Anyone who’s dealt with significant debt knows how difficult it is to write out a large cheque every month to pay it off. Instead, financial weblog FiveCentNickel suggests paying off debt in micropayments: In short, pay what you can afford, and then scrape together whatever else you can during the month and send in multiple, smaller payments… Believe it or not, [a friend]got to the point where he was sending Citibank an extra $5 each and every day via online billpay. By making a game out of finding an extra $5/day, he managed to stay motivated and slay the debt beast well ahead of schedule.
Impulse buying can affect anyone, but if you’re tech minded, the things we can be tempted to buy can be especially expensive.Here’s a tactic suggested by the No Credit Needed blog: a self-imposed cooling off period on impulse buying decisions, also known as the $100 a day rule. Basically, for every $100 that tempting toy will cost you, wait one day. So, $1000 game console? Wait 10 days, then see if you still want to buy it. The nice thing about this is you don’t have to say “No” right away – you’re saying “Maybe, I’m going to think about it”. In my experience that’s much easier to accept when you’re impulse shopping than a flat out no.
The $100-a-Day Rule Prevents Impulse Buying [No Credit Needed via Get Rich Slowly]
The Consumerist lists 10 ways to really save money, which include one of my tried and true standbys, rolling your credit card debt over to a new provider which offers you a 6 month interest free period. Of course, the aim should be to pay it off before the honeymoon period elapses and you revert to the full interest rate.(Don’t make the mistake I once made of keeping the old card ‘just in case’ – of course I ended up with two credit cards in debt.)Of course, the only real way to save money is to spend less than you earn and start putting money into savings. But the list has a few suggestions for doing that too, including paying your credit card off in full every month to avoid credit charges, and the old standbys – making your own coffee and lunch instead of buying them.Got any other tips for getting the most out of your money? Share in comments please.
10 ways to save real money [The Consumerist]
The Simple Dollar personal finance blog delves into household budgeting—something more of us should do, but are kept away from by fear of spreadsheets, math, and undue time commitments. Blogger Trent’s solution is simple and reliable, however, and takes only a willingness to collect paper and toss it in a shoe box. Collect one to three months’ worth of receipts, checks, pay stubs, and other paper records of money in and out, drop them on a floor when you’re done, and then arrange them however you’d like: You’ll probably find yourself shifting piles around and making new piles throughout this process, as you should. The goal is to find ways to group your spending that’s natural to you. Don’t try to force it to match someone else’s groupings – if a group of receipts or statements feel like a natural group to you, that’s how they should be sorted.
Over at the Get Rich Slowly personal finance blog, one buy-savvy reader shares the techniques and thinking she’s used to improve her haggling, a skill many of us have neglected or ignored entirely. Whether at a yard sale or big-box electronics store, changing your angle of approach can often yield solid savings. A few of her suggestions:If I’m at a yard sale or buying a bunch of things, I pile them up and ask for a better price because I’m buying a lot. I always ask if there’s a discount for good customers, and that’s often all it takes to get a discount. I ask, “Can you take $XXX if I promise to give it a good home?” I say, “It’s so cute, I don’t need it, but it’s really attractive, can you take $XXX for it?” It’s amazing how minor a nudge it takes to get something off the price.
Yahoo Finance profiles several “extreme” savers, folks who call saving money a passion and go to unconventional lengths to stretch their dollars. For example, to save on rising food costs: Uber saver Mike Hegarty, a CPA in Des Moines, Iowa, says he saves $500 a year on meat by purchasing whole animals from local farms. In case you’ve never done it and you’re having a hard time visualizing it in your garage, when you buy a quarter of a cow from a local farm, a butcher cuts it into the familiar hamburger, flank and sirloin steaks and packages it for you. An extra bonus: Local farms often raise all-natural or even organic beef, pork and chicken.
The article highlights other unorthodox tips for saving money on retail, automobiles, charity, commuting and housing, phone service, and travel. If you’ve got an extreme saver tip of your own, let’s hear about it in the comments. Extreme Savers Share Their Secrets [Yahoo Finance]
Despite the content of his site, financial blogger J.D. Roth isn’t a budgeter—opting instead to follow what he calls a “spending plan.” But in the wake of some financial changes, he’s decided it’s time to build his first budget. His choice and suggestion for anyone looking to set up their first real budget is called the 60% solution, which allocates the lion’s share of your gross monthly income to committed expenses (like rent and car insurance), then divvies up the remaining 40% equally to retirement, irregular expenses, long-term savings, and “fun money.” The 60% solution, as Roth points out, is intended for recent college grads, but it should also work well as a starting point if you’re on your first budget. If you’ve already got a tried-and-true budgeting plan, share what works for you in the comments. Building Your First Budget [Get Rich Slowly]
One way to save up for large purchases is to buy yourself gift cards in small increments in advance, says a reader at personal finance blog Get Rich Slowly. So if you’re saving up for an iPhone, for instance, buy yourself a $20 gift card to the Apple store every few weeks. Editor J.D. Roth writes: You can use “reverse credit” to save for more than just large items. You might use it to budget for your morning coffee, for example. If you want to limit your spending at Starbucks, put a fixed amount ($20 maybe) on a card at the beginning of the month. When that card is drained, you know you’ve spent your coffee budget. At the start of next month, put another $20 on the card.
As J.D. points out, this method is similar to “envelope budgeting”, the classic method your grandparents used to put money aside for specific purposes. Use “Reverse Credit” to Stick to Your Budget [Get Rich Slowly]
Ramit at I Will Teach You To Be Rich shares a system his friend uses to set a firm amount of discretionary spending each month and then not spend more. It’s a take on the “cash in envelopes” system (represented digitally in programs like Budget, and it’s just as grok-able—when the money’s gone for the month, it’s gone. Obviously, you’d want to ensure you don’t draw serious overdraft fees, and you’d have to have a handle on your monthly budget to begin with, but it’s at least as effective as deducting credit charges as you go, and possibly moreso, with the thought of having a card turned down a nice social conditioner. For those with a fuzzy grip on spending, this technique could make the numbers seem pretty firm. How to use a separate debit card for discretionary spending [I Will Teach You To Be Rich]
Does watching TV news or checking business news sites give you cold sweats as you ponder how your investments are doing? Are you logging into your financial site every day but still feel your money slipping away? Just ignore your money, J.D. at Get Rich Slowly says—stocks pay off in the long term, not day-to-day, and worrying about it is the easiest way to make a money-losing mistake: In Why Smart People Make Big Money Mistakes, the authors note that it’s dangerous to watch your investments every day. When you pay close attention, you tend to become emotionally invested in even small movements. You lose sight of the long-term and make decisions based on short-term events. Peek in every month or so, but don’t constantly check your investments.
