Spend Less Make More
By Steve Gillman
When you spend less
money on the things you buy, it can have the same effect as making
more money. You might look at it like treasure hunting. Just
like when you find valuable old coins, when you discover ways
to save on your normal purchases, you're making yourself richer.
You have extra money to spend or invest how you like.
(Flickr photo by 401(K) 2012)
But it matters how you you accomplish your savings. Clipping
coupons to save money on things that you would not have otherwise
bought can be a cheaper way to try some new products, but it
also can mean spending more, rather than less. Those kinds
of "savings" can bankrupt you if taken too far. To
actually spend less you need to find ways to save money on those
things that you will be buying in any case.
There is another reason you might want to skip the coupon
clipping. It is that your focus should first be on the things
that will save you more money for the time invested. You can
spend a lot of time looking through newspaper coupons, after
all, just to save a few dollars. This is especially true if like
myself, you don't shop primarily for name brand products (those
are the ones that offer coupons most often). Instead, you might
want to sit down and call a few banks, or go online to see what
refinancing options are available for your home mortgage. Instead
of saving $10 on groceries, you might save thousands of dollars
over the years.
You can always return to that coupon clipping in nany case,
if you have the time. But find the big savings before you bother.
An extra couple hours looking for the best price on your next
car, for example might mean you spend $1,000 less. How many jobs
have you had that pay $500 per hour? Certainly "couponing"
isn't one of them.
Saving big money on the purchase of a car or a couch is nice,
but it is the large regular expenses where you can save the most.
The mortgage payment is a good example, and you might think of
this when you buy that car too, getting one that will cost hundreds
of dollars less to operate every year because of cheap repairs
and good gas mileage. Look first then to the large and the regular
If you rent, for example, consider carefully what you really
need and see if there is a way to get it for less. This doesn't
mean renting in an area where you don't want to live, but it
could mean moving. After all, if you spend $300 less on rent
for a place that is almost as nice as what you have, that's like
having $3,600 handed to you annually. You could use the money
to travel anywhere in the world, or to start a small business,
or to invest for retirement.
In addition to looking at the large expenses you have right
now, consider the expenses you "buy into" when making
big decisions. When you buy a house, for example, you buy a package
of expenses also. Some homes cost more for taxes, insurance and
heating--and for all the time you own them.
Let's say you're looking at a home that requires borrowing
$140,000 at 6.75%. Now let's assume you take the time to find
a nice home that will cost $110 less per month for utilities
and taxes, and will only require a loan of $120,000, plus you
look around to find a rate of 6.25% for that mortgage loan. Perhaps
over the weeks you spent 40 hours extra to accomplish this. Your
savings over the next thirty years though, would be $60,900 on
your payments and $39,600 in those other expenses, or about $100,000.
How many jobs have you had that pay you $2,500 per hour?
Obviously the big stuff matters most if you want to spend
less money and so have more in your pocket for any other purposes.
Keep looking for the savings on the large expenses, and if you
never get back to those coupons, well... don't sweat the small
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