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

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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.

49 Money Tips from Free Money Wisdom

Over at Free Wisdom, Jon the Saver reached out to some finance blogs to get their best advice on their #1 finance tip. Check out what they had to offer...

Sustainable PF- “Pay yourself first.  By saving 10% in an automated matter you can save for your retirement more easily.”

Money is the Root- ”Spend less than you earn, and you will never be broke!”

My Personal Finance Journey- “My top financial tip would be for college students to open up a Roth IRA and fund it if they have a job in college or during the summer between classes so that they can take advantage of compound interest to save for retirement.”

College Investor- ”Start investing your income from your first job to get ahead.  The power of compounding is amazing!”

Prairie EcoThrifter- “My best tip would be to make your own cleaning and personal care products. You can save a bundle and they are much healthier for you and your family.”

Net Worth Protect- “When developing a savings plan keep it simple.  As soon as you receive your paycheck allocate a percentage towards savings and immediately move the funds out of your spending account.  Out of sight, out of mind”

Funancials- ”Your child can easily get a loan for school, but you cannot get a loan for retirement. I think too many parents have the dream of paying for their child’s education (which is great) but they reduce their retirement savings to make it happen. Big no no.”

One Cent at a Time- “Do not prepare your buying list after clipping coupons rather, get your shopping list and find coupons for each of them.”

20′s Finances-  ”Start saving for your future today! Planning for retirement even in your 20′s can earn you lots of money in the long run and make life much easier.”

DollarVersity- “Failing to plan is planning to fail—you need a roadmap to achieving goals.  Paying off debt, building wealth, or running a successful business may be the goals, but you need to plan your course to reach those destinations.”

Free From Broke- “Don’t spend more money than you have.”

KrantCents- “Savings is the key to success.  I learned how to save early and it, more than anything, helped me achieve success.”

The Jenny Pincher- “Spend Less Than You Earn! It’s so simple yet so effective if we can get ourselves in that mindset!”

The Family CEO- “Be very intentional with your spending. Cut back on or eliminate the things that don’t bring you much value, so you can have in your life the things and experiences that do.”

101 Centavos- “Early is for go, late is for show.  If you want to be successful, get up early.  Getting to work while everyone else is either still asleep or just now brushing their teeth will give you a leg up on the competition.  Staying late is fine if you want to impress the boss, but your productivity decreases along with your energy levels.”

Millionaire Nurse Blog- “To prevent lifestyle creep, any raises, bonus money, and  gifts can be put into your emergency fund, or added to your retirement savings.  You will hit your savings goal faster and not increase your lifestyle costs, a twofer!”

Your Finances Simplified- “Limit your rent/mortgage payment to no more than 25% of your net income.  The reason why you want to do this is so that you are flexible when life happens or you have the opportunity to invest more money and generate wealth.  This tip alone has given me the income to invest in multiple income producing business that will have me retiring by 40 or sooner.”

The Frugal Toad- “Diversify among asset classes, re-balance quarterly, employ dollar cost averaging, and keep your hands off!”

20 and Engaged- “Don’t keep up with the Joneses. Live your own live beneath your means and you’ll prosper financially.”

Money Beagle- “When setting large goals, make sure to set smaller goals along the way.  Reaching the smaller goals (and giving yourself a small reward) will help you stay on track and minimize the chance of losing momentum and focus on the way toward your larger goals.”

Money QandA- “We spend our entire lives buying things and collecting things. Instead spend your money doing things, gaining experiences, and checking things off your bucket list. Not only is that the way to financial success, it will make your life more rewarding as well.”

Retire by 40- “My top tip is to start saving and investing as early as possible. If you start saving and investing as soon as you start making money, then you will have a lot of time to take advantage of compound interest. It will also give you more time to learn about investing and a lot of time to correct the many inevitable investing mistakes. ”

Wisebread- “Many rewards credit cards pay you a sign-up bonus only after you reach a minimum spending threshold. The best way to reach this minimum is to purchase gift cards for merchants you visit often, or even cash cards from Visa or American Express. Simply make the purchase before the deadline, and use the gift cards later. You can also buy gift cards at grocery stores in order to maximize bonus spending categories. For example, the American Express Blue Cash Preferred card gives customers 6% cash back from supermarkets.”

Free Money Finance- “Spend less than you earn.”

Money Crashers- “It’s really important to focus on cutting expenses and implementing strict budgets to allow us to live our lives to the fullest while still saving for the future. But, beyond that, one of the most overlooked strategies is creating incremental income. For example, do you have a passion or expertise you could leverage into a business? Then consider some of the many side business ideas as an avenue for you to create some valuable passive income. And if you’re lucky, this could potentially turn into a full-time job that you’re truly passionate about each and every day!”

Afford Anything- “Spend lavishly on things you love and cut ruthlessly on things you don’t care about. Money is just a stand-in for your priorities.”

Financial Highway- “Start Investing EARLY! Even at $50/month you can benefit from the power of compounding, it is better to save $50 today then $100 a year from now. ”

Christian Dollar- “Spend less than you make, make more through hard work and patience, and give more than you want to. It’s really that simple.”

Financial Samurai- “To listen to people who are wealthier and older than you.”

GenXFinance- “Don’t sweat the small stuff. So you’ve cut out the daily Starbucks, dropped cable, and clip coupons to save a couple hundred bucks a month. Who cares. You will never become wealthy by worrying about how to save the next five bucks. It is a losing game because there is only so much that can be cut, and beyond the basics you end up sacrificing your quality of life for the sake of saving what amounts to essentially nothing. Instead of spending time dreaming up ways to cut things out of your life to save ten dollars, think about how to make an extra ten dollars. Or a hundred dollars. Or a thousand dollars. Unlike the limited upside by cutting expenses, the upside of potential income is limitless. Yes, you still want to be conscious of how you spend your money, but focusing your energy on earning more has the potential to make a much greater impact on your life.”

Bucksome Boomer- “Choose your life partner well.  Divorce sets you back decades in your net worth and financial health.”

Life and my Finances- “The best tip I could ever give anyone is “put on your blinders”. Your happiness in life does not depend on how shiny your car is or how many square feet you have in your house. Be thankful for what you have and ignore the Joneses.”

Financial Success Young Adults- “Stay on top of the markets! The Wall Street Journal and CNBC are great ways to keep up with the flow of information. The economy does impact your personal finances and keeping up with help you become familiar with the language of finance and help you better manage your money. ”

Narrow Bridge Finance- “My best money tip is to know when to buy and sell stocks. Technical and fundamental analysis sound complex, but once you know the difference you will know how to buy a stock for long run value over the trends of the moment.”

Debt Eye- ”Check your bank statements every month, and make sure there are no reoccuring charges that you’re not familiar with.  These can include: identity protection, credit monitoring, and or services you hardly use.”

Ultimate Smart Money- ”Think wisely before you act.  Make your purchasing decisions based on your need instead of what you want. Don’t allow your emotion to control your decision.”

Frugal Confessions- “Create an End-of-Year Windfall for Yourself: If you max out your Roth IRA every year ($5,000) by spreading out the payments, it would be around $416 per month. Instead, pay $500 per month for ten months and create a small windfall of cash for one of the most expensive times of the year: an extra $500 cash flow for November and for December. Remember to turn the automatic withdrawals back on after the holidays.”

Fat Guy Skinny Wallet- ”Whenever we are tempted to splurge on an item, or in some other way, spend money on an item for which we haven’t budgeted, we pay that money against our debt instead. For instance, if I get tempted to order a pizza and some wings on the way home from work, what helps me refrain from wasting my money is the thought of using that money to pay off debt instead. So we will not make the purchase and instead we will sign onto our bank’s website and make a payment against our credit card in the amount of the splurge ($20 for pizza in this case). This helps us to fight the urge to spend money frivolously, and it helps us to pay down our debt faster!”

Soldier of Finance- “Find a battle buddy that shares your financial goals to keep yourself accountable (like a workout partner) and help each other succeed.”

Good Financial Cents- “Incorporate the multiple bucket approach when saving for your retirement.  Do this by incorporating Roth IRA’s, Traditional IRA’s, 401k’s, and regular investment accounts to give you plenty of options for your retirement income needs.”

Budgeting in the Fun Stuff- “Keep track of your spending.  If you don’t know where your money is going, you can’t manage it for your present or future.”

Maximizing Money- ”Always make your money work hard for you, but remember to work even harder for your money.”

Roshan Watson- “The Real Golden Rule: He Who Has the Gold Makes the Rules”

ChristianPF- ”For me I think being content with all that we have is one of the smartest things we can do financially. We all know living below our means is a key to financial success, but for many being content with what we have is the first step to living below our means.”

Digerati Life- “My #1 personal finance tip is to prioritize where your money should go.  Many people don’t use a budget or think about where their money is being spent.  But if you take the time to sit down and do some planning (even just a little), by focusing on your financial priorities and on how you intend to parcel out your money (a limited resource), you may be surprised by what you find.  For example, if you’ve got debt, you may decide to prioritize this over saving for a much longer term goal, like a house purchase.  Either way, the exercise of thinking about your income and outgo can be a good first step in making sure your finances are in order.”

DQYDJ- ”Sweat the big stuff.  Automate your retirement contributions and savings and eventually you’ll thank me.”

Thirty Six Months- “My biggest financial tip to budget for everything and don’t buy on impulse. That’s how you get in trouble.”

Frugal Wiz- Financial Tip: “Establish an emergency savings account first before paying off your debt.”

All of these tip may not be right for you, but most will be. Choose wisely!

Persona Finance 4 The People is here to help!

Simplify Your Finances

People seem to think that being financially responsible and organized is something that is hard to do, well it isn't!

Here are some tips to help you simplify YOUR finances:

1. Make Electronic Payments
Setting up electronic payments means that people don’t have to do anything. Their payments will be taken from their bank accounts when they are due and they can never be late. This frees up the time they would have had to take writing checks and mailing these bills every month; it also saves money on stamps.

2. Take Advantage of Electronic Statements
Receiving statements in the mail means that people have to keep track of a lot of paperwork. A better plan would be to have electronic statements. The company would be happier with this arrangement because they save on administrative costs, and the customer can keep everything in a convenient place online.

3. Use Online Bill Pay
Online bill pay with the bank makes it possible to pay the bills online. This makes managing finances simple like in the previous example.

4. The Old Tried and True Spending Budget
Creating a budget helps people tremendously who don’t know where their money is going every month. A budget is a plan, and people who make a list of all the necessary bills they have to pay know they will be able to pay those bills when they give them the highest priority.

5. Reduce the Amount of Money Spent Each Month
When creating a budget, people might notice that they have too many different types of bills to pay each month. This can mean that they will have an unmanageable number of spending categories in their monthly budget. If the budget is too complicated, it’s not going to benefit people who want to make their finances simpler. They need to keep all of their spending categories to a minimum in order to make the budget strategy work.

6. Consolidate Accounts
A big help is to consolidate accounts which will keep them all in one place. For example, some people have more than one savings account. If all of these savings accounts are under one bank then these accountholders can log into that one bank and see all of their accounts in one place making managing money much easier.

7. Set Up a Level Pay System for Utilities
When people set up level pay for their utilities, they know that they will be billed around the same amount of money each month. Utilities can be unpredictable and in some months, people can use more than of one type of utility than another.

8. Give Things Away
By giving things away, the house is much less cluttered and there are fewer things to manage.

9. Purchase a House that Fits the Family’s Needs
When purchasing a new home, be sure that the house is exactly what will be needed and nothing more or less. This will ensure that the mortgage payments will be easily manageable and that the maintenance on the house isn’t overwhelming.

10. Make a List of Things to Accomplish
Making a change from a disorganized state to a more organized one can take a little time. Before getting started on this project, people can make a list of their most important goals down to the least and finish each goal before moving on to the next. Setting a time when they would like to have the goal accomplished will ensure that the item gets done and can be crossed off of the list.



...And there you have it!