by Larry Wiener
A couple of nights ago I decided I wanted to buy a particular book. Still in print, I knew it would be hard to find at my local bookstore, so I went online. I found the going rate to be about $10 in paperback. It was worth it to me, but I decided to take a few minutes to see if I could find a like new used copy for less.
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I looked on Amazon and found one from a reputable seller for about $6.
Like most of our readers here at BetterBudgeting, I was glad to save the $4 and didn’t consider it any big deal until I started thinking of a conversation I had with a friend who was always in the permabroke mode. While my friend has a good income, he said that he didn’t have time to do all that comparison shopping. He says his time is too valuable to do all that "petty" stuff.
Then I began to figure it out. I spent Five Minutes to save $4.
That’s an hourly rate of $48, non-taxed.
If you spend 30 minutes cutting coupons and going through the flyers and then save $25 at the store, that’s $50 an hour!
Granted, most efforts at savings don’t pay off at the $50 an hour rate, but once you have those money saving habits down, they pay off big.
The more I thought about it, the more I began to realize how much those habits can lead to financial freedom, especially if you are very intentional about what you do with the money saved.
Of course you can go to the other extreme. It doesn’t really make a lot of sense to drive five miles because they have milk on sale for ten cents a half gallon less than your corner store. Still, applying some of those money-saving habits and then making good use of what you save can have a profound influence on your financial life.
Different money-saving habits will work for different individuals and families depending on geography, circumstances, and interests.
Here are a few habits that I have developed to get you started:
Buy gently used when it makes sense
The amazon.com marketplace and half.com act as online consignment stores for books, movies, software, and the like. Often you can find like-new items without having to spend too much time as both sites are well organized. Used cars make sense for people who don’t drive a lot and you can find some real bargains on gently used furniture in the classifieds and consignment stores.
Use grocery coupons
Once you get a system down, you can use a rotation system to slash your food dollar. You can buy non-perishables when they are on sale and then use a coupon. If your schedule allows you to go to the store in the morning, you can also buy surplus meat or milk which is perfectly good, but value priced. These tools can save up to 50% off your grocery bill. See my article on coupons on this site.
Use online auctions for gift type items
If you think ahead and realize that Aunt Franny loves Hummel figurines and doesn’t have a particular one, you can save yourself money and hassle by going on e-bay or another auction and finding it rather than going to a mall the day before and buying a scarf that ends up not being in her color.
Go to closeout stores
You can do remarkably well for clothing, housewares, and lots of other items in closeout stores such as TJ Maxx, Marshalls, Burlington Coat Factory, and Ross. The selection of merchandise can be remarkably current. If you haven’t been to one of these stores lately, check them out.
Use your daily newspaper to identify sales
Here in California Macy’s and Robinsons May have sales almost every weekend. Catch them and you can save a bundle on current merchandise.
Check out the dollar stores
Stores like the 99 Cent Store and Dollar Tree are becoming a larger part of the landscape. Here you can find a lot of closeout merchandise for a dollar. Often they are current products that merely are experiencing a change in labeling. Today when I was out wandering around I stopped by Dollar Tree and saw pickle relish at a great price. Since I use that relish a lot in macaroni salad which I make for barbecues and potlucks, I grabbed several jars. This is also a great source for videotapes, snack products, juices, and the like. Just be careful about expiration dates.
Once you develop and start to use your own array of savings habits, one key step is to be very intentional about what to do with the money you save. Let’s say you get inspired and start saving $200 a month. What would be good use of that money. Again, that depends on your circumstances.
Here are some ideas:
Get out of debt
Debt is the enemy of financial freedom and credit card debt is the worst. If you are enslaved to the card companies, check out some of the other articles on this site for more ideas.
Develop a cash reserve
If you don’t have a cash reserve for when the clutch on the car blows, this would be a great use for the money you save. Start by putting it in the back of some drawer if you need to and then when you have enough, start a savings account. This way you won’t have to borrow when you have an unexpected need of money.
Invest for some future goal
If you have access to a 401(k) or 403(b), these are great investment vehicles for retirement. IRA’s are also great investments. Or, you may want to do some more short-term savings and investing for something like buying your next car for cash.
Enjoy your savings
If you are out of debt and have a cash reserve already, you can apply some of your money saved toward something that will just bring you enjoyment. I’m about to buy a new mountain bike and I figured that to be about five week’s worth of grocery savings.
Yes, that little bit of extra time spent developing and then applying good financial habits will pay off mightily. If you haven’t already developed those habits, start now. You'll be glad you did.
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Copyright © 2002 by Larry Wiener. All rights reserved.