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| Tips on Saving Money |
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| lpxxfaintxx |
 Posted: Sat Jun 10, 2006 6:42 am Post subject: Tips on Saving Money |
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| I have a bit of a problem on spending too much money... does anyone have any tips to share with me? |
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| snapplekid13 |
| Posted: Sat Jun 10, 2006 8:31 am Post subject: |
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Investing Manager
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Do you have a trustworthy room mate? If so then give them all your cash if thats what you use ( if not then IDK ) then tell them how much you need and they give it to you.
Worked with my sisters room mate! I don't live with one so IDK. |
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| crazymonk |
| Posted: Fri Jun 16, 2006 8:39 am Post subject: Re: Tips on Saving Money |
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| lpxxfaintxx wrote: | | I have a bit of a problem on spending too much money... does anyone have any tips to share with me? |
Before you decide to spend money, ask atleast 3 times: Do I really need it or do I just want it? If your answer is wanting then don't spend. Spending is a habit. Some of the usual ways of control.
-Don't use credit cards, if you use it pay it in full amount each month.
-Keep balance your cash flow/spending, limit to positive cash flow by holding your spending to later time (i.e. next month)
-Don't loans money unless the loans create future assets. ie. Education, house (for resell), or good investment on the market. |
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| DKnightSr |
| Posted: Fri Jun 16, 2006 10:55 am Post subject: |
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Grandma said, "The trick to saving money is spend less than you earn". Sounds hoakie, until you begin the game of "how can I buy it for less". Let's take steaks. Pretty much everyone loves them! So buy a chuck roast...cut it into steaks (that's all the butcher does) and voila! Ya' just saved (minimum) 20 cents a pound. Add a bit of tenderizer, and you have a flavorful steak at half the price of t-bones or sirloins. Ya' like hamburgers? Buy the chubs on sale, and save 40-50 cents a pound.
Need transportation? Save the 12-25 thousand for a new car. Spend no more than $3000 on the most reliable, lowest miles, best cared for vehicle you can find. It will probably be a MOPAR (don't ask me why, it just works that way). Even if it lasts no more than 2 years, you saved a ton! The average car is "done for" in 10 years. That means average annual cost on a $25000 car is $2500. NOW your old $3000 "pot" doesn't look so bad, eh?  And guys, anyone who tells you chicks dig flashy guys with flashy cars...probably has a flashy car to sell. I have 3 daughters, and they look at the eyes, the butt (yes, disgusting but true!) and then listen for the "true and honest heart". The vehicle they drive is only a fact of life, not a consideration.
And ladies who are looking to settle down... they look for a strong back, a loving heart, and a home! Trust me guys, a home with a picket fence has done more for me than any car. It represents stability and commitment. Do whatever it takes...but buy a home of some kind. The truest fact in life is...they ain't makin' any more dirt! Best investment, bar none, available. Plus, it's a forced savings plan. You build equity (and net worth) whether you want to or not! 
Though I'm not LDS...(they won't have me, I smoke) I'm a great believer in Brigham Young's statement. "Use less, eat less, work less, sleep more!" There's a world of truth in those words.
When you're first starting into this world, it's tough. Don't beat yourself up 'cause you're not tucking away "At Least 10%". Alot of brokers, agents, and bankers have made alot of money selling programs that "help" you force yourself to save 10%. Start by putting yourself on a budget. Just like a business. I've been on one now for over 15 years. The first year was tough, as we could only "gestimate" the numbers. But the 2nd year got more accurate, and by the 3rd year we were free of all debt except our home. There's no "easy way"...ya' just gotta step up to the plate and make it happen. Turn down the heater, turn down the water heater. Turn OFF the air conditioner (leave windows open at night, and seal home in the morning, with windowshades drawn during the day). Learn to wear shorts and a T-Shirt.
In short...as Grandma said... "If you take care of the pennies, the dollars will take care of themselves". I can vouch for that. It works!
Last example, then I'll "go away". Ramen noodles. Greatest invention since the calculator! 2 bags of Ramen for 40 cents, 2 hard boiled eggs (sliced) added 20 cents, a quarer of an onion (diced) about 10 cents, and you have a filling, fairly nutricious "quick and easy dinner". Compare that to McDonalds at $6... and you just cut your cost by nearly 90%!!! Now if you could save 90% on a car...would you do it?
Final thought: You are where you are because God put you there. The people in your life are there for a reason. They are teaching you something. You are being groomed for your own personal "calling"...or some people call it "your niche". Wherever you are, whatever your circumstances... listen for "The Whisper". You will KNOW the right moves at the right times. Just listen. Money is not everything. Matter of fact, it's usually more trouble than what it's worth. So seek happiness, calm, and balance. The money will come when it's needed.
Everything you "own" in fact owns you. You either have to maintain it, insure it, or dust it. Keep it simple my friend, and seek happiness.
Best of luck to you!!!
Dennis |
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| BallJacker |
| Posted: Sat Jun 17, 2006 4:55 pm Post subject: |
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Investing Manager
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IRAs and 401K are a SCAM!!! Yes the money is tax deferred, but when you finally get around to taking it out your taxed, aCK! I've been reading some books on TAX "Avoidance" and not "Tax Evasion", the later may get you in a Federally maniditory facility (Jail).
Depending on your age and income, you should have a financial game plan. One where you set goals to reach. What's the use of saving money if you can't spend it? You need to treat yourself once in while to let yourself know your still able to enjoy life. Just dont do it too often.
The best advice is to live within your means and control yourself. |
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| CJ. Wentworth |
| Posted: Sat Jun 17, 2006 6:20 pm Post subject: |
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I'd like to say that while I completly agree with DKnightSr I think that that kind of regime will only work for people with a strong enough will, or motiviation to consciously cut back.
I'd like to make the suggestion of making it "automatic". Having read The Automatic Millionaire I agreed with the statement that people live to have fun. Budgeting or Cutting Back = not fun.
So to sidetrack that thought pattern, you get your bank or your work to put 5% of your salary directly into a saving account. If you can't support 5 then go down to 1. Once you get used to living off of that, ramp up the % until you're putting as much as you can afford or are simply comfortable with. Basically goes by the old saying of "you don't miss what you don't see", or "you don't spend what you don't have".
By "tricking" yourself into saving you're free to continue spending your money on whatever you want (assuming you're not up to your eyeballs in debt, and also aren't spending more than what you have anyway), which means you can still have your coffee's and fast foods and such.
As to what you do with your saving's, don't spend it on crap. Don't waste all your time and earned money on a Car or on a Holiday or Boat's or anything like. If you want a Car/Holiday/Boat then set up ANOTHER saving's account and treat it differently than your proper Saving's account. Invest your savings. Don't be one of those people trying to look rich but in reality are poor poor poor.
BallJacker. That's the system and that's how it works.
Let's compare 2 different Scenarios.
1: You invest $1000 of after tax dollars (your own savings). For you to get this initial $1000 you've actually earned $1000 + Whatever tax you paid on it. In Australia this is ~30% so I really earned $1,300 and the governemnt took 300. This means you've paid tax on your initial invetsment and as you've stated when you take it out you'll pay tax again
2: You invest $1000 of pre-tax dollars. Instantly I'm "saving" $300 that I don't have to pay in tax. In after tax dollars I would only be investing ~700, but because I haven't paid tax on the $1000 I get the entire sum to invest.
With the entire Compound Interest thing going on until retirement, that $300 saving's turns out to be huge. Also remember that in this case the 300 is only the % of what I've put in. And 30% at that! If I were investing $100,000 instead, I would be "saving" $30,000 (even more because tax rate get higher the more you earn)
*note: in australia they're abolishing the need to pay tax when you retire and draw a pension. Basically they'll give you your money back in it's entirety
Anyway I'm no pro in that so I wont' go any further (hopefully someone else will)
I 100% agree with the Financial Game Plan. If you fail to plan you plan to fail. |
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| CJ. Wentworth |
| Posted: Sat Jun 17, 2006 7:38 pm Post subject: |
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Investing Sr. Associate
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| snapplekid13 wrote: | Do you have a trustworthy room mate? If so then give them all your cash if thats what you use ( if not then IDK ) then tell them how much you need and they give it to you.
Worked with my sisters room mate! I don't live with one so IDK. |
100% disagree with this. in fact 1000% disagree.
The ultimate reason I do is that you're banking on your flatmate/someone else to do your saving for you. If you can't control your money, then what's to stop them nicking off with a few dollars every now and then. Even if they don't and are entirely trustworthy, you have learnt NOTHING. Saving is a habit, and you must UNDERSTAND it.
If you turned flatmate into Bank then I would back it 100%.
The main reason you don't want someone else handling your money (regardless of how trustworthy) is that there is no insurance in case something goes wrong. If someone robs your friend then it's up to your friend to get the money back, if someone robs a bank then the bank get's the police and government and every single person it knows to go out and get the money back. There will be records (that will stand up in court) that the banks will keep that your friend cannot. Even if your friend does keep records, the court will most probably not believe him/her.
There's also the issue of Inflation. If you put $1,000 into a jar as "savings" you're in fact loosing money. Put inflation at 3% and by the end of the year your $1,000 is equivilant to $970. In a similar fashion if you put your "Savings" into a Transaction bank account (ie, 0.01% interest p.a) you're also loosing money. To truly save your savings account must must must have at LEAST have an interest rate equal to that of inflation. If there are charges/fees then the interest rate must raise to take them into account as well. (The banks quote an Effective Interest rate, which takes into account Compound Interest, fee's and other such expenses).
Also there's no use in learning to save if you don't understand it. In handing your money over to a flatmate, you're depending on them never moving out and that they have a firm understanding of how to make money work. Saving is a habit. Saving MUST be a habit. It must NOT be something that you trust someone else to do. Please don't confuse this as saying you can't trust the Banks to save for you (as my above post suggests) as the Banks are not "someone", they're safer and easier to deal with than "someone".
Last edited by CJ. Wentworth on Sun Jun 18, 2006 2:51 am; edited 1 time in total |
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| CJ. Wentworth |
| Posted: Sat Jun 17, 2006 7:59 pm Post subject: Re: Tips on Saving Money |
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Investing Sr. Associate
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| crazymonk wrote: |
Before you decide to spend money, ask at least 3 times: Do I really need it or do I just want it? If your answer is wanting then don't spend. Spending is a habit. Some of the usual ways of control.
-Don't use credit cards, if you use it pay it in full amount each month.
-Keep balance your cash flow/spending, limit to positive cash flow by holding your spending to later time (i.e. next month)
-Don't loans money unless the loans create future assets. ie. Education, house (for resell), or good investment on the market. |
Sorry to disagree Crazy but Credit Cards (if used properly) will boost your Saving's Amazingly. There are only 2 things you need to turn your Credit Card into your biggest saving's tool.
Let me say this now. Your Credit Card is not your enemy, nor is it your friend. It is merely a tool, and like all tools if used correctly it can make your life so much easier. Just like you wouldn't use a Fork to eat Soup, you wouldn't use your Credit Card without paying it back.
Anyway, the 2 things that I stated earlier are this.
1: Interest free days. Most CC's in australia have 55 days interest free. This is amazing and eliminate's the need to worry about the % charged. Your MUST MUST MUST have this option. It is impossible to use your CC effectively if you don't
2: NO FEE's NO FEE's at all. If you can't get a fee-less CC then go for the one with the LOWEST fee. I say fee as a singularity because there should be only one, ie a single annual fee, but no monthly fee's.
Now just like you can't eat a Steak without a Fork, you also need a Knife. Read: Your CC alone will not save you money, you need another Tool for this to work. That other tool is a "high interest" saving's account.
The requirements of the Savings account are as follows.
1: Interest Calculated Daily and paid as early as possible. Most Saving's account vary from 5-6% pa, Calculate Interest daily, and pay monthly.
2: No punishment schemes when you withdraw money. ie, they don't take "bonus" interest away if you move your money in and out of that account.
3: The ability to have salary placed DIRECTLY into this account.
4: The use of the Internet banking (to transfer money between accounts)
5: Interest earned must be paid directly back into the saving's account
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Now! How to Save money using your Credit Card.
However your money is earned (ie, salary, rental, whatever) you have it ALL placed into your Savings account. If circumstances don't allow to to place all, then as much as possible (ie, you pay rent in cash).
Now, as the interest is calculated Daily and paid monthly, you MUST have the most money in the Savings account for as long as possible to recieve the most interest, and also at LEAST a month so to receive the interest. The way you do this is to charge EVERYTHING to your Credit Card. Dangerous I know, but read on.
By charging everything to your CC, you recieve 55 days interest FREE. This means that you can leave your money in your Saving's account for 55 days before having to move it out.
At around day 50 of your 55 day interest free period, your Saving's account will have paid the interest back into itself. At this time you should "wipe" your CC debt. ie, withdraw from your Saving's account to pay your CC bill to 0.
At this point you simply start the cycle again. Leave your money in your Savings account for 50days and charge everything to your CC. After 50 days wipe your CC clean.
The reason I say 50 days instead of 55, is that money takes time to move from one institution to another. They all say allow 5 business day's for transactions, so working on 50 day cycles gives you a buffer of 5 days for your money to move from your saving's account to your CC. If you're not comfortable with 50 days, go to 45.
Basically you want your money in your saving's account for as long as possible. |
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| CJ. Wentworth |
| Posted: Sat Jun 17, 2006 8:12 pm Post subject: |
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To try and simplify or to give you a visual of how that CC saving scheme works is this.
Day 1: $1000 is placed into a Savings account at 5%pa
Day 1-50: You charge every single expense that you can to your CC (with 55 days interest free) totalling $1000, but effectively costing you nothing. Meanwhile, from day 1-50 your Savings account has been earning Interest.
A little number crunching (rounding as well, so the figures are not exact)
5%pa / 365 = ~0.014% each day. Your 1000 is earning 0.014% each day
1000 * .014% = ~14c each day. 1000 earns 14c a day.
14c * 50 = $7. After 50 days you've earned ~$7 interest.
Day 50: You take 1000 out of your Savings and Pay off your CC. Using the numbers above you still have $7 in your Savings account.
Now think about that. $7 For NOTHING. For Free. You've just "earned" $7 by moving your money around a little differently. You still got $1000 of whatever it was you charged to your CC, you still paid for it all, but now you're up $7
While it may seem like a small amount, you may not spend $1000, you may save more, your interest could be higher, but every single $ counts when you're working with Compound Interest. |
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| CJ. Wentworth |
| Posted: Sun Jun 18, 2006 2:46 am Post subject: |
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Investing Sr. Associate
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All this changes entirely if you have Bad debt.
The basic's between bad debt and good debt in laymens terms.
Good Debt: Makes you Money. Leverages. Is Tax beneficial
Bad Debt: Costs you money. Depreciates. No tax benefits.
If you have bad debt, pay that off before even thinking of saving. If you want to think of saving, think of the fact that interest rates on any type of Bad Debt (overdue credit cards) has a standard of ~10-20%. Most saving's accounts only have an effective rate of 5-6%.
Either save 10-20% by paying off bad debt
or save 5-6% in a saving's account.
It's quite obvious that you should pay off bad debt before considering saving accounts |
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| BallJacker |
| Posted: Mon Jun 19, 2006 7:19 am Post subject: |
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I'm a bit wary of that 55 day CC idea. What CC is that and what country? Here in the US it typically 29-30 days. Then they start charging late fees, unless you fall for that CitiBank SCAM where you dont a late fee if you charge something, but you still get charged for finance charges.
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| CJ. Wentworth |
| Posted: Mon Jun 19, 2006 6:42 pm Post subject: |
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Investing Sr. Associate
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| BallJacker |
| Posted: Tue Jun 20, 2006 4:04 am Post subject: |
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Investing Manager
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| Now if one can find a card with O% Transfer, O% Interest, 0% Cash Advance, 60 day grace,No Annual Fee, and a $100,000 credit line. That would be a great card. |
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| stoogepid |
| Posted: Wed Jun 21, 2006 6:26 am Post subject: |
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Investing Sr. Associate
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| Put all your change in a change jar! |
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| t-bag |
| Posted: Tue Jun 27, 2006 6:24 am Post subject: |
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Investing Sr. Associate
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Sorry for off topic question but....
CJ Wentworth, any relation to the one I see commercials for? |
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