Finance Globe

U.S. financial and economic topics from several finance writers.
14 minutes reading time (2836 words)

Stretching a Dollar Without Being Stingy

Stretching a Dollar Without Being Stingy

Saving money doesn’t mean being cheap. We all love luxury, quality, and convenience. We also love security and freedom. It’s smart to save money where it’s easy, so you can redirect that cash to areas where you’ll benefit most, possibly a much needed vacation, kid’s college education, a better house, and an enjoyable retirement. Being frugal isn’t about depriving yourself; it’s about making smart financial decisions and getting the most for your money. Changing your spending habits will save you money, and you’ll feel a sense of accomplishment and control as you watch your savings grow.

Use credit wisely. Credit can be a quick and easy way to pay for something, as long as you don’t spend more than you would if you were paying with cash. Use credit for the convenience of one statement billing; don’t treat it as “extra money”. Using credit can easily get out of hand if you aren’t disciplined in your spending, and disciplined in paying the balance off in full before the end of the grace period every month. Interest fees can easily cause you to pay much more than the original purchase price; even items purchased on sale can cost you more than they’re worth if you let finance charges accrue.

Buy quality items that will last. There’s always a reason that an item costs more or less than its competitors. It may be that it’s a nationally advertised item with a brand name rather than a well-made product with little marketing. It may have been made in a country where labor costs are extremely low as opposed to union-made in the United States. It might have been made with inferior materials instead of exceptional materials. It’s up to you as a smart consumer to find out why there’s a price difference, and figure out if it’s worth paying. Buying cheaply made items will cost more in the long run if you have to keep replacing it because it breaks or wears out. It may not matter to buy something cheap if you know it will be outdated or unnecessary in a few years - but if you expect it to last for years to come, consider it an investment piece and pay for quality.

Do-it-yourself. You can save yourself the cost of a professional in many aspects. Those who are handy or mechanically inclined can easily learn to do simple home-improvement projects, landscaping, and general auto maintenance. Just make sure that you can handle the project you are taking on. It can cost you more in the long run if you don’t get it right the first time and have to call someone in to fix your mistake! Also, don’t forget that it will probably take you a lot longer to complete a project than a pro who’s good at what he does, you could be better off calling someone in and spending your valuable time making money doing what you’re good at. It’s smart to stick to smaller projects until you are confident about tackling big ones, and then you can be proud of the quality workmanship, your custom touches, and the savings you earned.

Forget about clipping coupons. Nationally known food products are marketed with commercials, jingles, and coupons. Farmers don’t have a separate plot for the advertised brands and the generic brands; all the vegetables are grown in the same place. It’s the label and packaging that causes the price difference. Try out the store brands. Even with a coupon for the national brand, you will usually still save more by going with the generic product. You may find that some of the store brand items are even of better quality; they are often locally grown and packaged, meaning that you’ll get fresher products that don’t spend as much time in shipping.

Make a list that you strictly adhere to. It’s easy to go shopping for things you need and end up with a whole lot more. It’s surprising how much we can end up buying that we didn’t know we needed before we got to that store. Make a list that you add to all week and do all your shopping in one weekly trip. If you see something that you really need or want, put it on next week’s list. That will help you prevent impulse buying and then you’ll have a week to determine if you really needed it or if it was just something that was only exciting for a minute. And do your shopping solo; a spouse or kids have a strong power of persuasion with you when it comes to things they want, and they wouldn’t even know what they’re missing if they don’t see it in the first place.

Look at buying used items. Do you want to buy a big-ticket item like furniture, workout equipment, sports gear, or a recreational vehicle? Watch the classified ads or garage sales for the item you want. People often buy stuff and decide to sell it after they’ve barely even used it; you can take advantage of their impulse shopping without feeling guilty. They realize they wasted money on something that didn’t get used and they’ll be happy to get any of their money back. You, on the other hand, have made a plan to buy something you knew you would use, have smartly researched the list price of the new item, located the item you want in good condition, and paid a deeply discounted price for it just because it went to someone else’s home before it went to yours. Not only will you get a good price by buying used, but if you’re looking for any type of vehicle, you will also avoid losing money to depreciation.

Look for scratch and dent items, returned merchandise, floor models. If you’re looking for furniture or appliances, you can save big by buying those less than perfect items in the store’s inventory. What if you could get a brand new, stainless steel side-by-side refrigerator for several hundred dollars less, just because it has a little scratch in a place that nobody would ever notice anyway? Floor models will be sold at a reduced price when the store is about to come out with next year’s line, you can save big on these items if it’s not necessary for you to have the latest model. Any item that has been returned, has damaged packaging, or is being sold “out of box” can be bought at a much lower than list price, just make sure the product was not damaged with the packaging.

Save money on vacation. The law of business is supply and demand. The more people want something, the more the businesses can charge for it. When fewer people want something, the price goes down. Lots of people travel in the summer and on holidays when the kid’s are out of school, so everything costs more during those peak times. You could skip the high priced airfare, motel-stay, and admission at the logo-laden theme park and go hiking and camping at a national or state park. The fresh air, wildlife, and roasting hotdogs and marshmallows while laughing by the fire can be just as exciting as the rides and will hold more meaning. Camping, with the proper gear, is a fun way to bond in the great outdoors at a very reasonable price. If the kid’s school schedule is not an issue for you, you can take advantage of exotic travel destinations in the off-peak season at a discount, and enjoy the added benefit of smaller crowds and shorter lines.

Save on children’s needs. Raising kids is expensive. Children will stain, tear, and outgrow everything they have; there’s no need to overspend on clothing that they will outgrow before next year. Many a parent has bought their child a new school wardrobe only to find that they’ve outgrown those clothes before the year has ended. Kids often lose interest in a toy that they’ve barely even played with. Garage sales and Goodwill stores are an excellent source of barely used children’s necessities. Let the other parents buy new stuff for their kids, and when the child’s outgrown it, it’ll get passed along so you can take the savings.

Build a timeless wardrobe. Clothing can be a major expense. If you have the habit of buying trendy, poorly made, or ill-fitting clothing, you are replacing your clothing more often, costing you more in the long run. Whether you wear suits or jeans and t-shirts, you get what you pay for, and well-made items cost more and will last longer with proper care. Yes, many times the price is just a matter of which designer’s name is on the label, but that is often because those designers use high quality materials and pay extra attention to fit and detail. While I’m not saying you should buy clothing because it has a certain label, I am saying you should look at your wardrobe as an investment worth paying for. You will rarely have to replace outdated or worn out clothing, when your closet is full of well-made and well-fitting classic clothes that look great on you. This is not a small expenditure, and it's probably more feasible to build your wardrobe gradually and piece-by-piece. When it is time to replace useless clothing, set a spending limit and only buy what fits you perfectly, what looks great on you, what is comfortable, and what is well made. These are the clothes that you will enjoy for years, and their overall cost-per-use will be much lower than a cheaply made, trendy outfit that you only wore three times.

Become a gourmet chef. Going out to dinner is relaxing, there’s no meal planning required, no mess to clean up afterward. Everybody deserves a stress-free dinner once in a while, but it’s an expensive habit if you do it very often. By cooking at home, you can easily enjoy appetizers, soup and salad, surf-n-turf, dessert, and drinks for well under twenty dollars a person. You’d have to skip a few courses to have a restaurant meal for that price. Even by just making pizza at home instead of ordering out you can save money, and if it’s a routine thing, changing that routine can add up to a huge savings. If you don’t feel like making a big mess of your kitchen, a simple soup and sandwich lunch can be a low-cost, quick and easy meal for just a couple of dollars, as opposed to about ten dollars plus tip for the same thing at a restaurant. If you go to fast food places everyday for lunch, you can easily spend hundreds of dollars a month on junk food that is bad for your heart and bad for your wallet. Cooking at home or packing a lunch is a sure way to save money on feeding you and your family.

Learn how to maintain your property. Taking good care of the items you’ve invested in will ensure it lasts longer and remains useful to you. Shoes, lawnmowers, appliances, cars, and houses all need regular care to work at their best. Regular maintenance will keep those items from breaking before their useful lives are over. A quality pair of shoes may need to be resoled before you wear them out too far. Routine maintenance on your automobile is necessary to avoid bigger problems later. A home that needs additional insulation can be fixed for far less than what you’d end up paying in higher energy costs. Be aware of whether it’s better to repair or replace when things do break or wear out. When dealing with old appliances or electronics, often it is better to replace them. It may cost more to run an old refrigerator than a new energy-efficient one. Some electronics are so expensive to repair that it may be cheaper to just buy a new one.

Save on utilities. Opening a utility bill is like opening a present; sometimes you’re pleasantly surprised and sometimes you’re appalled. Get your whole family involved in turning off unused lights and televisions. Dry your clothes at a lower heat setting, not only will it use less energy, but it will also keep your clothes from wearing out as quickly, saving money in two ways. Keep your freezer full; it costs less to run if frozen food is in there to help maintain the temperature. Use ceiling fans to circulate the air in the summer, and reverse the blades in the winter to push the warm air down. Make sure to weather-strip all doors and windows, and get insulated draperies to save on heating and cooling costs. Collect water in a rain barrel to water your lawn and garden. If you’re lucky enough to have an attached greenhouse, open the door in the winter to let the warm air into your house.

Be crafty. Decorating your house shows your personal sense of style. It’s fun to transform your house into a home that reflects your sense of beauty. With a little fabric or paint, yard sale finds, and some imagination, you can transform plain old everyday stuff into unique, custom designed furniture and decorations. Get ideas from your local hobby stores, decorator magazines, furniture stores, and home and garden shows. Unique picture frames, draperies, artwork, and vintage chairs and dressers can all be made better with your artistic touches. You can find things in stores and them imitate them or even make them better for way less than what you could buy. It costs less and is more rewarding to see your home decorated in items that you’ve put some effort into designing and making.

Have a hobby. If you find that you ever shop out of boredom, or go out on the town often because you have nothing better to do, consider getting a hobby. There are many hobbies that aren’t cheap; some can even be more expensive than a shopping hobby. You can find a hobby that costs little or no money, like hiking, astronomy, or bird watching, or one that costs some money but comes with other benefits. A vegetable garden will require an initial investment, and some maintenance costs, but you will be rewarded with fresh, homegrown produce that is waiting for you outside your back door. Woodworking is expensive for the tools and materials required, but if you plan on making your own furniture, it could be a worthwhile plan. Designing and making your own bead jewelry can be a fun way to pass time and add to your jewelry collection. If you are an artist in disguise, you can paint and save on costly artwork for your home. You might even be able to sell a few of your creations to admiring guests, but be careful about starting an expensive hobby that you think will pay for itself with product sales. It should be considered a form of relaxation and entertainment for you unless you really research your market.

Consider the total cost of ownership. If you’re thinking about buying horses, a vacation home, a boat, or RV, don’t forget to factor in the cost to maintain them. The original purchase price may be affordable, but these types of things will require constant upkeep. A boat or RV will require fuel, insurance, storage, docking or camping fees, maintenance, repairs, and depreciation. A vacation home will need insurance, utilities, maintenance, and someone to check up on the house while you’re gone. A horse will require feed, vet care, boarding, and daily attention. Unless you are truly dedicated to the activity involved in these types of luxury items, you could be better off renting than buying. You may find that after a couple of camping trips, or a few months of daily horse care, you really aren’t as interested in it as you thought you’d be. If you rent first, and decide you want to keep doing it, you can always buy later.

Slow down and simplify. Technology will keep getting better and better. If you have to get the newest gadget every time it comes out, you may never stop replacing those things that you consider to be outdated. No matter how many times you get what’s new and improved, there will always be a better phone, a better computer, a better video game system, a better TV, a better car. If the item is necessary for your work, then you can justify the need for keeping up with the times. But if it’s not, your money will flow down a never-ending stream of replacing last year’s model. If you can do without the latest and greatest of all these technological improvements, you can save yourself a bundle. Wait until you feel you need an item with the new improvements to purchase them, regardless of when they become available. And if you really have to have something, don’t forget that the price will go down after the initial consumer rush, often after the first year of release.

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Thursday, 02 February 2023

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