Countdown to Financial Fitness: Find the Best Value - When to Splurge

Countdown to Financial Fitness: Find the Best Value - When to Splurge: To celebrate the audiobook release of my self-help, personal finance book, Live Well, Grow Wealth , I'll be sharing excerpts each week o...

Find the Best Value - When to Splurge

To celebrate the audiobook release of my self-help, personal finance book, Live Well, Grow Wealth, I'll be sharing excerpts each week on this blog. 

This excerpt is from Chapter Two, Find the Best Value, and it discusses the importance of focusing discretionary spending on the things and experiences you value most. Getting the most value out of your money is not unlike deriving the most satisfaction from your allotted calories when trying to reach and maintain a healthy weight. 

All my life, I've struggled to keep my weight under control. I tried every kind of crash diet: grapefruit, bananas, fasting, Atkins, Slim-Fast, seven pounds in seven days, counting calories, counting carbohydrates, low-fat, low-sugar, etc. Most of them worked well enough, and I lost the weight. But then I celebrated finishing the diet and went back to my old eating habits. The weight returned.

One New Year's Eve I reviewed several past years' resolutions, and weight loss always led the list: lose five pounds this year, lose ten pounds this year, get back to 110 pounds, get back to 120 pounds, fit into my skinny jeans again by summer.

In 2004, I joined Weight Watchers. Rather than a diet, Weight Watchers is a lifestyle change. The program incorporates good health habits that can be sustained for a lifetime. You eat normal food, not pre-packaged menu items. There are really no foods off-limits, so you don't have to say goodbye to your favorite fattening snacks forever; you just have to work within a daily and weekly "point" allowance. The program forces you to make choices that balance the taste experiences you crave with eating foods that are good for your body.

For example, if someone brought donuts to work, I didn't necessarily have to shun them because I was doing Weight Watchers. But at the time, a donut cost six points, a big chunk from my daily allotment of twenty. That twenty points had to include three servings of milk or milk products (lower point deduction for the low-fat variety), two teaspoons of olive oil, a source of protein, and four to five servings of fruits and vegetables (fortunately, many fresh vegetables contained one or zero points). If I gave up my glass of wine with dinner (two points) and my scoop of ice cream after dinner (four points), I could sink my teeth into a sugary donut. If the treat were day-old glazed from the supermarket, I’d pass. If the donuts were fresh and hot from Krispy Kreme, or one of my favorite frosted flavors, and I was craving something sweet, maybe I’d succumb, but I’d choose carefully and eat the treat slowly, savoring the flavor. No chance that I would wolf down two; twelve points was definitely too much to spend on empty calories. And eggnog? I can still enjoy it occasionally, but I can no longer chug a cup a day between Thanksgiving and New Year’s—not if I want to pass December's weight check.

Financial fitness works something like the Weight Watchers program. Most of us have a finite amount of money to spend each month, and there are essential expenses that must be covered. There’s not enough left over to satisfy every whim, so we have to choose the splurges that give us the most pleasure, and then savor them, make them last, make them worth it.

For more tips, read or listen to Live Well, Grow Wealth by Sharon Marchisello.

Sign up for my newsletter at sharonmarchisello.com

 

Countdown to Financial Fitness: Squeeze the Most out of Your Money - Part 2

Countdown to Financial Fitness: Squeeze the Most out of Your Money - Part 2: To celebrate the audiobook release of my self-help, personal finance book, Live Well, Grow Wealth , I'll be sharing excerpts each week o...

Squeeze the Most out of Your Money - Part 2

To celebrate the audiobook release of my self-help, personal finance book, Live Well, Grow Wealth, I'll be sharing excerpts each week on this blog. 

This excerpt is from Chapter One, Live Within Your Means, and it discusses how to squeeze the most out of the money you have. 

Do you drive to places where you could walk or ride a bicycle? Change that habit and you'll help the environment, do your body a favor, as well as save money on gasoline and wear-and-tear on your car.

Next time a server brings you a generous stack of paper napkins, take the unsoiled ones with you when you leave the restaurant; use them in your car or at home. You'll reduce what you spend on paper products—and help reduce the quantity of paper that gets thrown into our landfills.

I once overheard a colleague of mine lamenting to another, "I had to drive back to the grocery store last night after I unpacked everything, because I'd forgotten to buy trash bags for the kitchen. And today was trash pick-up!"

His friend commiserated. "Yeah, what would the garbage collector think if you'd had to stuff your trash into a Publix bag!" They both laughed at the horror of the scenario.

I kept silent. I rarely buy kitchen trash bags. I have a waste can under my sink that fits the plastic bags that come free at grocery stores. I suppose the garbage collectors are making fun of me right now! I'm repurposing something my colleague would wad up and throw away in his "official" trash bag. But my house is paid for; his isn't.

One Saturday, we were taking yard waste to the county recycling center and noticed someone had dumped half a dozen brand-new biodegradable bags on a bed of grass clippings. These sturdy paper bags are suitable for multiple uses, as long as they don't get torn or wet, and the ones we spotted were in pristine shape. We emptied the bags and took them home to reuse; most remained intact for months afterwards. I'm not advocating "dumpster diving" as a way to save money, but if you can maximize your use of every item before discarding it, your savings will mount, little by little. The homeowners who dumped those bags will probably go out and buy new bags next time they clean up their lawn, when they could have easily reused the old ones.

Some waste occurs because we're disorganized or careless. Check your receipts from businesses to ensure you weren’t overcharged, and that any discounts or coupons were properly applied; also, make sure nothing you purchased was left behind. Don't leave money on the table by forgetting about gift cards, store credits, coupons for events or services you know you plan to use. Or what about items you purchased but found you don't need? Most stores will take unused goods back within a reasonable amount of time, so do it; get your money back. Keep the item and receipt by the door or in your car so it can be returned on your next visit.

Waste a little bit here, a little bit there, because it's too much trouble to do otherwise. What does it matter? It's not that much. You feel stupid and cheap taking home paper napkins and reusing bags. You have better things to do than stand in line to return a product. But over time, frugality adds up. You've squandered money and resources that could have been used to grow your wealth and buy the things and experiences that add value to your life.

Once you get the hang of it, once you start to respect yourself for being frugal instead of being embarrassed because people will think you're poor or a cheapskate, reducing waste in your life and squeezing the most out of your money and possessions will become one of the easiest ways to shrink your financial footprint and begin living within your means.

For more tips, read or listen to Live Well, Grow Wealth by Sharon Marchisello.

Sign up for my newsletter at sharonmarchisello.com

Countdown to Financial Fitness: Squeeze the Most out of Your Money - Part 1

Countdown to Financial Fitness: Squeeze the Most out of Your Money - Part 1:   To celebrate the audiobook release of my self-help, personal finance book, Live Well, Grow Wealth , I'll be sharing excerpts each week...

Squeeze the Most out of Your Money - Part 1

 

To celebrate the audiobook release of my self-help, personal finance book, Live Well, Grow Wealth, I'll be sharing excerpts each week on this blog. 

This excerpt is from Chapter One, Live Within Your Means, and it discusses how to squeeze the most out of the money you have. 

We live in a rich country, and most of us are guilty of waste: wasting food, wasting resources, wasting money. We overbuy, we overpack, and as a result of our wasteful habits, we overspend.

You have probably seen someone use half a roll of paper towels to clean up a small spill, ruin a half-full can of paint by not bothering to put the lid back on, leave good tools outside to rust. Walk through any restaurant and observe how much food is left on customers' plates, ready to be thrown away.

Examine your own life to see if you can cut expenditures by wasting less, by recycling and re-purposing. Do you throw away a tube of toothpaste before squeezing out the last bit? Do you open a bottle of water, take a sip, set it down somewhere and forget about it? Instead of recapping it and putting it back in the refrigerator, do you just pour it down the drain? You could at least water the house plants or rinse a dirty dish with the contents if you're not going to drink the rest of it.

I have neighbors who let their newspapers pile up on the driveway while they're on vacation, and then throw them away when they return. Not only does the collection of newspapers send a signal to potential burglars that the residents aren't home, they are paying for a service they aren't using. With a quick phone call or online request, they could suspend their subscription and have their account credited for the time away, or perhaps have the papers donated to someone who might enjoy reading them.

Print on both sides of a sheet of paper when feasible—and don't waste ink and paper to print out anything unnecessary. I worked with colleagues who printed out every email they received. Why? Learn to trust electronic storage. (But be sure to back up your data regularly.)

Excess copies, documents printed in error or no longer needed, and even junk mail and opened envelopes can be used as scratch paper. No need to ruin a clean sheet of paper to write yourself a note or make a grocery list.

Don't mail anything you can pay online or hand-deliver. I've received Christmas cards, thank-you notes, and invitations from next-door neighbors that were stamped first-class and processed through the Post Office when the person could have walked over and handed it to me or slipped it under my door.

If you use a credit card that offers reward points, periodically check your balance and redeem your points as soon as you’ve earned enough to purchase something you want or need. Don't let the points expire or become devalued by the company's policy changes. And take a moment to compare your redemption options to ensure you're getting the best value.

For example, when I first signed up for a Discover Card, I received a cash rebate once a year which equaled approximately one percent of my qualifying purchases. Now Discover has converted to a point system and added a lot of gift cards and products as redemption options. I still assumed I would prefer to receive the cash, which I usually applied to my current Discover Card bill. But after closer review, I found I needed fifty reward points to redeem fifty dollars in cash (or credit toward my bill). However, I could redeem only forty-five reward points for a fifty-dollar gift certificate at certain restaurants where we dined frequently. As long as I selected a gift certificate I knew I would use in its entirety, I was able to squeeze an extra five dollars from my reward points.

For more tips, read or listen to Live Well, Grow Wealth by Sharon Marchisello.

Sign up for my newsletter at sharonmarchisello.com

Countdown to Financial Fitness: Audio Release of Live Well, Grow Wealth

Countdown to Financial Fitness: Audio Release of Live Well, Grow Wealth: I'm pleased to announce that the audio version of my nonfiction book, Live Well, Grow Wealth, is now available. To preview or order, cl...

Audio Release of Live Well, Grow Wealth

I'm pleased to announce that the audio version of my nonfiction book, Live Well, Grow Wealth, is now available.  Jennifer Henry did an excellent job with the narration, so please check it out. To preview or order, click here.

Live Well, Grow Wealth can be described as Personal Finance 101, a commonsense guide to shrinking your financial footprint. Based on my experience of living frugally, investing, and retiring early, I compare achieving financial fitness to maintaining a healthy weight. In ten easy-to-follow steps, Live Well, Grow Wealth shows ordinary people how to build wealth by living within their means without compromising their values.

Here are the ten steps that are discussed in detail in Live Well, Grow Wealth:

1.       Live Within Your Means

2.       Find the Best Value

3.       Get out of Debt

4.       Build an Emergency Fund

5.       Save for Retirement

6.       Begin to Invest (basics)

7.       Consider Relationships

8.       Teach Your Children

9.       Get Completely out of Debt (pay off long-term debt, like a mortgage)

10.   Invest More (stocks and covered calls)

 I hope you'll check it out and share it with someone who can benefit.

Sharon Marchisello is the author of Live Well, Grow Wealth.

Sign up for her newsletter at sharonmarchisello.com

Countdown to Financial Fitness: Cash, Credit, or Debit

Countdown to Financial Fitness: Cash, Credit, or Debit: In preparation for the release of the audiobook version of Live Well, Grow Wealth , I'll be sharing excerpts each week on this blog.   ...

Cash, Credit, or Debit

In preparation for the release of the audiobook version of Live Well, Grow Wealth, I'll be sharing excerpts each week on this blog. 

This excerpt is from Chapter One, Live Within Your Means, and it discusses the pros and cons of various forms of payment. 

Many financial consultants will tell you to cut up your credit cards, or to never apply for credit at all. I won't tell you that. I love my three credit cards; they are a secure alternative to carrying a lot of cash. I use them for groceries, gasoline, and even some utilities; I pay by credit card whenever one is accepted without an additional charge for the convenience. The secret is to remit the balance in full every month, on time, so you never pay one penny of interest. For me, a credit card is a convenient form of payment, and a side benefit is that I get to use other people's money for a short while. Additionally, many credit cards offer rewards like frequent flyer mileage, gift cards, or even cash back. If you think of a credit card as a magic plastic wand that enables you to buy something you cannot otherwise afford, perhaps cutting yours up is a good idea.

Those who tell you to cut up your credit cards may counsel you to operate on a cash-only basis, and this works well for some people. The premise is simple: when you run out of cash, you can't spend any more. Personally, I find it harder to keep track of expenditures when I pay in cash. Withdraw twenty dollars from the ATM, and it disappears. At the end of the month, it's just something that went into the "miscellaneous" column. If you are a cash-only person trying to get a handle on where your money is going, be diligent about writing down every expenditure. When you use credit cards, debit cards, and/or checks, you can retrace your steps and account for every outlay. Keep the credit card receipts and make use of your check register so you can reconcile them with your statements each month.

If you pay mainly with cash, keep coins working for you. Many people cast their small change into a drawer, the bottom of a purse, or the floor of a car and do not even bother to pick it up when they drop it. I'm not advocating stopping at the bottom of an escalator or jumping into traffic to retrieve a quarter. But I find it odd that so few people take the time to pick up a "lucky" penny—or nickel or dime. That penny you found on the sidewalk yesterday may come in handy today when your total is $5.01 and it keeps you from breaking a larger bill. The smaller the monetary denominations, the less they matter, and the faster they go. Check your coin purse to see if you can produce exact change for your purchase; cashiers will appreciate it (especially if you can pull it out quickly enough to avoid annoying the customers in line behind you). The longer you hold onto those larger bills, the richer you’ll feel.

Some people save all their change and take it to the bank once they fill a mason jar, treating the proceeds like a windfall. My father saved his change for about thirty years. I collected coins as a child, and he continued the hobby long after I lost interest. He figured the coins would appreciate in value, which was true for the ones issued before the early sixties, when the U.S. mint stopped making them out of silver. When he died, I inherited his collection: a steamer trunk full of jars and jars of pennies, nickels, dimes, quarters, half dollars, and silver dollars. Most of the coins only fetched face value and were more trouble than they were worth to transport and cash in. Some banks even wanted to charge a fee to accept them! Unless you come across a rare issue or a coin older than 1964, spend your change.

Some people claim the best solution is a debit card. It offers the convenience of a credit card, and it’s easier than writing a check. You don’t have to carry a lot of cash, yet you are unable to spend more than you have in your checking account. While you don’t have the same protection as with a credit card, some merchants offer the option to select "credit" instead of "debit" at the time of transaction, which adds some fraud protection. But because the funds are paid immediately from your checking account, it's harder to dispute an incorrect charge, and your financial life can be crippled if a thief steals your card number and PIN, and then wipes out your account (or even overdraws it, incurring additional charges). If you write checks and also use a debit card, be sure to document debit transactions on your check register and keep track of your balance to avoid getting hit with overdraft fees. Also, be vigilant with your statements to ensure there is no unauthorized or forgotten activity.

To learn more, read Live Well, Grow Wealth by Sharon Marchisello.

Sign up for her newsletter at sharonmarchisello.com

Countdown to Financial Fitness: Absolutely Necessary Expenses

Countdown to Financial Fitness: Absolutely Necessary Expenses: In preparation for the release of the audiobook version of Live Well, Grow Wealth , I'll be sharing excerpts each week on this blog.   ...

Absolutely Necessary Expenses

In preparation for the release of the audiobook version of Live Well, Grow Wealth, I'll be sharing excerpts each week on this blog. 

This excerpt is from Chapter One, Live Within Your Means. I suggest categorizing your expenses as absolutely necessary, necessary but reducible, discretionary but important, and totally unnecessary. This post discusses expenses deemed absolutely necessary, such as housing, taxes, and insurance.

The absolutely necessary category should contain fixed expenses like your rent or mortgage payment, which are hard to reduce, but not impossible. You might be able to refinance your mortgage or move to a less expensive dwelling; however, while those actions can save you money over the long term and may be warranted, they can result in added short-term expenses.

Taxes belong in this fixed-cost category, as they usually are not negotiable. But if the value of your home has dropped significantly, you have the right to contest your property tax assessment with the county. (You can do it yourself; you don't have to hire one of those companies who offer to do it for you—for a fee that eats up most of your savings.)

F.I.C.A. is a fixed part of your payroll tax, but if you work more than one job and earn a high income, don't forget to re-claim the excess at the end of the year. Review your pay stubs and ensure you have not paid more than the maximum.

If you received a large income tax refund last year, or if you need more money in your pay check now, change the amount of federal tax your employer withholds by adjusting your W-4 form. You still have to reconcile next April 15 when you file your tax return, but do the research to ensure you are claiming every deduction to which you are entitled.

Insurance is another fixed cost that is hard to reduce. But if you haven't done any comparison shopping lately, obtain quotes from competing companies to ensure you're getting the best possible rates for the coverage you need. If you do find a lower rate for the same coverage from a different provider, your current provider may be willing to match it in order to retain your business.

Consider raising your deductibles to save money on premiums. Set the savings aside in an emergency fund in case you have a claim.

Look for unnecessary line items. Do you have a teenager on your policy who is no longer driving your car? Are you carrying collision insurance on an old car whose blue-book value is less than the deductible? Are you paying for towing insurance when you're a member of the Automobile Association?

If your net worth is high, do you have an umbrella policy? For a small surcharge, this additional liability coverage can provide good value. Are you getting all the discounts that apply to your situation?

Some people buy more insurance than they need. Life insurance is important if you're the main breadwinner and you have a family dependent on your income. But if you're single, who will suffer financially when you die? If the answer is "no one," why do you need to pay for a lot of life insurance? My husband and I each carried supplemental term life insurance while we had a mortgage. After the mortgage was paid off, we dropped the life insurance coverage. Because we both worked and had accumulated assets, the death of one of us would not have caused undue financial hardship for the other. Those premiums were better spent building up our assets.

Think carefully before letting an insurance agent talk you into buying a "whole life" policy, which is sometimes marketed as a savings plan. Unlike term life, which covers a specified period of time when it's needed, whole life covers the insured's entire lifetime, provided the premium is paid. Premiums for whole life insurance are generally higher than for term life, and the policy builds up a "cash value" as well as having a death benefit. My parents purchased whole life policies for my brother and me when we were babies, which carried a $1500 death benefit. Now that our parents are gone, my brother and I each own our paid-up policies, and the cash value exceeds $1500, but the money our parents spent on premiums could probably have grown a lot more had it been invested in something else.

Even if you don't need life insurance, you might, however, need disability insurance to help support yourself if you can no longer work because of illness or an accident, and you need your wages to cover your expenses. On the other hand, if your income is not dependent on your ability to work, why buy disability insurance? I discovered that my 94-year-old mother-in-law was paying $19.00 a month for an accidental death and dismemberment policy; unlike wages, her pension and Social Security would continue even if she became disabled, so why insure her income against disability? She had stopped driving, and even if she died in an accident, I believe it would have been hard to convince the insurance company that her death was not at least partially attributable to natural causes. The fine print on the policy read that the death benefit would be cut in half "once the insured reaches age 70"; she was over 80 when this totally inappropriate policy was sold to her through her credit union. When purchasing insurance, consider your age and what risks you face. What's the probability and the impact, versus the cost to insure against that risk?

Think carefully before you purchase travel insurance or all the add-on coverage the car rental agencies try to sell you. What risks might you face, and what would it cost you to deal with that situation without insurance? Check your existing policies (auto insurance, medical) to ensure you're not duplicating coverage you already have. Some credit cards offer certain protections when they're used to pay for car rental, cruise, or plane tickets.

A word about travel insurance. For years, my husband and I passed up purchasing travel insurance when we booked cruises at the last minute, often at a very low rate. We figured the odds of our canceling and losing our cruise fare were slim. Also, working for an airline, we'd fly space available, and missing our cruise because we couldn't get a standby flight—the biggest risk we faced—was not a covered loss.

I also had a bad memory of my mother's experience with travel insurance. Her companion dropped dead of a heart attack a few weeks before their planned trip. While the company refunded my mother's money because "death of traveling companion" was covered, they refused to refund his portion because his death "must have been due to a pre-existing condition." And dealing with travel insurance bureaucracy, providing proof that his "pre-existing condition" was cancer, not heart trouble, was the last thing his bereaved family wanted to do.

My attitude toward travel insurance changed when we took a Panama Canal cruise, with a stop in a small Central American port that our airline does not serve. A woman from our ship collapsed and died during a shore excursion. The cruise line put her husband off at that remote location and left on time. Fortunately, the couple had purchased travel insurance to cover those many unanticipated expenses: hotel accommodations while dealing with the death and securing release of the body, transportation of human remains back to the United States, etc. Now, my husband and I usually purchase travel insurance when our itinerary includes remote destinations.

Final thoughts about all types of insurance: don't buy more than you need, but don't skimp where it’s most important, or you could leave yourself vulnerable to catastrophic loss.

Review each of your expenses carefully, decide which ones are truly necessary, which ones can be eliminated or reduced, and then make a fiscal plan. The sooner your outgo becomes less than your income, the sooner you can start building wealth and enjoying financial security.

To learn more, read Live Well, Grow Wealth by Sharon Marchisello.

Sign up for her newsletter at sharonmarchisello.com

Countdown to Financial Fitness: Trimming Necessary Expenses, Part II

Countdown to Financial Fitness: Trimming Necessary Expenses, Part II: In preparation for the release of the audiobook version of Live Well, Grow Wealth , I'll be sharing excerpts each week on this blog.   ...

Trimming Necessary Expenses, Part II

In preparation for the release of the audiobook version of Live Well, Grow Wealth, I'll be sharing excerpts each week on this blog. 

This excerpt is from Chapter One, Live Within Your Means. I suggest categorizing your expenses as absolutely necessary, necessary but reducible, discretionary but important, and totally unnecessary. This post discusses necessary expenses such as groceries and household services. 

Are you paying someone else to perform tasks you could do yourself? For example, mowing or fertilizing the lawn, cleaning the house, walking your dog? If so, perhaps you can realize some savings there. And speaking of a lawn, you can save money on water and fertilizer by letting some of the manicured green area go natural, planting drought-tolerant ground cover, or even paving it over.

Groceries, too, may seem like an uncontrollable expense. What can you do about the price of milk? My mother used to peruse the grocery ads, circling the best sale prices at each store, and then make the rounds. She was a housewife living in a small town where distances were not great between businesses; most people do not have time for this. Compare the regular prices of the items you purchase most often, and then choose the store with the best overall prices and service for your main shopping. By frequenting one establishment, you'll be more in tune to sales and thus be able to take full advantage when they happen. If your grocery store has a free frequent shopper program that offers discounts, sign up. But keep an eye on sales offered by competitors so you can pick up bargains when that store is on or near your route.

Menu planning and organization are essential to saving money on groceries. If chicken is on special this week, prepare your family's favorite chicken dish; why buy hamburger at full price? If you're planning to cook a perishable item right away, consider a "manager's special" that has been "reduced for quick sale" because it's nearing its expiration date. But if you have no immediate plans for that item in your menu, forgo the bargain, because chances are, it will rot and stink up your refrigerator.

Work in some meatless meals if you can convince your family to try vegetarian cuisine. Lower-cost meat substitutes can anchor a balanced meal.

Avoid purchasing junk food which often consists of expensive empty calories. And if you have the time and ability to cook from scratch, stay away from pre-packaged convenience foods as much as possible.

Stock up on items you use regularly when they are on sale, especially non-perishables like canned goods, dried pasta, and paper products. With proper timing around specials, you can avoid ever having to pay full price. Buy fresh fruits and vegetables when they're in season and incorporate them into your menus. Freeze extra packages of meat, and make note of the date. Don't waste food by buying more than you can use or store safely, or by stashing it where you can't find it until it has spoiled. Label leftovers and serve or recycle them promptly. If your family is averse to eating leftovers, avoid them by learning to prepare less food at mealtime.

Know what is in your refrigerator and on your shelves to keep from re-purchasing items you already have, and to ensure everything gets eaten while still fresh. When you stock up on items you already have, group them together and store the new behind the old, so you'll use the item with the oldest date first. Keep a grocery list in a convenient location—and take it with you when you go shopping—so you don't have to dash out to purchase a needed staple in order to finish cooking dinner.

Shopping on a full stomach and sticking to your list will help you avoid the temptation to buy unneeded items, especially those placed strategically beside the cash register. Accepting a tasty sample and a coupon from a salesperson does not obligate you to buy the product. If your spouse or children have a habit of succumbing to temptation, leave them at home when you shop.

Pay attention to package size to ensure you're comparing prices accurately. One brand may appear cheaper, but the package may contain less product. Some store labels include a price per ounce, or per unit, to help with these decisions. A calculator can be a useful tool if, like me, you have trouble doing the arithmetic in your head. And try to remember what price your items were marked when you arrive at the register. Write them down if necessary. Some stores will give you an item free if it scans incorrectly. That scenario rarely happens, but you may miss an opportunity if you're not paying attention.

Coupons play a role in saving money on groceries. Some stores will even double manufacturer's coupons up to a certain amount. But before using a coupon, compare the price of competing brands, particularly the store brand. Sometimes the coupon provides the better deal, especially if it can be doubled, but often the store brand is still cheaper. If the food tastes just as good, why not buy the lower-priced item instead? Some store brands have a satisfaction guarantee; if you buy it and don't like it as well as the name brand, the store will refund your money or replace it with the name-brand product. Only use coupons for items you really want to try, or were planning to buy anyway. Otherwise, you're spending more money instead of saving it. (Why do you think manufacturers offer coupons in the first place?)

Rebates are another way to save money on groceries, as well as on other household goods, but sometimes, they are more trouble than they are worth. With a coupon, you know at the point of sale whether it will be honored; with a rebate you have to trust there is nothing in the fine print to disqualify your application after you've jumped through all the hoops, used the product, cut out or soaked off the UPC label, mailed in the original cash register receipt, and waited six to eight weeks. Some companies allow you to submit rebate applications online, which takes pain and guesswork out of the process.

Another way to save on groceries and other items is to belong to a discount warehouse store, such as Costco, Sam's, or B.J.'s. Contrary to popular belief, you don't have to buy everything there in mass quantities. I remember telling a neighbor we'd joined Costco and he remarked, "You don't seem like the type to buy fifty pounds of potato chips." While some products are sold in bulk, or in larger quantities than you'll find in a grocery store, some can be bought individually—furniture, name-brand clothing and accessories, jewelry, appliances, electronics, tools, household goods, pharmaceuticals, alcohol, many grocery items—and the quality is often quite high.

But don't assume because a product is sold in a warehouse—or outlet mall, or other "discount" store—that it's the best deal. Sometimes an item can be purchased at your local grocery store for less, especially on sale and/or with a coupon. It's always important to compare prices. Also, warehouse stores charge annual membership fees, so if you join, make sure you'll shop there enough to offset the cost. Before joining, visit with a member or ask a store employee if you can come in and have a look around, to determine whether a membership will really benefit you.

Plan your purchases for items such as clothing, school supplies, and bedding to take advantage of seasonal sales or sales tax holidays. Consider shopping online if free shipping is offered. (But don't buy something you don't need just to bring the total order amount high enough to qualify for free shipping.)

Dry cleaning is another area where you may be able to reduce expenses. My mother refused to buy a garment if it wasn't washable. Her advice is not practical for everyone, but do consider the cost of cleaning and maintaining your clothing when you purchase it. I bundle my dry cleaning to take in a couple times a year, and look for coupons that offer a percentage discount if the total is over a certain amount, or a set price for ten items, thus lowering the average cost per item. If you wear a uniform or other work-related garment that must be dry-cleaned regularly, check around for special pricing. Many dry cleaners offer discounts for military personnel, law enforcement, or airline staff.

Ask the price when you drop off your items, and let the dry cleaner know about any coupons you possess or discounts you are requesting, to ensure they will be honored. I have friends who routinely drop off their dry-cleaning without asking what it will cost, and then just pay whatever bill is presented without question. I always ask for a quote up front, even though some dry cleaners don't like to give it. One place I went to charged extra for silk, extra for wool, extra for pleats, extra for each color in a garment. I never did find out what type of fabric would qualify for standard pricing; everything I ever brought them incurred a surcharge. It's best to know about those hidden costs before you agree to the cleaning, so you can negotiate or shop around.

Whether you're dealing with a dry cleaner, a cell phone company, a cable or internet provider, a grocer, an airline, an insurance company, you can save money by asking the right questions and insisting on an accounting of what you're paying for, preferably before you agree to buy. Take advantage of the fact that there is competition in most of those industries. Don't be afraid to take your business elsewhere if you're not treated fairly.

To learn more, read Live Well, Grow Wealth by Sharon Marchisello.

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Countdown to Financial Fitness: Trimming Necessary Expenses, Part I

Countdown to Financial Fitness: Trimming Necessary Expenses, Part I: In preparation for the release of the audiobook version of Live Well, Grow Wealth , I'll be sharing excerpts each week on this blog.   ...

Trimming Necessary Expenses, Part I

In preparation for the release of the audiobook version of Live Well, Grow Wealth, I'll be sharing excerpts each week on this blog. 

This excerpt is from Chapter One, Live Within Your Means. I suggest categorizing your expenses as absolutely necessary, necessary but reducible, discretionary but important, and totally unnecessary. This post discusses necessary expenses such as utilities and gasoline. 

At first glance, the category labeled necessary but reducible may contain expenses that are fixed; indeed, once you receive a utility bill, you usually cannot negotiate a reduction in the amount unless there's been an anomaly. But look for ways to reduce these bills in the future. Tiny changes in your energy consumption behavior can make a difference over time. Shrinking your carbon footprint and preserving the environment go hand in hand with saving money on utility bills and thus reducing your financial footprint as well. Take shorter showers, and if you belong to a gym, take some of your showers there.

Fix leaks promptly. Don't use the toilet as a trashcan. Don't leave the water running while you brush your teeth. Unplug or turn off appliances and lights not in use (including cords and chargers plugged into an outlet but not connected to a device). Install timers and thermostats. When the weather is mild, open a window instead of turning on the air conditioner. My husband and I halved our electric bills (compared with what they had been for the previous owner of our house) by adding screens and installing an attic fan, so we don't have to run the air conditioner in the shoulder seasons.

Don't leave windows and doors open when the furnace or air conditioner is running. As my father used to say, while I was letting the cat hover in the doorway deciding whether she wanted to stay in or go out, "Shut that door! We're not heating the whole neighborhood!"

When heating your house in winter, don't keep it so toasty you can wear shorts. Put on a sweater and some warm socks and turn that thermostat down. Every degree you can stand to push it down will shave dollars from your bill. Same thing goes for air conditioning in the summer. It's hot outside. Wear your summer clothes inside; why turn your house into a deep freeze? Not only will you save energy, but you'll stay healthier, as your body won't have to cope with extreme temperature changes.

In some areas, certain utilities have been deregulated—gas, telephone, cable, internet—and thus there are multiple providers competing for your business. Keep your eye on promotions offered by competitors, and ask your provider to match them. If you're not happy with your service or the response to your request for a lower rate, consider switching if the competition offers a better deal. But beware of limited-time promotions where the savings are short-lived; the new provider's regular rate may not be any better than what you currently pay, and the service could be inferior.

Gasoline may seem like an uncontrollable expense, especially if you have to commute a long distance to work. Prices shoot up and down at the whim of the oil companies. Pay attention to gas prices; while I don't recommend driving out of your way to fill up at a cheaper station, try to find the one with the best price along your usual route. Applications such as Gas Buddy can compare prices in an area and direct you to the best option. Can your car run as well on regular as on premium? Many cars do. If so, you’ll save ten or even twenty cents a gallon. Some stations offer discounts for paying with cash instead of credit; some locations, such as Kroger, offer discounts at the pump with affinity cards. If you belong to a warehouse club such as Costco or Sam's, that store may offer lower prices on gasoline, so plan to fill up when you do your shopping there.

Avoid unnecessary trips by combining errands. Some errands can be eliminated altogether with a phone call or an email. Carpool, bicycle, walk, or take public transportation when it makes sense. Does your employer allow telecommuting?

Drive conservatively: you consume more gas at excessive speeds. Charging up to a traffic light and then slamming on your brakes wastes fuel. Clean out your car; no use hauling around that bag of fertilizer for weeks after you bought it because you were too lazy to take it out of the trunk.

To learn more, read Live Well, Grow Wealth by Sharon Marchisello.

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Countdown to Financial Fitness: How to Reduce Discretionary Expenses

Countdown to Financial Fitness: How to Reduce Discretionary Expenses: In preparation for the release of the audiobook version of Live Well, Grow Wealth , I'll be sharing excerpts each week on this blog.   ...

How to Reduce Discretionary Expenses

In preparation for the release of the audiobook version of Live Well, Grow Wealth, I'll be sharing excerpts each week on this blog. 

This excerpt is from Chapter One, Live Within Your Means. I suggest categorizing your expenses as absolutely necessary, necessary but reducible, discretionary but important, and totally unnecessary. This post discusses discretionary expenses. 

Chapter Two will delve into deriving the most value from your money and deciding what discretionary expenditures bring you the most happiness. But if you're spending more than you earn, this category is a logical place to look for reduction. Do you subscribe to magazines or newspapers you never read? If so, cancel them. 

When you plan to leave town, do you fail to place a vacation stop on your deliveries and ask that your subscription be extended? Do you buy books or movies you could have checked out of the library? Do you watch all those premium cable channels you're paying for? 

Does your calling plan require you to pay extra for features you don't need or use? Contact your provider or check out a different one to see if there's a less expensive plan that suits your needs. Are you paying dues to a country club or gym you rarely visit? If so, be honest with yourself and drop out. 

When you travel, do you buy souvenirs that end up in the next garage sale? Do you exchange gifts with people just because it's expected? (And then later re-gift what you received, knowing your friends will do the same?) 

Are you paying for a storage facility to keep "stuff" you'll probably never use or might have even forgotten about? Why not de-clutter and have a garage sale, or make a donation to charity, saving yourself the monthly facility rental bill? 

Do you over-pack when you travel? Years of working for an airline and flying standby taught me to pack lightly, rarely taking more than will fit into a small roll-aboard suitcase. (And this includes packing for a cruise.) Pack light-weight, washable outfits that can be mixed and matched and worn with the same pair of shoes, and wear your bulkiest items on the plane. Not only will you save checked luggage fees and tips to porters and bellmen, but packing lightly will enable you to maneuver the public transportation system at your destination, instead of hopping into an expensive taxi. (And some taxi services even charge an additional fee for each bag.) 

Can you let more time lapse between haircuts, coloring, manicures, pedicures, massages, car washes, professional cleanings? Instead of taking the kids to a movie every weekend, can you rent a video and serve microwave popcorn once in a while? Do you have to go out for lunch every day, or can you brown bag it, at least sometimes? Can you make coffee at home instead of buying a latte at the drive-through? The point is to find areas you can cut without compromising the quality of your life to an unsustainable level.

To learn more, read Live Well, Grow Wealth by Sharon Marchisello.

Sign up for her newsletter at sharonmarchisello.com

 

Countdown to Financial Fitness: Totally Unnecessary Expenses

Countdown to Financial Fitness: Totally Unnecessary Expenses: In preparation for the release of the audiobook version of Live Well, Grow Wealth , I'll be sharing excerpts each week on this blog.   ...

Totally Unnecessary Expenses

In preparation for the release of the audiobook version of Live Well, Grow Wealth, I'll be sharing excerpts each week on this blog. 

Today's excerpt is from Chapter One, Live Within Your Means. I suggest categorizing your expenses as absolutely necessary, necessary but reducible, discretionary but important, and totally unnecessary. This post defines totally unnecessary expenses. 

To build your confidence and produce instant results, start with the low-hanging fruit. If you're paying late fees or excess interest because you didn't make a payment on time, you need a better system for managing your bills. Not only does it hurt your credit rating, making it more expensive or more difficult for you to borrow money in the future or even find employment, you're wasting money that could be better spent on something you need or enjoy.

Most creditors allow you to set up automatic payment arrangements, to deduct the balance you owe from a checking account or charge it to a credit card on the due date, so you'll never have to worry about late payments. If you do enroll in auto-pay, make sure you keep enough money in the specified account to cover these payments so you won't be assessed a returned check fee or other penalty—another unnecessary expense. Perhaps an email reminder from the creditor will work better for you. Or maybe you set up a special folder, kept in a prominent place, for organizing bills. Be familiar with the due dates, so if a bill gets lost or misplaced, or an email reminder is accidentally deleted or ignored, you can contact the company or go online and make your payment on time. If you're planning to be out of town when your statement is scheduled to arrive, contact the creditor, have someone handle the payment for you, or set up an online payment to occur just before the due date. Whatever your system, just make sure you use one that works, so your bills are always paid on time, your checking account is never overdrawn, and you never charge over your limit. If your outgo numbers are so skewed that you have to negotiate with your financial institution to balance your budget, then do it.

Traffic tickets, parking violations, library fines, etc., are all categorized as unnecessary expenses that add no value to your life. Not much you can do about them once incurred, but you can learn from your mistakes and try not to repeat them. If the traffic ticket is a first offense, investigate the possibility of attending traffic school or doing community service to have it removed from your driving record; otherwise, you'll keep paying for it through higher insurance rates.

My husband takes issue with my listing "library fines" as an unnecessary expense. If he's unable to renew a book he has not yet finished, he'll keep it a few extra days and pay the fine. He considers it renting a book he wants to read but doesn't want to buy. University students have been known to check out textbooks and keep them for an entire semester; the overdue fine is most likely much less than purchasing the book, even used.

A similar case could be made for incurring a parking ticket to keep from being late to an important job interview. It's your list; if you're honest with yourself, you'll be able to identify expenses that can be trimmed or avoided without compromising your values.

Some people put vices, such as smoking or gambling, in this "unnecessary expense" category. If you did that, maybe the habit doesn't give you enough pleasure to justify the cost. Think of the money you can save by giving it up, and work toward that goal. Motivate yourself by setting aside the money you would have spent (for example, for a pack of cigarettes or a lottery ticket) and watching it grow.

To learn more, read Live Well, Grow Wealth by Sharon Marchisello.

Sign up for her newsletter at sharonmarchisello.com

Countdown to Financial Fitness: Live Within Your Means

Countdown to Financial Fitness: Live Within Your Means: In preparation for the release of the audiobook version of Live Well, Grow Wealth , I'll be sharing excerpts each week on this blog.   ...

Live Within Your Means

In preparation for the release of the audiobook version of Live Well, Grow Wealth, I'll be sharing excerpts each week on this blog. 

This excerpt is from Chapter One, Live Within Your Means. First, you have to look at the big picture: 

There is no such thing as unlimited wealth. Even the developers in Dubai learned that lesson after the global financial meltdown of 2008. One catastrophic spill can wreak havoc with the fortunes of a titanic oil company. Famous real estate moguls have declared bankruptcy. 

No matter how much money you earn, if you spend more than you have, you will run out. The converse is also true: no matter how little you earn, if you spend less than that, your wealth will grow. It's simple arithmetic. 

Think of certain professional athletes who rose from poverty to snare multi-million-dollar contracts, yet found themselves penniless within a few years. Or lottery winners who quit their jobs and proceeded to fritter away their fortunes. Contrast the retired school teacher with a modest home who left millions to her favorite charity. The difference: the teacher lived within her means. 

Not having enough money to meet your needs and live the way you want is stressful. It can cause health problems. It can ruin a marriage. Some people are tempted to violate the law, or fall victim to get-rich-quick scams, trying to take a shortcut. 

Every time you turn around, someone has a hand out. The prices of basic necessities rise, but your income may not keep pace. Your possessions break or wear out, and must be repaired, replaced, or updated. The best-laid plans can be thwarted by an emergency expense no one could have foreseen, or a catastrophe that was not your fault. How can you possibly live within your means? 

The first step is to know exactly how much is coming in, and how much is going out. If you hire a financial planner or credit counselor, he or she may tell you to write down every penny you spend and receive for a specified period of time, and then make a budget: the dreaded "B" word. I must confess I never did this. 

The closest I came to budgeting was when my future husband and I purchased a house together. He had money for the down payment; I did not. I had a job, though, so I agreed to pay all our utility bills and buy the groceries after we moved in, in addition to my share of the house note. We kept a log of our household expenses and I'd deduct his half each month from what I owed on the down payment loan. 

We still handle our expenses this way. Periodically, we tally everything up and he transfers money into my account for the difference. Once we went to a financial planner and she asked me about our budget; I was able to produce one from this expense log, our bank statements, and our credit card bills. 

Whatever method you choose to document your big financial picture is fine; the goal is to understand what money is coming in, and what is going out. Writing down every expenditure and then creating a budget works for a lot of people. 

Once you've figured out how much is coming in and how much is going out, it's time to start analyzing. If more money is coming in than going out, you're in better shape than most. If you have more money going out than coming in, the faster you take steps to reverse the situation, the better off you'll be. The magic of compound interest and wealth-building principles are working against you. 

So how do you do that? 

Can you increase what is coming in? Ask for a raise or apply for that promotion. Take advantage of some overtime. Get a part-time job or start a business on the side. Send the kids out to solicit yard work from the neighbors. Re-structure investments or tap an asset. Organize a big garage sale or start selling your treasures on eBay. 

For most people, it's not easy to increase the "coming in" column, and some of those solutions might only be short term. For example, once you've sold all your valuable possessions, if you're still spending more than you make, then what? Therefore, it's more effective to concentrate on shrinking the "going out" column. 

First, classify your expenses as absolutely necessary, necessary but reducible, discretionary but important, and totally unnecessary. 

Absolutely necessary, non-negotiable expenses probably include your rent or mortgage payment, and other fixed costs like insurance premiums, union dues, tuition, and taxes. Necessary but reducible might include utility bills, gasoline, clothing, and groceries. Discretionary but important expenses are not necessary for survival but add value or pleasure to your life: travel, cultural activities, magazine subscriptions, entertainment, toys, pampering. Totally unnecessary expenses eat up your income and add no value to your life: late fees, fines, excess interest on credit card debt.

To learn more, read Live Well, Grow Wealth by Sharon Marchisello.

Sign up for her newsletter at sharonmarchisello.com

Countdown to Financial Fitness: Resolution: De-clutter

Countdown to Financial Fitness: Resolution: De-clutter: When I retired in 2008, I promised my husband I'd finally get around to cleaning out our "box room." This is a spare bedroom w...

Resolution: De-clutter

When I retired in 2008, I promised my husband I'd finally get around to cleaning out our "box room." This is a spare bedroom where we stashed excess stuff when we first moved to our house in 1994.

The room is filled with electronics now long outdated, including a turntable and vinyl records. Books languish in boxes because our house doesn't have adequate shelf space, and we've given up on finding a contractor to build some. A decade's worth of National Geographic magazines is stacked against a wall. Boxes of photos, still unlabeled, wait to be displayed in albums. Maps and tour brochures are scattered across the floor with no semblance of organization.

Paintings from my mother, grandmother, and an artist friend lean against each other, hidden from view, because my husband and I can't agree on which ones we should hang--and where. Many need new frames, which can get expensive.

It's now 2021, and I've made little progress on cleaning out the box room. If anything, it's gotten worse, as more unable-to-categorize items have been stockpiled there. This includes a growing TBR mountain of books I've bought from author friends or received free at conferences or from giveaways.

Years ago, I wrote a post on this blog about the high financial cost of clutter. People with too much stuff waste money on storage lockers and moving fees. Not knowing what you own or where to find it when you need it can cause you to make unnecessary purchases. And just looking at a sea of junk and wondering how to pare it down can increase stress, which is detrimental to your health.

I never abandoned the goal to de-clutter, but it seems like something else always took priority. Now I realize I've been going about it all wrong. Instead of trying to find time to tackle such a monumental task, I need to approach it in small bites. 

Ten minutes a day, do something to de-clutter. That's my New Year's resolution, and I've written it down to hold myself accountable. 

Taking small bites, making small, sustainable changes, is really the best way to achieve any larger goal, whether it's losing weight, writing a novel, getting in shape, or saving for retirement. 

What goals have you set for the New Year, and how do you plan to achieve them? I'd love to hear your comments.

Sharon Marchisello is the author of Live Well, Grow Wealth.

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