Reader Stories: How to pay off debt and save money! Part 2

This post is from the series called "Reader Stories" about tips, success, and lessons learned by our readers. Be kind and enjoy!

Today's Reader Story comes from a mother of two with an eye for discounts. She has found ways to save money on many items and services we all use every day. Many tips are so simple, they are profound.

Understanding the difference between need and want is critical in being successful once you embark on a financial plan or goal

.

If you absolutely need something try looking for it on Ebay or Craigslist prior to purchasing in a store.  One example is a cell phone charger.  I could have purchased one at the sprint store for 29.99 and decided to check on Ebay where I got not one but three chargers for a total price of $5.64.  I wanted a bobby pillow before having my second child to make breastfeeding easier and because this was a want not a need I decided to look for it used on craigslist versus buying at Baby R Us for $39.99 and ended up getting a used one for $5. 

According to Pet Education, the cost of owning a dog over its lifespan is anywhere from $5k-$14k depending on how thrift you are.  If you are thinking about purchasing an animal, I would advise against it if you are trying to pay off debts or save money because caring for animals is costly and a want not a need.

Clothes shopping?  I only shop at goodwill or salvation army for clothes.  Salvation army has 50% off most of their clothing and shoes every Wednesday which makes their prices much lower than goodwill prices.  I wear dresses often because the price is $4.99 at goodwill for a dress where an outfit would end up costing more than that.

Buy generic when better and take a calculator with you to the store.  If you are trying to determine which diapers or cereal box is the better deal.  Take the price of the item and divide by how many items you receive or ounces you get, then do the same for the other item so you know exactly how much you are paying.

$15.99 for 103 diapers (15.99 divided by 103 = 15.52 cents per diaper) 

$5.00 for 33 diapers ($5.00 divided by 33 = $15.15 cents per diapers)

In this example, it is a better deal to get the 33 pack diapers because per diaper it is cheaper.  I buy dental floss, mouth wash, aluminum foil at the dollar store and buy anything generic you can.  Walmart has equate Valvoline for $1.00 where the Valvoline (name brand alternative in same size bottle is $2.79).

I now only buy soda pop if I can get it for 25 cents a can or less and anything more than that, I am simply not interested.  This means I can have enjoy 6 cans over 6 days for the same amount of money I would have spent on one 20 ounce bottle at the work vending machine.  However, tap water is much cheaper than soda pop so would be the best option.

The average household in the United States has over 8k in credit card debt.  An $8,000 debt at a rate of 18% interest will take more than 25 years to repay and cost more than $24,000.  Do you know your interest rates?  If you don’t call your credit card companies and find out.  Some credit cards can charge interest as high as 30% or as low as 13%.  You want to pay off the 30% credit card first versus the 13% card.  However, work to never spend more money than you make.

How could a credit card pay you to use it? That sounds too good to be true.  The reason credit card companies want you to use them is because they get a cut every time you purchase something.  Credit cards charge the merchant for accepting the credit card 2-4% of the purchase price

Look for programs to help you save for your future goals.  For example, citizens bank has a savings program for purchasing a home where you save $100 a month for three years and they give you $1,000 in free money towards the down ayment on a home.  They also have a college savings program where you save 25 a month, each month, and are rewarded $1,000 in free money once your child reaches 18 years old.  Go here for more information:  http://www.citizensbank.com/savings-and-cds/college-saver.aspx

Buying a home, use an easy rule of thumb to ensure you are living within your means.  Never purchase a home greater than 2.5 times your yearly income.  Doing so could put you in dire financial strain in the future.

Aim to never buy a house unless you have 20% of the purchase price to put down on the home.  Why?  If you do not have 20% down when you purchase the home the bank considers you a risky person to lend to and buys “private mortgage insurance on you (AKA PMI).”  You will be paying an extra monthly charge with your mortgage of $37.50 a month or $450 a year.

Stay tuned for part 3 and don't forget to comment and discuss!

Want to share your success and tips? 

Email personalfinance4thepeople@gmail.com to find out how.

Reader Stories: How to pay off debt and save money! Part 1

This post is the first in a series called "Reader Stories" about tips, success, and lessons learned by our readers. Be kind and enjoy!

Today's Reader Story comes from a mother of two with an eye for discounts. She has found ways to save money on many items and services we all use every day. Many tips are so simple, they are profound.  

I bought a house for $56k and a car for $16k just five years ago and have paid them both off with an income of $45k a year.  I was also able to afford $6-8k a year in daycare expenses.  How did I do it?  Hopefully these tips will help.

     

The two biggest ways to manage or save money is through budgeting and auto-deductions.

1.)  Budgeting- Review all credit card statements and ATM withdrawals to find out exactly how much money they are spending in different areas.  From there, you can prioritize what's most important to you and where you are willing to cut back on spending to free up money to put toward their financial goals.  Typically, people are spending a lot more money than they realize on food, entertainment, miscellaneous expenses throughout the day, and clothing.  It's also a great idea to have people carry around a check register or regular pen and paper to immediately write down every expense they incur for one whole month.  It's amazing how fast expenses add up!

2.)  Auto-Deductions- Just like people have 401(k) contributions set up to pull money out of the paycheck before you see it.  People automatically adjust their lifestyle to spend whatever is left in their account so you most likely will not even miss it.

3.)  If you shop on the internet, don’t check out without googling a coupon code.  I have saved over $100 and received free shipping by simply finding these coupon codes online.  I recently made a purchase at K-Mart online free ship to store.  The local store already had the items I wanted and I used a coupon code to obtain 20% off my order and when I went to pick them up I didn’t have to wait in a large line or go look for my items.  They had my items ready to go and I already paid.  This saves time and money. 

4.)  Look at all your bills?  I have saved $5 a month for a year just by calling my cable provider and asking if there were any promotions or discounts available or anyway to reduce my bill.  I already had the smallest package they offer but they still were able to give me $5 off a month for a year because of my persistence.

5.)  Don’t go to the cell phone store, call them instead.  I went to a sprint store and they told me there was no such thing as a 500 minute plan.  They told me this, I propose, because they do not make any sales bonuses off selling contracts like this.  I called sprint customer service and obtained a 500 minute plan with free sprint to sprint (all I need) for $35 a month on a basic phone.  Not having a fancy phone is an easy way to save money.

Stay tuned for part 2 and don't forget to comment and discuss!

Want to share your success and tips? 

Email personalfinance4thepeople@gmail.com to find out how.