Thursday, January 13, 2011

Is A Bad Credit Rating A Good Thing?

Is A Bad Credit Rating A Good Thing?

Could a bad credit rating save you from bigger problems? It has done just that for many young people. How can this be? I'll start with a true story.

A Good Credit Rating Story

A friend, whose name I will withhold, started his adulthood with good credit. He soon was able to get credit cards at will, and finance cars, snowmobiles and more. He managed to make the payments on his debt, and went deeper and deeper into debt while he was at it. By the time he was 30 years old, he had over $20,000 in credit card debt, plus loans on cars and business tools.

It was too much to handle. He considered bankruptcy, but was convinced that the credit card companies would reduce his balance due if he just threatened to do so. First, though, he had to stop paying on the cards, or the credit card companies wouldn't believe he was in financial trouble. He did this, then drafted a nice letter to the companies, explaining his situation. Most of them cut at least 30% off what he owed, provided he paid the remaining balance immediately. This he did with a home equity loan.

In the end, his bad credit rating wasn't as bad as if he had actually declared bankruptcy, so he was able to rebuild his credit score. He has also begun to rebuild his credit balances. His good credit rating has enabled him to begin again the stressful process of overburdening himself with debt.

A Bad Credit Rating Story

Another friend of mine had her first credit rating based on the phone bill in her first apartment. She didn't ever pay the phone bill on time, and it was eventually disconnected. This, and a few other minor credit infractions when young destroyed her credit scores. What has this meant?

She can't borrow, so she hasn't had the pleasure of being at the edge of bankruptcy. She can buy things for cash when she has it, or wait until she does. Has this inability to have a bunch of things around that are worth a fraction of what she owes on them made her a less happy person? The opposite is true, in my opinion. She just doesn't have the debt-stress that is so typical today.

Is Bad Credit Good?


I am not recommending that you purposely try to get a bad credit rating, but if you already have one, it isn't all bad. The habits that got you there would probably get you into even more trouble if you could borrow more. Look at it as an opportunity to stop going further into debt, and a chance to learn better habits.

Start paying cash for everything. Pay down those credit card balances (the higher interest ones first). The moment you get those cards paid off, start setting aside money to buy a good used car for cash. When you've done that, start putting what would have been a car payment into a savings account, for a future down payment on house or a business (the only things you should borrow for). A bad credit rating can be good thing, if you take it as a lesson and an opportunity.




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How To Get Free Stuff

How To Get Free Stuff

Yes you can get free stuff, and yes, sometimes there are strings attached. For example, when we were at universal studios I got a free backpack. The catch? I spent six minutes filling out a credit card application. On the other hand, we ate pretty well for free on free sample days at local food stores when we lived in Tucson, and there really weren't any strings attached. Here are some other easy freebies

How to get Free hollydays

Somebody in Hawaii, Costa Rica or Colorado is just waiting for you to come and stay in their house while they are away. You may have to water the plants, and even get the mail for them, but you get to stay in a beautiful home in a sunny place. Sometimes you even get paid for these vacations. The only catch is that to find these opportunities, you may have to subscribe to one of the newsletters that list them.

We camped in our van for ten days at Williams Landing, east of Tallahassee, Florida, on Lake Talquin. It's a beautiful place, with hot showers. Our cost? Zero, and you can stay up to two weeks. There are free campgrounds scattered around the country. Ask an RVer about this, or buy a Woodall's directory from any large RV dealer. Camping can be an essentially free vacation if you do it right, because you may spend less than if you stayed home.
Free Entertainment

Some libraries now carry movies on DVD, and most at least have documentaries. We have even seen music videos on DVD in one library. The only cost is the time to get a library card.

Want to go to free concerts? Most festivals have some free musical entertainment. The National Cherry Festival in Traverse City, MI, for example, has free entertainment every night during the week-long festival, including many recognizable bands and (often) a Beatles tribute band. Go to any search engine and type in "festival" and the name of towns around you to find these freebies.
More Ways To Get Free Stuff

Most states give away free road maps. Some give away free legal forms too, like statutory wills. Check the state's online sites.

Free dental x-rays are available at some dental colleges. You have to be patient, as the students are just learning, but an experienced technician is always with them. You get the x-rays to take to your own dentist, which can save you $30 to $80. Some schools charge a small fee.

Some utility companies offer free energy audits. They come to your home and find the places where you are wasting energy. Some even give you a free kit for caulking windows and weather-stripping doors.


You can get free, confidential business advice from a business expert via email. Go to the website of "SCORE" (Service Corps of Retired Executives). These are successful business executives who volunteer their time to help others in business.
Some restaurants offer free dinners on your birthday. Others offer a free birthday cake. Many bars will buy your first drink for you if it's your birthday. How do you find the ones that do this? The same way you always discover how to get free stuff - as

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Debt Consolidation Is It A Good Idea?

Debt Consolidation
Is It A Good Idea?

Why is debt consolidation necessary? Maybe it isn't. It seems like the easy way out of the problem of too many payments every month. When your credit card and loan payments add up to $900 every month, why not just get a loan that will pay all of these debts off and have a nice easy payment of say, $300? There are two reasons why this may be a bad idea.

Debt Consolidation Ignores The Cause

Too much debt? Why? Rarely is the cause due entirely unforeseeable circumstances. Most often, if you have debt problems, it is because you buy too many things on credit. In other words, it is due to bad financial habits.

Now what happens when you combine all that debt? Do you have less debt? Maybe you get a lower interest rate on average, but you still owe all the money, right? Your consolidated debt is just easier to pay, because it is in one lower payment stretched out over a longer period. What else becomes easier now? Adding more debt.

This is exactly what many people do. They get their $900 of various payments rolled into a loan with a $300 payment, and now they have all that excess income. Time to go buy some things on credit. Obviously, debt consolidation can be a way to postpone reckoning with the real problem - bad financial habits. Postponing dealing with debt makes it much worse, of course.

Debt Consolidation Costs More

It may seem like you are saving money on interest with some consolidation loans, but this isn't always true. The problem is that you are converting short-term debt into long term debt. The longer you take to pay off the money owed, the more you pay in interest.

Let's look at an example. If you owed $6,000 on a credit card, with 18% annual interest, it would take a payment of $176.26 per month to pay it off in four years. You would pay a total of $2460 in interest. Suppose, in order to get the best interest rate and easiest terms, you rolled the debt into your 30-year mortgage on your home (many people do this). If it was a 7% loan, it would add only $39.92 to the payment. That's easier than $176, and a much lower interest rate, but how much total interest will you pay over the years? $8371 - more than the original debt.


Of course there are debt consolidation loans that are not for 30 years, but you get the point. Even with a 15-year, 7% loan, which would costs $53.93 per month, you would pay at least 50% more in interest than with the 18% 4-year payoff. Converting short-term debt into long term debt can cost you a lot more in interest.

Try hard to make those payments and get rid of that debt sooner. You'll be glad you did. Of course, it may be impossible to make those payments. That happens, but for a reason. At least work as hard on changing your habits as you do on getting that consolidation loan.



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Living Cheap

Living Cheap

Living cheap doesn't mean being miserable, or giving up what you want. In fact, in my own case, it meant getting to do the things I really wanted to do. The less you spend on each thing or activity, the more of them you can have, right? So the key is to spend less and still get what you need and want. Here is how I managed it.

Living Cheap In A Mobile Home

My first house was a mobile home on a small lot. I bought it for less than $20,000, and had payments of $257 per month. Even with taxes, insurance and repairs, it cost less than rent. It had three bedrooms, an expanded living room, and a nice fenced-in yard. I eventually sold it for $45,000.

What really made it cheap, though, was two things that I did. First, I paid as much as I could on it when I was working. I owned it free and clear within five years, and from that point on it cost an average of $300 per month to pay for the utilities, phone, garbage collection, taxes, insurance, and repairs. That's living cheap.

The next thing I did made it even cheaper. I found that I could easily rent the other two bedrooms, and get $65 per week for one, and $75 or more per week for the other. I included all utilities, and found decent young guys to rent to. The rents added up to $600 per month, making this more than cheap living, and even better than free housing. I made $300 per month AND lived for free.

Living Cheap By Planning

I found that I could work less, so I could get by without a car. That saved a lot of money. The occasional bus fare, and the used bicycle I bought didn't add up to a fourth of what it cost to have a car. I had to plan my trips around town a little better, but it was worth it.

During these years I never paid more than $40 for a piece of furniture. You have to know what is important to you. I paid $220 for a high-tech sleeping bag, because I liked ultralight backpacking. On the other hand, I couldn't tell the difference between a nice, clean used couch for $30 and one that cost $900.

One thing I found was that when I worked less, I had time to look around at my options. Time can save youa lot of money. I paid half of what others paid for groceries. When I did get a car, I found a repossessed one that was worth much more than I paid. I went to Ecuador for a month for $1,040 total, including all airfare, hotels, meals, a guided climb up a 21,000-foot mountain, and more. It was possible because I had the time to search for the deals.

I worked part-time jobs for years. I read books, played chess, wrote poetry. I traveled several times a year,


and met the love of my life in South America (happily married for over eight years now). All this was possible not because I made a lot of money, but because I spent less than I made, and used the difference for the things that mattered to me.

This isn't a how-to guide. I explain how I traveled and bought things so cheaply in other articles. This example is simply to get you thinking about the possibilities, and point out some principles. The principles? Don't buy things you don't need. Find ways to pay less without getting less. Spend a little less time working and a little more time thinking. Stay out of debt. Know what is truly important to you, because this is what you can have more of by living cheap.



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Excessive Credit Card Debt

Excessive Credit Card Debt

There are many things you can do to resolve your excessive credit card debt. The first thing though, is to stop creating more. I have seen more than one person get out of debt briefly, only to fall back into it again. So start changing those habits. Of course, you have the debt, so what can you do to knock it down? here are some ideas.

Discount Your Excessive Credit Card Debt

Settle debts for a discount. When I collected debts for a living, we regularly took 50% as payment in full, if we thought it was the best we could do. If you really can't handle your payments, you may be better off to borrow the money from family to settle your debts for 20% to 60% of face value. Credit card companies regularly take 50% or less as payment in full if they are convinced you are headed towards bankruptcy.

Write a nice letter explaining your situation, and how you will get the money for the pay-off. Explain that you will most likely be filing for bankruptcy, but would like to settle up with any willing creditors before that happens. This let's them know they may be left with nothing if they say no, and you split your remaining assets between other creditors.

How To Pay Debt

If you are trying to dig out of your debt, always pay high-interest cards first. For example, if you have $200 budgeted to apply to your cards each month, pay the minimums only on all others, then put the rest of the money towards the card with the highest interest rate. Once that one is paid off, work on the next highest.

This is a powerful technique that saves a lot on interest charges. If you have three cards, for example, you would pay the minimum of (let's assume) $40 on two of them, and apply the other $120 to the highest interest card. Once that card is paid off, you continue to put $40 towards one card, and now apply $160 to whichever of the two remaining is the higher interest credit card. This is the fastest way to pay down credit card debt.

Excessive Credit Card Debt - Other Tricks

Don't buy the credit card insurance. This typically stops your payments when you are injured or unemployed. It is one of the most over-priced insurances out there, and doesn't eliminate the debt, but just delays it.


Avoid credit card security insurance. It pays for unauthorized charges when your card is stolen, but you are only liable for the first $50 if you report the theft in any case, and many cards already have 0 liability.

Avoid consolidation loans. Don't consolidate debt into a home refinance unless you have a definite plan for paying the loan off early. 6% isn't cheaper than 18% when it is for 30 years instead of 5.

If you have tried some of these techniques without success, contact a nonprofit credit-counseling service. They may be able to help you negotiate lower rates with your banks, and otherwise counsel you on how to reduce your excessive credit card debt.


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Bargain Finder Secrets

Bargain Finder Secrets

Would you like to be a bargain finder? Wouldn't it be fun to be one of those people that always finds a good deal? You can start by learning the secrets of opportunism.

For example, did you know that you can eat a wider variety of fruit than your neighbor, and spend only half as much to do so? How? By buying fruit in season, when it is at the lowest price. As a bonus, it is also of the highest quality at these times. This is opportunism.

You'll notice that this means not always getting exactly what you want when you want it, but you get more variety this way, and you spend much less. You go with the flow. If oranges are cheap, you'll be eating oranges. If apples are in season, you'll be eating apples. Whatever the case, you'll always be finding bargains.

You don't have to eat things you don't like or deny yourself pleasure. You just shop for those things that you like among those that are cheaper now. There will be other, different, great deals next week or next month. Unless you are extremely picky about what you eat, you'll almost always find delicious foods that you like on sale.

This is the premise of opportunism - that you get more by going with the flow. A true bargain finder gets more variety in the long run, and more for the money. This can be applied to many areas of life.

Some Bargain Finder Examples

Before I went to Ecuador a few years ago, there were many interesting places I wanted to go. I chose Ecuador because it was a thousand dollars less to go there than to any other country. I had a fantastic time for a month for $1040 (including airfare). I also met the most wonderful woman I know there, and eventually married her, so you never know what riches you'll find when you go with the flow.

My wife and I go to the movies here in Tucson on Tuesdays, when we can get in for $2.00 each. Others are paying $8.75 a couple miles away. What are they getting by paying four times as much? They get to see the movie six weeks earlier. The movies don't change in those six weeks, by the way, and enough friends have seen them by then to let us know if they're good or not.

Opportunism means not paying more unless you are getting more. It also means making honest choices. Will you actually enjoy that movie more by seeing it now? More than you'll enjoy the FOUR movies you can see in it's place? Do you have to take that fishing trip now? If you're planning to take both a fishing trip and a gambling trip, why not do each when it's cheapest?

When William Danko and Thomas Stanley wrote "The Millionaire Next Door," they found that MOST millionaires bought used cars. They bought BMWs and Mercedes, not old Ford Pintos, but the lesson was


clear: They understand opportunity. Cars often lose half of their value in the first three years, but they're not half used-up, are they? Is it worth an extra $6,000 to say you have a new car (And you will have to tell people, since it's hard to tell a three-year-old car from a new one)?

To be an opportunist doesn't mean just settling for whatever is easy and cheap to get in life. We all have our areas that are more important to us. If you really love those $15 cigars, why not buy them? On the other hand, if you really can't tell the difference between the $5 and 50 wine, why not buy the former? Opportunism is one of the keys to being a true bargain finder.



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Funny Ways To Save Money

Funny Ways To Save Money

I saw a list of funny ways to save money on a "frugal living" website. I'm not sure they were necessarily meant to be funny, but were gleaned from real suggestions sent in. Some cheapskates don't seem to notice that an extra hour at work might put them further ahead than many hours of penny-pinching.

The following are real suggestions, and then there are some funny ways to save money that you really shouldn't try.

Funny Ways To Save Money - The Real Suggestions

One person suggested ways to save money on weddings that included picking up the leftover flowers at a cemetery. I'm not sure how you can tell which are "leftovers."

Another creative penny pincher found a way to save money on a car wash. He washed his entire car using the squeegee at the gas station.

A woman confessed that she has the kids stuff their pockets with the free ketchup, salt and other condiment packets every time they were in a fast food restaurant. That's not all, though. She actually had the kids squeeze ketchup and mustard from the packets into regular jars of ketchup and mustard, and claims she hasn't bought these condiments in years.

To save money on an umbrella, one man suggests going to the lost and found department of any large public library. Tell them you lost a black umbrella. They will have several, from which you can pick the best one and claim it as your own.

Call people long-distance when you know they won't be home. Leave a message for them to call. That way, they pay for the long-distance call.

Funny Ways To Save Money - Don't Try This At Home

Don't pay baby sitters! Get young couples who are thinking about having kids to "rent" yours for the evening. They get to see what it will be like, and you can get paid instead of paying for sitters.

Turn off the TV and all the lights to save electricity. Tell the kids it's a game of hide-and-seek.

Train your dog to beg for food from strangers, so you won't have to buy dog food.


Rub pine needles under your arms instead of buying deodorant.

Take extra napkins from fast food restaurants to save on toilet paper.

Borrow your neighbors toothbrush instead of buying your own.

Visit friends around dinner time to get free meals.

If I write a book on ways to save money, funny or not, will I make much in sales, or will everyone take my suggestion and borrow it from the library instead of buying it?

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How To Be A Frugal Shopper

How To Be A Frugal Shopper

A frugal shopper has skills and ways of looking at things that help him or her take advantage of the money-saving opportunities in life. There are eleven of these techniques below. You can learn them in a matter of a day or two, practice them for a few weeks, and then save money for the rest of your life.

1. A frugal shopper studies other people. Do you know someone who always gets the best deal on cars, boats, or whatever? Ask him how he does it! Some people will tell you that the cheapest coffee in town is $3 per cup, while others will say 50 cents. There are probably people near you living a good life on half of what you make. Learn how others do things, so you'll know your options.

2. Frugal shoppers tell people what they need. Just mention it in conversation. Do you know how many people get free or cheap things, just because they talk? My neighbor wanted to upgrade her living room debt, and was thrilled that I would take her 3-month-old couch off her hands for $30. Glad I mentioned I was looking for one.

3. Frugal shoppers pay cash. Things are cheaper when paid for in cash instead of credit. Want that new patio set? The price divided by the number of weeks you can wait to get it equals how much you need to set aside each week. You'll not only save on interest when you pay cash, but you'll often get a better price.

4. A good shopper looks for alternatives. Maybe you'd have just as much fun taking that discounted trip to the Bahamas as you would going to Jamaica. If you happen to enjoy pizza just as much - or more, skip the expensive restaurant and call Dominoes.

5. Frugality requires knowledge of values. It's tough to get a great deal on a car if you don't know what a great deal is. Start educating yourself on prices, especially before you're ready to buy anything that costs a lot.

6. Use the internet. I bought a ring for my wife on a wholesale site for $47, including shipping. When I received it, I took it to a jewelry store and found the same ring for $150. The internet is also an easy way to learn prices before you go shopping anywhere.

7. Advertise. Many years ago I put an ad in the classifieds that read, "Looking for a mobile home on land - can put $3,000 down." An older couple that was thinking of selling called me, and that's how I bought my first home at a good price.

8. Visit rummage sales. Only you can say if it is worth your time, but you can save a lot of money on a wide variety of things. Late or early is best. Early gets you the super-cheap stuff before others get it. Late in the day you can negotiate almost anything, and even get things free.


9. Visit flea markets. Again, the time you'll spend may not be worth the savings if you make $50 an hour at your job, but these are great places to practice negotiating skills. Haggling over the price is expected. Bring a list of what you need, so you don't buy too much unnecessary junk.

10. Shop at thrift stores. Note which ones have better prices or more of what you need. Many have a color-tag system to keep the stuff moving. Each week all the items with tags of a certain color are half-price. Just watch for those green tags and ignore the rest - their week will come.

11. A frugal shopper does the math. You didn't really save $400 on that car if it costs you $500 more in gas each year. Also, be aware that some stores are cashing in on shoppers assumptions that larger is cheaper. Yes, the gallon of pickles might actually cost more than four quart jars. Be ready to do the math.



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Save Money - More Funny Ways The other day, I was doing research on ways to save money. While checking web sites and discussion forums, I discovered

Save Money - More Funny Ways

The other day, I was doing research on ways to save money. While checking web sites and discussion forums, I discovered that the cheapskates are hitting new - and funnier - lows. Choosing your spouse according to how frugal he or she is, and reusing the plastic from bacon packages were some of the serious suggestions. One contributor to a forum even said, "Instead of buying toilet paper, I use yesterday's newspaper."

My personal choice for the most ridiculous way to save money was to stop drinking beer. What are we trying to save money for? Some more funny ways to save money are below. I suspect - or at least I hope - that many of these are not meant to be serious suggestions. In any case, don't try these at home.

Save Money By...

- Turning off your clocks at night to save on electricity.

- Carrying powdered drink mix to add to water in restaurants, to save on buying drinks.

- Installing a cat door and training your cat to go outside to the neighbors yard to go to the bathroom. This saves on cat litter and time spent cleaning the yard.

- Eating dog food. (According to this contributor, dry dog food is better than canned.)

- Telling everyone you'll be out of town for Christmas, then shopping the after-Christmas sales for presents.

- Asking friends to save the labels from any new products they buy, so you can put them on your thrift-store purchases when you are buying gifts.

- Closing the heater vents in all the rooms except your bedroom before going to sleep.

- Encouraging mice in the house by leaving crumbs around - so your cat will have a free food supply.

- Learning speed-reading so you can read books for free while in the aisle at the book store.


- Leaving furniture in the same place in your house, so you can easily get around at night without turning the lights on.

- Bringing back rolls of coins from Canada, to use at the laundromat and in pop machines. This can save you 20% or more, depending on the exchange rate.

These may be funny ways to save money, but did any of them make you think "Hey, that's a good idea?" If so, do you still pick up pennies on the street? Wouldn't it be more efficient to just stay at work for an extra minute to earn a minutes pay? While you are there, you can take a big drink of water - to save on your home water bill.


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Ways To Save Money Product Life Cycles

Ways To Save Money
Product Life Cycles

Many of the best ways to save money are about knowing the how the market works and making it work for you. This is certainly true in the case of product life cycles. Undersatnd this cycle, and know where a product is in it, and you can save a lot of money.

Most products have a somewhat predictable life cycle. There is the birth of the product, the popularization, and then the common distribution. Once the distribution of a product is common, it is often much cheaper than when it was new. We have all seen this with VCRs, DVD players, futon couches and other things.

How do you take advantage of this to save money? The primary way to save is to wait if you can. The price of a product that is in the "mature" phase of its cycle can be as much as 80% less than when it is new. Consider that the quality and functionality of a $59 Walmart DVD player is about the same as that of one that cost $600 when they first came out. That's a 90% drop in price.

Fortunately, life cycles seem to be getting shorter, meaning you might not have to wait as long as in the past for prices to bottom out. With some new electronics, waiting a year can mean paying half as much. If you can afford to wait, watch for the time when most people who want the product have it. This is probably when manufacturing costs have hit their low and competition is at its greatest - in other words, when the price will be at its cheapest.

To really take advantage of the life cycle of a product, wait until it is a mature product and a new version is being introduced. With some products, you may need to the new version for functionality, but with others the change is more one of style. In any case, the old version often gets really cheap as it is cleared out. For example, if a new style of running shoe comes along, the existing one may get really cheap, even though it does essentially the same thing.

Pricing Cycles And Secret Codes


Some retailers have their own pricing codes that can be deciphered. "Price hackers," are those who try to break the codes and determine where things are in the pricing cycle. For example, some of them claim that when a price ends in "8" ($3.88, $7.28) at Target stores, the product price is beginning its descent. If it ends in "4" it is as low as it will go.

If you notice clues to these codes, you might figure them out. Of course, if the store you are in doesn't use such price codes, you'll be doing a lot of investigating for nothing. A simpler way to determine what the prices mean is to ask a friendly employee, who may be happy to help you and show off his or her insider-knowledge. In fact, learning how to identify and talk to firendly employees may be one of the better ways to save money.


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Saving Money - $100 Per Hour To Swim In Your Own Pool?

Saving Money - $100 Per Hour
To Swim In Your Own Pool?

Is saving money on the things you buy important to you? Then start by being honest about what things really cost you. To understand how difficult (and crucial) this can be, consider the following example.

Saving Money - The Swimming Pool Story

Marty and his wife June loved the idea of having a built-in swimming pool in the back yard/patio area. It would improve the house and be a great way to relax on hot summer evenings. As it was, they were going to the sports complex almost every week, to use the pool there for $7 each. They figured they would be saving money on that with their own pool.

The pool they wanted would cost $50,000 according to the first quote they got. This included all the tile work around it and the finishing touches - everything. Fortunately they knew enough to get two more quotes, and finally found a company that would charge just $40,000 for the whole job.

Soon they refinanced their house, to pull out $40,000 in equity. The pool was done on schedule and on budget, although they did spend another $2,000 for the extras they wanted. Over all they were very happy with their new swimming pool.

They used the pool almost every night for the first summer. But the second year they used it less often, and even grew a little bit tired of the work required. Chlorine monitoring was necessary, filters needed to be changed, leaves needed to be cleaned out, and more.

Marty did most of this work himself to save money. But it still cost over $800 per year for heating, treating and caring for the pool. By the fourth year, the thrill was gone, and they realized they had used the pool just eight times that year. Saving money on it became more of a priority, so they stopped heating it when they weren't using it. Of course this meant it was difficult to use the pool spontaneously (it took a long time to warm it up).

What if you knew ways to spend less on almost everything? What would you do with the money you saved? Travel? Buy something nice for someone you love? Cut your hours at work and relax a little more? The possibilities are endless.

There are more than 400 ways to save money listed in Part Two of the book, including ways too get free dental x-rays and tire repairs.

The real value in the book, however, is in Part One. This is the part that will really change your thinking. You'll see how to get more for your money - more of what really matters to you. You'll learn about the studies in "behavioral economics," how that research is being used to manipulate you, and what you can do about it. You'll learn the "7 Keys" as well

Jeff got a new job in year five, and they had to move. They had to clean and repair the pool cost, which cost about $1,000. It was necessary to get the house ready to sell. This, with the $4,000 in annual costs over the years, added up to $5,000. They also paid $14,000 in interest over the five years, for the money they borrowed to put the pool in (7% annual interest). June was shocked when Marty showed her on paper that it had cost them $19,000 to use of the pool for the five years they had it.

Even worse, the pool didn't add as much to the value of the home as they hoped it would. Swimming pools have value, but a $40,000 pool won't necessarily make people pay $40,000 more for a home. The real estate agent figured the swimming pool added $20,000 to the market value of the house. As it turned out, their home sold for about $20,000 more than a similar one - without a pool - down the street.

Thinking about their "dream pool" Jeff took out a pen and a piece of paper, and started to add up the times they and their friends had used it. It was used for a total of just 400 hours during the five years they had it. Then he added up the costs to maintain the pool ($4,000), repair costs ($1,000), interest costs ($14,000), the capital loss ($20,000), and the extras they bought ($2,000). He arrived at a figure of $41,000, and divided this by the 400 hours of use.


He told to his wife, "The pool costs us $102 per hour." They had been saving money by not paying $7 each to use the health club pool, of course, but they could have paid that every week and taken a week-long vacation to Hawaii every year and still spent less. This was depressing, especially when Marty thought about the time cleaning and caring for that swimming pool.

You can see that saving money on what you buy involves more than good shopping skills. You also have to look at the true cost of the things you buy and do, and make an honest assessment of whether they're worth it. Often there are cheaper alternatives that are just as satisfying (or perhaps more so, in the case of pools that you don't have to clean and vacations in Hawaii).



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1040 Tax Information

1040 Tax Information

Note: This is not an IRS site, but a collection of ways to save money at tax time - ways that you may not have heard of.

IRA Tax Deduction Secret

Starting an IRA (Individual retirement account)? There is a way to get two tax deductions from your contribution. Instead of using cash, sell any stock you own which has decreased in value, and then put THAT cash in your IRA. Why? Because you can write off the capital loss for the sale of the stock, and thereby reduce your taxes even more than if you just put savings into the IRA.

What if you still like the stock? Buy it back using your IRA. There is a "wash rule" in the tax code that says you can't sell and repurchase a stock (within a certain amount of time) just to claim a loss. However, you and your IRA are separate entities as far as this rule is concerned, so you can immediately repurchase the stock in your IRA and still write off the loss.

The Telephone Excise Tax Refund (TETR)

This is a one-time payment available on your 2006 federal income tax return. It is designed to refund previously collected long distance telephone taxes. Individuals, businesses and tax-exempt organizations are eligible to request it.

Taxpayers have a choice: a standard refund amount between $30 and $60, based on the total number of exemptions claimed on their 2006 tax return, to eliminate the need to locate old phone bills; or they can locate those bills and use the actual amount. Ask your tax preparer about this one.

File Your Taxes Electronically For Free

Free File is a relatively new IRS program is a free service offered by companies for taxpayers with an Adjusted Gross Income (AGI) of $52,000 or less. You can find the links to these companies at the IRS web site.

Before selecting a company link, review the tax software company’s criteria to confirm that you meet their eligibility for preparing and e-filing your federal return for free.

Fees for state tax returns may apply. Some companies offer free state tax return preparation and e-filing.
Some companies offer free e-filing of the Form 1040EZ-T, Telephone Excise Tax Refund, for those who want to claim the refund credit and are not required to file a federal income tax return.

You are under no obligation to buy any of the company’s other products or services.

General Tax Savings Tips

1. Take every deduction you can. Audits are rare, and if you honestly think you are entitled to a deduction,


taking it is not a crime. If you are not entitled, at most you'll have to pay a penalty and interest - but only if you are audited.

2. Put off income or capital gains. We once delayed a closing on a property we sold by a week, in order to close after the new year. Our profit wasn't taxed for an extra year that way.

3. Accelerate your deductible expenses. If you pay the property taxes on that rental unit this year, you get to claim it as an expense this year, and so pay less tax.

4. Get good advice. If you have a high income, or a business, stock market or real estate investments, you need to talk to a good tax accountant (not just a tax preparer).


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Save Money By Knowing The Games Stores Play

Save Money By Knowing The Games Stores Play

Who wouldn't like to save money when shopping? But looking for sales is just a start. You also need to be aware of the games that retailers play, starting with the two common ones explained here.

Reference Price Advertising

You have seen advertising like, "Was $119. now only $89!" Similar signs will confront you once you get to the store. Interestingly, regardless of whether the retailer ever sold a single unit at the $119 price, you feel like you are getting a deal, and that is the point of this game.

States often have laws requiring that these be honest advertisements, meaning the store must have the item for sale at the stated price for a certain amount of time before they can claim that it was the "normal" or "regular" price. Of course, not surprisingly, many have it at that price for the absolute minimum time required by law. They may not actually expect to sell any at the "regular" price, since it is solely there to make you feel good about the new "sale price."

One way some retailers use this tactic is by having many similar models of a product. A furniture store might have several mattresses that are very similar, for example. Which one is on sale is rotated, so there's always one that looks cheaper than the others. If you notice this, certainly don't pay the regular price, but wait until the one you want has its turn on sale.

You can also save money in this situation by buying one of the "sale" items. Alternately, since they never expect to sell the items at that price anyhow, the store manager may give you a similar discount if you ask (or insist) for it on the one you really want.
Price Matching Scams

Stores find that it costs nothing to guarantee the lowest price in town. It may be true that they'll match any competitor's price, but then again, they will only match the price on the exact same item - and they may not carry the same models as other stores do. They're also very aware that we rarely check the prices in other stores before buying - and almost never after buying.

Consumer research shows that when a store advertises that it will match competitors advertised prices, we generally think they have lower prices than other stores. Interestingly, this impression is there even when they are one of the higher-priced stores. This is because we often just don't check the prices at other stores.

There are some customers who actually compare prices and demand a reduction. This doesn't cost the store much, and meanwhile, they can sell for more than other stores to all the "average" consumers who don't check other stores.

You might wonder if comparison shopping worth the trouble and time. A study done by the Consumer Literacy Consortium in 2002 found that buyers who spent 16 minutes comparing prices online save an average of $100 on a television. Does that sound worthwhile?


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Pricing Secrets That Can Save You Money

Pricing Secrets That Can
Save You Money

Want to save money on that next purchase? It can help to know the pricing secrets of retailers, like the two covered here.

The Secret Of The Minimum Advertised Price

Sometimes pricing doesn't seem to make much sense. For example, why does whole wheat pasta cost three times as much as regular pasta? Doesn't regular white-flour pasta require the extra trouble and expense of removing parts of the wheat? Economist will tell you that price is determined by what the market will bear. This is certainly an important principle to understand, but does it always apply in real life? Well, yes, in a way - but it is complicated.

Consider the "manufacturers suggested retail price," or "MSRP." Also called the "list price," it is the price a manufacturer suggests to the store - at least in theory. But in practice it is generally the maximum price a retailer can charge us. After all, who really wants to buy something that is priced higher than the manufacturers suggested retail price? So in this case, "what the market will bear" has been limited by the manufacturer.

Another price that manufacturers suggest to retailers is the MAP, or "minimum advertised price." This is one we don't hear about. It's not an absolute minimum that retailers can sell for, and they certainly want to sell for more if they can. But if they sell for less than this they risk upsetting manufacturers and suppliers. Why? Because they can't convince new retailers to carry a product if competing retailers are selling it so cheap that it is difficult to make a profit. The new retailer could sell it for more, but who would buy it when it is advertised cheaper somewhere else?

Of course, you want to buy at the MAP, so to determine (approximately) what it is for a particular product, check several stores. If all are advertising the product on sale around the same price, it is usually close to the MAP. The "big box" stores stick to the MAP in their sale advertisements, as often as not.

What if you want it even cheaper? Look at small stores. They can get away with sales that price the product below the manufacturers minimum advertised price, because they have less to risk by angering suppliers.

Be careful, though. Some stores sell below the MAP because they're selling incomplete products. For example, if it is a computer, you might have to buy a keyboard and speakers as separate items. When other stores are selling a complete product, compare the total cost of everything you need to get a product that is functional.

Why Prices End In 99

$29.99 might as well be $30, and we know this, so why do retailers play this game? Simple explanation: Because this pricing secret works. You may automatically round up a price like this, but you may not have looked at it in the first place if it said $30 instead of $29.99. We process information from left to right, so you see the "2" before anything else, and this is more appealing than a "3" when you want a lower price.

You see, even if only unconsciously, your mind is probably thinking "20-something dollars" versus "30-something." Your next thought might be "Oh, it's $30," but you are already looking at the product, right? It makes you more likely to buy it than if you never stopped to look at it in the first place.


In any case, retailers get caught in this game whether they like it or not. After gasoline retailers started pricing a gallon using ".9" cents, for example, how could any of them stop doing it that way? Just imagine if all the other gas stations had gas at $2.99 and 9/10 and one at $3.00. Ten gallons would be just a penny more there- not worth driving on. However, drivers just see the sign and immediately think they are the most expensive gas station (they are - it just isn't enough difference to matter).

How do you put this knowledge to work for you? Be aware that the 9/10 caught your eye at the gas station, but a penny or a tenth of a penny savings won't justify going out of your way. Save more money by just stopping at the first reasonable station - at todays prices you can't afford the gas to drive around looking for a penny savings.


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Buy A Used Car For Less

Buy A Used Car For Less

Want to buy a used car for a lot less money? There are two good ways to do so, and one good reason to buy used - to save money. Okay, that seems obvious, but this isn't just about spending less initially. The research shows that a four-year-old car can cost 40% less over its lifetime versus a new car, when you include the costs of gas, oil, repairs, insurance, and everything else. In fact, almost half of the millionaires in the United States buy used cars, according to the book "The Millionaire Next Door," by Thomas Stanley and William Danko.
Buy A Used Car For Less

Want to buy a used car for a lot less money? There are two good ways to do so, and one good reason to buy used - to save money. Okay, that seems obvious, but this isn't just about spending less initially. The research shows that a four-year-old car can cost 40% less over its lifetime versus a new car, when you include the costs of gas, oil, repairs, insurance, and everything else. In fact, almost half of the millionaires in the United States buy used cars, according to the book "The Millionaire Next Door," by Thomas Stanley and William Danko.

First Way: Buy The Right Used Car

The idea here is to look for the cheapest "type" of car that will provide you with everything you need. The bottom line is that some cars just cost more than others. You pay more to buy and to operate them, so look for the lowest-cost one that will suit your needs. Whatever your negotiating skill, a four-year-old Jeep Wrangler is still going to cost more to buy and run than a four-year-old Dodge Caliber. So unless you need the four-wheel drive or space of the former, why not buy something smaller and cheaper.

Some of the factors to consider when looking at the overall cost of a used automobile:

- The initial price. The popular auto "blue-books" or price guides will give you an idea of what used cars are selling for in your area. Some of us think the accuracy of these may be suspect, but they are better than nothing for comparing the relative values of various models of car.

- Ongoing repair costs. Find a copy of the Consumer Reports auto edition at your local library. It has ratings for all major systems and parts of different models. Usually there is also an average annual repair cost for each car too.

- Gas mileage. Ask an owner about the mileage he or she gets - if you think he or she is honest. There are also websites like fueleconomy.gov where you can find fuel economy figures for used cars. With 15,000 miles per year, the difference between 20 miles-per-gallon versus 34 MPG is an extra 309 gallons per year, or $1,000 at $3.25 per gallon.

- Auto insurance. Different cars have different insurance rates. Ask an agent about the cars you're considering, and take notes.

- Future resale value. Plan to drive the car for just a few years? Then you have to consider what it will lose in value during that time. Different used cars may cost $8,000 each, but one may be worth $6,000 a couple years later while others are only worth $4,000 or even less. Research resale value online, or look over a used-car price guide to see which models tend to retain the most value.
Second Way : Negotiate The Right Price

The next step in buying a used car for less is to negotiate a lower price. There are a few tricks you should know, but start with a good idea of what the car is worth according to whatever guide you have available. Look for the wholesale cost, and make your first offer lower than that. Here are some other pointers:

- Invest time. When you think you want a car, spend some time with the owner or sales person, and looking at the vehicle. Expert negotiators call this "time investment," and use the technique often, because the more time the seller has invested with you, the more they want to sell to you. They don't want to "waste" that time. In other words, you can get a lower offer accepted if you first take more of the sellers time up front.

- Subtly point out any issues. Examine the engine and the underside of the car, even if you aren't sure what you are looking at. Hint at any problems you see politely, but never contradict or insult the seller. The idea is for the seller to like you but to also start to doubt the value of his vehicle.

- Be prepared to walk away. Always be ready to say, "I'll think about it," and leave (unless you really need a car today). It's one of the oldest and surest ways to get price concessions when negotiating. Car salesmen in particular know that when people "think about it" they rarely return, so this is a strong tactic on your part, and they'll usually make their best offer at this point.

- Get a mechanic look at it. Bring the car to your mechanic, or have a friend with some mechanical knowledge come with you to look at it. A car isn't necessarily cheap if it breaks down a week after you buy it, and in any case everything that your friend or mechanic finds wrong is a negotiating point that may result in a lower price.

To summarize: Use both ways to buy a used car for less.

1. Look at the right cars - the cheapest for your needs.

2. Negotiate the lowest price you can get.

Unusual Ways To Make Money | Buy A Used Car

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A Few Money Saving Ideas

A Few Money Saving Ideas

People are always looking for money saving ideas, and they often start by looking for ways to pay less for things. But instead of just paying less for the same things, you may want to re-think about what you buy every month. Of course you need the necessities, such as food, clothing, and your rent or mortgage payment, and there are always ways to save some money on these, but what can you eliminate or reduce to save even more? Here are some ideas.

Drive Less

Even though the gas prices have been going down, there are still ways to save even more money in this area. Perhaps the most common way is carpooling, which is the practice of driving multiple people in the same car. This is especially true for people who live near each other and tend to go to the same location over and over again.

For example, if persons A, B, C, and D all live in the same neighborhood and all go to the same area for their jobs, then all four people can go in a single car to that same area. They can set up a schedule for who picks up whom and when, such as one week, person A picks up persons B, C, and D, whereas another week, person C picks up persons A, B, and D. Because all four people are going in the same car, money is saved because only one person has to refuel his or her car.

See if you are in the habit of buying things that you really don't need, or at least buying things too often. Maybe you buy a box of baking soda every week to freshen the refrigerator. You could save a little money by using that box of baking soda for the entire month (assuming it worked for that long). In other words, instead


of buying the same thing once a week, you can buy it once a month. That is three weeks worth of expenses saved per month, and it adds up over the years.

You can search for money saving ideas online, and easily save between a few hundred to even a few thousand dollars a year or more. You can compile a budget and then make changes as you go along to save money. That may be the best of these money saving ideas.


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Learn To Budget Money - Four Steps

Learn To Budget Money - Four Steps

There are some people who don't need to learn to budget money, because they simply and naturally spend less than they make, and save the rest. Why bother to allocate "x" dollars each month for this or that category if your "outgo" is always less than your income, and you invest the rest for retirement. So if you don;t want to budget, you can try habitual frugality or an income that is constantly growing larger. But if you're not up to either of these challenges, you may need to learn basic budgeting.

Most people want to learn to budget money only once they're in financial trouble (hopefully that's not why you're reading this, but better late than never). Debts have piled up, and income doesn't quite cover the bills and habits. Stress is a common result, and learning the usual budgeting techniques is a good idea. Those are covered in four steps below. The second part of this article presents another way to approach this problem of managing your money.


How To Learn To Budget

Step One - Expenditure Tracking

Write down everything you spend for two months. Have categories that make sense (entertainment, utilities, etc), so you can see where the money is going. You'll be surprised at how much money is spent in some areas, and you might also find that as you watch the money going out on paper, you begin to change your habits. Looking at your convenience store purchases on paper motivates you to skip a soda or two, just so you don't have to write it down. This a good exercise to repeat every year or so, if only for the habit-changing effect it has.

Step Two - Reduce Expenditures

Do this before you start making the actual budget calculations. Get spending under control and then you will have a better idea of how much to allocate to each category. With a bit of thought you can cut the cost of most things and activities in your life. Turn down the hot water heater temperature, combine trips to save gas, bring a lunch to work instead of eating at a restaurant. Find the relatively painless ways first - like spending an hour to find a cheaper insurance policy for your car. If these are enough, you may not need more drastic measures.

Step Three - Make a Budget

Using your current income and your expenditure tracking notes, create a monthly budget, allocating money to each category expenses. You may need $250 per month for groceries, $300 per month for paying down credit cards, and $120 for the retirement account, for example. Be sure to include all regular expenses. The totals should add up to a bit less than your income. If not, lower those allocations and take more cost-cutting measures.

You need to account for large and unpredictable items as well. You don't know when a car repair will be necessary, for example, but you do know it is an eventuality. Try this: add up the amount you spent on your car over the last two years and divide by twenty-four to get a monthly figure for expenses.

Step Four - Set Up Systems

You'll need systems for following your budget and tracking money spent. For things that are hard to track, like convenience store purchases, you can put the allocated money in an envelope at the beginning of the month. When it is gone, you are done until the next month starts and the envelop is refilled. For large expenses, like car payments, repairs, insurance and registration, it may be best to set the money aside in a separate bank account, where it can accumulate until you need it. Medical expenses can be handled this way to, and you should have an account or envelope for the "completely unexpected."

Budgeting Based On Values

Certainly it can help to learn to budget money, but there is another approach that begins with asking why you are making money in the first place. You need it to survive of course, and the steps above will help with that, but you don't manage your money just to pay bills. After all, money is a powerful tool that can serve you in your pursuit of anything that is important and valuable to you.

A value-based approach starts with identifying what is of real importance to you, and setting reasonable goals based on that. If, for example, you value travel, you might make it a goal to take a major trip around the world every two years or so. If self-development and peace of mind is important you might plan to buy good books and courses that will help. If you truly value something, set a goal, put a price on it, and then determine how much you'll need to set aside each month to accomplish it.


Begin setting that money now - even before you do the two-month tracking exercise or make a budget. Then work the rest of the budget around these important goals. You see, if you start by figuring how much you need for the "necessities" of life, it's likely there will be no money left over for what you really value. Start with what's important.

Suppose the rest of the budget doesn't work after you set aside this "goal" money.What do you do then? Cut expenses or make more money. Consider for a moment how much less money some people live on than you do. Now, if these goals are truly important to you, live like they do. Just learn to budget money for what matters most, and if it truly is valuable, you can almost certainly find a way to make the rest of the budget work too.



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Ways To Save On Food - Fruits and Vegetables

Ways To Save On Food - Fruits and Vegetables

Here are several good ways to save on food, or at least on fruits and vegetables. Saving money on other grocery items is covered on other pages.

Buy Frozen Fruits and Vegetables

Frozen fruits and vegetables often cost much less than fresh, depending on the season. You can use frozen vegetables in cooked dishes and frozen fruit in "smoothies" (just blend orange juice with frozen blueberries, strawberries or raspberries).

Now for the really good news: The frozen versions may have more vitamins than the fresh. This is because fresh fruits and vegetables travel for days and sit in the store displays for days, and then sit in your refrigerator for days, all the while losing vitamins. The ones in the freezer department are usually cleaned and flash-frozen shortly after being picked, thus locking in much of the vitamin content.

How To Save On Organic Fruits and Vegetables

If you sometimes buy organic produce to avoid pesticides you know that they can be expensive. But there is a way to keep your pesticide exposure down while saving money. Just buy organic when shopping for those foods with the most pesticides and spend less to get non-organic fruits and vegetables when buying those that typically are lowest in pesticides. The lists:

Foods with most pesticides:

Peach
Apple
Bell Pepper
Celery
Nectarine
Strawberries
Cherries
Kale
Lettuce
Grapes (Imported)
Carrot
Pear

Foods lowest in pesticides:

Onion
Avocado
Sweet Corn
Pineapple
Mango
Asparagus
Sweet Peas
Kiwi
Cabbage
Eggplant
Papaya
Watermelon
Broccoli
Tomato
Sweet Potato

More Ways To Save On Food

Do you want the freshest, best produce at the lowest cost? Then buy whatever is in season at the moment. That's when you get the highest quality, and because of the abundant supply this is also when prices are normally the lowest. You get the same fruits and vegetables as you normally do, but when they are ripe and probably better for you.


You can also adjust your diet to include more fruits or vegetables that are cheaper. Habit alone may have you buying some of the things you eat, while there are cheaper alternatives that you would enjoy just as much. Try any produce that's on sale and see what you really like. Then among your favorites just buy whatever costs the least each time you go shopping.

Gardening might seem like a way to save on food costs, but this rarely works if you have a small garden. By the time you figure the costs of seeds supplies and water you may be paying twice as much for each tomato or cucumber. On the other hand, why not visit friends who like to show off their gardens. They will probably send you home with a free zucchini or two.


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Five Tips On How To Save Money

Five Tips On How To Save Money

I once wrote a book full of tips on how to save money, with close to 500 ways to save on almost everything from car repairs to groceries to weddings. There are all sorts of little tricks for paying less for the things you buy. But knowing a few of the most basic strategies is more important than specific ways to spend less on this or that item. Five of these follow.

1. Eliminate Unnecessary Expenses

We all have things that we really don't use. Some of these things may not cost us anything to keep around, or at least it may seem that way. On the other hand, suppose you could comfortably live in a smaller house that cost $30,000 less than your current one - except that you need the space for all the things you rarely use. With a 30-year 7% mortgage that extra space will costs you almost $72,000. Is it worth that much to keep those things around?

Then there are the things that have more direct ongoing costs. Even if you owe nothing on an unused motorcycle or snowmobile, they still require insurance and licensing. Subscriptions cost money whether you read those magazines or not. Look at what you really use and what is unnecessary. Get rid of the latter. You lose nothing eliminating these kinds of expenses.

Avoid making the same mistakes again in this area too. We often buy things without honesty assessing how often we'll use them, and without considering the future expenses they create. Buying a fish tank and a few fish, for example, can add up to more ongoing costs than you might have thought. Fish food, cleaning supplies, and occasional replacement of parts are some of the expenses this "one time" purchase adds to your life. Buy it if you will really enjoy it, but be sure you know what the real costs are and have decided that they're worth it.

2. Look First At The Big Expenses

It doesn't hurt to find ways to buy a cheaper pair of socks or less expensive dog food. But start your efforts to spend less with the large expenditures first. You might spend an extra hour finding a great deal on a car, and save $2,000. That's more than you'll save with years of coupon clipping for groceries. So start big and then combine that with the next of these tips on how to save money.

3. Reduce Regular Expenses

Where can you find the most potential for saving money? With things you have to pay for again and again. Look first at the big regular expenditures. Find ways to cut your utility bills, driving expenses and perhaps even the mortgage payment or rent. There may be ways to save on all of these and more. Small stuff matter too if it is regular enough. For example, replace that three-dollar cup of coffee you stop for every weekday with a fifty-cent one at home and you'll save $650 each year, or about $30,000 in the working years of your life.

4. Track What You Spend

Here's a simple but enlightening exercise: Write down every dollar and penny you spend each day for a month or two. People probably avoid doing this because they are afraid to see the truth spelled out on paper. But do it and you'll see how much actually goes to your bills, meals and habits. It's possible you'll discover that what you think you value isn't reflected in how you spend your money. This could prompt some money saving changes in your life. That leads us to the last of our tips on how to save money.

5. Be A Conscious Consumer

It's easy to spend money without thinking about whether we need the thing we are buying, or if there is a


cheaper alternative. We shop almost unconsciously at times, but becoming more aware of our choices is a great way to spend less. Once you have actually tracked your spending for a while this awareness is easier. Spend a month consciously thinking about each thing you spend money on. Make it a habit to ask yourself questions like, "Is it worth what it costs?" and "What alternatives do I have?" and "How important is this to me?"

Delaying purchases is another way to become more aware of how momentary impulses and feelings lead us to make purchases. Wait a week and most things will still be there to buy, but many things will no longer be desired. Apart from the lessons this can teach us, it is also just a great way to save money.


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How To Spend Less

How To Spend Less

There are thousands of answers to the question of how to spend less. But this article isn't about the specific ways to pay less for this or that item. It is about the few basic methods to spend less and still get everything you need in life.

Don't Buy It

This is perhaps the most obvious way to spend less. It is also perhaps the way that is most commonly overlooked. Whenever we buy something we clearly think it is worth the price at that moment. yet how often do we later realize that it doesn't have quite the value we thought it would have?

For example, you might buy some gadget and then notice a year later that you haven;t used it more than once. There is a simple way to avoid this: wait a week to buy. If you get in the habit of procrastinating on purchases you'll still buy the things that are truly important to you. But there are many purchases that won;t be made if you wait a week.

Then there are the things bought that are never really analyzed in terms of their total cost. You buy a snow mobile for example, and use it only eight times in the years that you own it. If you did the math you might find that it costs you $500 per use or more. So do the math!

Pay Less

This is the usual way we try to spend less. Using coupons and sale-shopping fall into this category. The following is another way that you may not have thought of trying.

Learn to negotiate. We tend to think that learning negotiating skills is for business people and those in sales, but why not for you too? If you can occasionally save $50 on a large appliance or $5,000 on a home it might be worth your time to learn a few "tricks of the trade," right? I have even paid half-price for a new book in a traditional bookstore using simple negotiating tactics.

Look For Alternatives


This is really another way to spend less for the same thing or for something similar. But it is often forgotten when we are buying things. It's easy to think that you just need to find cheaper planes tickets for you trip to Florida, for example, and forget that there are other wonderful places to go that nay cost you hundreds of dollars less.

This is true even with small purchases. You may be used to eating fresh fruit, for example, but it may be just a habit. You might enjoy blended "smoothies" in the morning just as much, and pay less for frozen fruit you use for them. Look for alternatives and you can spend less - sometimes a lot less.


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How To Save Money On Food

How To Save Money On Food

A typical article on how to save money on food will mention coupon shopping, maybe stocking up during sales, and buying generic brands. The following is about some of the lesser known basic strategies for spending less.

Alternatives To The Usual Food Purchases

Would you like to eat all the same things you currently do throughout the year and even add more variety, while spending less money on your groceries? You can if you're willing to enjoy whatever is on sale at the moment instead of catering to the fleeting demands of your taste buds and temporary desires.

You might enjoy oranges, strawberries, and apples for example, and normally buy whichever sounds good at the moment you are shopping. However, they each go on sale when in season, sometimes for as much as 70% less than they cost off-season. Now suppose that you eat oranges when they are cheap, then buy strawberries when they go on sale, and do the same with apples. You still get all the variety you normally do, don't you?

However, you might pay an average of 50% less for your fruit throughout the year. Now add kiwi fruit or other fruits and vegetables as they become plentiful and cheap. You get even more variety. You get the best products as well, because these foods usually go on sale when they are at the peak of the season and sitting around for the least amount of time.

Apply this strategy in restaurants too. Look at the specials which are offered before you look at anything else on the menu. You certainly get variety in this way, and save money on the food you eat. There is no need to see this as denying your desires, since you'll get to eat everything you like and get more variety. Each meal or grocery purchase just becomes an enjoyable surprise.

Eat First, Then Shop

It's one of the most important tips on how to save money on food. My "research" into this (having tried it both ways myself) shows that we buy as much as 30% more at the grocery store if we are hungry while we shop. And if we have more food in the house we eat more - that's especially true of the snacks we load up on when shopping on an empty stomach. This then is a tip for healthier eating as well as a way to save money on groceries. Always eat before you go.

If you are a bit hungry it helps to have list and stick to it. But make an exception when you find those great sales on foods you would normally buy anyhow.

Eat Less Send Less

No, you don't need to actually go hungry as a way to save money on food, nor eat less over-all. On the other


hand, the things an average person eats vary tremendously in price, right? So why not eat less of those things that cost the most and maybe aren't so healthy, and replace them with more of the healthier cheaper alternatives? You can do this at home and when you eat at restaurants.

I might as well have titled this section "Eat More Spend Less," because one of the easiest ways to cut your consumption of expensive foods is to eat more of the foods that costs less. Fill up on a delicious and healthy cheap dishes like seasoned rice and beans, and you won't have room for expensive and unhealthy deserts or snacks. If you are in a Mexican restaurant, for example, you could fill up on the free chips and salsa and then just order a delicious appetizer in place of a full meal.


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Save Money On Heating Bills

Save Money On Heating Bills

Turning down the thermostat is probably the most common tip on how to save money on heating bills. It may be a good idea, and it is true that you can put on a sweater to stay comfortable. But some people feel the cold more than others, right? And among all the ways we can save money, should giving up our physical comfort at home be one of the first things we try?

The expensive options suggested for saving money on heating bills include adding insulation to your home, buying solar panels to reduce your furnace use, and upgrading your heating system to a high-efficiency unit. Those ideas may work as well, but you may not have the money to invest. Also, the arguments for these as money-saving plans sometimes don't make sense.

As an example let's suppose you spend $20,000 to put a solar heating system on your home. It saves you half of your annual $1,200 heating cost, or $600. Now suppose you have to finance the system. The interest alone could be more than the $50 monthly savings, so you may not ever recoup your costs, let alone save any money.

You have to do the math and consider the real costs, including the interest paid if financed, or the interest lost if paid from money you have in the bank. I recently read on a solar advocacy website that a solar hot water system costs "only" $5,000 and could save 50% of the costs of running my regular hot water heater (which is still needed due to cloudy days). Now, our hot water probably costs about $240 annually, so we would save just $120 each year. We can do better than that leaving the money in the 3% account we have at our online bank! The $150 we would make annually in interest pays the extra $120 and leaves us an additional $30 versus having the solar water heater.

Insulation can be more cost-effective if you are deficient in insulation right now. There are other major upgrades that may pay off too. On the other hand, what if you haven't got the money for the big fixes and you like your home to be a warm place to live? Then you need to apply some of the following ways to save money on heating bills without spending a fortune.

- Close of any air leaks. Look for drafty areas, find the air leaks and seal them up with caulk or weather stripping. Closely check around windows and other possible openings. Three dollars of caulk might be sufficient for any and all leaks you find, and weather stripping around leaky doors is cheap as well.

- Check each room and adjust the registers as necessary. In most forced-air systems these can be opened or closed somewhat, so if you have rooms where you don't spend much time, close the vents off partly to reduce the hot air going there. It costs nothing to do this.

- Adjust drapes, blinds and curtains. If you open curtains when the sun is shining you'll notice the heating effect pretty quickly. You can also get in the habit of closing them once they are in the shade or each night after the sun sets.

- Install an electronic thermostat with a timer. A decent electronic thermostat can cost $100 or more, but they are still one of the cheaper ways to cut your heating bill by 5% or more. The timer can be set to turn the heat down at night when you are cozy in bed, to turn it up thirty minutes before you get up, and to turn it down during times when no one is home, like when you are at work

- Manually adjust the thermostat. If you want to save the cost you can do the same thing the automatic


thermostat does by adjusting the heat control whenever you go to sleep or leave the house for a while. One disadvantage: you'll have to put up with the cold for a few minutes after you wake up or get home. It is a no-cost way to save money on heating though.

How to save money on heating bills? The easiest quickest way is still the one first mentioned: turn down the heat permanently. If you do this, wearing a sweater isn't the only thing you can do to compensate. Floors sometimes chill us more than the air, so wear warm slippers or thick socks. A cup of hot tea can warm you up for an hour. Lounging in the sunniest chair is another trick. Or... find another way to save $20 per month and turn that heat back up to where it is comfortable.


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