Because I’m dead center of trying to figure out my own personal financial Rubik’s Cube, and because I’ve been listening every day to the Financial Aid Podcast, I’ve had finance hacks on the brain. Besides, Graeme wanted me to talk about them, too. So, here goes 7 tips on finance from a guy who’s broke:
Keep the change– Whenever you pay for anything with cash, always pay with bills. Then, take the coins at the end of the day and put them in a big jar. Use this money for the occasional treat, or put it towards a vacation. It’s a painless way to save some cash.
An Anti-Raise– There’s great advice out there that says, when you receive your annual raise, adjust your direct deposit such that the raise doesn’t ever hit your paycheck. Instead, shunt it off into savings, or into your 401K, etc. Just don’t let it hit your pocket. Well, if you’re me and you never took that advice, consider giving yourself an anti-raise as a way to start fixing your finances. I called up my bank and had them put roughly 5% of my pay check every period into my Savings account. When I get a decent little chunk in there, I’ll pay off a few things, and then transfer the rest into investments.
Pay Debt vs. Save Up– If you’re really in a bind and not sure where to start, nail your credit cards and bigger loans (not counting your mortgage) before socking away money in savings or money market accounts. Why? Because most credit cards have interest rates that will negate any effort of saving if you’re carrying a balance.
Negotiate a Better Card– There are tons of credit card companies out there. If you’re trying to put your house in order, shop around for the possibility of transferring your balance into a low or zero-percent rate so you can get a little relief. Use that relief to get the card paid down to zero as fast as possible. BONUS HACK: Often times, once you know you have another option, you can call your current card company, tell them you’re getting ready to transfer your balance to another provider. They’ll sometimes (often?) offer you the same deal that the new company is offering, and I think that’s better, from a credit record point of view.
Multiply Tiny Expenditures- Say you’re stopping by the local coffee shop for a large iced coffee and a bagel every morning. Say it costs $6. You might think, “Well, that’s not too bad. I didn’t have time at home anyway.” But, $6 x 5 days = $30 a week on breakfast alone. If you spent even $15 ahead of time on grocery options that gave you things you can take with you from home, that’d cut that cost in half. Look also at magazine subscriptions and ask whether the value you’re saving off the cover price is really the same as whether you read the magazine every month. Ditto your cable TV service. Do you need all the channels you’re paying for?
Consider Your Entertainment Budget– Are you paying for cable, Netflix, movies in the theater, live concerts, and more? If you threw your weekly revenue amount onto a spreadsheet, showing what you made, how much you paid in rent, bills, food, and other expenses, and then had a break-out column for entertainment, what percentage of the cash you’re spending in a given week or month would your entertainment budget be? How about if you add in your hobby spending, like that new lens for your camera, or that replacement iPod? How does that impact the way you see your finances.
Plug the Holes– I learned this one when reading about adding a solar power system to a standard electrical system. The author of the article said that he was able to save money on his energy bill WITHOUT building the solar power system by doing a simple audit in his home. He found these items to be power-suckers (and thus expenses to you): modern TVs and DVD players. If they’re plugged in, most of them are drawing a significant amount of power to be in “standby” mode instead of off. Ditto your power supplies for recharging, like your battery charger for your cell phone, your digital camera battery charger, etc. Go for a walk around your house and see how many devices are plugged in that are drawing power without being used. BONUS HACK: Put all your chargers on a power strip with its own off-switch, and keep the whole strip turned off when you’re not charging a device.
Your mileage may vary, and like I said in the title, I’m no expert, but because I’m working on this actively, you might find these tips to be pertinent to your own situation. But truly, YOU are the experts. Come on! Light up the comment section, or better still, add to our wiki ! Tell us your best finance and money-saving tips.