Money Crashers » Spending and Saving

Become Wealthy By Being Invisible

Erik Folgate — Fri, 23 Oct 2009 03:37:36 +0000

Last night, I read this article from Kiplinger’s about “The Invisible Rich”. This article sums up everything I believe about money and how to become wealthy. We are programmed from an early age that money comes easy, wealth can be built quickly, and that having nice things is an indication of having a lot of money. It’s simply not true. Net worth is really the only indicator of someone’s wealth. You either have money or you don’t have money. Sure, you could have a lot of stuff that added up to a large sum of money, but those assets are depreciating, so every year your net worth is decreasing because of depreciation. Here’s my favorite line:

The message in all this: The biggest barrier to becoming rich is living like you’re rich before you are. Why? Because all that discretionary spending — the chic apartment, frequent travel and restaurant meals, consumer electronics, fancy clothes and cars — crowds out the saving that will enable you to be rich someday.

If you never learn anything else about personal finance, learn this one thing. You can never build wealth if you’re constantly trying to act like you’re wealthy. Our culture is so obsessed with stuff. We want nice cars, a nice house, a nice TV, a nice laptop, and nice clothes. This starts as soon as we get that first job and we’re making decent money. The hardest thing to overcome as a young person is to transition from a broke college student to a broke professional with a monthly income. The first thing many young people do is go and buy a car on credit with a hefty car payment. Then, they buy brand-name business clothes at retail prices, and then they buy some new furniture from Rooms-To-Go at sticker price. Isn’t it true?

If you can master the art of supressing your wants and pay cash for big-ticket items at a young age, it will set you up for a much easier path to wealth. Be invisible at a young age. Don’t draw attention to yourself. If you buy a house, make it a modest one. If you buy a car, buy a used one. If you buy a suit, buy it from JC Penney. Thomas Stanley’s famous book, “The Millionaire Next Door” is all about the average millionaire, and Stanley’s findingers were remarkable. Most millionaires drove used cars, wore suits off the rack, and they lived in modest homes. But, they had a HUGE net worth. Will this be you?
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Become Wealthy By Being Invisible is a post from: Money Crashers

5 Tips For Saving Money This Halloween

Erik Folgate — Tue, 20 Oct 2009 20:14:02 +0000

I’ll admit that Halloween is not my favorite holiday, and it’s not because I’m some overzealous Christian who thinks it’s the “Devil’s Holiday”. I am a man of faith, but Halloween ticks me off more from a financial perspective. Along with Valentine’s Day, it has become one of the most commercialized non-holidays that have no meaning. I understand that the kids have a good time with it, and it’s fun for them, but when you take a step back and really look at Halloween, it really is pointless to spend a bunch of money on it. With Halloween parties, costumes for the kids, house decorations, and all of the crap that schools make you buy for arts and crafts time, Halloween can get really expensive.

Last Tuesday, I participated in the #frugalchat Twitter conversation moderated by The Debt Diva. If you’ve never been to her site, you should definitely check it out. She has a great blog and runs a debt management company. I have no clue how she is able to post so much on Twitter, but she has a great presence on there. Some of these ideas were part of a discussion we had about keeping costs down for Halloween.

Buy your pumpkins the day before halloween. You won’t get as good of a selection, but they’ll be half-priced, and you can buy more than one for decoration. Also, you won’t need to worry about rotting.
Use everyday items to decorate the house. You can take cereal boxes and spray paint them black or gray to place in the yard to make it look like a cemetary. You can also use quilt padding to make cob webs.
Instead of throwing a party for the kids, play a game. Video/photo scavenger hunts are really fun. Make a list of things to find or do around the neighborhood (i.e. a black cat or an abandoned “haunted” house)
Make your own costumes. Dressing like a celebrity or an iconic figure is usually the easiest to do. You can do the same for kid’s costumes.
For Couples, have a scary movie marathon. Pop some popcorn and bake some spooky looking cookies, and watch scary movies from Netflix or the Red Box.

Links to Halloween Ideas that Save Money:

Quick and Inexpensive Halloween Decorations from Better Homes and Gardens’ Web site

Video on Halloween money savings tips.

DIY Projects for Decorating Your Yard.

Avoid Spending Too Much Money On The Weekend

Erik Folgate — Fri, 09 Oct 2009 03:22:49 +0000

If you are like me. then you don’t spend much money during the week. You’re too busy MAKING money to have time spending any money. But the weekend is my financial weakness. I eat out more and I spend money on crap that I don’t need. I am s\ure that I am not the only one that is guilty of this, because it’s natural spend more money on the weekend when you aren’t working and you want to relax and have fun. However, if you have financial goals like getting out of debt, saving for retirement, or saving for large purchases like a house or a car, your weekend binge spending is probably hindering those goals. Here are a few ways to curb your weekend spending.

Instead of going out to watch the game, have friends over. Ask everyone to bring something. It’s so easy to drop $50 to $100 just by going out to eat and drink for a football game. You’ll save much of that money by staying at home but having fun with some friends.
Don’t go shopping without a purpose. We get in so much trouble if we go to Target without a list or to the mall just to “window shop”. We always end up buying stuff for the house that we don’t need or clothes that we didn’t budget for.
Make good use of free recreation. Go to a park or look in the newspaper for free events going on around the city. Use the outdoors, it’s free!
Take your credit cards out of your wallet. If you do go out during the weekend, don’t take your credit cards with you. It’s too tempting to spend money that you don’t have.
Plan out your weekend. Planning can easily help you save money, because then you won’t fill in spots of boredom with spending money. We like to plan one meal for eating out. So if we say, we’re going out to eat Saturday night, then we know that’s our meal out, so we’ll need to eat in for the rest of the meals. It works pretty well.

Do you find yourself overspending on the weekends? What do you do to stop yourself from spending so much?

How To Stay Broke Forever

Erik Folgate — Thu, 08 Oct 2009 03:38:58 +0000

Our culture is really weird when it comes to money. We base our financial status on how much stuff we have, rather than how much money we actually have. Banks have brainwashed us into actually evaluating a purchase based on how much the payment is, rather than how much the product really is. When is the last time you heard a car commercial that told you how much the car was? It’s not very often. They often say something like this, “You can sign and drive this great car and pay only $299 a month!”. We have it all backwards about what it means to be wealthy, and that is why you run into so many people that are broke. So, if you want to stay broke forever, follow this step-by-step process.

Step 1: Sign up for a payment every time you “buy” something.

Buying a couch? Finance it! Buying a car? Finance it! Buying a Mac computer? Finance it! Accumulate as many payments as you can, because the more payments you have, the less disposable income you’ll have to use for investing in index funds and real estate. But why bother with investing money in assets that appreciate? That would be silly!

Step 2: Listen to your friends that don’t have any money

Ever notice that people with the strongest opinion about personal finance are the ones without any money? If you want to stay broke for a very long time, continue to listen to their advice. Lord knows they have plenty of it.

Step 3: Be obsessed with your image

Broke people love to look good. They love driving a new car all the time, wearing expensive clothing, having the latest gadgets, and living in houses bigger than they need. Not only do they live in bigger houses than they need, they have renovated every square inch. Even the garage has granite counter tops! If you want to stay broke forever, continue to care about how you look and what other people think about you.

Step 4: Pay Retail For Everything

Not only are you accumulating every depreciating asset you can get your hands on, you paid too much for it. You don’t negotiate price, because that’s embarassing. You MUST have a certain name brand. You never buy used, and you never shop anywhere but malls and boutiques.

Step 5: You don’t think about the future.

You could care less about your 401(k) and the fact that your employer will match your contributions. You’re too young to think about retirement, right? You don’t have an emergency fund, because you’re too busy using every last cent of your paycheck to buy stuff, and insurance is just too expensive. You’ve got better things to do with your money than buy life insurance.

Get the point? Sorry for the sarcastic tone of this post, but the point should be clear. Does any of this strike a cord with you? If it does, I am not making fun of you. I am simply trying to help you see what kind of path you are leading if you don’t re-evaluate your financial situation. You can have a million excuses for why you are broke, but everyone has excuses. Rise above those excuses and take hold of your finances. Related Posts:

How To Stay Broke Forever is a post from: Money Crashers

Tips On Negotiating To Get A Better Deal

Erik Folgate — Wed, 30 Sep 2009 03:27:45 +0000

Negotiating takes practice. Some people are born with good negotiation skills, because they have a natural ability to talk to people. But for the rest of us, it doesn’t come naturally, and practicing your negotiation skills in everyday situations will help you save a lot of money over a lifetime.

Don’t Ask For A Deal Right Away

Some people make a big mistake by asking for a discount or a lower price in the first breathe. Getting a deal takes time. Instead of immediately asking for a discount or a deal, talk about the features of the product with the salesperson. Ask them to research the product on Google Products to check prices on the internet. Ask for a discount without actually asking for it, then if the salesperson doesn’t get the hint, ask outright.

Connect With the Sales Person

Whether it’s a salesperson or someone selling on Craigslist, find something in common. Get to know the sales person. This is usually the tactic of the salesperson, so reversing it onto them will take them off guard, and it might cause them to let down their guard, which will soften them to the idea of giving you a deal. My grandfather was a master at this tactic. He would sit in a model home selling real estate and when a potential buyer came into the model, he spent the first 30 minutes talking about something completely different than real estate.

Do Your Research

If you don’t know your stuff, the salesperson will destroy you on facts and features, and they’ll convince you that the product you’re looking to buy is worth the fulll price. Cross-research is key. What brands offer what features for how much?

That’s Not Good Enough

Use the “That’s Not Good Enough” method of negotation. If someone offers a price or package, tell them that’s not good enough, take a step back, and don’t say anything more. Let them come up with another price. This works great when negotiating a car deal.

Got more suggestions? Share them with us!Related Posts:

Tips On Negotiating To Get A Better Deal is a post from: Money Crashers

11 Ways To Exercise and Be Healthy While Saving Money

Erik Folgate — Sat, 26 Sep 2009 02:36:56 +0000

Exercising and eating healthy is a multi-billion dollar business. Think of all the weight loss formulas, food programs, membership gyms, and workout equipment, and workout apparel that we buy every day to stay healthy and look our best. Here are 11 ways to exercise and stay healthy without spending a lot of money.

Workout at home. With a couple sets of dumbbells, you can do shoulder press, curls, tricep extensions, push-ups, crunches, and lunges.
Buy a workout program. I have heard good things about the P90X workout program. It’s a legitimate program, with 15 different workouts. There are no gimmicks with this workout program. It’s the real deal.
Avoid weight-loss food programs. You don’t need Jenny Craig or Weight Watchers to eat healthy.
Eat out less. Most restaurant food has portions that are too big, and more they make more flavor by inserting fatty ingredients like cheeses, cream based sauces, and butter.
Negotiate a gym membership. They are VERY negotiable.
Get a dog. You’ll spend money taking care of a pet, but the long-term companionship and responsibility of walking them on a regular basis will get you out of the house more and make you go jogging or walking.
Don’t spend money on supplements. Supplements might help you lose weight quick or bulk up quick, but once you get off them, it’s easy to quickly gain the weight back or become softer.
Get 7 to 8 hours of sleep.
Eat a breakfast full of fiber and protein. Oatmeal and eggs have a lot of fiber and protein, plus they are cheap to make. They will also keep you full until lunch.
Shop at discount retailers for workout apparel and shoes. For shoes, I always check shoe stores like Rack Room, Famous Footwear, and Marshalls.
Buy a bike on Craigslist. Why spend $800 on a new road bike, when you can get a used on for half the price? I found a guy in my neighborhood that rebuilds bikes, and he sold me one for $60!
What things do you do to stay healthy and save money? Does anyone have any tips for swimming on the cheap?

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11 Ways To Exercise and Be Healthy While Saving Money is a post from: Money Crashers

Americans Are Becoming More Frugal And Saving More Than Ever Before

Erik Folgate — Fri, 11 Sep 2009 14:36:34 +0000

I always find it humorous when I read an article that makes it sound like Americans becoming more frugal is a bad thing. This article from McClatchy reveals that Americans are becoming more frugal and saving at an incredible rate amidst the recession. Of course, less spending isn’t good for the retail industry, because they rely on us to spend money on stuff we don’t need. Or as Dave Ramsey would say, “we buy crap we can’t afford, with money we don’t have, to impress people we don’t like.”

Federal Reserve data released Tuesday showed that consumers cut borrowing in July by an annualized 10.4 percent. The dollar amount of the decline, $21.6 billion, was the largest month-over-month decline on record.

This is great news thats Americans are starting to realize that they need to stop borrowing money and stop spending money that they don’t have. What aggravates me the most about the people that write these articles is that they follow up this data with this statement:

A lack of borrowing translates to a lack of spending.

You don’t have to borrow money to spend it! These are the lies that our country has fallen for, because we’ve been brainwashed by banks to think that the only way we can fuel our economy is by borrowing money to spend more than we can afford. If spending were going down and saving wasn’t going up, then I’d be worried, because then we have no idea what’s happening with discretionary income, but that’s not the case.

The survey also found that Americans expect to save on average 14 percent more once the recession is over than they did before it; if that’s true, that means the “new normal” would involve consumer spending at 86 percent of pre-recession levels. That would cut U.S. spending by more than $1 trillion a year.

Now, they are starting to get it. We are re-writing the book for what “normal” is in the United States. The new “normal” doesn’t involve maxed out credit cards, lines of credit against artificial home equity, and car loans that are half the amount of our income. People are starting to wake up and realize that when the economy dips south, they need a safety net to protect themselves. Frugality is becoming a habit and a way of life for many households, and that’s not a bad thing.

But what about the retailers?

I am not worried about the retail industry at all, because their hard times will be temporary. Once we continue to save money, stop putting purchases on credit cards, and live within our means, we will start spending again, but this time it will be with our OWN money.

Retailers are reacting by reducing the products that consumers can choose from and narrowing their choices of colors and styles.

“They are dramatically cutting inventories. We’re going to see stores look like they’ve never looked before, and part of this is to put a floor (under) prices and create a sense of urgency with products,” said Hurlbut, the retail consultant. “We could see fairly long-term changes in spending and habits.”

This is a good thing! Think about how many choices you have just just to buy a damn pencil. Retailers have gotten out of control with inventory and choices, because they knew they could entice buyers to spend more money for features that don’t add any value to the product or service.

When we start spending money at a higher level again, it will be with cash, and retailers will appreciate that, because they’ll spend less money trying to collect unpaid credit card bills, and we will buy more quality products, because we’ll be more interested in the most value for our money.

Southwest Charges $10 For Early Boarding Privileges

Erik Folgate — Wed, 02 Sep 2009 21:38:11 +0000

I thought this article was relevant to my last post about Southwest charging an extra $10 for early boarding privileges.

Southwest will charge an optional $10 for anyone who wants to upgrade their ticket for early boarding. The significance of this is that Southwest doesn’t assign seats, so early boarders will get seat preference and they will most likely get overhead luggage space near their seat.

Why We Like This

Charging extra for something like this is a much better revenue model than charging for checked baggage. Sometimes its impossible to fit everything into a carry-on bag, so you are forced into a fee. This fee is completely optional, and it adds value to the customer who purchases it. Charging for checked baggage is like a restaurant charging you a flat fee for a server to wait on you.

How To Avoid The Fee

At only $10 a pop, my guess is that many travelers will opt to pay for this, so make sure you arrive earlier than normal when taking a Southwest flight. If you don’t upgrade, still get there early to get in line for a better seat. Related Posts:

Southwest Charges $10 For Early Boarding Privileges is a post from: Money Crashers

How To Save Money On Airline Fees

Erik Folgate — Wed, 02 Sep 2009 19:37:56 +0000

In order to increase revenue to save their business, many airlines have started nickel and diming customers with a ton of fees, some up front and some hidden. No longer do airlines provide full-service. Everything comes at a price from the snacks to checking baggage. Here are some quick tips to help you avoid extra airline fees.

Pack snacks and drinks with you. If you’re on a long flight, avoid paying for snacks and meals by carrying on your own snacks. I haven’t come across an airlines that charges for a beverage yet, I am sure some of the smaller discount airlines do charge for it. Beverages are tougher to bring with you because of the liquid restriction, but you could still carry one on from the terminal and still save money.
Pack Light. Not only will you be helping the environment out, because the plane will be lighter and use less fuel, but you’ll avoid checked baggage fees that most airlines now charge for. Southwest is one of the only airlines that don’t charge for checked baggage. I recently paid $20 each way on United to check a bag.
Keep your pets at home. Many airlines charge to bring small pets on the plane with you. Southwest now charges $75 to bring a small dog or cat on the plane with you.
Don’t let the kids travel without you. Some airlines are charging an extra fee for minors that require supervision during the flight.

Fees, fees, and more fees. Be smart, and don’t pay these extra fees! Do you have any others to make us aware of? What’s the most you’ve ever been charged for an airline fee?

iPhone Apps To Help You Save Money

Erik Folgate — Wed, 26 Aug 2009 02:57:54 +0000

Yowza

Yowza is a new iPhone application that helps the user find local coupons and deals. The company behind the application has partnered up with a lot of big and small companies to offer exclusive digital coupons. Simply pull up the coupon on your phone and present it to the business, and they will scan the barcode on your phone to apply the discount.

Snap Tell

Snaptell makes great use of the iPhone’s built-in camera. Simply snap a photo of a book, dvd, cd, or video game, and the application will find the best deals for item you took a photo of.

Cheap Gas

Cheap Gas does exactly what it says, it finds you the cheapest gas in town without using a ton of gas to find the cheapest gas in town!

Kids Eat Free

Kids Eat Free costs .99 cents, but you’ll recover that cost the first time you use it. A lot of restaurants offer “kids eat free” days, but it’s tough to remember who offers what and when. Restaurants like to do this promotion, because typically kids meals don’t cost the restaurant much, and they know that the parents will eat, too. Still, this is a great way to save some money when eating out, and this app helps you locate these local deals.

Big Oven

If you really want to save money and cut back on your budget, reducing the money you spend on eating out is essential. But, cooking can be a drag, especially when you have no direction about what to cook or how to cook it. The Big Oven iPhone app is a great recipe application with thousands of different recipes for all types of cuisines.

Gift Planner

Find yourself spending a lot of money on gifts? This app will help you plan a budget, set an amount, and track the performance. It’s easy to forget how much you are spending on someone if you are buying them multiple gifts for an event such as a wedding or baby shower. This app will help you stay within your gift budget.