You'll notice that I said "My Favorite Ways to Save Money." That's a deliberate phrase as everyone has their own ways they like to pinch a penny, it's not as if there is are some Ten Commandments of Frugal Living out there. Or is there? If there is the blogging world would know it, I'm pretty sure.
Anyway, spending money is kind of a personal thing, everyone has different opinions on the matter and here are just a few of the ways Andrew and I choose to save. That and we skip every fourth meal.
But with the current national situation being what it is (do we really even understand the big picture yet?) most of us are thinking about ways to trim the fat. Here are my picks.
1. Don't get cable television. Every so often Andrew and I consider signing up for cable or getting a satellite dish or some other way to supersize our t.v. consumption but then we check on the prices and that cools us off. For a basic (a BASIC) cable package here plus a DVR service such as tivo it would cost us $80 a month. Ouch. Now I can think of a lot of other ways I'd rather spend those eighty dollars such as at a fine restaurant where someone brings me whatever I want to eat or at Banana Republic or . . . but of course if I spend the money somewhere else it isn't really saved now is it?
Besides I'd be willing to bet money that unless you have NO t.v. you probably have too much--and I include myself in that finger-pointing.
2. Give your own haircuts. Now I have to confess that I'm cheating here. I cut all my kids' hair but I'd never think of cutting my own hair or letting Andrew tackle the job. Actually one time, long ago, at the very beginning of our marriage before I knew my husband much better we were poor college kids living in Washington D.C. and I desperately needed my hair cut.
We went all over the place looking for someone who'd trim me up and they either let me know they "didn't do white hair" (not that my hair was white, I think they meant my skin) or that they really didn't care to glance my direction because they were a fancy salon. So out of desperation I asked Andrew to cut it straight across. I went into a detailed explanation of how to accomplish this (hadn't I seen it done a million times?) and when he was finished I brought the ends on either side of my face around, saying "And now if you've done it right, the ends should be the same . . . " gasp. The side lengths were a good three inches off and I realized I'd been hacked so grostesquely that I ended up trimming it up myself before I felt comfortable showing my face in public.
The girls at work noticed the new haircut (d'uh, just like they'd notice if I came in with a poodle on my head) and said with hesitation "Oh . . . you got your hair cut" and after they heard my tale of woe they were full of sympathy.
But at any rate, cutting your kidss hair can save you tons of money--four heads times once a month is about $600 a year. Then that saves you enough money that you can afford to get YOUR hair done by a pro.
Check this site How to Cut Hair and practice on your kids. What else are kids for?
3. Cut down on insurance. Now I'm not suggesting that you cancel your insurance--every adult should have health insurance and every adult with an income and dependents should have disability and life insurance--but in general I've found people think they need much more insurance than they really do and it ain't cheap. Watch for ways you can cut back on your policies (if it's up to you and not through an employer which unfortunately is often the case) and see how much you can save.
For example, when Andrew and I were thinking about starting a family we had a very basic health coverage plan. The deductible was something like $2500 or $5000, I can't exactly remember, but it only kicked in when something really went wrong and it only paid out past that super high deductible.
Of course because of this our premiums were only $40 a month for the two of us (doesn't it pay to be young and healthy?) When we wanted to have a baby we looked at adding maternity coverage but after pricing it we realized that it would be cheaper to just pay for the delivery ourselves, keep the catastrophic basic coverage should anything happen like an emergency during delivery or a c-section or something like that, and forget trying to get the insurance company to cover it.
This is usually the way things work--insurance companies hire actuaries who know their odds pretty darn well and they bank everything on those odds. Your best bet is to insure against things that would destroy you--like a prolonged illlness--or something that you really can't control. Insure high enough to protect against it destroying you financially but not enough to strap you for cash each month paying the premiums while the odds of it happening are pretty small.
Forget insuring against things that are eventualities: dental work, preventative health care such as yearly check-ups, obstetrical visits, eye glasses. You'll save more by paying for it yourself because the insurance agencies know the odds of you filing a claim and they're going to win in the gambling game, that's how they make their money.
4. Get your DVDs cheap. We check out DVDs from our local library where not only can you get them for free but you can keep them for a full week--up to three if you renew. We reserve them online them pick them up when we get the notice that they've arrived. Of course the cheapest way to see your videos is to watch them on the wall televisions at Blockbuster but that's not nearly so convenient as taking the movie home to the privacy of your own home. Kidding again.
I understand some places offer Red Box where you can get a weekly coupon code for a free video which Momadvice.com publishes but they don't offer that here in Alaska. Pity. I love a good movie and I love a good FREE movie even more.
5. Cut down on eating out. If you or your spouse work at an office you're probably eating out for lunch every day. I'm not sure why this is such a firm tradition in the American workplace but not only is eating out fattening and unhealthy it's terribly expensive. Ditto on the daily espresso. Try packing your lunch and see how much you can save--I figure even if you're only saving $3 a day (and I'm sure that's pretty conservative) that adds up to a bit over the month. If convenience is the issue try buying prepared frozen meals for $2.50 at the grocery store and taking those to work--it's still cheaper than the daily fast food value meal which really isn't much of a value if you think about it. Andrew takes his lunch every day unless he has a business lunch and he actually likes it because that way he can get his daily Oreo fix. He's probably the only attorney I know who packs a bag of Oreos for lunch but that's why I love him.
6. Cut down on extracurricular activities. Not only are children typically over-scheduled these days, with their many lessons and team sports cutting into family time, the costs can be staggering to a family watching their budget. Looking at the costs of hockey alone (a favorite here) besides the equipment costs (and how fast do those kids outgrow it?) and the price of leagues, lessons and games added to the cost of travel for tournaments makes it mind boggling. Multiply that times another child or two and then by the two or three more activities each child is involved in and you've got a house payment calling you "Mom."
Limiting children to one extra curricular activity not only helps them keep their sanity (and yours) but it makes financial sense. If you want your child to take piano lessons look around for a teenager who teaches lessons. That's how I started piano lessons and that's how my kids started and it makes a lot of sense. You don't want to start with a fancy, expensive teacher only to find a year or so into things that Johnny can't stand playing the piano and all of that money you spent is wasted. Of course if a fancy teacher is your style and your child quits you may ultimately save quite a bit of money because suddenly all the cash you'd counted on paying to Julliard's is freed up.
7. Buy generic. Nowadays you can buy pretty much anything in a generic form and it will usually save you tons of money. Don't get sucked in by brand names and learn to tell the difference between when you really are paying for quality and when you're just paying to have a name stamped on the package. Most generic groceries, I've been told, are actually produced by the same companies that make the name brand counterparts they just also own generic lines such as Kroger and sell the same items under the generic label.
Even with medications if you compare the list of active ingredients the generics have always been comparable to the name brands--only for less money. The only time I've ever found a generic product to be far inferior is when it comes to macaroni and cheese. You cannot--I repeat, CANNOT--buy a generic box and have it taste acceptable. Don't know why this is but it is Truth. Must mean there's an art to the way Kraft makes their neon-orange fake powdered cheese. Who knew?
8. Cut back on tech costs. When you add up the costs of land lines, cell lines, Blackberry fees, internet costs, cable costs, texting fees, roaming fees, etc. etc. etc. suddenly you're shelling out big bucks to be on the cutting edge of technology. Decide what you need (and the key word is need) stick with it and ignore the others. There are some creative ways to cut costs too--I use Skype to talk with my parents in India and it's completely free. Gone are the days where you pay $300 for an overseas holiday call to family now you can call anyone anywhere for such nominal rates that it's insane not to take advantage of it.
I know it might cause issues in a family but teen texting costs can be crazy where email and regular cell phone calls get the message through quite well. I don't recall it saying anything in the Parenting Handbook about parents being required to provide texting capabilities to their children--if you're looking to cut costs I'd start with eliminating those dancing thumbs.
9. Pay cash for your cars and buy used. I know this goes against every conventional wisdom in the book but I've always felt strongly about paying cash for cars. Not just because it saves you lots of money but because most things shouldn't be bought on credit. A house is different because it's a secured loan--it's worth something--and a school loan is different because it's an investment though both can be taken to extremes and cause you problems.
But a car is just an expensive piece of status that is worth less and less the longer you hold onto it. The minute you drive a new car off the lot it's cost you thousands of dollars because no longer is the car shiny new so learn to make do with used cars. This doesn't mean you have to sacrifice quality, buy a slightly used car that is still under warranty and you can save more than you'd imagine without losing value for your dollar.
Pay cash for your cars and save yourself all that money in interest plus the added benefit of not having to buy collision insurance. If you own your own car you can go with simple liability insurance and saving whopping amounts each month in lower insurance premiums. Of course I'd only recommend that if you're in the habit of not smashing into other people's cars. If your driving skills leave something to be desired then maybe you should stick with the collision option.
You know you're a King of Saving Money when the teen boys you work with at church offer you $1000 for your 1993 Ford Escort wagon. Andrew works with the 14 year old guys and one of them was riding home with him and said (and I paraphrase) "This car is sweet! I'll give you $1000 for it--it doesn't have all that stupid computer stuff that makes it hard to work on. "
So it may be a piece of junk but it's OUR piece of junk darn it! I don't think any bank would actually want it now that I think about it--in fact we should have taken the kid's offer, I don't think we could get $20 for the car on Craig's List.
10. Cut out ineffective warehouse memberships. Notice I said "ineffective." After my post a few weeks back about my rocky relationship with Costco I appreciated all the comments it generated. Seems like the general agreement is: know your membership options, know your local Costco and be aware of where you're spending or saving money. Some warehouses are better deals than others and savvy shoppers can save money only if they're aware of where the money is going. Me? I don't see that our Costco here saves me anything so we're cutting our membership.
So let it be written, so let it be done.
Oh, and by the way, someone suggested in the comments that you could buy prescription medications at Costco without having a membership. I asked our local Costco pharmacy about it last week and it was confirmed--you can buy prescriptions at Costco without a membership. Yes, you can thank me later.
11. Buy clothing and other seasonal goods after the season is over. Here we're lucky to have summer and winter (I'm trying to be positive) so we need the full spectrum of clothing options. I buy my kids next year's winter gear from sales the year before. Right about now Walmart is putting their snow pants on sale for $11 a pair (better than $20 which is normal), boots can be marked down from $30 to $10, just watch out and keep your kids' sizes handy.
I'm a believer in doing this for me too--I watch Anne Taylor and Banana Republic like crazy when the season gets underway to see when things will start to go on sale. Yes it means I'm usually wearing last year's styles but *sniff* somehow I manage.
12. Cut out newspapers and magazines. We stopped taking the Anchorage Daily News about two years ago and I've never missed it once. I figure that not only have I now personally saved a portion of the rain forests equivalent to the size of New Jersey but I have saved hundreds of dollars in the process. All major newspapers can be found online, which is how I read the ADN when I'm not irritated at them (ah, there's a subject for a post!) and to be paying subscription costs for the physical paper seems strange if you're pressed for cash.
If you buy for the coupons, it's still cheaper to buy an individual Sunday paper and get your coupon fix than it is to continue a weekend subscription. If nothing else it's my small little protest for old fashioned newspapers to get with it and join the Technological Age. Who's with me?
13. Don't move. I don't mean don't move--hold still--I mean don't move from house to house. I've heard that the average time a homeowner spends in a home here in Anchorage is five years. Wow! Five years! That means that every five years (unless your business is relocating you and paying for the costs) the average Anchoragite is paying 6% of the sale price of their home to a realtor. The average cost of a home here in 2007 was $333,000 (I'm sure it's up since then) so unless you like to plop down $20,000 every time you go to a new house across town you might want to think about staying put.
Usually people don't think too much of paying these costs because homes appreciate so the realtor's fees come out of the realized gain on the property but think about how much more you'd save if you stayed put altogether? No paying movers to move you, no hook up fees or deposits on utilities, no buying boxes, no buying pizzas to induce your buddies to come over and help you out.
You might try to save money by selling your home yourself but this is such a hassle and being that there's absolutely no incentive to buy a home from someone representing themselves that it seems a bad idea overall. Stay put--fix up what you have or learn to live with how it already is and you'll save a bundle. Or the other alternative is to sell your fancy house, pay those realtor fees then buy a shack on the beach in Hawaii. Right now that doesn't sound too bad to me.
I saw something about credit at this rather hypnotic interactive game from the U.S. Treasury. Although do you see the irony? Here's a video on credit and living within your means from the FEDERAL GOVERNMENT. Physician heal thyself. Found via Joe and Kristen's Journal.
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