We began our series with Part 1: Providing the Image Without Investing the Money, followed it up with Part 2: Providing the Image Without Investing the Money - The 'Free' Tools, and now this is Part 3, where we take a serious look at the ways to make that impression required by your status without going broke.
There is no better better investment when you need consistent, reliable transportation to and from work than a good car.
There is no worse investment when you need consistent, reliable transportation to and from work than a new car.
What? That's right, for so many reasons, a new car is the worst thing you can do to sabotage your prospects of future financial wealth. The keyword here is "new". A new car, on average, loses 20% of its value when you drive it off the lot. It then continues to depreciate. The worst part? You probably went into debt to buy it, which means that you have an asset that cannot pay for itself if you encounter an emergency situation.
Some basic logic on car purchases: If Loan Amount > Car Value, then Loan - Car Value = Wasted Money.
Beyond saying that you should always buy used, I'll go on to say that I think taking a loan in the first place is a mistake. A loan traps you, especially when the asset it paid for is worth less than the loan balance.
I recently discovered Dave Ramsey and have been reading his book The Total Money Makeover. Wow, he has some great insights into human psychology and our relationship with debt. He believes in living debt free, because our income is our greatest asset when it come to generating wealth.
Dave Ramsey's view on car purchases is one of his most radical departures from traditional American thinking. He recommends that you never go into debt to buy a car again. He identifies the car payment as one of the biggest drains on a family's ability to save and generate wealth.
What should you do then? Save your money and buy it cash, sell the car that's attached to a payment (if you can pay off the loan amount), or pay off your current car loan. If you saved, you can usually buy something that works for about $2,000, continue to save, then sell it and buy another car down the line that better fits your desired lifestyle.
That's a big deal, especially when you have to present an image. I recognize that this image is often required of you, but I recently also made a discovery: if you keep your older car clean, keep it maintained, and are creative with vehicle choice, you might not have to upgrade to something beyond your means. FYI, you should never upgrade to something beyond your means anyway.
Never spend your money before you have it. -Thomas Jefferson
I drove a nice car into work every day until we had our daughter. When that happened, my wife and I swapped cars and I'm now driving a 2004 Toyota Corolla. It's not a bad looking car, but it does sport a few dents and scratches. Luckily, if I'm visiting a client, I can expense a rental for a day. Even if you can't expense it, however, the cost of a rental once in a while is considerably less expensive than buying a new car.
Clothing is a pretty flexible area to gain massive savings. If you're up for putting in the work, you can score pretty big.
The clearance rack typically has clothing that might be flawed, or simply isn't in season anymore. Buying a jacket at the start of summer is a good investment when it's marked down 50% or more. Look for outlets, look for sales, and avoid impulse buying. Check out this article for more insights: How to Be Stylish Without Spending a Lot of Money.
Taking time to buy is critical and only buying what you need is even more important. I use my smart phone to scan a bar code and do comparison shopping at the store. I feel a little uncomfortable doing it because I'm afraid of being discovered shopping at another store...while in a store. However, it makes you into an informed buyer, on the spot. You could be saving or getting a deal, but you can't possibly know the going rate on everything, so if you have the tool, use it.
Money in the bank is like toothpaste in the tube. Easy to take out, hard to put back. -Earl Wilson
I used to go out to lunch just about everyday. I know, it's insane, but I did. I didn't have to do this, and I found that most times when I thought I had to, I actually didn't. I used to believe that relationships were fostered over lunch and that frequency of lunches helped that. It's not true. I've set boundaries and that's uncomfortable at first, but once people see what you're doing, they might just jump onto the band wagon with you and realize their own savings. My friend Sam has applauded my efforts and now spends lunch with me in the break room discussing money management techniques. It's a lot of fun and we feel good for saving our money together. That's friendship!
I don't recommend outlawing all eating out. There are times when it's nice to have the freedom to forfeit dinner when you're too exhausted to deal with it. Pay for service and enjoy it.
For those times when you have to go out, look for the deals on the menu, or look for restaurants with a more authentic feel (if you think the person you're with will enjoy that), because the smaller, hole-in-the-wall restaurants typically serve less expensive food and it often has a very good taste. Don't pay for the prime location and decor of the more expensive restaurants.
I pity the fool! -Mr. T =)
With everything, to achieve a lower cost of living, you have to apply yourself to being diligent and sometimes creative. There is usually always a way to save more money than you'd otherwise spend. It just takes some personal discipline and training to get yourself into new, money-saving habits. That's the point.
Do you have a trick for saving money that you'd like to share? Let me know in the comments!
