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5 Steps to Save
- Image by BitHead via Flickr
“Saving is too hard.”
“I don’t know where to start.”
“How much should I save?”
“Who the heck are you to tell me what to do with my money?”
“Shut up, Jason.”
These are the things I hear when I start talking about getting a good strategy in place to save some money. Financial matters are intimidating to a lot of people. They’d rather not think about their money any more than they absolutely need to, if that much. Here, I’m breaking it down to some simple steps to make saving easy.
1. Get motivated. Why do you want to save some money? Are you trying to make a secure future, or do you just want to buy a new toy? These are the kind of questions you have to ask yourself. Nobody else can tell you why you want to make changes to your lifestyle, and nobody else’s reasons matter in the least. Saving money is something you have to do for you.
2. Figure out how much you can save. Generally, you’re going to need a budget so you can figure out what you can afford to save, but not always. If you are making ends meet, then you get a raise, you can obviously afford to bank the difference. If you do that, you’ll never even notice the missing money. If you try to save so much your mortgage goes unpaid, you’re plan is doomed to failure.
3. Open an account at a new bank. The biggest problem I used to have when I was trying to save was that it was too easy to get the money. Every time I checked the balance of my checking account, I saw the balance in the savings account. Worse, it took seconds to transfer that money from my savings account to my attached checking account. Every time I wanted to see if I could afford whatever toy I was looking at, I’d see money that wasn’t earmarked for anything in particular. Naturally, that money got spent more often that it was ignored and allowed to grow. Now, I can completely forget about the money.
4. Automate. I’ve automated everything I can. All of my bills are paid automatically, except for one company that insists on quarterly paper invoices. I’ve got $665(neighbor of the beast!) automatically transferred to my INGDirect account, to get divided between my various savings goals, including a fund for my semi-annual property tax payments and a fund to pay for the braces we haven’t actually had to buy yet, but will in a couple of years. The money disappears into a bank I don’t use for my day-to-day expenses and grows completely out of sight. Every once in a while, I look at the account and get surprised by how much has accumulated.
5. Get rich. Once you’ve got the other four steps in place, all you’ve got to do is let it work. Over time, you will build wealth in a way that may surprise you. Your goal at this point is to do nothing new. Every once in a while, you can pull out some money and tuck it into an investment account to get some real growth going for you.
“Thank you.”
“You’re the best.”
“What would I do without you?”
“How can I show you my appreciation? <wink><wink>”
“What the heck are you doing with my wife?”
These are the things I always hope to hear after sharing my strategies to save money.
Saturday Roundup – No More Car
- Image via Wikipedia
…err, no more car loan. I paid off my car this week, a year early! Now I’m down to 2 debts: a credit card with an embarrassingly high balance and my mortgage. We’re rocking the debt snowball!
Free Money Tip
INGDirect is having a sweet promotion. Open a checking account, use it three times in 45 days, and get $50 free. Free money is the best kind. I love my ING account and keep all of my savings there. If you don’t have an account there, yet, now is a great time to open one.
30 Day Project Update
This month, I am trying to establish the Slow Carb Diet as a habit. At the end of the month, I’ll see what the results were and decide if it’s worth continuing. For those who don’t know, the Slow Carb Diet involves cutting out potatoes, rice, flour, sugar, and dairy in all their forms. My meals consist of 40% proteins, 30% vegetables, and 30% legumes(beans or lentils). There is no calorie counting, just some specific rules, accompanied by a timed supplement regimen and some timed exercises to manipulate my metabolism. The supplements are NOT effedrin-based diet pills, or, in fact, uppers of any kind. There is also a weekly cheat day, to cut the impulse to cheat and to avoid letting my body go into famine mode.
I’m measuring two metrics, my weight and the total inches of my waist , hips, biceps, and thighs. Between the two, I should have an accurate assessment of my progress.
Weight: I have lost 17 pounds since January 2nd. That’s 6 pounds since last week. I cheated this week and had a slice of toast and 6 croutons with my grilled chicken-but-no-cheese salad.
Total Inches: I have lost 9 inches in the same time frame, down 3.5 since last week.
Naturally, the first week is the most dramatic. That’s when my body was flushing most of the garbage I’d been eating, including holiday feasts. I’ll have a hard time complaining about 6 pounds in a week. My guess is that I drop another 10-15 pounds by the end of the month, bringing the average to about 1 pound per day. Over time, that will drop as my base caloric burn drops to match my new weight.
Best Posts
Realized Returns is giving away a Kindle. I would greatly appreciate it if you didn’t enter, because I’d love to get a Kindle.
Maximizing Money has put together a stellar list of financial blogs. If I’m not enough to keep you going, take a look at that list.
Mystery shopping sounds like it could be such a sweet deal for some people. Always try to make money doing what you love.
Here is another list of sites that can make you some money. I love side hustles.
And finally, here is Lifehacker, showing you how to make better cocoa.
LRN Timewarp
This is where I review the posts I wrote one year ago.
I wrote a post on saving money while cooking. This post has easily withstood the test of time. We keep getting better at stretching our budget. Over the last year, we’ve actually reduced our food budget by an additional $50 per month, while the quality of our meals has gone up.
This was the first week I posted a 30 Day Project update. My first goal was to start waking up at 5AM. That worked well for almost the entire year, but I’ve let that slack off over the last few months. On the weekends, I don’t set an alarm or try to get up early, but I’m still up by 7:30, usually. During the week, my alarm goes off at 5:10, but I let myself snooze it. I’ve discovered that I do better at attending to my personal projects(like blogging) late at night instead of early in the morning. So, I’m going with what works, instead of trying to force what doesn’t.
I also reviewed the bills I pay that aren’t paid monthly in my third budget lesson.
Carnivals I’ve Rocked and Guest Posts I’ve Rolled
First 3 Things to Do in the New Year was included in Crystal’s rockin’ new Total Money Carnival.
4 Ways We Keep Wasting Money was included in the Festival of Frugality.
Living the XBox Life on an Atari Income was included in the Carnival of Personal Finance.
Swamp Finance was hosted by Squirrelers.
I ran the guest post, The Best Financial Advice I Ever Received for Saving Money Today.
Thank you! If I missed anyone, please let me know.
Get More Out of Live Real, Now
There are so many ways you can read and interact with this site.
You can subscribe by RSS and get the posts in your favorite news reader. I prefer Google Reader.
You can subscribe by email and get, not only the posts delivered to your inbox, but occasional giveaways and tidbits not available elsewhere.
You can ‘Like’ LRN on Facebook. Facebook gets more use than Google. It can’t hurt to see what you want where you want.
You can follow LRN on Twitter. This comes with some nearly-instant interaction.
You can send me an email, telling me what you liked, what you didn’t like, or what you’d like to see more(or less) of. I promise to reply to any email that isn’t purely spam.
That’s all for today. Have a great weekend!
Budget Lesson, Part 1
budget” width=”300″ height=”185″ />Over the next few weeks, I will be going over my budget in detail.
The first section is income, but that’s straightforward. A line for each income source, bi-weekly, monthly and annual totals. Simple.
Before we start, a word on the organization. There are five columns:
- Category – This is the description of the line item.
- Cost – How much do you pay for this item?
- Time – What is the frequency of the payment? Valid values are ‘m’, ‘q’, ‘y’, ‘w’ for ‘Monthly’, ‘Quarterly’, ‘Yearly’ and ‘Weekly’.
- Monthly – Cost and Time are combined to calculate the monthly expense, to make it possibly to budget. If this is $100, I need to set aside a C-Note each and every month to make the payment when it comes due.
- Yearly – This column is mostly informative. It’s helpful to see this in comparison to my annual pay.
The first section I am actually going to address is discretionary spending.
- Groceries/Dining $475.00 – We don’t budget heavily for groceries, which would be a surprise if you saw me. At the smallest I have ever been, fit, I was never small. We shop smart, buy in bulk when it makes sense, and rarely eat out. We also keep cooked rice and beans in containers in the refrigerator as a cheap and healthy way to stretch almost everything we eat.
- Discretionary $250.00 – This gets used for household items, like toilet paper and soap. It also get used for the odd book or movie, or to cover the gaps between the other categories and reality.
- Baby stuff $60.00 – We have two children in diapers. ‘Nuff said. This category does get progressively smaller as the baby items are outgrown and the children get potty-trained.
- Gas/oil $200.00 – Gas and auto-maintenance. This is actually higher than monthly costs, allowing us to set some aside for larger maintenance issues.
- Clothes $15.00 – All of our dressers are overflowing, so this is strictly replacement cost for the time being. Our kids wear a lot of hand-me-downs.
- Blow Money $50.00 – Occasionally, habitual shoppers need to shop. If they don’t do it on-budget, they will do it off-budget and kill the whole idea.
Initially, we used a “virtual envelope” system. We had a spreadsheet and every time something was spent in this category, we entered the amount and stopped when the category was spent. Didn’t work. We are going on a pure, cash-only system as of the first of the year. No money, no spendy.
Living the High Life
This post is part of the Yakezie Blog swap. I have swapped this week with Eric at Narrow Bridge Finance. This is a post from Eric discussing the theme: What Motivates You to be Financially Responsible? Please take a moment to read my post, Monsters, at Eric’s site.
Unlike my blogger buddy Jason here at LiveRealNow, I have no family. Quite the opposite in fact, I am loving the single guy life. I don’t have much debt. I love going to the bars and partying on the weekends. I have a good job. I have relatively low expenses. Things are good.
So what is my motivation to be financially responsible? It is two-fold. First, I want to be able to keep doing whatever I want whenever I want without worrying about money. Second, I do want to settle down someday in the not too distant future and make sure I have a good foundation to start the next chapter of my life.
I Want to Do Whatever I Want Whenever I Want
Is that selfish? Probably. But who cares? I don’t have kids, I don’t have a wife. I don’t even have a girlfriend at the moment. I do make an effort to donate to local organizations I believe in and I am happy to have friends over for a pre-game and buy a round of drinks, but that is as far as my obligation to others goes.
Doing whatever I want is not always cheap. I like going to concerts. I enjoy nightclubs. I love traveling and exploring new places. $80 tickets, a $15 cover plus drinks, and a $500 trip are fairly common occurrences in my life.
As you know, money doesn’t grow on trees. I have to work hard to pay for the things I want and the experiences I have. I am totally okay with that. But I have to plan now to be able to do what I want later.
I live in a modest and inexpensive apartment. I try to keep my food budget low. I bought a small car that would be reliable, low maintenance, and fuel efficient.
By cutting out wasteful spending and thinking before I spend, I am able to do pretty much whatever I want. If you have the same goal, dive into the depths of your budget. Dig in deep and see where you are spending money. Not to be cliché, but the ‘latte factor’ is a big deal. Those stops at Starbucks, afternoon snacks, energy drinks, cable bills, and other cash drains might not be worth it. If you don’t really, really enjoy it and get pleasure from it, why would you spend money on it?
My Future – Family, Travel, and Early Retirement
I am 26. I am at that point where I am going on a lot of dates. I am meeting a lot of great girls. One of these days, probably when I least expect it, I will fall madly in love and get married. You know the story.
My short term dream is a life of travel and urban living. My long term dream is to get married to a hot Jewish girl (I am Jewish, so it makes sense to “keep it in the tribe”) and have two or three kids. Once kids are in the picture, we move out from the urban fun areas and settle down in the burbs.
But just because I will give up the party life does not mean I have to give up my passions. I want to show my kids the world, give them amazing life experiences, and help them grow to hopefully be even more awesome than me, which is a hard bar to beat.
To do all of that and reach financial freedom, I have to set my goals and work to achieve them. (In case you were wondering, Jason recently wrote a great post on financial goal setting. If you have not read it yet, you really should.)
To get there, I am already working on saving and investing. I am contributing over 10% of my gross income at work to my retirement plans. I am working hard to pay down my student loans and save up a down payment fund. I am planning ahead and saving for my future goals.
How to Reach Your Goals
You probably have financial and life goals too. What are you doing to get there?
We can always tell people about our dreams. However, unlike when you are two years old and dream of being an astronaut police officer that lives in a toy store with an ice cream machine and a McDonald’s in it, your dreams today can be a reality.
With few exceptions, every person can reach their goals. Do you want to retire at 40? Take steps to save and create residual income streams. Do you want to travel in space? Save up to buy a ticket on Virgin Galactic. Do you not have enough money? Diversify your income streams and make more. Do you feel chained down by your traditional desk job that you hate? Start a business and transition to self employment.
Yes, it is easier said than done. But you will never reach your goals unless you take solid steps to get there. Don’t just dream it, live it.
Please take a moment to head over to Eric’s site, Narrow Bridge Finance. While you’re there, be sure to subscribe. You don’t want to miss his posts.
Money Problems – Day 5: Boosting Your Income
Today, I am continuing the series, Money Problems: 30 Days to Perfect Finances. The series will consist of 30 things you can do in one setting to perfect your finances. It’s not a system to magically make your debt disappear. Instead, it is a path to understanding where you are, where you want to be, and–most importantly–how to bridge the gap.
I’m not running the series in 30 consecutive days. That’s not my schedule. Also, I think that talking about the same thing for 30 days straight will bore both of us. Instead, it will run roughly once a week. To make sure you don’t miss a post, please take a moment to subscribe, either by email or rss.
Today we’re going to look at ways to boost your income.
People spend a lot of time talking about ways to reduce your expenses, but there is a better way to make ends meet. If you make more money, you will—naturally—have more money to work with, which will make it easier to balance your expenses. I’ve found it to be far less painful to make more money than to cut expenses I enjoy.
I can hear what you’re thinking. It’s easy to tell people to make more money, but what about telling them how? Guess what? I’m going to tell you how to make money because I rock.
By far, the simplest way to make more money is to convince whoever is paying you to pay you more for what you are already doing. In other words, get a raise. I know that’s easy to say. Money’s tight for a lot of companies and layoffs are common. None of that matters. Your company knows that hiring someone new will involve a lot of downtime during training. If you’ve been visibly doing your job, and the company isn’t on the brink of failure, it should be possible to get a bit of the budget tossed your way.
- The first thing you need to do is get visible. If you habitually come in 15 minutes late, make it 15 minutes early. If you are working an alternative schedule, consider switching to the standard schedule, so everyone who matters can see you are at work. Start sending status updates to your boss, including copying him on emails to other people you work with, if those emails signify important milestones in a project.
- Next, log your work. Keep track o what you do, what you’ve accomplished, and—most important—how much money you have made or saved for the company.
- Third, do your research. Hit the salary survey sites to find out what other people in your field are making. Don’t worry if you are on the high side. There is always someone making more than you. If you are the exception to that rule, try using a similar variation of your job description and title. What’s the concrete difference between a software engineer I and and a software engineer II? About $15000.
- Finally, schedule a meeting with your boss and ask. Lay out the things you’ve done, the amount you make for the company and what other companies are paying. Chances are, your boss will have a hard time refusing your request.
Another simple idea is to get a second job. Personally, I hate this idea, but it works wonders for some people. Gas stations and pizza stores offer flexible schedules and they are always hiring. If they aren’t willing to work with your schedule, or it doesn’t work out, you can always quit. This isn’t your main income, after all.
My favorite option is to create a new income stream. What can you do?
Take a piece of paper and a close friend and brainstorm how you can make some money. Write down every type of activity you have ever done or ever wanted to do. Then write down everything you can think of that other people who do those activities need or want. Remember, during a brainstorming session, there are no stupid ideas. Take those two lists and see if there is any product or service you can provide.
You can start a blog—although don’t expect to generate much money early—or try writing for some revenue-sharing article web sites, like hubpages or squidoo. Other options include affiliate marketing, garage sale arbitrage(buying “junk” at garage sales, fixing it up and selling it), or even doing yard work for other people.
One interesting business I’ve seen lately is a traveling poop-scooper. These people travel around and scoop poop out of ddog-owners’ yards. Business booms in the spring when the snow melts, but it can be an ongoing income, since dogs don’t stop pooping.
Raising your income can make it easier to pay your bills, pay off your debt, or even taking nice vacations. How have you made some extra cash?
