Free Ebook.


Enter your email address:

Delivered by FeedBurner

« Hyundai Markets to the Economy | Main | It's Budgeting Time of the Year »

January 05, 2009

Comments

Feed You can follow this conversation by subscribing to the comment feed for this post.

We were given an Entertainment Book for a Christmas gift. Since we do frequent some of the establishments it is nice to have available. Plus, since we didn't pay for it, it is free money.

I do this all the time - Costco membership. I definitely save more by having this membership. You can save much more and even make up the difference by getting the executive membership. Costco will pay you the difference if you don't make at least the $50 back for the upgrade.

It works in certain situations. For example I have a Netflix account. I am spending probably about $130/yr for the service but get so much value out of it because I use it to its extent.

A couple of months ago, I did an in depth look at how much I would save by purchasing a used motorcycle to use for commuting, rather than my SUV. It resulted in the purchase of a bike. I'm now getting over 40MPG verses 16. My break-even-point has been pushed out a little due to the reduced price for gas now, but overall, I'm still saving more money monthly, than I was earning with the money in INGdirect.

@Craig

I think that's different than spending to save. Just because you use something extensively doesn't mean you are saving money. You can live without Netflix.

On the flipside, if you use Netflix but have since canceled the cable, you likely saved money. For instance, I spend $8.99/month on Netflix which allowed me to stop my Satellite service which was $60/month.

But even then, the comparison is tough because you are simply finding a cheaper service which isn't really spending to save.


Now if you pay for a car in full you are spending quite a bit all at once. But it will save you lots of money in the long term in interest if you were to get a loan and make payments on the car. That is a better analogy to the post above.

I have two sons ages 7 and 5. I spend a bit more to buy quality clothes and shoes for the older one so that they are still in good shape when I pass it down to the 5 year old. This way spending a bit more I really save a lot not having to buy everything new again.

I bought a subscription to our local fishwrap (& firestarter) last year with an eye towards the Sunday coupons. I then tracked coupon savings and was careful about spending only on needs & not at things just because we had a coupon.

We were making progress to offsetting the cost of the subscription by coupon & other such savings, but then I got off the system and lost track & in fact quit watching the Sunday paper for good coupons.

Another way to "spend" to save is by the purchase of quality items that outlast cheap items or that save on energy or other resource costs. If item X is 1/3 the cost of Y, but you have to buy 5 Ys to get the same utility out of 1 X you are losing money. An example of this is E85 gasoline, yeah, you pay less per fill up, but you fill up more often.

I take my '94 Tempo in for oil changes at least several times per year.
I also go to the dentist several times per year - even though I don't have benefits - as it's cheaper than paying for dental surgery in the long run.

I buy multiple copies of grocery coupons that I'll use from The Coupon Clippers. They sell coupons for ~10% of the face value.

I'd like to add one thing: you have to be able to do math and calculate a return on investment (ROI) before you spend money to make money.

This applies to things like buying a house (if the mortgage is less than equivalent rent you'd be doing well and you probably would have sat out of this housing bubble) or anything involving an expected payback. Making several of these decisions over time will improve your net worth.

-BC

I'm not allowed to spend to save money, just as I am not allowed to have an emergency fund.

No, seriously. Student loan collectors make NO allowance for these things.

This seems a good place to ask:

Since I'm not allowed to save up money to build an emergency fund, I have no cushion for unexpected expenses. As it is, I don't have enough to live on after 15% of my income is taken for a student loan, and I have a rent arrearage of approx $500 (almost one month).

This clearly is not sustainable.

What can I do before I become homeless?

I pay extra for good-quality (often organic) produce. This helps me eat more healthily, which I'm positive will reduce my health costs in the long run, though obviously it's a little hard to quantify. A more pricey gym membership goes in this category, too; as a lazy person, the nicer the gym, the more likely I am to go, and I really need that incentive. The ultimate monetary value of a longer independent life is hard to calculate, but clearly great when you consider the cost of home health aides.

@poor boomer -
I'm not sure your exact situation, but you might be able to work out a graduated payment plan for student loans. I had a very low paying job after graduating with the (easily attainable) prospect of making more in a few years. I went with a graduated loan payment which reduced my early payments for the first couple years. Now that I make a little more, my payments have gone up, but I can afford it. Not sure if that is useful in your situation, but just wanted to throw it out there.

@FMF: Ramit goes even further to say that he's committing himself to spend (!) a fixed monthly sum to educate himself on personal finances (incl. growing his income).

@Poor boomer: do I get it right that you're unable to pay off your student loan and are therefore at the mercy of the creditors? I'd try to earn more, or if that's impossible, do some work on the side (income that nobody knows of).

@Poor boomer: some people might even let you live in their house in exchange for doing maintenance.
P.S. apologies for this off-topic post but we can't let him become homeless can we.

Alas, my student loans are in default (after using up all my delay time, I was unable to keep up the payments on a minimum wage income, and today's affordable-payment programs did not exist when I defaulted.

I have a garnishment of 15% of my net pay which is why I can't pay the rent on time.

To get my loans out of default, I would have to make voluntary payments of $80 per month ON TOP OF the garnishment. Obviously, on my current income, this is not going to happen.

Some would say that I am paying too much to rent a room in a house with nine people, but since I am entirely unable to save up any money, I am also unable to move anywhere cheaper.

I'm not sure if this is the same thing but stocking up on things that are on sale is spending money to save money. Yesterday I bought 30 lbs of chicken, which was on sale at .47/lb. That was more money than I meant to spend at the grocery store at that moment but it will average out and save me money.

p.s. Actually, with the garnishment, I am paying down the balance $100 per month, which will pay off the loans in approx five years.

There is an "income contingent repayment" program which makes payments affordable based on your income and allows negative amortization, with any remaining balance forgiven after 30 years of payments.

On my current income, that program would require a monthly payment of $15.

BUT since my loans are in default, I am not eligible for that program.

And since the garnishment leaves me living on fumes, I'm unlikely to get my loans out of default any time soon.

The whole concept of spending money so that you can save money is ridiculous. Of course, buying the Entertainment book in order to save on purchases that you already make could save money. But using it to buy things that you wouldn't normally buy isn't saving money at all! I still prefer the proven method of cutting spending in those areas that I'm over spending. It easy to remember, simple to do.. and it works every time!

I buy higher quality for things I will likely use a long time and buy repairable vs. disposable.
I keep up with the maintenance on my car and wash it at least once a month to remove the salt buildup which increases rusting.
I also prefer to pay one time costs rather than ongoing payments (ie - buy vs. rent).

The real problem is that no one makes enough money. If you made a couple hundred more dollars a month by operating your own debt free business you wouldn't need to worry about saving $3 by going to costco or clipping coupons.

GREAT PUNCH LINE.

Each one has their own spending habits; some are acceptable and some are not. It isn’t bad or good, it is whether our spending directs us in the way of our spending purpose, or leads us in the opposite direction. Stay persistent and stand tough!
Before making a decision on buying anything we must ask ourselves these following instructions:
How long will this be useful to me?
Do I really need this?

To obtain and keep money we have to be savvy. There is responsibility that goes with the handling of money. No matter what you earn, it's easier than you believe to take control of your money. A few simple things done regularly can really make a lot of difference.Here is a program which will help to make choices around money that have nice rewards. Money Management

The comments to this entry are closed.

Start a Blog


Disclaimer


  • Any information shared on Free Money Finance does not constitute financial advice. The Website is intended to provide general information only and does not attempt to give you advice that relates to your specific circumstances. You are advised to discuss your specific requirements with an independent financial adviser. Per FTC guidelines, this website may be compensated by companies mentioned through advertising, affiliate programs or otherwise. All posts are © 2005-2012, Free Money Finance.

Stats