Save Thousands By Focusing On The Big Picture

This is a post from Pauline of InvestmentZen.com

One thing that makes me want to bang my head against the wall is when I see people call themselves frugal, yet be the poster child for “penny wise, pound foolish”. Ok, you save and save every single day, a little here, a little there. Globally, you’re pretty miserable because you have removed all the good things out of your life. You have no more gym membership, cable TV, magazine subscriptions, you eat rice and beans day in, day out… I even met a guy who had no central heating!

He was in his 70s and he really broke my heart. When it was very cold in winter, his bedroom on the upper floor of his house became too icy to sleep in. So he would come down to the ground floor, where he had an electric heater. He would carry his mattress on his broken back, and sleep on the floor of his living room! He claimed the electric socket upstairs were too old to bear a heater. That discomfort could have been fixed with less than a thousand dollars. How far he was willing to go for the sake of saving money made me scratch my head.

That won’t make a big difference on his net worth. What will is taking action to reduce and optimize the big expenses in your life. Your mortgage for example. Rates are at historic low levels right now, and finding a mortgage refinance at just 0.5% less than what you are paying at the moment can save you thousands. Yes, thousands.

The average US home is worth around $250,000. At 4.5%, you are paying $1,266 a month over the next 30 years. These days, you can find a 30 year refinance for 3.5% on average. That means lowering your mortgage payments to $1,123 per month. Saving yourself over $50,000 in interest in the process. I did my last refinance online. I decided to pay a little for the convenience of staying with the same bank, and not having to provide a new one with the mountain of paperwork they usually require. It took about 15 minutes to drop my rate by 0.5%. No fee, no valuation, the bank had all the details already.

15 minutes of my time for thousands in saving? Any day.

This summer, I was looking for a house to buy in Southern France. I saw one that fit my needs. It was listed via a real estate agency at $700,000. I thought if I could find where it was, I would save myself the fee. The town was small, but it took me a few hours to locate the house, based on the online ad pictures. When I arrived, the owners were surprised, and said I was the first one showing up without an agent. I had spent hours on Google Maps trying to determine the neighborhoods where the house could be. Once I got there, it only took me an hour to find it. The owners said they wanted $650,000. I didn’t end up buying it, but that would have been a fine payday otherwise.

Another thing that makes me cringe is when people do not value their time. If you make $25 per hour at your day job, but walk back home instead of taking the $1 bus, you are losing on an opportunity to stay an hour more at work, and make $25. Sure, that can be your way to unwind, get some exercise,… but for people who see it from a saving standpoint, I don’t get it. Your time is better invested in yourself (trying to get a promotion, working extra hours, starting a side hustle) than trying to save a few bucks or couponing.

More and more, I am trying to focus on big lifestyle changes that will have a huge impact on my net worth, rather than pinching pennies. I chose to relocate abroad, and that cut my monthly expenses by 60%. I did not buy a car when mine got stolen last December. It has been a little inconvenience, but I have been home maybe 4 months since that happened, and in the meanwhile, the $10,000 I didn’t put on the car (plus insurance, gas, maintenance and repairs) grew on the markets. And whenever I really needed one, to bring back groceries and heavy things, I would rent one for the day, for $30.

The S&P500 had a good run since last December, returning 9.8%. My $10,000 would have yielded $980, way more than what I spent on the occasional taxi or rental. But I understand that this lifestyle switch is not for everyone.

Still, the next time you are tempted to find ways to save more, try to start with the big stuff.

How to Save Money on a Tight Budget

How to Save Money on a Tight BudgetEven a robust savings plan can be sidelined when times get tough. Often, a savings plan is the first thing to go when the economy tightens up. However, that is a big mistake because everyone needs a savings fund for short-term emergencies or long-term goals. Here are a few tips that can help to keep your savings account going strong.

Limit Spending

Eliminate unnecessary purchases, like buying donuts for the office or impromptu shopping sprees. Plan each purchase that you need to make, but also allow for unexpected necessities, like a copay for a doctor visit or unplanned dinner guests. Periodically review your checkbook or debit card register to see where those unexpected purchases occur, and then look for ways to avoid them until your budget returns to normal. Shop for low-rate credit cards and introductory offers if you must use credit.

Reduce Regular Expenses

If you aren’t already doing it each year, contact your insurance company and your utility providers to see if discounts are available. Chances are you may be eligible for a reduced bill based on changes in your eligibility status or special rates that are being offered as a promotion. A good driving record and responsible utility use may lead to unexpected premium or Bill reductions that will help to ease your budget. Take a grocery list to the supermarket to avoid overspending. According to a May 21, 2015 Gallup survey reported in an article by John Fleming titled “Americans Still Spending More, Still Not on What they Want,” 55 percent of Americans claim they were spending more for groceries than on other major purchasing categories, including utilities and car fuel.

Watch for Sales

Take advantage of special monthly, semi-annual, or annual sale events at your favorite stores. For example, a popular supermarket chain in Northeast Ohio offers an annual three-day summer sale event in August just for meat. Buyers can stock up with meat in their freezers for months to come. Some store promotions provide fuel discounts or coupons on your next purchase. To add a little extra, browse online coupon sites like Groupon.

Share the Cost

The amount of food served to an average adult in a typical restaurant these days may be as much as 50% more than it was a generation ago. That means diners are taking home plenty of doggy bags and leftovers for the next day. However, we are also paying for that extra food. To cut costs when eating out, consider ordering a child’s portion if allowed to do so. You can also split a meal with a dining companion. Carpool with neighbors or kids’ friends’ parents to save driving costs to and from school. For summer camp, share the cost of a sleeping bag with your child’s classmate’s family, and then each child take the sleeping bag to camp on different weeks.
Shop Second-Hand.

Consignment stores or thrift shops are excellent places to find great bargains on lightly used clothing, some of which can be brand-name, as well as seasonal items like a winter coat or summer T-shirts. You can also find garden supplies, quality furniture, and a host of other things that would cost far more if you paid full price and bought them new. In addition, many thrift stores offer reduced prices. For example Goodwill has a different color code reduction each week, which adds a 50 percent discount on all items purchased. Furthermore, a frequent shopper card, when full, provides another 35 percent discount. Senior citizen discounts may also apply at thrift stores, so take advantage of these ways to save money if you fall into this category.

Steps like these can help you to save hundreds of dollars a month with careful planning and controlled spending. Then continue to feed your savings account for peace of mind so that you will be prepared for the next opportunity or unexpected need.

Keeping the Money That You Have

When it comes to paying attention to your needs in life there are few areas as important to focus your energies on than your finances. If you do not have the right amount of money then you are going to learn that it is hard to take care of anything that might come up as you move through life. Luckily, it can be very easy to get yourself together in this regard. To make magic happen with your budget, all you need to do is begin looking in the right places.

Financial experts with a focus on venture capital, like Hiruy Amanuel, can be a wonderful place to begin. When you listen to the advice provided to you by professionals in the industry then you will find it much easier to get into the correct mindset. You can also begin the process in simple ways all on your own. Here are a few tips on how you can keep the money that you have so that you can become more financially secure.

Stop Spending

One of the best bits of advice that you are going to get in regards to your finances is to stop spending so much. You might not think that you are wasting your funds on a daily basis but you will be surprised to discover exactly how your small purchases add up. If you are someone that likes to eat out multiple times a week, for example, then you are most likely spending more than you should. This is a common place where people waste money but it is far from the only area that you should focus on.

Typically it is the smaller purchases that wind up coming back to haunt you. A cup of coffee is only a few dollars and so it seems like you are not spending that much when you get your morning fuel on your way to work. Unfortunately, if you average three dollars on each cup and buy coffee every day that you work then you are looking at over a hundred dollars in coffee each month. This is money that you could be saving, so you are going to want to pay close attention to your smaller purchases.

Understand Investments

Another surefire way for you to fix your finances is by discovering worthwhile investments. Many people are hesitant about investing their money because it can be perceived as a risk. While it is true that you are taking a gamble with investments it is important to keep in mind that some risks are less dangerous than others. Knowing where to invest your money is easy if you pay attention to popular trends and ask the correct experts for relevant advice in regards to how to move forward.

You also might want to consider finding investors for an idea or business that you have been concocting. Making your dreams into tangible goals can have a profound impact on the future of your finances. If you work with the right experts, like Hiruy Amanuel and the professionals involved with the world of venture capital, then you are going to be able to make big changes happen.

Formulate a Plan

One of the best tactics that you can employ with your attempt to save money is having a plan. This can seem like a given but it is not as easy as simple as you might believe. If you want to save money it is not enough to just say that you are going to try to save money. Typically, you are much more likely to see success with saving if you have a tangible goal that you can work towards. This can be anything from putting money aside for retirement or beginning a college fund for your little one.

The reason that having a goal is more useful is because it allows you the ability to track your progress in a way that makes sense. If you want to put aside a specific amount of money from each paycheck you have the ability to look at what you’ve saved after a few weeks and see if it is going to eventually add up to something significant. If it is then you can stay the course and if it isn’t then you can make the adjustments that you need to in order to correct your savings.

Face the Future With Confidence

When you have the correct financial know-how to save it can do wonders for your spirits. Money troubles never really go away but your worries can easily be diminished if you know how to go about the process of saving. Consider the tips that you’ve learned today. Stop spending on the small stuff, be sure to have a plan, and keep abreast of good investment opportunities. Using these bits of advice as your guide you will be able to discover a sense of confidence in how you approach your future finances.

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