13 Ways to Live Well on Less, Part 2 (Free Money Finance)

October 05, 2005

13 Ways to Live Well on Less, Part 2

Here's part 2 of Money Central's "13 Ways to Live Well on Less":

4. Try store brands. "Every time somebody goes to the supermarket, I want them to try one more store brand," which Howard notes costs up to 40% less. "To get people to change everything isn't possible. But to get them to change one item at a time is less difficult."

5. Buy used. New is nice, but for the best buy, think pre-owned. Bach points to the classic example of a used car. After two years of depreciation, you can get a good, high-quality car at virtually half price, says Bach. "And if you ever do buy a new one, plan on keeping it five to 10 years," he says.

Whatever you're buying used, Ramsey says to focus on high-quality merchandise, "not torn up, junky or dirty."

Secondhand shopping isn't just for those who have to watch their pennies, either. Ramsey recalls a millionaire friend who picked up a $38,000 Rolex for $18,000 from a reputable jeweler. "That's how he got to be a millionaire," Ramsey says.

6. Pay cash. "When you spend cash, it hurts," says Ramsey. "And you spend less."

Ramsey recalls a study several years ago that showed when shoppers spend cash, "you spend 12% to 18% less than when you spend plastic because of the emotional pain." Plus, he says, you can get a better deal when you use cash as a negotiating tool.

7. Pick your credit card wisely. If you must use a credit card, make sure it's one that gives you something. Look for a no-fee card with a rewards program. Mark Oleson, director of the Financial Counseling Clinic at Iowa State University, recently signed up for a AAA-branded no-fee card that rebates 5% of all gas purchases. The credits are applied automatically to his account every month. Now he's getting $2 gallon gas for $1.90 without changing his buying behavior.

8. Shop around for auto insurance. You want your car protected, but make sure you get the most cost-effective coverage you can. Howard recounts one ecstatic caller to his radio show who compared rates and sliced his annual premium by $1,433. "That's the easiest money for someone to grab," he says. Anecdotally, Howard says, the typical savings by shopping around for better auto insurance rates is around $1,000.

While you're at it, look at your coverage and deductibles on an annual or semiannual basis, says Oleson. Can you afford to raise the deductible to lower your premium? Are there any overlaps in your coverage that could be eliminated?

I've already said a lot on these topics, so I'll end with some posts you can review if you want more information: