I have a new article up that explains that when you cut expenses, that doesn’t automatically result in you saving money. Saving money by cutting expenses is a two step process: 1) You cut the expenses and 2) You put the difference between what you were paying and what you’re now paying into a savings account or against debt. Many people do the first step, but don’t follow through on the second one and wonder why cutting expenses hasn’t helped their bottom line…
Having a savings cushion is much more than simply having money in the bank. There is a sense of relief (not having to worry day to day how your going to pay for the next necessity) and empowerment (you have options when you have savings that you don’t when you’re in debt). I was having a difficult time formulating these all into a post when I ran across this piece:
The author is unknown, but it reportedly originated in a memo from the World Financial Group:
Your savings, believe it or not, affect the way you stand, the way you walk, the tone of your voice. In short, your physical well-being and self-confidence. A man without savings is always running. He must. He must take the first job offered, or nearly so. He sits nervously on life’s chairs because any small emergency throws him into the hands of others.
Without savings, a man must be too grateful. Gratitude is a fine thing in its place. But a constant state of gratitude is a horrible place in which to live. A man with savings can walk tall. He may appraise opportunities in a relaxed way, have time for judicious estimates and not be rushed by economic necessity.
A man with savings can afford to resign from his job if his principles so dictate. And for this reason he’ll never need to do so. A man who can afford to quit is much more useful to his company, and therefore more readily promoted. He can afford to give his company the benefit of his most candid judgments.
A man with savings can afford the wonderful privilege of being generous in family or neighborhood emergencies. He can take the level stare of any man … friend, stranger or enemy. That ability shapes his personality and character.
The ability to save has nothing to do with the size of income. Many high-income people spend it all. They are on a treadmill, darting through life like minnows.
The dean of American bankers, J.P. Morgan, once advised a young broker: “Take waste out of your spending; you’ll drive the haste out of your life.”
If you don’t need money for college, a home or retirement, then save for self-confidence. The state of your savings does have a lot to do with how tall you walk.
It does a good job laying out the fundamentals that I also believe to be true with getting ones finances in order and the benefits beyond the money itself that result.
Now if only I could have written it…
There is a piece over at smartmoney.com on how to get your magazine subscriptions at a discount. The piece lays out three basic strategies:
1. Check the mail-in subscription inserts that for a benchmark for evaluating other offers
2. Visit the well-known sellers of discounted magazine subscriptions such as Publishers Clearing House and Amazon.com.
3. Consider purchasing through eBay, but know the risks.
What the article leaves out is the absolutely best way to get magazines – for free.
A little known secret is that while the magazines want you to pay for the subscription to help defray their costs, they also want to keep their circulation numbers as high as possible because this allows them to charge more for the advertisements inside the magazine. If the magazine feels it’s going below a subscriber base number they need to attract and charge advertisers what they want, they will often times give away subscriptions for free in increase their circulation numbers.
While finding these free subscriptions to popular magazine titles is sporadic, they do appear from time to time. When they do appear, however, you need to be quick as they are usually given away within days if not hours. In the past year I have picked up free subscriptions to the following personal finance / money saving magazines: Budget Living, Forbes and USA Today (as well as a subscription to TV Guide). I also recently received a free electronic subscription to Fortune.com by taking a survey
The best way to find these free subscriptions is to keep tabs on a freebie site and the magazines that get listed there. It does take a bit more time, but you can end up with a fairly good selection of money related reading at no charge.
Had a conversation with a friend about the money jar trap. You probably keep a change jar of some type and by doing so, there is a good chance you’re losing money rather than saving money by doing so. This is because it’s getting harder and harder to exchange coins without paying a fee to do so and by paying that fee, you end up losing money. it’s not just Coinstar at the grocery store, but also more and more banks charge for this “service.”
An easy way around this is to move up to a a dollar saving game where you empty your wallet of all the dollar bills you have each time you come home instead of the change. The problem here is that you have to actively participate to make this work…there is a big difference between searching through your wallet to place dollar bills in your jar than to empty the loose change in your pocket as you pass the money jar.
My friend has developed a “hybrid version” which avoids the money jar trap. he swears by it, but it sounds a bit complicated to me:
He empties his change each day into his money jar, then once a week switches the change into bills to deposit. The change then goes to a variety of different things that bypass the fees for exchanging coins. Some goes to his kids for allowance money, others for the car wash and parking meters and stuff like that.
Basically he says by changing the coins once a week into bills instead of letting the coins build up for months, there isn’t the coin exchange fee that you get with a massive amount of coins.
My opinion? It works for him and when it comes to saving money, that’s the most important thing. I personally see the dollar game as an easier alternative, but that’s just my opinion. Either way, making adjustments so that you don’t have to pay to exchange your coins makes a whole lot of sense.
One of the easiest ways to save money is to simply call the company and ask for a better price. This is especially easy when it comes to services that are offering deep discounts to try and lure you away from their competitors. One of the best ways to do this is to use your junk mail to relate competing offers.
I was interviewed for a story about this a few weeks ago in the The Indianapolis Star. After doing the interview, my mother received her cable bill and complained about the price. I took a satellite TV offer she had received in the mail a few days earlier, made a call and reduced the price of her cable by $25 a month for three months (from $65 a month to $39.95 a month for three months). It took all of 5 minutes on the phone.
We then went through her other services. We were able to get the gardener to reduce his fee by $10 every two weeks for a total savings of $20 a month. We called the credit card company and got her interest rate reduced from 12% to 7% – there was no immediate savings here since she didn’t have a balance on the card, but if there is an emergency in the future and she does have a balance, she will reap savings there. We called the telephone company and although we didn’t get a discount per se, the customer representative steered us to a package deal that cut her phone bill by about $15 a month over what she was paying. We called the newspaper and received a $5 a month discount (in this case we didn’t have a competing offer, but simply asked if they had any discounts they were offering to current customers) Total savings: $65 a month for about 45 minutes on the phone.
When I have talked to others about this, most who don’t do it say that the reason they don’t is because they feel uncomfortable. Many seem worried about what will happen if the they don’t get offered a better price and wouldn’t know what do do from that point. So instead of being put in an uncomfortable position, they simply pay the higher price.
I fully understand being uncomfortable when doing this, especially for the first few times. As with anything new, there is always some apprehension and uncertainty of what to do if it doesn’t go as you expect. It does become much easier the more you do it and it is well worth the effort for the amount of money you can save.
There seems to be a misunderstanding among many who I suggest this idea to that there must be an ultimatum involved in the negotiations. “Either give me a better price or I will leave.” I never use an ultimatum when asking for a discount because most of the time I really don’t want to leave the company that I currently use.
When you call, simply say that you received this offer in the mail and that you’re “thinking about it” and were wondering if your current company could match it. If they say yes, you’re done and you saved money. If they say “no,” simply ask what is the best price they can offer. If it is less than you are paying, then you’re done and you saved some money over what you had been paying. If they say that they can’t give a discount, then thank them for their time and say you will think about it further. Since you never made a demand that you would leave if they didn’t give a discount, you are never forced into an uncomfortable position.
I especially like this type of saving because it is what I refer to as Painless Saving – you save money without ever having to make a sacrifice. You get the exact same service at a better price.
This is a simple saving money technique that can be used for almost all services you use that have competition in your area. Check your junk mail, newspaper ads and fliers. Most people can reduce their costs by over $50 (and often much more) a month using this method.