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!
There are certain circumstances that buying new works out. Like when i purchased my 2008 dodge ram. The factory had an 11,000 dollar incentive to purchase the vehicle. However this is a rare case. Do not purchase all the extra crap for your car. Permaplate worthless. extended warranties are a yes or no proposition. Can you work on your car? whats its track record? is it the 5th generation of the car? how long does it extend? do you get a portion back if its totaled/sold? and finally the cost. spending 4,000 for a 2 year extension. That would mean in 2 years the engine trans or electrical would have to be damaged. 2000, for 5 additional years or 100,000 miles. Well how many miles do you drive. 30000 a year. then your only getting 3 years benefit. Does it have a deductible? Does it provide a rental car. As it stands my truck 4.5 years later is worth 3000 less then what i purchased it for. Had i spent the additional 11000 it would be 14000. ouch thats 3000 a year in depreciation. My wifes car we purchased 1 year used. It had 20,000 miles on it had the standard 3 yr 36000 miles. she drives 8000 miles a year. so we were ok there. We decided to purchase the extended warranty. it was 2000 dollars and extended the warranty an additional 5 years but only to a total of 100,000 miles. well that gave us 7 years to do 80000 miles. we would be under that. So thats a 400 dollar investment each year with a 50 dollar deductible per incident of repair. also we could get back any funds we didnt use do to vehicle total/sell. as it was at 3 years 2 months a motor for switching vents for the air conditioner went out. So we spent the 50 dollars. and took it in. I work on vehicles and looked at the prospect of accomplishing the repair myself. The motor itself was $160 retail (prolly $50 cost). i then saw that to get to this motor you basically had to take half the dash board apart and have an arm that can bend three ways that are really long and are small like a girls. i estimated the time for the repair for me at 8 hours. for them prolly 2 or 3 because i found out this is a common problem OY. and since that 8 hours is going to happen on a weekend. It means i pay myself double my rate of pay. Needless to say it paid a significant chunk of the extended warranty. Part of it i agree was our own insecurity. we thought used car someone else abused and we get the problems. Since we have bought new and somewhat new i realize i will be driving my truck for another 10 to 15 years as i only have 40,000 miles on a 4.5 year old truck. so i will be driving my truck from 24 - 39. hmmm midlife crisis vehicle next. I think not.
ReplyDeleteclothing. I am an accountant. I don't need to impress anyone they need to impress me for me to spend money with them. I have one set of shoes, basic Hanes cotton socks( i couldn't wear dress socks because my calfs are to big and they end up cutting off circulation to my feet. one belt. and about 10 shirts. welcome to boring ville. people see me in the same thing weekly. oh well. i own 1 suit. ive had it my entire professional career. i own one tie. black. by the way why is the picture of all womens clothes and your a dude?
ReplyDeleteRestaurants. If im taking someone out that isnt family or friends its on the company dime or they are paying their half. I never go out to eat by myself unless my food spoiled or i had one of those mornings.
ReplyDeletetricks
Make your own laundry detergent. laundry detergent is water with a dab of soap. look up a recipe.
Do your own maintenance. there isnt a person in this world who cant change their own oil. it takes no longer then going to a shop. you save fuel, you make sure the job is done right. It costs some decent money if they strip your oil plug nut. including oil leakage, loss of car use until you can get it fixed. new oil pan. new tap and plug if your lucky and unlucky an brand new engine because they double filled your oil or they forgot to put oil or the leak makes it so 5 days later your oil light comes on and ur engine seizes.
wax your car then when you wash it DONT USE SOAP. wax stops dirt clinging to the vehicle. soap strips the wax. vicious cycle if you wax then use soap.
mow your own lawn. i bought on craiglist a 25 dollar electric lawn mower 4 years ago. still works. edger 30 dollars. 55 dollars 15 minutes a week and i save close to 1000 a year.
home maintenance. oooooo scary. not. do you have someone in your family that is good with construction? call them/ google. ask for the basic steps. I bet if you offered them a beer/dinner they would even show up and show you how(and bring the tools). much cheaper then hiring out and you learn something.
Clutter. played that piano in the last 5 years. no bye bye. gone snowboarding in 3 seasons. bye bye. lighten your clutter and youll lighten your life. otherwise you just get bitter at that stupid piano you were supposed to learn how to play and you spent how much ahhhhhhhhhhhh. when its gone you go. hmm im never going to play the piano okay. instead i am an awesome cook.
Dryer lint. all these fancy dryers now have this fancy thing where they shut off when they get to hot. how do they get to hot they are plugged with lint. why are they plugged with lint because they design them to plug. read the manual it says clean lint out every 2 years(not talking the trap) my sister hired someone after hers stopped working. bye bye 180 dollars. i have a similar dryer. it did the same thing. i was like crap i dont want to spend 180 dollars. so google to the rescue. 20 minutes later and a phillips head screw driver bam running dryer clothes got finished and now its on my maintenance schedule. (note my dryer is about 1 foot off the ground you might have to do more work to get it to tilt. luckily driers are the light one of the pair.
buy a carpet cleaner. use only vinegar and water (google this) the professionals cost 150-200 dollars ding up your furniture and then put soap on the carpet. they dont get all the soap out. what clings to sticky dried on soap. DIRT. since repeat. buy a carpet cleaner and after you vaccuum sometimes hit a room. hit major walkways more. spend 30 minutes save some money.
Air conditioning heating. dont use that bonus room close the vent. dont worry the system will push the air out harder out of another vent. spare bedroom close it. bathrooms close it. LOOK FOR AIR LEAKS. take a windy day walk around. do you hear whistling? airs coming through which means it escapes to.
Screens security screens are your friend. its june. its 90 degrees outside during the day. its 82 degrees in your house. you kick on the air through the heat of the day to survive. its 5 now and its 80 degrees outside. shut off the air open up. multiple windows on opposite sides of the house allow for a draft.
something more fun but kind of weird. in the middle of the summer drop a small pool in your living room fill it up with water. flip on the tv and relax in your cool pool inside.(you can be naked then)
if you have a desk top set it to sleep when your done using it.
cable bill forget it i got an antenna. other then that i watch shows online.
thats it for now ill come back if i have more tips.
I echo the laundry detergent tip. Here are some others...
ReplyDeleteBuy whole chickens and skip boneless/skinless. Save the carcass and make your own stock in the crockpot. Consider cloth diapers for little ones. I bought a huge stash of factory seconds prefold diapers for $130. I am crocheting my own wool covers - cost $30-$50 premade. I can crochet them for about $5 in the cost of yarn. We will spend under $200 to diaper our little one. Buy things on Craigslist! We have picked up an entertainment center, computer desk, lawn mower, and most recently, an Ergo baby carrier (paid $65, in perfect shape, and would have cost $140 brand new). Call some tree trimmers in your area and see if they will dump mulch for you. It's FREE, keeps down dust and weeds, enriches your soil, and is beautiful. Hide the paper towels and use cloth napkins, sponges, and dish towels instead. Reserve paper towels for the truly gnarl stuff like dog puke and dead bugs.
Buy food in bulk. Stock up when things go on sale. Not only does this save money and hedge against inflation but it also helps build an emergency food stash which is useful when you just can't get to the store, are in a short term job loss situation, or there's a major disaster that interrupts the food supply. Filter your own water and bring your own reusable water bottles full of home-filtered water with you! Make your own deodorant. It works amazingly well (it keeps the hubby smelling fresh; 'nuff said), it's way healthier, and it's CHEAP. Buy a bottle of Dr. Bronner's soap. Use it on the whole family and ditch the expensive body washes. Save your foaming soap hand pumps and refill with a little Bronner's and water the rest of the way. Invest in a good pair of clippers and cut your own hair at home. Reuses grocery bags as trash bags (in 5 years, I've only ever bought one box of trash bags). Reuse ziplock bags. Depending on what was in them, you may not need to even wash them (for example, we put frozen veggies in a ziplock in the original bag and just reuse the ziplocks over and over). For things like fruit or bread, they can be turned inside out, washed, air dried, and used again. Buy cheese by the pound. Shred a whole bunch at once and freeze. Pull a bag out of the freezer when you need shredded cheese and skip the cakey preshredded stuff. Negotiate deals at the farmer's market. Last week, I got 6 canteloupes for $12. They were asking $3 each but gave me a deal since I bought so many (pregnancy cravings...what can I say?). I buy a flat of strawberries every month or so for $18. It would cost almost double if I bought the same quantity in 3 packs. We eat what we can and freeze the rest for smoothies.
ReplyDeleteOn clothes - I have been tremendously blessed to borrow an entire maternity wardrobe thanks to my sister, sister-in-law, and other friends who've made contributions to their stashes. I have bought a pair of work pants and capris and that's it. Everything else is borrowed and will be lent back when the next person in the family needs them. We have been graciously offered enough baby clothes to clothe our little one for the first year and perhaps beyond. I am not even budgeting for baby clothes since I expect we'll have plenty. YARD SALES!!!!!! I have gotten a Pyrex casserole dish for a buck, an ice cream maker for $5, a toaster oven for $3, one cast iron skillet for FREE and two others for $3 each I think, a nice metal cart for the farmer's market for $3, and so on. WAY more fun than the mall!
ReplyDeleteDitch the toxic household cleaners and replace them ALL with baking soda, borax, and vinegar. Your house will truly be clean, it's cheaper, healthier, and no worries about little ones getting poisoned! Consider downgrading to a phone sans a data plan and use an iPod touch with wifi for apps instead. The best things in life are free (or darn near close). A national park pass is $100 a year and every bit as fun (or dare I say MORE fun) as going to Disneyland. Take the kids to the park instead of Chuck E Cheese. Watch a movie at home with homemade popcorn and skip the movies. Go camping and skip the hotel. But the dog a Kong toy - impossible to destroy. Never trust a puppy alone with a fluffy bed. We saved hundreds of dollars on dog beds once we figured this out. The dog can be bathed in Dr. Bronner's too! Baking soda and vinegar work in place of shampoo and conditioner (for humans...dogs too but Bronner's gets them cleaner). Do you own a pair of Rainbow sandals? Not cheap but they last forever. Mine are going on 5 years and Steven has had his since before I met him over 6 years ago.
ReplyDelete