I spoke with my husband finally and said he had to face the music too. We first decided to stop spending so much money. Translation: Try not to spend any money on anything that is not essential. This is not a long-term solution, believe it or not, because we've created a life that causes expenses: both planned and unexpected, to occur, and many of those aspects of our lives require money. But, just because those aspects require money does not mean that we cannot make changes with respect to how much or whether or not to continue with that expenditure at this time. By trying not to spend, we had a chance to reevaluate what we spend our money on and to try to rid our lives of those things that cost money but add little real value to our life – examples are items we have bought that are consumable and could be obtained with less money and/or for free, or, are simply, unnecessary. For example, go to the library for books and magazines like I have been doing lately. I still get to indulge my passion for reading, but it's not such a costly hobby. That does not mean I will never buy a book again -- I will just think first about whether I can wait to read it and/or can get it at my library. It turns out my library even has a ton of on-line services that allow me to take care of my renewals and requests from home. My life has not changed -- just spending money for my hobby has.
Now, I have never been a very frugal person so, for me -- this was a huge discovery: the power of spending on what you need and what you really want -- and nothing else. There are many “consumable” items in our house that, frankly, are not even being used. Just stop spending on those things that don’t add value and look for bargains -- you don’t have to go crazy, but deciding to say no to more things and buying more items more cheaply has a certain satisfaction built within it. It is not deprivation, it is a different way of thinking about money. There are things we have bought that we have never used – at the least, it takes away no value to stop buying those things. We have multiples of some items that we don’t need. Thus, with virtually no change in life-style, we found places to spend less money. I know it sounds like a no-brainer, but we were not living that way, and, many people are living like us. The coffee you buy rather than bring from home; the work you pay for on your house rather than do yourself. Take out instead of cook in. Some of these items are important to us and should not be removed from our lives; others, not so important. Take stock. You may find some surprises like we did.
We also decided to get more value out of some of the things we have or need: for example, we are planning a garage sale which has a two-fold purpose: it is forcing us to “de-clutter” our entire house (in 15 minute increments), and it may give us back a fraction of value – I’ll update you on whether it was worth it and provide details of my learning experiences as a result of my first ever garage sale. We are planning to donate all leftover goods (and have already donated a few good things to someone I know who needed them). I’m excited about finding new homes for my old things. (I’m an avid fan of DIY shows and, as such, have seen many people find great things for themselves at "bargain" locations such as garage sales).
Again, this is a short-term fix, but a real eye-opener. As we de-clutter, we realize the waste: the unused or barely used items, the impulse buys, the full-price buys, items that didn't fit and didn't get returned. For some, this all may sound insane: but, in my life, this was eye-opening, I was truly wasting money and had you asked me if I thought I was an extravagant spender, I would have said no. But extravagance is not what you buy, it's why you buy it, and, having no good reason to buy something is extravagant living even if it is as cheap as a dollar picture frame.
Another example, years ago, we bought a time share – an expensive one that we are still paying off. Selling it seems to make little sense now given its market value so using it correctly at least is allowing us to get some value from it. Don’t get me wrong, it’s a beautiful resort, we’ve gone to 5 fabulous vacations there, my sister got one fabulous vacation there as a gift from us, and, we believe, we will use our home resort again in the future. However, our home resort is not something our family is into right now. So, the time-share does not get used like it should. The weeks we weren’t using were only costing us money because I could not figure out the time-share trading system. I decided to learn it – and I learned the same thing everyone who is successful at it says and which I will share with you at a later date -- and, believe it or not, I made my first successful trade for the 2007 spring break. I also have some people interested in renting my 2007 home week which will bring in some money. Ignorance and an unwillingness to invest the time in dealing with this property every year, have made me lose value in something that should be providing value.
I looked at other ways of saving money. I called my homeowner’s insurance and reduced my bill by $62.00 per month. How? By raising my deductible: after a lot of research, I learned that the big deductible on a homeowner's policy is a waste: in today's society, where people fear putting in claims, having a small deductible, especially on homeowner's, is something that makes no sense: you'll only use that insurance for a catastrophic claim. Even if we put in a claim, the $750.00 in premiums I saved this year makes up for the larger amount we may have to spend on a deductible should a claim ever need to be made. The longer I need not make a claim, the longer that this will become a true savings. I also handled the return of plates on a car that we just got rid of to reduce my auto insurance; doing that quickly allowed me to save more money than had I procrastinated and not returned those plates. I did it quickly because my spiral notebook system forced me to write down that task and I dealt with it immediately. Again, not rocket science, but certainly an excellent result. We are also discussing taking the collision coverage off the older car; but I am still researching that (as it turns out, we bought a new car, because we would have had to spend money fixing up the old car and it was better used in buying something else). We will be looking into ways to further decrease our insurance by taking defensive driving courses. (I'm learning whether or not on-line courses are allowed in my state because I found one for $45.00 per person.) Also, what we pay with a young, male driver in the house would be a lot more had we not known that they reduce the amount of the insurance premium for such things as being away at college, having a B average (a good student discount), and, having taken the regular driver's education class that most new young drivers take. Thankfully, our insurance company asked us about those things -- but, if you don't get reductions for those, you might call your own insurance company. Finally, I am sending my homeowner's policy to my auto insurer for a rate quote; having both policies together may lessen their overall expense.
I've been learning far more about our benefits from work and how to use them properly, and, with my spiral notebook, it’s easy to make sure I deal with an issue and later follow up on it. One example is dealing with an insurance claim for a procedure my son had while he was at school. If the insurance does not pay, the entire bill will be about $1,000.00. However, I believe they are just not processing things correctly. By dealing with that issue and being persistent, I will save that money. For those of you with Flex Accounts, use them to the maximum need you have (which is not necessarily the maximum allowed). They are pre-tax dollars, and money that comes back to you should you use a covered service. But, many policies still have "use it or lose it" so people fear them -- look at your plan again, there are new rules giving companies the chance to opt out of the entire use it or lose it issue, and, you may be surprised at what is covered. For example, over-the-counter medicines of all types can be reimbursed -- you just need a paid receipt. Because these benefits are pre-tax dollars, it just makes sense to take the maximum that you need; otherwise, you'll still be paying for the services and the medications but you'll be using after-tax dollars.
And, other than the garage sale that we’re planning, I have been looking into ways to sell some of the things we own, possibly on e-bay. Part of this is that we realized that our things are really hindering the life we want to live, yet, part of it is that we are in a financial position that we would like to get out of. We learned from that process that we bought a piece of art (my birthday gift in 2000) for a small amount of money and it is now worth 10 times that amount and seems to be going up. (If only we could buy more – what in the world is getting that rate of return?) It was a present from my husband to me, on my 40th birthday, and, I don’t think I’m going to sell it, but, it was nice to find that out. In fact, we’re probably going to spend money in the long run on it because it should be nicely hung and displayed properly and it possibly needs to be reevaluated for insurance purposes – all things I have to look into (it’s already in my long-term to do section of the spiral notebook). I do have a brand new Liz Claiborne beautiful coat that doesn't fit that I'm going to sell on e-bay, and, as we de-clutter, we find more items to sell or donate (and donating to a charity does save in taxes -- I just have to be sure to get a receipt and to file it properly; not a problem in my new file system (which has a section for current year tax deductions and revenues). These kinds of changes have not impacted on our lives at all: if they have, it has all been positive.
This is so simple, it seems almost unbelievable. So far, we have changed our relationship with money and our financial situation simply by investigating what exactly we have, need, want and taking stock of it all. The process is clearing our heads, our hearts and adding actual income into our pockets. These steps will not make us rich immediately, but over the long term, we will have saved money by really thinking before we spend because now we see how unwelcome the accumulation of unnecessary things is in our lives and on our wallets.
Our newest habit to gain a better handle on our spending this month is to get receipts for everything we spend and create a cash account on my money software. We created a box to put envelopes in to just hold our receipts. My plan is to put the information on the computer account software. I’ll let you know how that helps our situation and be able to start running tallies of all of our savings from previous patterns of spending. I imagine that we will find that the bulk of our money is spent in a lot of little ways that could be changed without a significant impact on our lifestyle while freeing up a significant amount of cash for the other phases of our plan.
I have also been making copies of savings tips -- little things like cutting your electricity bill that require very little work on our part, but can generate big savings. One example is that many of your electronics use electricity even when not in use (for powering up lighting displays etc.; thus, it may make sense to put them on a power strip and shut down the strip when you are not home). But, remember, once you look at your spending, you will have a better grip over how to make sure that you are doing the right thing with your money -- using it to add value and not wasting it on things that do not bring you any value. We had a health club membership for my daughter and she wasn't using it -- it turned out to be $75.00 per month. That was strictly the equivalent of throwing money out the window.
Also, be sure to take advantage of offers made by those with whom you do business. The place where I buy my school/office supplies offers a card that sends me coupons for money off as does a place I shop for clothes. I keep these coupons in my file folder system and when I go out shopping, I bring them with. (I tend not to be a coupon clipper; however, when they are for items I use frequently, I use them.) We fly on one airline frequently, we signed up for their frequent flyer program. Recently, I was looking for a place to stay in two locations a couple of nights apart. I registered at the same hotel chain and signed up for their privileges. While these are marketing tools, they may also save you money and are worth looking into. The same is true for credit cards -- in today's competitive credit card environment, it makes no sense to use a card unless it gives you rewards. Often shopping online will lead to savings, especially if you get free shipping. Many professions have unions or professional organizations that can offer you group discounts on things you need, like life insurance -- you should look into those things before you buy elsewhere. You should also learn as much as you can about big-ticket items; home renovations have certain areas on which you should not "skimp"; however, that does not mean that you cannot look into other types of savings if you are planning to renovate your home. And beware of whistles and bells -- if you can get an item that offers fewer features, but, you do not need those features, you should really think about whether or not you need the additional features or are just buying them because they are there. Maybe an oven does not need six burners for your family (maybe it does). Think ahead, though, you should anticipate your future needs as well as your present needs so that you are not replacing items that become obsolete quickly. Another great way to save money is to buy "off-season" when possible.
We are now at a point where we are looking for a new car. In the past, we have gone to "look at" some model we had an interest in, and, come home, owning a new car. This time, we are planning first -- we have a model in mind, we are considering one that is used with a warranty and low mileage, and we are researching that car as compared to other cars for maintenance, reliability, mileage, etc. We started looking two weeks ago, but we have not left home yet in our search because we are still in the research phase. We may wait to buy the car, but we are going to be prepared for the car we want or are willing to substitute in case we find it at a good price. And, no matter what, I have learned one thing in my years as a car shopper -- it hurts them more than it hurts you when you walk out. Yes, it is a disappointment that you cannot get a car when you want one, but we are not children and as long as we are not desperate, we can walk away from a deal that does not suit us. I think everyone buying a car should have that mentality. That is why we are beginning our search now -- our old car does not have much life left in it and before it dies and we are in a desperate place, we need to find a replacement. That is a whole new way of thinking for us.
( Since I started this website, we did purchase a new car. We bought a new car because it was on the low end of our affordability. We are very happy because the old car had a very bad problem with it that was about to cost us approximately $5,000.00 to repair. Thus, had we not moved on the new car, we may have ended up desperately seeking a new car. But, one thing I must mention in my decision-making. Don't forget that tips about making the best deal are always offered, but, big-ticket items are often a very human transaction. It feels good to tell your friends that you made a good deal, or, at least, that you didn't get ripped off (which I believe we did make a good deal and did not get ripped off), but, it also gave me pleasure to make the sale with the Salesperson who worked with us. I know he is a good salesman because he made me feel personally great about putting money into his pocket. I don't think I've ever felt that way about a car salesman that I've done business with, but, the whole place had a quality of trying to be "new" and doing business a bit differently. So, money is only one side of the equation -- but, it is the one we are beginning to take a lot more seriously.)
Remember: I did a lot of research to find things that the average person can do that can make them much better off financially. I did not ask for help from a financial planner: I learned by researching and listening to people I respect. And, while experts are useful for some things, when it comes to money, be careful of Wizards Bearing Promises of Wealth With No Work. I am implementing those ideas that have value and sharing it all with you. Who needs Wizards when you are taking control over money?