seem to be in demand so you may not be able to play the waiting game on these models.
6. Control your urge to splurge.
Impulse buying is costly. Stores know they can charge a little more for that merchandise in the display rack near the register and the entrance. They’re counting on your impulse. Use a list and stick to it. That list is your mission, do not deviate from your course!
7. Skip the travel sites.
Booking a hotel room through a travel site like Expedia.com or Hotels.com requires you to pay in advance. Cut out the middle man instead and use these sites for comparisons, but call the hotel directly yourself. You will likely get the same rate if not a better one and not have to prepay. I’ve also heard that calling a local number (i.e. not the 1-800 number) can get you in town prices that are lower than what they charge out-of-towners. That ay not be standard practice, but it’s worth a try.
Source
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Posted: April 19th, 2011 | Author: Joe | Filed under: spending | Tags: Cable Bill, Frugal, spending, Tips | 1 Comment »
According to a recent Consumer Reports reader poll, a majority of readers bundle their internet, television and phone service through a single provider, and most are happy they did so. Not only that, but many also haggled for a lower bill for their services.
Reader response.
Here’s the highlights of the poll:
- 27% of bundle customers said they would definitely choose a bundle again.
- 55% said they “probably” would.
That leaves only 18% who were either unsatisfied or couldn’t figure out if they had an opinion.
Among the main reasons for choosing the bundle was convenience. As someone who is constantly scheming for ways to eliminate my own monthly payments, I can appreciate the desire to consolidate those payments.
Of the readers who didn’t opt for the bundle, the main reason for skipping was a lack of real savings. As I’ve said before, it’s only savings if you’re paying less for services and products you either need or actually use. Paying anything for services you don’t use is not saving anything.
Tips.
Here are a few of the tips for determining which provider to use and whether a bundled package is right for you.
Verizon FiOS and AT&T U-verse get good marks.
More readers who bundled with these providers said they would do so again than any other respondents. Interestingly, these readers also had fewer complaints about big price hikes once the introductory offer time had expired – the opposite of cable customers.
Compare everything!
It’s important to compare cost of equipment, activation fees and servicing fees and not just the monthly bill. Not all providers are forward with their pricing and many try to hide behind various fees that only show up on the monthly bill, and not in their brochure.
Avoid contracts.
Contracts from television, internet and phone providers are nothing more than a locked in monthly charge. They limit your ability to switch providers when you want and therefore limit your haggling ability. It’s best to avoid if possible.
See the big picture.
When comparing provider costs, look beyond the introductory price. Look at how much you’ll spend for 3 years, and do this for all providers you’re considering. Often times, providers make up money they lose in the introductory 1st year through higher than average costs the 2 years after the intro offer expires.
Haggle.
Even if you’re not switching providers, it pays to haggle with your existing provider. The key to haggling successfully is to be prepared. If you’ve investigated the competition with the intent of possibly switching, but decided it’s not worth the hassle to switch, you can still use that time and effort spent researching as leverage to bargain for a lower monthly bill with your current provider. They don’t need to know you researched and decided to stay put! Call them up and point out the benefits to you if you switch providers. Tell them that you’re happy with the service, but not the cost. You’ll be surprised at what they might offer to keep you.
Remember: It may be a hassle for you to switch phone numbers and email, but it’s much more costly to gain a new customer than make an existing one happy.
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Posted: February 16th, 2011 | Author: Joe | Filed under: Saving, spending, Tips | Tags: Frugal | 2 Comments »
I write a lot about saving money wherever possible, and being sole source of income for my family of 5 makes me more inclined to read articles about saving than I might otherwise be. But sometimes I come across the ridiculous extremes of frugality and I like to share those with my readers too. Take for example, this Yahoo! finance article.
Can you be too cheap?
The basic premise of the article is YES. However, I would like to point out that there is a difference between being frugal and being cheap.
The difference between frugal and cheap.
In a nutshell, the difference is this:
- Being frugal means always being conscious of where your money goes and how much you’re spending. It means never paying full price for what you can get on sale. It means working at saving – clipping coupons, delaying gratification and living simply.
- Being cheap by contrast is frugality taken to the extreme. It can mean failing to replace parts on your car and risking future injury to save a few (hundred) bucks today. It means always buying the least expense item regardless of quality even if that item precipitates greater spending in the future by means of repair or upkeep.
So, can you be too frugal? I don’t know. I suppose that’s open to debate, but here are 5 ways you can be too cheap – and it will cost you!
1. Neglecting Basic Maintenance
This, to me, is a no-brainer yet we’ve all been tempted and probably engaged in this sort of neglect at some point in our lives. Deciding not to spend that $100 on servicing your car can end up costing you $1,000 down the road. The trick of course is knowing which services are truly necessary and which are not. Another point to consider is when the maintenance is required. For example, no one would say that changing the oil in your car is unnecessary, but it may not need to changed every 3,000 mile either. Many cars will go for 6,000 or even 7,500 miles but many people are still having it done every 3,000. Check your car manual – you might be able to save money without risking early breakdown!
2. Doing Your Own Taxes
I honestly don’t see this as something that will cost you money. With the financial software available these days and the guarantee of help should the IRS audit you, there’s really little reason for most people to use a tax professional. The glaring exception to this is if you own your own business, or have a complicated tax situation. However, most people have a straightforward W-2, standard deduction type of tax return. I say, save the money and do it yourself.
3. Borrowing From Your Retirement
I agree that this is a bad idea in almost all cases, but is it really a “cheap” thing to do? I mean do cheap people have much in their retirement savings to dip into, and if they do are they really likely to do it?
For what it’s worth, the article does list some helpful means of alternative income:
• Pick up a side job or do some freelance work to make cash.
• Sell some of your belongings that you don’t need.
• Stop (or cutdown on) eating out and buying coffee or soda.
• Look for ways to cut costs in your regular expenses, such as dropping/reducing your cable and cell phone plans.
4. Not Saving Anything
I’d agree with this one 100%. It’s a bad idea, it will cost you in the long run and it’s something a “cheap person” might do. Especially if there are fees associated with the saving, like investing.
5. Skimping on Food
I suppose the true cost of buying the cheapest food is the cost to your overall health and well being. That of course translates to higher health costs down the road, but that to me is of secondary concern. Who wants to feel run-down and sick all the time? Yet I still here people complain about the price of food and buy the cheapest available product without consideration to health.
Final thoughts.
Saving money is great, but it is possible to go too far. In this blogger’s opinion, it’s better to be frugal than cheap.
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Posted: October 7th, 2008 | Author: Joe | Filed under: spending | Tags: Frugal, Lessons, spending | 2 Comments »
We’ve all had buyer’s remorse at some point in our lives. I remember my first time. I was probably 7 or 8 and I received some birthday money from my grandparents.
My best friend also had some birthday money saved up and the new mall had just opened in the next town. So we loaded into the car with my parents and drove off to that new, shining city.
After traipsing around what must have been acres of shiny new mall, we settled on a gaming store. This was in the early 80′s when PC games were the new “it”.
Anyway, long story short, I bought the hot new game that cost my entire savings, and my friend bought the value pack of 7 games for the same price. I can still remember my parents pointing out that my friend was making a much wiser purchase than I, and perhaps it was that reason my pig-headedness came out and I stood firm.
The game, of course, was not worth the money and I felt like a total shlub for wasting my birthday money on it. It was made all the worse by the fact that my friend got some really fun games for his money.
I learned a lesson about frugality on that day.
The result is that I don’t spend money often, and when I do it’s with a great deal of forethought and analysis. So much so, my wife often thinks I lack any and all spontaneity. Unfortunately, she’s right in many ways. Of course, I argue that spontaneity in spending is almost always a bad thing.
What’s your earliest financial memory and how did it shape your financial future?
Photo: “Remorse” by Jennifer Buehrer
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