Beating Broke

5 Creative Ways to Save

August 17, 2011 By MelissaB 17 Comments

Common financial advice is to pay yourself first; set aside your own savings before you pay any bills. Yet, what happens if you don’t have enough money to pay yourself first? What if you can’t set aside $100 or more each month? How can you continue to save for your goals whether they are establishing a $1,000 emergency fund as Dave Ramsey recommends, saving for a replacement car so you can avoid a car loan, saving for a down payment on a home or simply saving for a vacation?

My husband and I are temporarily in a tight financial situation; he is finishing his Ph.D. and I am staying home to take care of our three children while doing freelance work at night. While I expect our financial situation to improve in a few months when my husband graduates, we are now in the situation where we have little to save, yet we would like to begin to save for a down payment for a house. We have found unusual, creative ways to save. Utilizing these methods won’t get us to our 20% home down payment, but they offer a great way to start saving, and we will add to the savings when our income increases. If you are trying to save more, try some of these strategies:

Save all of the $5 bills that you get. You are at the grocery store and you buy $33.22 worth of groceries; for your two twenties you give the cashier, you get back one single and one $5 bill. Put that $5 bill into savings. My husband and I have been doing this since June 1, and already, in less than three months, we have saved $175. That is a savings rate of approximately $60 a month. More importantly, that is $60 we didn’t think we had to save. Sometimes it is painful to put that money aside, but in the long term, it is worth it. Of course, this method works best if you routinely pay in cash.
Save all of your change. This is a similar strategy to the $5 bill strategy, but it is a little less painful because you will be saving less overall. However, your savings will still add up quickly. My husband and I used this method a few years ago to save for a weekend vacation. We saved $300 in a year’s time.
Save one dollar a day. Another blogger I read was told at her wedding that she and her husband should save one dollar a day. She and her husband did just that, and at their 10 year wedding anniversary, they had $3,650 saved, which they used on a 4 day second honeymoon. Talk about a painless way to save, but what a great reward at the end.
Save the money you would have spent on an impulse purchase. Do you really want a pop when you are checking out at the grocery store, but you resist the urge? If so, take the $1.59 you would have spent and put it in your savings account. You would have wasted it on an unhealthy, impulse purchase; why not instead use it to your benefit and put it in your savings account?
Have $5 or 10 automatically withdrawn from your pay check. Even if money is very tight, you can probably sacrifice $5 a week. If that is the case, arrange to have the equivalent of $5 a week automatically withdrawn from your paycheck and placed in your savings account. Over the course of a year, you will have saved between $260 and $520.

Of course, there are many ways to save when on a tight budget; you just need to get creative with how you do it. Also, don’t worry that the saving method you choose is not adding up quickly enough. Saving something is much better than saving nothing, and once you become disciplined to save money regularly, as your income increases, you can save more.

photo credit: Carly Jane1

Street Smarts

August 12, 2011 By Shane Ede 7 Comments

Street Smarts: Beyond the Diploma
By: Jim Randel

Often, when we’ve “grown up” and graduated college, we all move on to our new lives as adults with the expectation that our schooling has given us everything we’ll need to be prepared for the wide world ahead of us. And, just as often, we are disappointed. While school has the advantage of preparing us for the work part of the world; we can all read, write, and do most arithmetic; we are usually very unprepared for the subtle nuances that take place that will give us a step up on the ladder of success.

Jim Randel, if you’re unfamiliar with him, is the author of the Skinny On series. I’ve reviewed a few of those here before, which, I would guess, is why his company sent me a copy of this book. (That’s my disclosure, folks. I was sent a free copy of the book.) What he’s done with both the Skinny On series and this new book, Street Smarts, is to take some very complex issues, and simplify them enough that you can get the basics without having to knock your head against the wall trying to understand them. Street Smarts holds 125 lessons on how to better succeed in the real world. Each lesson is short, to the point, and valuable. There’s very little chaff to sort through, and it’s an easy and fast read with some rereading value.

One thing you won’t find inside it’s pages is explicit detail. There is not, for instance, 20 pages on the mathematics behind the rule of 72. There also is not 100 pages or more on the workings of a mortgage loan. Each is it’s own lesson, and is two pages. You’re not going to learn everything there is to know about any of the topics by reading this book. What you will get is the highlights that will allow you to safely navigate the topic without causing yourself too much trouble.

The book is also paired with a website where they’ve been putting up regular fresh content. It’s already got quite the archives of good tips and information. You can visit it at TheStreetSmartBook.com.

This book would make a great gift for a newly graduated senior, of high school or college.

Ways to Save with Banking and Recurring Payments

August 10, 2011 By MelissaB 17 Comments

If you are new to saving money and cutting expenses, you may search the internet where you will find such tips as “Skip your daily coffee fix” and “Buy store brand foods instead of name brand foods.” While this advice is good, it only offers a superficial way to cut expenses. You may need to look beyond this generic advice to find other ways to trim costs. My family is in this situation currently; our income does not add up to the equivalent of our expenses. Not only are we making less than we spend, we are not able to add to our savings. This situation is temporary, until my husband finishes his post-doc, but obviously it is not sustainable for the two years he will be in a post-doc position. Here are some of the extra ways we have found to trim our budget:

-Stop writing checks. We have automated our bill paying online. At first I was resistant to do this, but when I added up how much I was spending on checks ($38.12 for a year’s worth) and stamps ($52.80 a year) for a total of $90.92, I decided to do it. I can’t eliminate all check usage, but automating our bills has reduced our check usage by 3/4s, which will save because I won’t have to buy checks as frequently.

-Cancel automatic payments for services you no longer use. One downside of automating payments online is that you may stop using a service and yet forget to stop the auto payment. I recently closed an eBay store that I had. As part of my eBay business, I had automated payments to a template service (that basically made my auctions look prettier by putting a design in the background) at $12 a month and to a selling newsletter for $8 a month. I was annoyed when, a month after I closed the eBay store, I discovered I was still billed the $20. I forgot to cancel the subscriptions.

You may find that some companies make it difficult to cancel online subscriptions. (Remember the old Friends episode where Chandler wants to cancel his gym membership, and every time he tries he is instead convinced to stay?) While it may be very easy to sign up for recurrent payments on your credit card, when cancelling you may need to call the company and listen to them try to upsell you. Persist because it is not worth paying monthly for a service you are no longer using.

-Change to online bank statements. My bank recently began charging $3.00 per month for paper statements. That adds up to $36 per year per account. Because I have 3 accounts with them, it adds up to $108 a year wasted. Yes, I prefer to have physical copies of my statement, but not at a cost of $108 a year.

-Consider changing banks if the fees get too high. Last January, my bank started charging me $9.99 per month for my eBay business checking account. That is $119.88 a year just for the joy of banking with them. I have since cancelled the account. I am now in the market for a new business account for my writing and blogging service, and you can bet I won’t be going with my current bank, and I’ll be looking at well reviewed banks that maybe have good new account promos.

There are plenty of ways to save money if you look carefully. These are just a few ways you can save at your bank and online, but they clearly add up. Making these small changes has saved my family $230 a year!

What other ways do you use to save money?

photo credit: Patrick Hoesly