Thursday, August 13, 2009

Frugal Living: Small Steps to Save Big

Thanks to our friends at The Greenest Dollar for today's fabulous post:


When it comes to saving money, we’ve probably all heard the same tips. Stop going to the coffee shop! Don’t buy frivolous things like artwork and jewelry! Start cooking at home!

And, it’s all good advice. But I think many of us fall into the trap of being “penny-wise and pound-foolish”. That is, we focus on the super small savings and then miss the big steps to save money.

A good example of this is “The Latte Factor”; you know, that little piece of personal finance wisdom that says if you stop spending money on lattes, you’ll save hundreds of dollars over the course of a year. And, it makes sense. If you spend $4 per latte twice a week, that’s $384 per year. Significant.

But, you could potentially save that much with just a few phone calls. You could shop around for cheaper car and home insurance, or renegotiate a better rate with your cable TV and internet provider. These are easy ways to save big that don’t involve daily or weekly sacrifices.

So, let’s look at some other small steps you can take to save big money.


Store and brand rebates run the gamut, from $5 to $500. But the shocking thing is that most of us shoot ourselves in the foot when it comes to rebates. According to a study done by Leflein Associates, 41% of people who buy a product with a rebate forget to send it in.

And, I’m wholeheartedly in this camp. Just this summer I’ve missed out on $26, all because I forgot to send in the rebate forms.

Will that $26 break the bank? Well, no. But you can bet I sure wish I hadn’t forgotten

And what about when Dell offers a $250 rebate on their computers, or Whirlpool offers a $400 rebate on their washing machines? That’s big money. And, a whopping percentage of people will never get it because they simply forget to send in the paperwork.

Rebates take very little effort, and they’re a great way to save money. When you think about the time it takes to send in the paperwork versus the time it takes to resist the urge to go to the coffee shop every week, there’s no comparison.

Regular Upkeep

I don’t know about you, but I loathe getting my car’s oil changed. It’s $30 each time, and I can think of a thousand ways I’d rather be spending that money.

But, regular upkeep on my car saves me big time over the long term. Why? Because it keeps the car in good condition. If I skipped the regular maintenance to save that $30 every few months, my car would eventually need thousands of dollars in repairs.

Spending money for upkeep on things like a car, a home, or even a nice coat, can be irksome. It can feel like a waste because you don’t really see an immediate benefit. But over the long term, these little expenditures have a huge return simply because they help you avoid big, costly repairs.

High-Yield Savings Accounts and CDs

If your savings account or emergency fund is currently sitting in an account with a non-existent interest rate, you could be earning money simply by taking the time to look for a high yield account.

Now, it’s true that rates have fallen big time. This time last year I was making 3% at ING. Now I’m making 1.4%.

But, that 1.4% interest rate is still higher than my bank’s offer, which is 0%.

And while I was Louisiana earlier this summer visiting family, I saw some truly stunning offers. For instance, Farm Bank in middle-of-Nowhere, Louisiana, was offering 5% interest on savings account. 5%! I almost swerved off the road. Another small bank in Mississippi was offering 4%.

If I didn’t live a thousand miles away, I would have gone in right then and opened an account.

I haven’t seen offers even remotely that good from the bigger banks, so I’m assuming it’s the only the small, community banks that are able to do this.

So, want to start earning some easy money? Then spend just a little time shopping around for interest rates. And, don’t pass up your smaller, community bank. They just might have the best rate around.

Physical Fitness

I can’t say enough about how much money you can save simply by getting and staying in shape.

Want a good example?

Ok. I live fairly frugally, but I spend $32 per month on a gym membership. Of all the things I spend money on each month, I truly believe that this is the expenditure I get the most benefit from.

Here’s why: as a self-employed writer, you can only imagine what my health insurance is like. The nice way to put it is that it’s for emergencies only. Any visit to a doctor is going to cost me at least $80. And if I get sick and can’t work, there are no “sick days” or “personal days” to fall back on.

When I’m sick, I make $0 for the day. Not good.

Before I began going to the gym regularly two years ago, I seemed to get sick all the time. I’d come down with little colds, the flu was a regular visitor, I had bad allergies, and I got tired easily. All thanks to sitting behind a desk all day.

But since I started running and working out, I’ve hardly gotten sick at all. I haven’t seen a doctor in years, and I feel great almost all the time. I’m more productive, more positive, and I have far more energy.

All of this is because I’m getting plenty of exercise. And, while I can’t say exactly how many hundreds or thousands of dollars my physical fitness has saved me, I know it’s a lot.

To me, that $32 per month is a small drop in the bucket to what I’m getting. I’m avoiding the doctor, as well as making more money because I’m more productive and alert.

Many people view gym memberships as frivolous expenditures. But in my mind, nothing could be further from the truth. Getting regular exercise is an easy way to save yourself hundreds or thousands of dollars in medical bills. It also increases your quality of life, and helps you work better because you have more energy.

Definitely worth the money in my book!

Last Word…

I know there are plenty of ways to avoid being “penny wise and pound foolish”. These 4 are just the tip of the iceberg!

What small steps do you do that save big over the long-term?

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