The Complete Guide to Control and Save Your Money
What You'll Learn:
- How frugal living can actually be a lot of fun
- How to be a savvy consumer in a world of spending
- A budgeting system that’s easy and effective
- How to cut expenses without sacrificing
- How to save money in all aspects of your life
- How to save massive money as a homeowner
- How to save money as a college student
- All of the best tools to save you money
The Fun of Frugal Living
How to Be a Savvy Consumer
Budgeting That Actually Works
How to Cut Expenses Without Sacrificing
How to Save Money on Everything
The Homeowner’s Guide to Saving Money
The Student’s Guide to Saving Money
Tools to Save You Money
“Frugality: Make no expense but to do good to others or yourself; i.e., waste nothing.”
This is one of Benjamin Franklin’s 13 virtues.
Frugality isn’t as popular or noble as it used to be, but at one time, people actually appreciated those who had the ability to live well within their means and practice discipline in their stewardship.
But I don’t want to dive too deep into the virtue of frugality, because there are plenty of philosophical books written on that. Let’s talk more about how fun it can be.
When I ask families what their funnest vacations were, and when I ask couples what some of their funnest dates were, I get similar answers.
You would think the Disney World trips and lobster dinners would be the things that come to mind, but that’s usually not the case.
People often remember the most frugal times the most.
Usually in the early years of your marriage, you are trying to make ends meet and learning to live together. And once you start a family, you don’t always have that much money for vacations when your kids are young. So generally you are used to frugal living.
It’s not a secret that most young couples are usually living (or trying to live) a frugal life, but sometimes these years are taken for granted. Going on cheap dates and taking inexpensive vacations can actually be a lot of fun. Sometimes getting out of debt can be just as fun!
The challenge makes it fun.
The Most Fun is Frugal
Think back to all of the dates you have been on with your spouse or significant other.
Remember the date where you went to that really fancy restaurant and the food wasn’t that great? Remember when you spent a lot of money on an elaborate show that neither of you enjoyed? Remember all of those dates that you went on together, but because of all the “attractions” you paid for, you didn’t actually spend time together. No? Am I the only one who has done that?
Often times, the best dates are the most cost-effective dates.
Buying stuff to do takes away from the time spent together.
Usually you actually spend time together when you don’t spend money on everything on you do.
Here is a really fun date to try: Have a “spend as little as possible” date night. The goal is to do as much as you can for as little as possible. You can do this through coupons, special deals or, best of all, things that are free to begin with. Go for a walk downtown, look at Christmas lights in the winter or even have a date at home. It’s hard to beat a date game night at home with just you and your spouse. Check out more really fun and really cheap date ideas.
Don’t Be Normal
This doesn’t just apply to dates, this applies to your whole life.
Throughout this guide, I’m going to show you how to take control of your money and live frugally without paying the high price of sacrifice. It’s not that hard; it just takes a little consumer awareness, really.
I also want to point out that I’m not saying expensive trips and things aren’t fun. They are. What’s important to know is that you don’t have to spend a lot of money to enjoy life, and that you should only be spending money to enjoy life once you have taken control of your money.
Remember that drastically cutting costs and aggressively saving money is only temporary.
It may not be fun to pinch pennies for the rest of your life, but if it will get you where you want to go later, then it’s worth doing now.
It’s not normal to be frugal. And it’s also not normal to have money.
It’s fun to not be normal. Be weird. You’ll be a lot happier.
Normal people finance their house, cars, televisions and even their vacations.
Being financially normal means that you are in debt and you are living paycheck to paycheck.
Why would anyone want to be that kind of normal?
Frugal living now can lead to an affluent life later and it’s worth the wait. So have fun with it.
Don’t wait until later to enjoy life; enjoy life now while you’re living frugally, and enjoy life later when you are debt free and not living paycheck to paycheck.
As a society, we are addicted to consumption. We consume products, food, things…at an alarming rate.
I’m starting this “Understanding Series” with consumerism for a reason. I’m going to go in-depth with every area of your finances throughout this series, but it all starts right here.
If you don’t understand consumerism and how to get out of the trap, you will lack in every other area of your finances.
Here it is: how to set yourself apart from the average consumer. How to be a savvy consumer…
You’re About to Become a Savvy Consumer
From credit card offers to coupons in the mail, we are constantly hit with marketing. Marketing is everywhere. It’s all around us, all the time and it always will be. It’s there to get us to buy, buy, BUY! And that’s okay, because that’s how business works, but it’s up to us to buy, as the consumer, intelligently. And it can be done, even if you’re an American.
We Americans get a bad rap due to our overspending and luxurious lifestyles that we can’t actually afford. It’s true that most Americans who look rich aren’t. Who wouldn’t want that new Mercedes with no money down and 4,000 easy payments of $500? As long as we can afford the monthly payment, it’s ours right? Well that’s another topic for another article, but it is possible to live within your means and be a savvy consumer, even if you do live in the Land of Opportunity.
In fact, I’m going to show you how to be a savvy consumer. More importantly, I’m going to show you how to take advantage of marketing campaigns without being taken advantage of by them. Are you ready? You’ve got this…
Change Your Thinking
I’m sure you’ve heard that before, just change your thinking. That’s the difference between the rich and the poor, right? Well yes and no, but thinking alone won’t do anything for your spending or your finances – there has to be action involved.
So what do I mean by “change you thinking”?
I mean don’t be fooled by marketing techniques. Learn how to spot them and take advantage of them. You have to have your marketing guard up constantly. Always be on the look out for someone trying to get you to spend money, because honestly, there will always be someone trying to get you to spend money.
Let’s get into a practical example of what I’m talking about…
How I Paid $47 for a Brand New Laptop
Do you remember those deals that used to be everywhere on the internet?
“Get this new laptop, iPod, or other new electronic item for free. Click here!”
Those ads were everywhere, so finally I decided to check it out. I didn’t believe the ad (at least not without some kind of catch), but I did want to know what was going on, so I clicked the banner. If you’ve ever clicked on one of those banners, you know how it works. You complete X amount of offers and they send you your free item. Not as easy as it sounds? Of course not, but I knew that it couldn’t be a flat out lie or the ads would have been taken down a long time ago and there certainly wouldn’t be so many.
So I tried it out. My wife and I sat down at the computer for a few hours to see what this deal was all about.
Here’s the short of it: we signed up for 14 different “free” offers. Now some of these offers required shipping, handling or processing charges (I guess they don’t really understand what “free” means), but overall I suppose the offers were kind of “free”.
Now I’m not a lawyer by any means, but I know how to read the fine print and I did…with every single offer. It turns out that every offer we signed up for would begin charging us after a certain time period (monthly subscription, reoccurring product shipments, etc.), so we made a list and here’s what it included:
- What we signed up for (product, service, etc.)
- How to cancel it (who to call, where to go, etc.)
- The date to cancel by (before we get charged)
- The account information (too many accounts to remember all of them)
We got our laptop. It was worth about $1,200 at the time (I looked it up) and we paid a total of $47. When the dates came, we cancelled everything. Only one of the accounts had some sort of error and charged us for something else, but one phone call took that charge off and left us with a laptop after paying the $47 and putting in about 4 or 5 hours of work (including cancellation time, reading the fine print and signing up for the offers).
Why did I tell you that?
Because offers like that are meant for people who won’t cancel the stuff they sign up for. We calculated how much it would have cost us if we would have kept everything and not cancelled the trials, subscriptions and products…the grand total? Around $600/month. Sounds crazy, right? How many people signed up for those offers, possibly got the laptop and continued paying the $600/month? Probably a lot. That’s why they do things like that. It’s for the people who are completely unaware of their finances.
It takes discipline and organization to pull off actually getting a free (or $47) laptop and most people don’t have either of those things when it comes to money. The companies know that, but that’s okay, because that isn’t you or me – we are savvy.
It Doesn’t Have to Be Worth $1,000
The laptop was an extreme example of how to be a savvy consumer, but that doesn’t mean you can’t apply this to every area of your life. We are a family of six, so something even as minuscule as dinner needs to be planned out strategically to be the most savvy consumers we can be, without spending hours trying to save a few bucks.
How does that work? We always have a plan.
When our kids wanted McDonald’s last week, we decided to make it happen (we rarely eat fast food). So we went to McDonalds and spent about as much as we would at a sit-down restaurant, right? Nope. We bought all the cheeseburgers from McDonalds for about $8. Then I went to the grocery store and bought a 50 cent bag of fries (that the kids actually prefer over Micky D’s fries) and cooked them at home. What about the soda? Did we drink water because it’s healthier and cheaper? Heck no! This was a fun meal and a rare occasion for us to east fast food, so I decided to “secret shop” the sodas.
Total cost of a fast-food meal for six: “$8.50”, but not really…
I know I just kind of slipped the secret shopping thing in there, but basically I am signed up for several secret shopper websites, so I constantly get emails about shops around me. I had an email to get free sodas from a local store as a secret shopper so I chose that day to do it. By the way, I actually got paid $15 to buy those sodas…
Actual total cost of a fast-food meal for six: “-$6.50.”
The 7 BEs of Being a Savvy Consumer
Yes, we got paid to eat dinner. That’s not normal.
And that’s my point. Don’t be normal. Be savvy. Savvy is anything but normal.
Don’t fall for the tricks and gimmicks – take advantage of them. Figure out what you can take advantage of by being a savvy consumer. Once you know what the marketing goal is, it’s usually easy to spot how it can be of use to you, as long as you don’t fall for the actual gimmick they’re expecting you to fall for.
Here are the 7 BEs to being a savvy consumer:
- BE an intelligent money saver – The main purpose of coupons is to get you to buy a bunch of other stuff that you didn’t have coupons for. If you find a great coupon, have a plan and stick to it. Don’t be wooed by advertising, stick to your plan. And calculate how much time you’re using with coupons. It’s not worth saving $30 or even $50 if it’s costing you 10+ hours per week. Your time is more valuable than that.
- BE a skeptic who takes action – When you’re given the opportunity to get something for free or cheap by sitting through a sales pitch (such as a timeshare pitch – does that bring up any bad memories?), have a plan ahead of time. Don’t go to the resort to get a free ticket for Disney World and spend $50,000 on a timeshare that you didn’t even know existed an hour earlier. Decisions like that take weeks, months or years to make. You should never make an on-the-spot decision, and especially not for a free prize that would have cost you less than a hundred dollars. If you can’t control yourself, just go buy the ticket, trip or whatever you’re getting.
- BE quick to look, but slow to act – Always be on the lookout for opportunities to benefit from, save money or make money, but make sure you fully understand everything you’re doing before diving in head first. Don’t be afraid of missing an opportunity by waiting to make a decision. It’s better to miss something, than to get into something you shouldn’t have.
- BE mindful with your money – Never make a purchase without taking two seconds to ask: do I really need this and is this the best price for this item? How many purchases have you made, only to go back a day later and realize you overpaid? It may or may not be worth finding a coupon or a better deal, but the important thing is to take the time to ask the question.
- BE an intelligent traveler – Traveling can be expensive, but it doesn’t have to be. Be a smart and savvy vacationer. There are plenty of options out there to book cheap resorts, swap homes and find cheap tickets. That may mean traveling during offseason, but what’s more important: booking a specific week or saving enough money to take two vacations for the price of one?
- BE a planner – Savvy consumers plan ahead. Period. From meal planning to vacation planning, it helps to be ahead of the game. When you go grocery shopping, you should have a list, stick to it and everything on that list should be for a specific meal. When you shop for clothes, keep a list of the things you need and the things you already have too many of. It’s hard to fall for marketing and advertising gimmicks, when you walk into a store knowing exactly what you need. The more you plan in advance, the less you spend.
- [Don’t] BE sold on spending money – It’s easy to fall into the trap of thinking you have to spend money to have fun. It’s quite often the opposite. Generally the more expensive something is, the less quality time it produces. Think about it: movie theaters and amusement parks are fun, but how much time are you really spending with your family? Some of the best things in life really are free.
What it Means to Be Savvy
Being savvy is a mindset – a lifestyle really. It’s not about clipping coupons, pinching pennies or never spending money, it’s about being mindful of your spending and prioritizing what really matters to you. “Savvy” translates to “aware”.
My wife and I aren’t impressed by fancy cars, so we don’t drive fancy cars. We’re not impressed by big houses, so we didn’t buy a big house. We prefer to spend our money on nice vacations, so we do. But what is it for you? What are the most important areas for you? Define them and focus on them. That’s where your money should be going.
I’m sure you’re more savvy than you used to be. We live and we learn.
When we get “got” by certain gimmicks, tricks and sales pitches, we know form then on that that’s a bad idea.
For example, thousands of people own a time share, and a large percentage of those people would have never bought it if they knew then what they know now. I’m one of those people. Everything made sense at the time, and while I didn’t get ripped off, I did think I was getting a better deal than I actually got.
We live and we learn.
But what about things that aren’t so obvious?
I want to share an example that may provide a different perspective for you.
The Real Cost of Cable TV
Do you have cable? If so, how much do you pay? It might be more than you think.
I have internet. You probably knew that. However, I don’t have cable. You may have known that too. However, my internet provider offers cable packages, as most do.
This month, I received a letter from my internet provider informing me that basic cable is now free. Yes, free. As long as you don’t want billions of channels, you can now watch cable TV for free. You can also get a home phone line for free, but does anyone really remember what that is?
Apparently, basic cable is considered a “need” in the U.S. now. That’s why they’re doing this. The government says people need the news, thus, people need basic cable. If that were the case, one would think they would only give you the news channels for free. I guess that would make too much sense. Either way, I’m sure everyone who is getting it for free is only watching the news anyways, right??? Yeah…I know.
When I got this letter, my first thought was “oh, we could hook it up and have basic cable” and then my wife and I started to calculate the real cost of cable. Beyond the monetary costs. You might be surprised…
The Monetary Cost of Cable
Obviously there are monetary costs of having cable. Unless you are just getting the free package (which still usually costs for the box, hook-up, etc.), you are paying for a package. Maybe a movie package, a sports package or whatever, but you’re paying for something. In many cases, it can cost well over $100. That’s a little insane, but it’s your money and your choice, so I’m not judging.
There is also a “keeping up with the Joneses” cost to television. It’s like there is a competition to see who can buy the biggest TV. It’s getting out of control, which is funny, because after a few days of watching TV on a new screen, your eyes adjust to the size and your brain isn’t viewing it any differently. Was it really worth that extra thousand?
And what about advertising? U.S. businesses spend billions and billions on advertising each year. Do you really think they would if it didn’t work? How many more products are American’s spending their money on just by the subliminal messages and the ads on the screen? Look at the current and projected costs of TV advertising:
It’s insane, but it doesn’t end there. There are the electricity costs. As we all know, electricity isn’t free. The average American spends about five hours each day watching television. I have no idea where they get this time from, but that’s what the statistics show. Almost 70% of the country watches TV while eating dinner. About half of the country thinks they watch too much TV. Of course, that doesn’t include the people who are in denial. 65% of U.S. families have more than three TVs in their home. Craziness, I tell you.
When you consider that the average person only reads for a few minutes per weekend day (yes, weekend day, not to include weekdays), it all starts to add up. We’re replacing everything with television. Family time, dinner time, reading time, and the list goes on. So what are we really missing out on by watching too much TV?
The Real Cost of Cable
So what is the real cost of cable? It can be measured in the form of many things, but the greatest measurement would be time. It costs a lot of time. Let’s look at the time it’s costing you…
- Family time – It’s no surprise that, on average, families who watch TV spend less quality time together. It’s not uncommon for parents to watch “their shows” in separate rooms while the children watch their own shows in their own room. How many hours could be spent together talking, playing games or enjoying the outdoors if we didn’t have cable?
- Learning time – The stats on reading are sad compared to TV stats. Almost all of us feel like we should be reading more. Many people claim to have no time for reading while they are spending hours each day watching television. You will prioritize the things that are important to you. I don’t know anyone who would claim TV to be important to them, but apparently it is.
- Earning time – What could you be doing with those hours? Perhaps you’ve been wanting to start a business or a side hustle, but you never seem to find the time. If you’re watching TV daily, I can find the time for you. You could call it a sacrifice, but I wouldn’t say that. We don’t call it a sacrifice to eat food instead of poison, do we?
- Teaching time – If you have children, you know how important it is to teach. Schools are a great starting place, but education really begins at home. Why is it so common for us as Americans to teach our children daily, until the day they start school. As parents, our job is never over. Sure, school is a great help, but it doesn’t mean we stop teaching. And teaching takes time.
That’s not the end of the list. It’s just the beginning, really. I’m not saying TV is the devil, but it may not be far off. It’s easy to justify our tube time by calling it “relaxing” or “winding down”, but who needs to wind down for five hours?
Honestly, I’m not totally against TV. We watch TV occasionally, not that what I do should affect what you do. What I’m saying is that the difference between the productive and the unproductive is that the productive see TV as one of many different types of occasional events to enjoy, whereas the unproductive see TV as a daily lifestyle choice. Which one are you?
Do You Know Where it All Goes?
Cable is one example of how your money can be wasted without ever realizing it.
Maybe you never thought about it, or you just thought everyone had cable. Some people do think it’s a necessity, and I get it. I grew up on TV and I always thought you had to have a TV in every room.
That is, until I actually sat down and looked at each expense I was paying out monthly.
And we have been without any sort of TV service for over 10 years.
As you go through this guide and create a budget, hopefully you’ll have moments where you realize you don’t need to be paying for some things that you’re paying for.
The next chapter is going to go over actually creating your budget.
The truth is, there are a lot of things left unsaid when it comes to budgeting.
There’s a reason it doesn’t work…or doesn’t seem to work.
I’m going to explain how to actually budget effectively and cover some unanswered questions.
Zero-Sum Budgeting + Automation
I think zero-sum budgeting is the best way to budget, because it requires you to spend every cent on paper before you actually spend it. And that’s awesome, because spending money is easy to do.
Here’s how it works:
- Download bill payment schedule. Fill out every area that is automated (more on automation in a moment), and then save it as a master copy. This copy will only contain the areas that are automated and do not change.
- Fill out the remaining categories. Now save it again for the current month. The remaining should be things like groceries, entertainment, clothing, etc.. Take your best guess at how much you’ll spend in each category.
- Track your spending. Download an app like Goodbudget to track spending. If you’re married, your spouse can download the app and you can sync them so you can track your total combined spending.
So what can be automated? Practically everything you spend on a reoccurring basis:
- Bills can be paid automatically through the company or through online banking.
- Investments (index funds, mutual funds, retirement accounts, etc.) can be drafted automatically.
- Savings can be deducted every month automatically
- Giving can even be deducted from your checking account monthly through your church, charity, organization or online banking.
Why Budgets Fail
Normal people give up on their careers and their marriages, so it’s really not surprising that they give up on their budget. Don’t be normal. But most of the reasons people give up are reasons you can avoid. Here are the most common:
- It doesn’t seem to work. Here’s the deal, it’s not going to work if you’re new at budgeting. Budgets never work the first month, or the second. Often it takes multiple months for budgets to really start being effective, but it’s worth the wait.
- Not planning the specific month. There are different expenses for different months. If you’ll be attending a birthday party, you’ll probably need to buy a gift. If it’s time to renew your license or your tags, you’ll want to put that on paper.
- Getting off track and just quitting. You’ll get off track. You’ll forget to put some expenses in. That’s perfectly fine, as long as you pick up where you left off and keep going. Missing a week or a month doesn’t mean you have to quit.
- Striving for perfection. Your budget will never be perfect. Trying to make it perfect and track every single cent is fine, until you start getting discouraged that it doesn’t work out. There will always be missed money here and there.
Don’t give up or get discouraged. Realize that everyone struggles with this and no budget is perfect.
What to Do if You Get Off Track
The most important thing you can do for your money is to track it.
Even if you completely stop every other part of your budget, tracking will keep you on…track. At least you’ll know, by looking back, that you went way over budget. In fact, if you don’t want to budget at all, at least track each purchase so you can better gauge the amount you’re spending. This can be quite an eye-opener for most people.
The fact is, good budgeting is boring. Like I mentioned earlier, I only manage about $900 each month. The rest of my money is building my retirement, funding my children’s education, giving to my church and paying other bills. All of those things will happen automatically. Actually, if I just lived each month by taking out $900 in cash and spending until it was gone, I would still accomplish my major financial goals.
Budgeting gives you the ability to see patterns and adjust amounts based on what you spend and what you need to spend.
If you start to get off track, just keep tracking your purchases. Even if you don’t ever open the budget document again.
When you come to your senses, you can easily pick up where you left off.
Some people swear by their budget. Some people swear at their budget. And others swear they had a budget, though they can’t seem to remember exactly what’s in it or where it’s at.
You used to be hard-pressed to find a finance book that didn’t recommend budgeting, but things have changed.
Several finance teachers, like Ramit Sethi and David Chilton, have started to move away from the “everyone needs a budget” mindset, and for good reason. They focus more on big savings and less on fewer lattes.
Today, I’m going to show you both sides.
Here’s why I swear by my budget, and why you don’t need one to be financially successful.
This is Why I Budget
I admit it. I don’t follow every part of my budget, precisely, every month. I’ve fallen off the budget train many times, but I’ve always hopped back on, and not for the reasons you may think.
I don’t budget to invest more, save more or spend less, though it does allow me to all of those things.
I budget for the sake of freedom.
I know that I can buy everything in my budget, when I spend every cent on paper before the month starts. That means I never feel guilty about spending $50 to $200 a month on myself, as part of my “blow fund.” I don’t feel guilty buying a new shirt when I have the clothing fund. I don’t feel guilty when I’m eating out, because I know my limits, according to my budget.
Most of all, I never wonder if I spent more than I earned, because I spent everything on paper first.
I also budget because I recognize that there are three costs associated with every purchase, as Rory Vaden points out in his new book, Procrastinate on Purpose:
- Actual Cost – The amount you actually pay. (Example: $3 for a cup of coffee.)
- Opportunity Cost – What you gave up by buying something. (Example: $3 invested for retirement.)
- Hidden Cost – The potential return you could have earned. (Example: $3 invested over 40 years with an 8% return equals $65.17.) I hope that $65 cup of coffee was good.
To me, this shows just how important it is to save a few bucks here and there on small things, because small wins can equal big wins when compound interest is involved (see my guide to investing for more on compound interest). And I’m not saying you shouldn’t buy that cup of coffee. I’m simply saying that your small purchases matter more than you think.
I’m a finance nerd, so it’s hard to justify not budgeting when I see how much of a difference a $3 purchase can make, but you may feel differently. You may hate budgeting. If so, welcome to the majority! Here’s the good news for you…
This is Why You Don’t Have to Budget
You can be very successful without ever setting a budget.
How so? By taking care of the important matters first, and then spending the rest.
Of course, you can’t spend money you don’t have or you’ll go into debt and you could ruin everything. So if you take this approach, I suggest pulling out your monthly spending cash so you’ll know when you’re out of money. You could call this the Minimal Money Management system. You plan enough on the front end that you don’t have to worry about the back end.
So what are the important matters? Well, aside from paying off all your debt and having a fully funded emergency fund (3-6 months of living expenses on a bare bones lifestyle), there are a few things that you need to take care of.
If you will set these things to automatically come off the top of your income, you will be set up for success, and you can freely spend the rest of your money on whatever you want… yes, you can buy that nice jacket or those yard gnomes you’ve been eyeing, but once you’re out of money for the month, you still have to stop spending. So make sure you can pay for things like food and fuel before you get too attached to those sexy yard gnomes.
First, start your budget, and then follow the process below.
Here’s the foundation that allows you to “spend the rest.” Make sure you’re doing these things first:
- Invest 15% for retirement – After your debt is paid off and your emergency fund is fully funded, set up an automatic draft for 15% of your paycheck to go into retirement investing. (See our free Investing Guide)
- Life Insurance – Buy the appropriate type and amount of life insurance. (See: Understanding Life Insurance)
- Other Insurance – Hold enough health, disability, auto and home insurance to cover the things that you can’t afford to replace (including your health). If you have a lot of assets, consider an umbrella insurance policy.
- Create a will – It’s important to know what’s going to happen after you die. If you have stuff, you need a will.
- Save for large purchases – There are always large purchases in the future. You may need a new-to-you car or a down payment for a home. Whatever it is, save an amount every month for this. If you don’t need the money for at least five years, go with some index funds. If you need it before that, go with bonds or a money market account. The important thing is to save.
- Give 10% – This is optional, but In truly believe that giving is the foundation of receiving, and that your finances will never be fully blessed without this piece of the puzzle. Give to your local church or your favorite charity – the important thing isn’t where you give, but that you give.
If you have all of those areas covered, you will be financially successful. Even without a budget.
The bottom line: Pay yourself and make sure you’re protected first, then spend the rest.
If you’re looking for more ways to budget without budgeting, Trent Hamm wrote a great piece on alternative budgeting methods.
I would argue that you will be more prosperous if you include a budget in your planning, but if it stresses you out and makes you crazy, it’s not worth it. After all, budgets aren’t for everyone.
It’s your decision. If you want to budget, I’ve included some tools for you.
My Favorite 2 Budgeting Tools
Format: Desktop, iPhone, Android
Personal Capital is my new favorite budgeting tool. You can link all your accounts for your budget. You can also see all your transactions in one place and link your investments to get your net worth.
Format: Desktop, iPhone, Android
Price: Free plan / Plus Plan ($5/month)
Goodbudget is my primary budgeting tool. If you prefer to manually input all of your expenses, then Goodbudget is for you. It’s simple and easy to use.
Free Budgeting Tools
Budgetpulse is great for simple budgeting, without linking your accounts to the system. If you would rather not link your accounts, this is a great manual system.
Format: Desktop, iPhone, Android
Price: Basic (Free) / Plus ($4.99/month)
BudgetSimple is just like it sounds…simple. It’s extremely easy to use; however, to link your accounts, you have to upgrade to Plus.
Format: Desktop, iPhone, Android
Price: Basic (Free) / Plus ($3.99/month) / Pro ($4.99/month)
Buxfer allows you to sync your accounts together in one place. They also let you upload your financial statements, generate reports and receive notifications if you’re overspending. It’s a great tool and you can always try the free version first and then make the decision to upgrade later or simply stay with the free plan.
dsBudget used to be my main budgeting tool since it’s easy and free, but they don’t have an app and even though the program is web-based, you can only access your information from the computer it’s downloaded on.
Format: Desktop, Android
GnuCash is budgeting financial software for your personal accounting, but it also works great for small-business accounting. If you’re looking for a more detailed accounting program, this is one of the top free pieces of software.
Format: Desktop, iPhone
Money Strands gives you the ability to compare your spending to people who are similar to you financially. It also sends alerts when you’re going over your budget.
Moneytrackin’ lets you track your spending and view reports of your spending breakdown. It’s also simple and easy to use.
Format: Desktop, iPhone, Android
Price: Basic (Free) / Premier ($95/year) / Coaching (Prices Vary)
Mvelopes is a simple envelope budgeting system that allows you to connect your bank accounts. They also offer a customized coaching service.
Format: Desktop, Apps are currently in alpha stage
Price: Basic (Free) / Premium ($9.95/month) / Super ($19.95/month)
PocketSmith gives you the ability to see daily bank balance forecasts for up to 30 years ahead. That’s pretty cool. It’s a highly comprehensive tool, but I think it will be better once the full apps are available.
Paid Budgeting Tools
Price: $49.99 one time
Money Dance is an easy-to-use, well designed and detailed budgeting program. You can also track your investments.
Price: $4.95/month (Free trial period)
PearBudget is a simple web-based app. It’s basically a spreadsheet that was turned into actual budgeting software. It doesn’t get much easier than this, but it does require a small monthly fee.
Format: Desktop, iPhone, Android, Kindle Fire
Price: $60 one time (Free trial period)
You Need A Budget does cost some money, but it’s extremely detailed and descriptive. I don’t use it personally, but if you want a complete money management system, you want this one.
But before you get a 2nd job, you should look at your expenses.
What can you cut?
What can you eliminate?
In America, we are famous for labeling our “wants” as “needs”.
So, which areas should you be cutting back on?
To start, here are some ideas to save on communication, food, utilities and insurance…
1. Consider cutting your home phone. If you still have one, it may be unnecessary. Do you really need it?
2. Look at your cell phone plan. Do you really need all of that? Only pay for what you use.
3. Look at other providers. Compare plans among providers. To really save some money on your phone bill, check out J’s article over at Budgets Are Sexy.
4. Reevaluate your internet plan. Shop around and look at all your options. You’d be surprised how similar the speeds of different internet plans are. It’s not always worth it to pay for the fastest one.
5. Cut back on eating out. Set a limit. Once per week, once per month or whatever works for you, but limit it.
6. Cook at home. I know, this is basically your only option if you’re not eating out all the time, but it’s worth mentioning. Cooking and eating meals at home can be great family activities and it’s a way to save some money. New to the kitchen? Become a better cook.
7. Use what you have. Use the food you already bought. Don’t let it go to waste. Use the last week each month to make meals that clean out your fridge and your cabinets.
8. Use coupons when it makes sense. Don’t spend 15 hours each week clipping coupons just to save $25, but some coupons are worth clipping. Be discerning and learn which coupons help the most. Sites like Coupon Sherpa can help you pinpoint deals and discounts to grocery stores, drug stores, and even Amazon. The deals are out there, you just have to look!
9. Stop paying for drinks. Drink water. It’s a much healthier alternative to sodas and juice. Plus, it’s free from the tap! If your water tastes bad, try this filtered pitcher that my wife and I use. If it’s really terrible, you may need this reverse osmosis filter.
10. Track all your food. Keep up with how much you spend on food. It’s much cheaper to bring your lunch to work, rather than eating out for convenience. And track every little snack or drink you buy at convieience stores. It adds up!
11. Turn down/up your thermostat. Each degree will save you about 3%-5% on your bill. Better yet, get a programmable thermostat and it will pay for itself.
13. Cut back on the hot water. If you don’t want to take any heat out of your showers, you could always just cut back by using cold water to wash your clothes.
14. Self-insulate your home. Weather strips and window insulator kits are just a couple of the affordable ways you can add extra insulation to save on utilities. There are also insulating blankets and covers for your water heater and air conditioner.
15. Cool for less. Cut money on cooling in the hot summer months by reducing your thermostat by one degree a month.
16. Check your coverage. Do you really need all the coverage in your insurance policies? You may be covered by two different policies for the same thing. See what you can drop.
17. Raise your deductibles. If you have an emergency fund, there’s no reason to have a high deductible. If you just take the extra money you would pay each money for having a low deductible and put it in a savings account, you will make up the difference in a few months.
18. Shop around for car insurance. When was the last time you called around and checked prices? There is always a cheaper insurance company out there, just make sure the quality isn’t lacking. We found out that Geico was cheaper for us, but we prefer the quality of USAA and it’s not that much of a price difference, but it’s good to know.
Anyone can get these diseases, but you can greatly reduce your chances by eating a healthy diet.
So then why don’t we all eat healthy meals every day?
Well first off, because fatty, processed, high-carb food tastes great, despite how it makes you feel.
But it’s also about price, right? Eating healthy is expensive. But it doesn’t have to be.
Our family of 6 spends less than $400 on groceries each month. It wasn’t always like this, it takes strategy and planning.
Here are some unique things we have done that you can do too, to eat healthy and save money…
1. Plan Your Meals Around Sales
Buy the marked down meat or the produce that’s on sale. Then you can plan meals around sale prices. If you make a menu for upcoming meals, just write down “meat” or “vegetable”, then you can decide which type to get based on what’s on sale.
The more variety you enjoy with meat and fresh produce, the easier it is to spend less on healthy meals. If you like all types of produce, you can buy what’s on sale during that season. You will also have an easier time finding meat on sale, if you eat all different kinds.
2. Drink Your Own Water
Everyone knows that water should be your main drink, but not all water is the same. If you’re trying to pay off debt, water should be your only drink. Have you tried your tap water? You can find reports on the quality of your tap water here. If it tastes bad, try using a filter, as long as it’s safe to drink. Our family uses a basic inexpensive Britta filtered pitcher. If you want to go a step further, or if you have really bad water try something like this or this.
You should be drinking water when you go out to eat too. This is a huge money saver, especially if you have a large family. You may forego eating out to save money and that’s a great plan, but if you don’t, I would urge you to consider drinking water.
The average American family eats out 3 times per week! If we assume that a glass of soda is $2, with just one child, that’s $6/meal or $18/week that an average family spends on not drinking water. That’s almost $1,000 in one year spent on drinks! This doesn’t even include beer, wine and alcohol, which would show even more staggering numbers.
3. Try Intermittent Fasting
Intermittent fasting is a way of eating, not a diet. It doesn’t focus on what you eat , it’s more about when you eat. The idea behind it is that you eat in a specific window of time each day. The most common time-frame is noon-8PM. There are several benefits to this method of eating, including increased fat loss. When your body is in a fasted state, you burn more calories. Common diets, such as the Atkins, that require you to consume little or no carbohydrates (to achieve a state of ketosis) have been proven to be bad for your long term health and shown to cause more problems than good. It’s also almost impossible to stick with an Atkins style diet as a lifestyle.
I practice intermittent fasting and have experienced great results. It’s definitely more cost-effective. I only eat 2 meals per day now instead of 4 or 5. Don’t believe all the hype about needing to eat several small meals per day. There have been no proven studies to show that eating several small meals increase your metabolism. This is just mainstream hype, mostly created by magazine articles. Sure, my meals are bigger, but overall I am eating less food, which means I am spending less money on food. Only eating 2 meals per day also makes it easier to buy your food in bulk, since you’re eating more at a time.
4. Find a Food Co-Op
Here in Oklahoma, we have a food co-op called Bountiful Baskets that reaches many cities. A food co-op is a place to get fresh, usually local, low-priced produce. It’s generally ran by volunteers, so make sure to help out, but the savings are worth every penny.
Go here to find a food co-op near you. There are even some listed in Canada, Australia and Europe.
5. Buy Frozen Fruit and Veggies
It’s important to include a lot of fruit and vegetables in a healthy diet. Buying fresh is always the best option for the most nutrition, but buying frozen is a close second and you don’t have to worry about all the sodium of canned food. Frozen fruits are great for shakes, smoothies or simply letting them thaw and eating. Not only are frozen veggies easy to prepare, they also takes up less space than fresh veggies.
6. Stop Buying Junk Food
Not only is junk food unhealthy, but it’s expensive. There is no reason to put it in your shopping cart. There is nothing wrong with the occasional bag of cookies or box of snack cakes, but it shouldn’t be a regular purchase. Use that money on meat, fruit or veggies. Our family only buys junk food when we go on vacation. It’s more of a treat than an everyday thing.
The Bottom Line
These are only a few tips to save money while eating healthy. If you want to eat healthy, you will make it happen. You will find a way.
Don’t fall prey to the general mindset that “you can’t afford to eat healthy”. That’s no excuse. There are ways to afford eating healthy and it’s very possible for you to do it.
It all comes down to having a plan, creating a solid budget and being mindful of where your money is going when you enter the grocery store. Make a list and stick to it.
One final point: I hear a lot of people talk about how spending $400/month works in some parts of the country, but not in the high-cost areas. That’s just an excuse. We’ve been able to spend this little in Oklahoma, but we also spent this little in San Diego, CA. The bigger the city, the more options you have, which means often times you can find even lower prices. You just have to go find them.
You don’t have to spend thousands to save hundreds.
Unless you want to do that. But you don’t want to do that.
That would be dumb. I don’t even know why we are still talking about it.
Since you don’t want to do that, do this…
1. Cool Naturally
An air conditioner isn’t the only way to cool your home. Try opening the windows.
No, not during the heat of the day, but on cool nights.
Be aware of the upcoming temperatures and plan when to open and close your windows. You can save some serious cash by using natural cooling at the right times.
Make sure the humidity is below 60%. Your unit will have to work hard to remove the moisture left inside if it’s over 60% and that could eliminate all your savings.
2. Move Out of the Air’s Way
Blocking vents with furniture or other things can cause your system to work twice as hard.
Keep the air flowing freely throughout your home by leaving vents and doors open.
Even using vent covers and shutting doors to unused rooms has been shown to cost more than leaving them all open.
3. Shut it Down
Remember this for your shades and your air unit.
Keep the shades closed and invest in darkening curtains. Keeping the heat out in the first place will keep your bill low.
For your unit, don’t totally shut it down when you leave since that will cause the unit to work even harder when you return, but remember to turn it up.
There’s no reason to keep your home as cold as an ice box when you’re not there. Unless, of course, you have pet penguins.
4. Use the 1 Degree Method
Start by keeping your home 1 degree warmer at night. If you’re used to 68, try 69. It’s not much of a difference, really.
After you get comfortable with that temperature, turn it up one more degree.
Over several weeks, you may be surprised to find that you are as comfortable at 75 as you were at 68. Each degree can make a noticeable difference in your bill.
5. Give Your Air Some Air
Make sure your air conditioning unit is clear of shrubs, trees and plants.
The unit will be working harder than it needs to if it can’t properly receive airflow.
Clearing the area around your unit can save up to 10% on your bill.
6. Plant a Tree
Plant a tree or two in front of your biggest windows to block heat, but not just any tree…
Go for a tree that is leafless in the winter to benefit from solar heat. Double the savings, double the fun.
This is a Big Cut
If you are able to do all of these, you may be looking at a 10%-20% savings in your overall cooling costs…maybe even more.
That will add up quickly.
If you can’t do all, just do a few. Any is better than none.
You can haggle anywhere.
And you can always save more.
Let’s start with a list of 14 one-sentence tips that will drastically improve your finances.
These are quick tips, but they will surely make a huge improvement if you take them to heart.
Remember, just because you have heard some of these before, doesn’t mean you actually absorbed it.
Read the list slowly and see if you can implement some of these, especially things that you may have “already heard.”
Hearing alone doesn’t help. It’s about acting and implementation.
Without further ado and in no particular order, here are a total of 14 One-Sentence Tips for your finances…
- Sell the useless things around the house that you don’t need.
- Cutting off your cable will not only save you money, but you will have more time to be productive in other areas.
- Always compare online prices when shopping around.
- Buy things based on what you and your family need, not based on what other people think.
- Add up the costs of your jobs (travel, food, expenses and daycare), then determine if it’s worth it for both parents to work.
- Spend less than you make.
- Compare rates for insurance companies frequently, since they are always changing, and switch if you find a better deal.
- Fine tune your budget so that you know where every cent is going and have more control over your money.
- Use Personal Capital to link your budget and all of your accounts together.
- Look for promo/coupon codes when you buy online by searching: “[site name] promo code”.
- Cut out a useless activity, like watching television, and replace it with reading a good book on finances.
- Cut up your credit cards if you have made late payments or failed to pay them off in full every month.
- Have an emergency fund for emergencies, not a credit card.
- Add at least one of these tips to your life today!
Try to implement as many as possible over the next few weeks.
You will notice a change in your finances if you do.
So that means things that are typically $2 or $3 are only a dollar at the dollar store. That also means some things that are typically 50 cents are also a dollar at the dollar store.
Then there are stores like Dollar General, which isn’t really a dollar store at all, if you’re going off the “everything’s a dollar” idea. I suppose Dollar General just means everything is generally…close to a dollar, which is more accurate, but still a little shady if you ask me.
I want to be clear that this list is talking about dollar stores where everything is actually…*drum roll please*…a dollar. Dollar stores can save you money, but if you use them for all your shopping, you may be wasting some money. Also, it’s worth noting that some dollar stores accept coupons and that can be quite lucrative, so check into that with your local stores.
Here are 15 things you should generally buy from the dollar store and some ways to save even more money…
1. Home Décor
Home decorations don’t have to be made out of the most expensive materials. Dollar stores offer really nice options for decorating your home, throughout the year or for the holidays.
Save more money: Look at the clearance sections of places like Ross and TJ Maxx. Or why not make your own? Go to some yard sales and bring some life into older pieces.
2. Party Supplies
Plates, plasticware and party decorations. Dollar stores usually have specific designs, like a one year birthday party or a going away party, but if you need a better selection, try Walmart.
3. Holiday Supplies
Almost everything you need for the holidays can be found at the dollar store. Wrapping paper, gift boxes, tissue paper, etc.
Save more money: The absolute best way to buy holiday supplies is to simply go to large retail stores like Walmart, after the holidays. We bought our Christmas tree there for 90% off.
4. Cleaning Products
You may be picky about your cleaning supplies, but if you’re not, dollar stores have a great variety. I use “LA’s Totally Awesome” for almost all my cleaning. $1/bottle.
Save more money: Make your own cleaning supplies for things like detergents or turn to coupons. Coupons may not always be worth your time, but you can get cleaning supplies practically for free with them if you do it right.
The more expensive spices may be hard to find at your local dollar depot, but for the basic spices, go to dollar stores.
Save more money: Why not make your own?
6. Preserved Foods
This one is 50/50, but when it’s a good deal, it’s a really good deal. Try to keep track of what you pay for canned and other preserved foods, on average.
Save more money: Can your own food. The Frugal Farmer is a great place to learn about canning.
7. Food Storage Containers
If you aren’t looking for quality, but just a cheap way to store food or possibly containers you can give away, the dollar store has the best deals.
Save more money: Walmart’s Black Friday, hands down. You can wait a little later after all the crazies leave to buy the storage containers. It will still be there.
Once again, if you’re not looking for quality, but just looking to stock your cabinets, the dollar store is your friend. Cups, mugs, glasses, plates, etc.. It’s really great if you’re just starting out.
Save more money: Black Friday. Kitchenware isn’t the highest demanded thing, so come after the crazy train leaves.
9. Coloring Supplies
Crayons, markers and colored pencils are cheap at the dollar store. And you can usually get actual Crayola brand if you want it. (Because everyone knows the other brands are junk, or is that just me?)
Save more money: Back to school sales. Get there early. Almost everyone procrastinates until the week before school. If you go within the first week of the sale, you’ll be shopping freely and possibly alone in the aisles.
Dollar stores often have name brands for cheap. Like everything on this list, it depends on the store, but if you shop around, you’ll find deals on batteries at dollar stores.
Save more money: If you use a lot of batteries, look into rechargeable options.
This one is especially true for movie theater candy. So if you’re one of those theater-goers with the extra large purse , you’ll love the dollar store.
Save more money: Look for sales in the actual candy aisle instead of just looking at the checkout counter. Or just stop eating candy.
12. Greeting Cards
This is the best thing on this list in my opinion. I buy all my greeting cards from the dollar store. They usually still have the $3 or $4 price on the back, so you really feel like you’re getting a deal.
Save more money: Make your own printable cards or use a free greeting card service to send an e-card. Saving the trees and saving money, right?
This is especially true for children’s undergarments. Socks and underwear are worth checking out at the dollar store.
Save more money: Outlet malls! Or back to school sales.
14. Crafting Supplies
Crafting items, such as scrap booking supplies are cheap at the dollar store. Once again, you’re not looking for the highest quality, you’re just looking for the visual effect.
If you can find one of those dollar stores that sell the actual mylar balloons for a dollar and air them up for free, you won’t find a better deal. Some even offer a custom design or wording on them.
Every dollar store is different, so don’t be surprised if you have had a different experience with something on this list.
Just remember to check the dollar stores out and know where to get the best prices in your area.
It’s hard to beat the prices, but what if I told you that you can do better?
I’m not talking about shopping somewhere else.
I’m talking about better deals where you already shop. On Amazon.
Here are 9 tools to become a master shopper on Amazon…
What Works and What Doesn’t
There have been numerous tools through the years for shopping on Amazon.
There used to actually be a website that allowed you to get paid when someone bought you something off your wish list…yeah, shut down. It was called AmzWsh and the entire idea of it seemed a little sketchy to me.
I’m actually going to keep this list up to date. I want you to be able to come back to list and use all the resources in the future, including resources I add when I find out about them.
Without further ado, here they are…
9 Tools to Become an Amazon Master Shopper
Check out these 9 tools and the 3 bonus tools at the end…
This one is a must, even if you don’t like camels. It’s a free service that allows you to follow the price of an item and then receive a notification when the price drops. It’s an automated way to save and keep saving. There’s really no reason not to use it.
2. Price Jump
Enter the URL of the product you’re interested in and this site will let you know if Amazon has the best price. It will compare other websites that sell that type of product. For example, if you’re looking at electronics, it will compare to places like New Egg and Tiger Direct. This an extremely simple way to save.
Visit: Price Jump
This is like buying used, but not really. Many of the deals are just open-box products. Never used, but the box was opened. The important part is that it’s all backed by Amazon’s return policy. There is nothing “as is” about Amazon Warehouse Deals. You buy a product, if it isn’t what it’s supposed to be, you return it. No risk.
Visit: Amazon Warehouse Deals
Markdowns, clearance items, overstocks and more. That’s what the page says. You can score some pretty great deals here, just make sure you don’t buy things just because they are on sale. That can get you in trouble.
Visit: Amazon Outlet
Trying to get to $35 for free shipping? Simply enter the amount you have left to reach $35 and hit enter. It will show a list of items you could add to your cart to get free shipping. This is a great alternative to buying useless junk, just to get free shipping. Buy stuff you actually need.
Visit: Amazon Filler Item Finder
This is an autoship type service. If you know you need certain products every month, subsribe and save. Save up to 15% and get free shipping.
Visit: Subscribe and Save
Everyone knows about Amazon Prime. Amazon Mom is also becoming a popular way to buy diapers at a discounts. But did you know about Amazon Student? If you’re an extreme Amazoner, parent or a student, these programs can save you some money.
Visit: Amazon Prime, Amazon Mom, Amazon Student
Yes, Amazon will usually price match. If you find a lower price elsewhere, just click on “tell us about a lower price”. Why not just buy the product there, instead of getting Amazon to price match? Because you can earn cash-back that I’m going to tell you about right now…
You should be getting cashback from Amazon. Ebates is one site that allows you to earn cashback while shopping on Amazon. We can’t forget the Chase Amazon Visa card. Earn 3% cashback on Amazon purchases? Yes, please. The best part is that you can combine the two.
Visit: Ebates, Chase Amazon Visa
Shopping isn’t all about Amazon.
Lest we forget the classics like eBay and Walmart. Here are 3 bonus tools…
1. Fat Fingers
This is a great way to find mispellings of items you may be looking for on eBay. It works best for things that are hard to spell, but you should always give it a shot.
Visit: Fat Fingers
2. Bay Crazy
Another great eBay tool. My favorite feature is the listing of auctions that are ending soon with 0 bids. You will find some great deals there. You can also use this site to search for misspellings, like Fat Fingers.
Visit: Bay Crazy
Finally, a tool for smarter shopping at Walmart. If you find a lower price after you bought something from Walmart, just scan your receipt and Walmart will give you a gift card for the difference.
Visit: Walmart Savings Catcher
It seems like it was somewhere in my childhood, but…it’s been a while.
We spend money. All the time. That’s life.
Why not make money while we spend? It’s very possible and here are 11 ways to prove it…
Get Smart About Credit Cards
We all know about the credit card rewards out there.
You see the ads in the mail everyday…
“Earn up to 5% cash back on your purchases”
“We offer the highest cash back of any card”
The truth is that nobody offers the highest cash back on everything.
That’s why you need more than one credit card to get as much cash back as possible.
Let me go ahead and preface the rest of this article by saying two things about credit cards:
- If you use credit cards, pay them off fully every month
- There are other ways to make money when you spend
Now let’s get back on track…
Choosing the Right Card
It’s common for certain cards to offer a higher cash back for certain purchases.
The percentages will be different, depending on the category, such as:
- Specific stores
- Home improvement
Find cards that match your normal purchases.
It’s important that I say “your normal purchases”. Don’t get caught in the trap of buying things you don’t need, or things you wouldn’t normally buy, just to get the cash back. That doesn’t make sense, unless you are a crazy person, but you’re not a crazy person, you are a money-savvy genius…or close to it, at least.
If you have a hard time remembering which card is which, just take a Sharpie and write “Gas” or “Groceries” on the card.
Also, make sure you do your research to find the best cards.
I shop on Amazon.com all the time, so I have an Amazon.com Visa that earns 3% cashback on Amazon purchases. That’s my most used card.
You can simplify the process of finding the right card by using the Wallaby Financial App. It will tell you which card you should use.
If you have multiple rewards programs, you can keep track of them all with Points.com.
Like I said earlier, there are other ways to make money while spending it. You don’t have to use credit cards. That’s only one way. Let me show you the rest…
Get Paid to Shop
There are a plethora of websites that offer rewards for shopping through them.
Basically you will buy everything you normally buy, but instead of going to the store or the website, you go to one of these sites first. You are then linked to whichever website you want to shop with.
For every dollar you spend, you earn a certain amount of cash back for shopping this way.
Then you can use your credit card to make the purchase and get rewarded twice!
Here are the other 10 ways to earn while you spend:
- Swagbucks – Earn money for all kinds of things.
- Ebates – My favorite! Earn while you shop.
- Fat Wallet – Another great way to earn while you shop.
- Memo Link – Earn while you shop here too.
- My Points – A fourth way to earn while you shop.
- My Deals Club – Great coupons and coupon codes.
- Extrabux – Up to 30% cash back through them.
- Shop At Home – Cash back for online shopping.
- Big Crumbs – Yet another cash back shopping site.
- Mr. Rebates – One more cash back website for you.
Maybe you were already taking advantage of these rewards. Maybe not. But hopefully now you will.
There are so many ways to earn while you spend, why not take advantage of them all?
How to Save Money on Books
Leaders are readers
Read on for 4 ways to get cheap books and free books!
1. Your Book May Already Be Free!
Before you buy a book, make sure it is not already free online. Many books that are in the public domain are available online for free.
BooksShouldBeFree.com has a huge selection of books and audio books for free.
Free-eBooks.net is a great resource for free books from rising authors.
If you plan to just read the book one time, why not use the library? It’s a great resource that’s often forgotten about.
2. Instead of Buying, Try Swapping
If you just read books one time, there are many great services for book swapping. Book swapping is where you swap books with other people; basically everyone shares books. What a great idea!
Here are some of the most popular book swapping websites:
3. Get the Most out of Used Book Stores
Used books stores and thrift stores are a great place to find cheap books, but they can be overwhelming.
The best way to maximize your time in used books store is to create a list of all the books you are currently looking for and start search for them. To make sure you always have your list, it’s best to keep it on your phone for easy access.
You also have the authority to bargain for a lower price at these stores. They may not be able to lower the price, but it doesn’t hurt to try!
4. Buy Cheap Books Online
We all know that amazon.com is a great place for cheap books, but don’t forget to also try other websites. Check eBay every time you buy a book to compare prices. There is a new eBay company called Half.com that is best when searching for books on eBay.
You can always search the internet for coupon codes to get discounts and free shipping. Just type in the name of the website (i.e. Amazon) then type in coupon code or promo code and see what you can find. It’s worth a try.
Don’t forget bookstore websites such as:
There are so many ways to buy cheap books and get free books online, so there is no reason to buy books without shopping around. Check out the websites in this post and save money on books!
How to Save Money on Technology
Here are 3 tips to keep you up to date with technology, while keeping your finances in check…
Just Hold On a Second
I remember buying a 27″ non-flat screen television for $700. I also remember buying a 1.4 megapixel camera for $500. Those were actually good deals at the time. Everyone knows how fast technology is changing so why don’t we just hold on a second?
If you can wait a year or even a few months to buy the newest piece of technology, the price will drop substantially.
At our home, when the PlayStation 4 came out, we bought a PlayStation 3, for a steal! Not only are the older items cheaper because they are older, but many people who buy the new systems are trying to get rid of their old systems and they will end up selling them for next to nothing.
500 Terabytes, Really?
Ok…so I know you can’t really find a 500TB hard drive right now, but I am not exaggerating by much. Why would you buy the biggest, fastest computer, only to surf the internet and check your email?
Too often, we get caught up wanting the best of the best, when we really just need something to do the job.
Do your research to figure out what you really need. Don’t spend a fortune on something that doesn’t really suit your needs.
Keeping up with the Joneses, when it comes to technology especially, will absolutely ruin your financial progress.
Know Where to Go
Last, but not least, it’s important when you do decide what you need to buy, that you know where to get it. Shopping online is usually the best place to go for new technology and old. Here are a few great websites (that I personally use) when shopping for electronics online:
- NewEgg.com – Primarily computers and computer parts. Also includes other electronics. New.
- Amazon.com – All types of technology. New and used.
- eBay.com – Auctions on all types of technology. New and Used.
- TigerDirect.com – Similar to NewEgg, but a good for comparing prices. New.
- SonicElectronix.com – Great for car, boat and home audio. New.
After spending the majority of the day at a certain car dealership, we ended up driving a new car home…well, new to us.
We are happy with the vehicle, and we were even happier with the price.
Long story short, they were asking almost $9,000 for a vehicle that we ended up purchasing for $2,800.
How did we do that? We used these 6 haggling hacks (I hope you can appreciate the alteration) to get the deal…
1. Be Flexible
We were flexible on everything except the price.
If you’re flexible, you can always move to a different car (or a different seller) when the negotiation doesn’t work out.
We wanted a vehicle with at least 6 seats for under $5,000.
That’s it. We didn’t care if it was a minivan, SUV, or a bus…if it fell within our criteria, we were interested.
This opened up a lot of options, which brings me to my next point…
2. Don’t Get Married at the Dealership
I’m talking about to a vehicle, not to a person. That would be a weird wedding.
There are better places to get married and better things to marry than a car…like a human, for example.
Don’t marry the vehicle you want, even if it’s the “car of your dreams”.
It’s important to know what you want, but not to fall in love.
That’s exactly what the dealer wants.
It won’t be the end of the world if you don’t buy that exact vehicle.
We didn’t fall in love, so we could always walk away, which leads me to…
3. Don’t Be Afraid to Walk Away
We left the dealership and they actually called begging us to come back. That happens when they know you are serious and they know you have money (either in the form of cash or a credit score).
The deal isn’t going anywhere, and if it does, you’ll survive.
Once you have your price set in stone, don’t budge.
You can always find a good deal. Seriously, you can.
Sometimes you have to just walk out so they know you’re serious. You can always come back.
Be prepared to devote at least one day to buying a car and that may mean walking out more than a few times.
4. Be Informed and Know the Value
You should be as informed as possible. It’s easy these days, since most of us have the internet in our palms.
The more informed you are, the less they can take advantage of you.
You can compare the value at these sites:
Most dealerships use these guides, along with others, such as a “black book value”. But just because they show you a piece of paper with a price on it, that doesn’t mean it’s accurate. Edmunds actually sent a staff writer undercover as a car salesman for a few months and one of the things he discovered is that some dealerships just make up a value and hope you’ll pay high-dollar for the vehicle, instead of questioning the price.
Salesmen tend to…”fluff” the truth a little, so don’t always trust the value they come up with.
Know the value of what you’re looking at. Do your research. You’ll want to check a few things out to get the real value.
It’s a good idea to take a test drive to a local mechanic for a quick inspection. If that’s not an option, try out Firestone or Auto Zone for a quick diagnosis (it’s not completely thorough, but it’s better than nothing).
You can check a lot of it yourself. Just remember to check everything. It’s easy to be sold by a cold A/C in the middle of July, but how well does the heat work?
5. Don’t Be Afraid to Hurt the Salesman’s Feelings
They will try every tactic in the book. They will try to make you feel guilty or even obligated to buy a car, but you don’t owe them anything.
You should see how much they would be willing to help you after you buy the car…probably not much. It’s all sales gimmicks.
The only decision that matters is the one you make. It doesn’t matter what the salesman wants. It’s your money. It’s ok if you decide not to buy and they get upset.
6. Don’t Finance, Get Rewards Instead
Pay cash. plain and simple. If you have to finance, you can’t afford it.
You have more negotiation power with cash. When you finance, they can always talk you into buying more car.
You should never finance something that depreciates.
We used a credit card for the purchase to get the cash-back. More money saved!
Just be sure to pay it off in full when the bill comes in.
One Last Tip
We actually had a great experience buying our car. It was fun to haggle and watch the price sink lower and lower.
You will usually get a better deal when buying private-party, but we chose to keep our options open to dealerships as well…and it worked out well for us.
It was sad, however, to watch the couples sitting in the different offices. Sad, upset and even scared. One lady was crying!
That’s what happens when you finance and especially when you overpay. It can be stressful.
We walked away knowing our car was paid in full. It’s a great feeling.
One Last Tip: Make sure everything that is promised is on paper. A tank of gas, gift certificates, a TV…these are a few examples of what dealerships will do to earn your business. Make sure, if you haven’t already received it, that it’s in the paperwork or you might as well forget about it.
And don’t forget to ask for the CarFax Report. No need to pay for one yourself. Any reputable dealership will provide one, free of charge.
5 Easy At-Home Car Repairs You Can Do Yourself
It seems every time I take it to a workshop, they find things wrong that I never even heard of. Things that end up costing me money I hadn’t planned spend—not now, anyway.
So I figured there had to be a better way to do basic repairs, and save not only the cost of the materials and labor but also the “extra” things mechanics always seem to uncover.
Here are 5 easy at-home car repairs…
1. Changing the Air Filter
There’s lots of contradiction about how often you should change the air filter, and it varies between every 3,000 miles and every 12,000. If you don’t drive much you can go longer in between changes, but if you drive a lot and especially in rough conditions, you should rather err on the side of caution and go for more frequent changes.
It takes all of about five minutes to change an air filter in most modern cars:
- Look for the filter under your car’s hood, or check your owner’s manual for its location if you’re unsure. You’ll usually find it in a black box with metal clips holding it closed.
- Open up the box and take a look at the air filter and the way it fits into the casing. Take the filter out and see how much dust it holds.
- Insert the air filter into the casing the way it was positioned, and close the metal clips on the box to seal it in.
Voila! Your air filter is either cleaned or changed. And it sure beats giving up your car for a day and paying for a mechanic’s labor for an hour.
2. Flushing the Radiator
With most vehicles, the radiator only needs flushing every year or two. When it needs doing, however, it’s vital that you give it timely attention if you want the car to keep running cleanly and efficiently.
- Find your radiator drain plug using the owner’s manual. Unscrew it and let the coolant drain into an empty bucket or bottle. Replace the cap, fill the radiator with a flushing solution and water, and start the car.
- Let the car run until it warms up to the normal temperature, then turn the internal heater on high. Run the engine for another 10 minutes, then turn it off and allow it to cool completely.
- Drain the flushing solution the same way you drained the coolant and fill it with fresh coolant. The hardest part of this task is making sure you dispose of the old coolant (and the flushing solution) safely where pets can’t drink it by mistake.
3. Obvious Oil Options
Oil changes are one of those pesky tasks that usually require sending your car to a maintenance workshop. Changing your oil and oil filter is an obvious way to avoid having to do so. It’s a messy, dirty job, but I’d rather clean my hands of grease afterwards than part with hard-earned cash!
- Drive your car around the block to warm up the engine and loosen the oil, then allow it to cool.
- Jack up the car, get underneath and find the oil pan. Unscrew the drain plug and drain the old oil out. Replace the plug.
- Locate the oil filter using the handbook, and remove it with a filter wrench. Lubricate the new oil filter’s gasket with some clean motor oil and tighten it in position.
Fill the new filter two-thirds full with clean oil using a funnel to avoid spillage. Use your dipstick to make sure you’ve put in enough.
4. Keeping the Battery Clean
There are few car problems as annoying as a dead battery, and often the cause is simply a build-up of dirt on your terminals.
- Unclip the negative cable from your battery.
- Disconnect the terminals, using a flat head screwdriver if you need to.
- Clean the posts with a professional solution or a mixture of baking soda and water, using a wire brush to scrub around them.
- Rinse the solution with clean water, dry the posts thoroughly with rags and remove all traces of moisture.
- Reconnect the battery terminals to the posts.
Honestly, could it really get any easier than that?
5. New Windscreen Wipers
Ok, even my mother can do this one herself. It’s always fun to see workshops offering free installation of new blades, because there’s really nothing to it: Buy the right blades for your make and model. Lift the wipers and press the tab underneath the wiper to remove the old blades. Attach the new blades to the wiper arm. That’s really all there is to it.
Take the plunge.
All you have to lose is some unnecessary expense and inconvenience, which I’m sure you can do without anyway.
When people see how much money she saves, they always want the inside scoop.
Here it is! Ladies and gentlemen, I introduce my wife to give you some saving advice…
From door handles to baby gates to the cabinets under the sink, we do a thorough job of child-proofing our homes.
But do we make sure our finances are child-proof?
With children come new expenses. Expenses that can get out of control if we don’t have a plan.
Here are 21 tips for child-proofing your finances…
1. Get Free Products
Sign up for baby clubs of products you use.
They will send you coupons for things you’re already buying.
You can also get samples from your OBGYN or pediatrician. I did not pay for prenatal vitamins the entire time I was pregnant (and for a couple months after I gave birth). My OB gave me what I needed.
This can also be true for some prescriptions at the doctor’s office. I can’t tell you how many times I didn’t have to buy a prescription because I asked the doctor for free samples.
2. Don’t Say “No” to Baby Showers
They take time, but what you get is completely FREE.
If you get stuff you won’t use, just return it for stuff you actually need.
3. Use Cloth Diapers
Using cloth diapers is not only great for your baby’s skin, but it can save hundreds over the span of the diapering age.
I chose to do a mixture of cloth and disposable. I use disposable when my child sleeps so I don’t have to change him every time he wakes up (plus, it’s easier to get him back to sleep).
I also use disposable diapers when we go into public or when someone else watches him away from home. Then I don’t have to tote dirty diapers.
I end up using 1 or 2 disposable diapers a day instead of 6-10 or even more!
I have heard of babies using upwards of 20 per day!
You can also use wash cloths instead of wipes. You can dampen them with water and add a little Witchhazel to the mix if/when they get a diaper rash.
If you are able to, breastfeed your baby. It saves time and money.
With our first child, I was unable to produce enough milk, so I breastfed as much as I could, then supplemented with formula for the rest of her diet.
Also, be sure to check with your hospital or insurance provider if you need a breast pump. Sometimes they are free or at least discounted. You can also rent one from some hospitals.
5. Be Smart About Baby Food
Solid baby foods can be made in a blender or food processor. You can feed your baby whatever you are eating (make sure to introduce foods according to what your pediatrician suggests).
You can also buy canned veggies and process/blend those for quick feedings.
For the ease of it you could try canned pumpkin or unsweetened apple sauce. It’s already a good consistency.
6. Don’t Pay Retail for Your Car Seat
Make sure to get your car seat from a trusted source.
Always check to see if the car seat has been in an accident and check it’s expiration date (they have expiration tags on the bottom).
That being said, a car seat can be a great hand-me-down from friends or family. Or you can always reuse one from an older child.
7. Plan Ahead
Have a small bag in the car with a few diapers, some wipes, a change of clothes and some snacks.
This will keep you from having to make “spur of the moment” purchases when something unexpected happens.
8. Compare Hospital Costs
All hospitals are not created equal.
Some hospitals charge for television usage as well as other “perks” such as single recovery rooms.
Keep this in mind when you are looking at the potential overall cost of your stay.
And just so you know, you or your insurance company has paid for all the items stanched under your little ones bassinet. Don’t forget that stuff. Baby wash, diapers, thermometer/covers, wipes…it’s all yours!
9. Don’t Immediately Go to the Doctor
If it’s not a life threatening issue, call your doctor and talk to them over the phone instead of automatically making an appointment
A lot of times they can diagnose and even prescribe a treatment over the phone, potentially saving you the cost of a doctor’s visit.
Many times you can borrow baby items from a friend or relative who isn’t using them.
Some big ticket items such as a breast pump, baby swing, jumper, or car seat can be borrowed at zero cost to you.
11. Swap Sitting Services
Alliteration aside…ask a trusted friend to swap sitting with you.
They can watch your kids one night and you can watch their kids another.
If they don’t have kids, maybe you could swap them some other service such as dog sitting or mowing their lawn.
This not only saves you money, but it saves your friend’s money too!
12. Don’t Be Afraid to Say “No”
Kids will be kids. And that usually means they ask for a lot.
It’s a great thing to get them what they want…sometimes.
Learn to tell them no, especially if it is an impulse request, but don’t forget to explain why you are telling them no.
My daughter asks for a lot after she sees a commercial or walks down the toy isle.
Does she usually remember that toy exists a week later? Nope.
I listen to her requests and file them away. When she asks for something often, that can give me a great gift idea for the next holiday!
13. Know What Your Insurance Covers
Insurance doesn’t always cover everything.
I always discuss what my insurance covers with my doctor and let them know that I DO NOT want any procedure that is not covered by my insurance unless they talk to me about it first.
A lot of doctors just follow a routine and it can end up costing you more if your insurance does not cover their “routine”.
Some insurance companies don’t cover things like the 2nd ultra sound when you are pregnant unless it is medically necessary. Speaking of pregnancy, if you don’t have insurance, some hospitals have a reduced payment plan for births (among other things). It never hurts to ask!
14. Count the Cost of Daycare
It isn’t always beneficial for both spouses to work outside the home.
If the cost of daycare outweighs (or comes close to) the income brought in by the second spouse, you might want to reconsider. At least calculate what you actually earn after expenses.
For instance, if day care is $300 per week and the second spouse makes $9 an hour for 40 hours, they essentially added $60 a week to the total household income.
What could you cut back to save $60 a month and have the second spouse stay at home?
After expenses like commuting and eating out, there may be even less than $60.
15. Don’t Always Buy in Bulk
Always calculate cost per ounce or item such as per diaper.
Contrary to popular belief, the bigger package isn’t necessarily the best price.
I also find that quite often they are close to the same price per ounce/item and with a coupon; it makes the smaller package a better deal.
Take the time to check. It’s worth it.
Some stores list the price per ounce on the shelf tags. Double check these as well. Surprisingly, they are not always correct.
16. Baby Stuff? Think Resale, Not Retail
Buy baby stuff from resale shops, yard sales and other second hand places.
Facebook swap shops are great for this!
You can purchase baby toys such as jumpers for pennies on the dollar and quite often, they are barely used because of how quickly they are outgrown.
17. Be Reasonable With Baby Clothes
Why not purchase baby clothes used as well?
Baby clothes are worn only a hand full of times before they are out-grown.
If you buy new, you end up paying $15 for an outfit that you can sell for $1 a month later when your baby out grows it.
Also, buy unisex colors/styles so that they can be reused for more babies in the future. You never know what (or who) is going to happen.
Forego the shoes. They outgrow the footwear very quickly. Shoes are cute, but they are unnecessary for babies until they start walking.
18. Compare Prices
Before you buy, make sure you are getting the best deal. Many times you could buy items for less on the internet or at another local store than the “one” you always shop at.
No one store has the best deal on everything.
Try to know the average price of the items you buy frequently.
Kalen and I frequently buy things like diapers off of Amazon instead of in store. You can often buy them with a damaged box (but no damaged or open diapers) for much less.
Amazon also shows the price per count for easy price comparison.
While you are comparing prices, make sure to check out the reviews on the products you are considering buying to see what others like you have to say about the product’s value. You can also talk to friends or family to see what their favorite or most useful buys are.
19. Buy What You Need When You Don’t Need It
If the item is not perishable or doesn’t expire quickly, buy it when it is on sale or when you have a coupon. Or both!
If you don’t do this, you know you will have to buy the item anyway and when you do, you will end up paying full price for it.
Why pay full price for anything, really?
Here are a few things that you could be looking for:
- Paper Towels
- Toilet Paper
- Laundry Detergent
- Shaving Cream
This is a great concept for Christmas and holiday gifts too; you can buy things all year round when they go on sale and put them away for later.
20. Pay for the Product, Not the Marketing
You may find a store brand or a less expensive brand that you like just as well or better than the one you have always used.
Often these brands are made by the same name brand companies, just without all of the fancy packaging.
Name brands are mostly only more expensive because of the marketing, advertising and packaging.
21. Don’t Buy What You Don’t Need
This seems obvious, but we still do it.
Do we really need a fancy expensive diaper disposal pail? Why not use a grocery sack? Tie up the used diapers and throw them out.
Do we really need 20 outfits of one size? Why not use 6 or 7 and just wash them every couple days?
This also works well with our cloth diaper regimen.
What about a changing station? Could you use the top of a low dresser? Why not use the floor or the bed?
Sometimes saving money on what you “need” can be as simple as challenging the concept of what is “needed”.
5 Quick Date Ideas for Under $10
Is it really worth it? Sometimes, but often it’s not.
The dates below are great ways to save money and spend time together. Some of them involve using things you already have, like fuel in your car, food in the cabinets or other things at home, but the point is that you should be able to do these dates without coming more than $10 out-of-pocket.
Average cost: $0-$10
This is also known as the “spend as little as possible” date. On this date, you will be the opposite of a high-roller; you will be a low-roller. The goal is to do as much as possible, while spending as little as possible. You can find great coupons and gift certificates online at places like restaurant.com and groupon.com. Use gift certificates that you may already have. Opt for the free things that allow you to spend quality time together, such as walks, hiking, house hunting (unless you actually buy a house, then it turns into a high-roller date!) or looking at Christmas lights. You will find that this is often times more fun than expensive dates.
2. Dollar Date
Average cost: $2-$10
Lest we forget the dollar movie theaters. They are still very much alive in many towns and if you have one, you should use it! I’ll admit that movies aren’t the best dates for interacting with your date, but occasionally I think it’s a good idea. Dinner and a movie? Make dinner at home with things you already have. Use coupons and gift certificates to make you meal as cheap as possible.
3. The Frugal Photographer
Average cost: Free
This seems to be a popular idea, but that’s because it’s a great idea! Find a great location, or two, or three! As many as you want, really. Take a camera and take pictures together. You can take pictures of nature, each other or old structures downtown. You can save the pictures and later have them framed for the memories. This is a really great way to spend time together and keep some of the memories. It’s also great for a picnic if you go somewhere scenic!
4. The Aluminum Chef
Average cost: Free
Maybe we can’t afford to be The Iron Chef for under $10, but we can be The Aluminum Chef. This one is simple. Cook together! Use things you already have at home and make a full meal. This works great for just the two of you or the whole family. Make an appetizer to eat while the main course is cooking, then make a desert! Cooking together is a great way to spend quality time with each other and create a wonderful free (or, at least, already paid for) meal. This is one of my personal favorite quick date ideas.
5. Game Night
Average cost: $0-$10
Playing games together is a great way to have fun, spend time together and save money! Pull out the board games or break out the Playstation. Either way, you are doing it together and that’s what makes it fun! For dinner you can buy a frozen pizza to cook while you are playing games. Just pretend like it’s delivery and if it’s Digiorno, it shouldn’t be hard to pretend.
Cheap dating is much easier when you are in agreement with your mate about saving money, but it can still be done without feeling cheap if you are the only one trying to save money.
Quit spending all of that money on dates and you can not only improve your wallet’s health, but improve your relationship’s health by spending quality time together. Remember, it’s not about the money, it’s about the memories!
- Get your own home appraisal
- Get a professional home inspection
- Get a real estate agent that knows their job
- Get a feel for the area by talking to some homeowners
- Get everything in writing – verbal agreements don’t hold up
Once you have found your home and you’re ready to get a mortgage, it’s extremely important to get the best interest rate you can find; it’s amazing the difference 1% can make on how much you pay over the life of the loan. If you already have a mortgage, run the numbers to see if a refinance is right for you.
Let’s start there: refinancing…
Sometimes it makes sense.
Sometimes it doesn’t.
And sometimes it will force you to spend a lot of money with little or no return.
Doesn’t that remind you of the government?
So, when does it make sense to refinance?
There are ways to figure that out and there are some things you need to know about refinancing…
Refinancing is the process of taking out a new loan to pay your existing loan.
There are several reasons for this:
- Lowering your interest rate
- Shortening the term of your mortgage
- Switching one type of mortgage to another
- Retrieving some of your home equity
- Possibly even debt consolidation
But, wait! It doesn’t come free… or even cheap, really.
There are costs associated with refinancing, such as:
- Appraisal fees
- Application and processing fees
- Title search fee
- A percentage of the loan’s principle
Like I said, it’s not always cheap. But…it’s often worth it.
Lowering Your Interest Rate
When seeking to lower your interest rate, you need to make sure that the change is enough to be worth it.
Refinancing companies will usually run your numbers and tell you whether or not it is best for you, but it’s best to know for yourself.
Use the calculator below to figure out how much money you will save with your new interest rate. Weigh that against the estimated closing costs for refinancing. Make your decision.
Even a 1% drop in your interest rate can make a huge difference.
Shortening the Term
Generally, the shorter the loan, the lower the interest rate. This is typically a win – win.
As long as you can afford the monthly payments and everything else makes sense, you should go for the shorter mortgage, even if it requires you to refinance.
It is easy to pay off a 30 year mortgage in 15 years, but it’s easier not to.
That’s why most people don’t do it.
If the interest rate is higher or the same, you will need to run the numbers.
If interest rates are down and you are locked in at a higher rate, you may even be able to shorten your mortgage without changing your payment.
Shortening your term makes much more sense in the earlier years than the later years, but once you run the numbers, you will know if it works for you.
Switching Loan Types
If you have a “creative financing” type of loan, such as an adjustable-rate mortgage (ARM), switching to a fixed-rate mortgage is a good idea.
At a minimum, you are reducing the risk of having interest rates skyrocket.
Creative financing can be very risky, so make sure you know what you are doing if you decide to use it.
Don’t fall into the trap of thinking that creative financing is the only way you can afford a home in your area. If that’s the case, you can’t afford to live there.
Tapping Into Home Equity
Not a good idea.
If you need to borrow money from your home equity, you can’t afford what you are buying.
As far as emergencies, use an emergency fund.
Running the Numbers
Basically, you should run the numbers to see if a refinance makes sense for you.
Hopefully you have a better understanding of what to look for.
You have everything you need to make the decision. Now you make the call.
Some people believe paying off your mortgage early is dumb. Let’s see why they think that…
Why is it Dumb?
I have read the articles on why you shouldn’t pay off your mortgage early and why it is “dumb” to do so.
Those arguments, for the most part, are pretty terrible.
Obviously, check to see if you have a pre-payment penalty, but if it isn’t that high, it may still be a good idea to pay your mortgage off early.
Don’t Pay Off Your Mortgage Until…
One of the main things people will say about paying your mortgage off early is that you need to have the rest of your debt paid off first.
Really? Is that not obvious?
What should be paid off before you start aggressively attacking your mortgage?
Just about everything.
- Personal loans
- Credit card debt
- Student loans
- Auto loans
- Medical bills
…to name a few.
Your mortgage should be the last debt you pay off.
I actually read an article that explained how you shouldn’t pay off your mortgage early, because your finances could “go south” and you may need to take out the extra equity you’ve put in. Come on, people! That’s why you have a fully-funded emergency fund before you start pouring money into mortgage payments.
Do This First
It’s equally important to set yourself up for success before you pay off the mortgage.
So do this before you begin to aggressively pay off your mortgage:
Many people will also tell you that you need to make “sufficient contributions” to your children’s education accounts, but obviously that is up to you. Don’t feel like you “need” to do that before paying off your home. It’s not your responsibility to pay for your children’s education, but it is nice and [hopefully] they will appreciate it.
Why You Should Pay Your Mortgage Off Early
Once your home is paid off, you [usually] cut out your biggest payment.
Talk about setting yourself up for success.
Just picture it…
You now own a huge asset that is paid in full. Your home is no longer the liability it once was since you no longer paying for it.
Sure, you have maintenance costs and repairs, but when your home is paid off and you have a fully funded emergency fund, your cashflow can take care of most of those expenses.
This should get you excited about paying off your mortgage:
- You can live in a home that you own instead of a home the bank owns.
- You have the option to sell you home for pure profit.
- You can live on much less since you lost that huge payment.
You can’t set yourself up much better than that.
Yes, you should pay your mortgage off early.
Once you have done everything mentioned here, get to work!
Another Option: A Compromise?
There are strategies for paying off your home early. We’ll get to them in a moment.
Those strategies are great and they work.
With mortgage rates being so low, why not invest the extra money instead of paying off your home?
I really don’t think you have to pick. I think you can do both.
If you want to pay off your home early, this may be the best strategy for you.
Let me explain…
Meet in the Middle
I haven’t read about this strategy before, so I am just going to claim a name!
I am calling it “meet in the middle”.
For this article, we will refer to these two crowds as the “OCD Investors” and the “Debt Haters”.
The “OCD Investors” think, with mortgage rates being so low, you can earn more money by investing than you can save by paying off your mortgage early.
The “Debt Haters” think, as long as you have a mortgage, you are in debt. And they hate debt (hence the name).
So, who’s right? Both of them.
Can’t We All Just Get Along?
I have devised a plan.
A plan to unite OCD Investors and Debt-Haters everywhere
It’s as simple as investing the extra money you would be putting towards your home.
Keep steadily investing until you accumulate the amount that you owe on your home.
Or, in other words, until you meet in the middle.
To start, just figure out how much you can contribute each month and start investing.
Make sure to use a separate account from all your other investments.
If you can’t afford the fund you want, start with a mutual fund that has a smaller initial investment, then keep upgrading once you have enough for the fund you want.
Once your investment is worth the amount you owe on your home, pay it off.
Is This the Best Mortgage Strategy?
This is only the best method if you can get a high enough return on your investment to earn more by investing than you would save by paying extra on your mortgage.
Usually this strategy wins, because you should be able to get a low mortgage rate right now and your return on some good basic index funds should yield a high return.
To calculate your situation, you need to figure out:
- Your available amount to invest
- Your mortgage interest rate
- Your specific tax situation
Simple Steps: Once you know how much you can contribute, use this calculator to see how many years and how much money you would save by paying extra on your mortgage. Then use this calculator to see how much you could realistically earn by investing.
This strategy works great for some, but not for others.
For example, if you’re interest rate is really high, you may want to refinance. If you can’t refinance for some reason, it may be more beneficial to pay extra on your mortgage.
The thing about this strategy is that it works extremely well for those who are in the right situation to make it work.
There are many variables, especially interest rates and taxes…
Watch Out for Uncle Sam
Obviously, it wouldn’t be worth your time to invest all this money, only to pay high taxes when you withdrawal to pay off your mortgage.
There are some ways to accomplish this strategy tax-free…
If you will be over 59 1/2 when you pull the money out, you can put it in a Roth IRA (if you meet the requirements).
If you are in the 10% or 15% tax bracket (USA), you pay 0% long-term capital gains taxes (long-term means gains on assets held for longer than 1 year).
Of course, tax brackets can always change, but they will most likely remain very low for the bottom tax brackets.
If you don’t have any options for tax breaks, you may have to do some more math. If you’re in a higher tax bracket, it may benefit you more to simply pay extra on your loan.
Just make sure it makes sense when you calculate your rate-of-return, taxes and interest rates.
Every situation is different.
This strategy is not for everyone.
You may not be able to make this method work.
Calculate the costs. If this method doesn’t make sense for you, you will have to choose a side, my friend.
“Debt hater” or “OCD investor”.
Figure out what is more important to you. Being debt free or creating the most possible wealth.
There is no right answer. It’s about your priorities.
If you’re not sure whether this makes sense for your situation, just leave a comment or send me a message. I would be more than happy to run your numbers.
It’s true. Just about every person in American (and much of the world) is in debt.
We are so used to it that we even consider ourselves to be debt-free when we still have a mortgage.
You know how it goes…
“Yeah, I’m debt-free…well, except for my house.”
If you have a mortgage you are not debt-free.
But you can be…
There is a lot to know before you start paying off your home early…
Types of Mortgages
There are many types of mortgages, but really, only a few apply to the savvy home-buyer.
Fixed-rate mortgages have a fixed interest rate for the entire life of the loan. This means that you will pay the same interest rate until it is paid off (or until you refinance). Fixed-rate mortgages are predictable since the interest rate remains the same. The standard loan is 30 years (in America), but it’s also fairly standard to see a 10, 15 or 20 year fixed-rate mortgage. The shorter, the better. Under no circumstance should you ever take out a fixed-rate loan for over 30 years. If you need a 40 year loan, you can’t afford that house!
Adjustable-Rate Mortgages (ARMs)
Adjustable-rate mortgages (ARMs) have an adjustable interest rate. Usually the rate is fixed for a certain amount of time, but after that time it fluctuates with the market rates. ARMs are unpredictable since interest rates fluctuate. They can go lower, but they can also go much higher. This makes an ARM much more risky than a fixed-rate mortgage. To keep it simple, I would just say: don’t do it!
Other Mortgage Types
Other mortgage types include interest-only mortgages, interest-only ARMs, balloon mortgages and other types of “creative financing”. There are also several variations of ARMs. These types of loans are very risky and should never be used by the average home buyer. In my opinion, they should never be used, period.
A fixed-rate mortgage is the safest and most predictable type of mortgage. Unless you are experienced with creative financing, stick with a fixed-rate. I recommend refinancing if you have anything but a fixed-rate.
It All Comes Down to One Thing
No matter which type of loan you may have, there is one very important thing for you to know right now when you are attempting to pay off any mortgage early.
It’s all about making extra principle payments.
I have probably heard 100 different ways to pay off a mortgage early and every single one of them equated to paying extra principle payments in one way or another, but that doesn’t mean that they aren’t all effective.
There are different reasons for the different strategies.
These strategies are not magic, but they work. And they set you up to be able to make extra principle payments, even if you don’t think you can afford to.
Everyone likes to talk about pre-payment penalties.
I have actually heard this as an excuse for not paying off a mortgage early.
Many loans don’t even have them. You need to contact your mortgage company if you are unsure and figure out if your loan has pre-payment penalties.
Even if you do have pre-payment penalties that doesn’t mean you shouldn’t pay off your mortgage early.
Yes, the bank would love for you to make payments for the entire length of the mortgage, 15, 20 or 30 years. That’s why pre-payment penalties exist, but don’t let them scare you!
These penalties generally only apply to the extra principle payments you make, not to your regular payments. Even if you have a penalty, you will almost always benefit from making extra principle payments.
Pay More, Earlier
You will see a bigger difference when you make extra principle payments in the earlier years of your mortgage, as opposed to the later years.
With a fixed mortgage, your payments will stay the same over the life of the loan as long as nothing about your loans changes.
Your interest rate will also stay the same with a fixed mortgage.
You payment is made up of principle and interest.
This means that in the early years, your payments will be almost entirely made up of interest. In the later years, your payments will be almost entirely made up of principle.
Why? Because your payment amount stays the same and your payment always includes principle and interest. In the earlier years, you owe much more on your home than in the later years.
Once you have paid off the majority of your mortgage, you are paying much smaller interest payments and much larger principle payments. Think about it: 6% of $150,000 (when you first get your loan) is a lot more than 6% of $20,000 (after you have paid off most of your loan).
Does that make sense? Hopefully! But if you have questions, that’s what the comments are for.
It’s important to make extra principle payments in the early years in order to pay less interest overall. Once you make it to the final years of the loan, you won’t notice as much of a difference.
Some people say that you shouldn’t pay off your mortgage early, but you should invest the money since you can generally earn more by investing than you can save by paying off your mortgage early.
This is true, but it’s much more true in the later years of your mortgage.
If you are in the very first few years of your mortgage, you can make a huge impact just by paying a little extra here are there.
It can mean years off the life of your loan if you pay extra in the beginning.
What Are You Putting Down?
If you are still looking for a home, consider making a sizable down payment.
You will reduce your overall mortgage amount. You will reduce your monthly payments, which makes it easier to pay extra. And you will pay less interest!
Don’t fall for those first-time buyer 0% down loans.
Plus, there are great ways to save money for your down payment.
First, you need to determine how long it will be before you will be buying a home.
If it is less than 5 years, you should save your money in a savings account, Money Market account or possibly a very conservative mutual fund.
If it is more than 5 years, you should invest your money in a moderate to aggressive index fund until 5 years before you plan to buy, then transfer to a safer account.
If this is your first home, you can use an IRA to shelter your down payment.
Now let’s talk about something that you may have heard about, but you may not understand…
A Word About Private Mortgage Insurance
Private mortgage insurance (PMI) is basically an insurance that the lender uses as protection in the event that you default on your loan.
It’s common for loans with less than a 20% down payment, since those are viewed as a “riskier” investment by the lender.
If you are required to pay PMI, it is typically included in your monthly payments.
The thing that many people don’t know about PMI is that once you have paid 20% of your total loan, you can drop it, but don’t expect the lender to remind you about this.
If you are required to pay it, pay 20% of your loan as quickly as possible, then call your lender and kindly ask them to remove your PMI.
1. The Short-Term Strategy
This is a big one.
30 years is a long time to pay for a house. Opt for a 15 year mortgage or even a 10. If you can’t afford to take out a mortgage shorter than 30 years, you can’t afford that house.
If you can’t refinance, that’s ok! You can pay a little extra on a 30 year loan to pay it off quicker. Look at how much extra you would have to pay to pay it off early, it’s not much:
This is the amount you would pay every month (for an 8%, $100,000 loan) to pay off your mortgage early:
- 30 years: $733.76
- 25 years: $771.82
- 20 years: $836.44
- 15 years: $955.65
- 10 years: $1213.28
Did you notice that there is only a $102.68 difference between paying off this loan in 30 years and paying it off in 20 years? That’s 10 years off your mortgage!
Figure out your numbers and how much you can save with Dave Ramsey’s free mortgage calculator.
Not only do you pay off your mortgage earlier with a shorter loan, but the interest rate is usually much lower as well. Why? Simply because the bank is “stuck” or “locked-in” at that interest rate for a shorter period of time.
2. The First Day Payment Strategy
If you take full advantage of this strategy, it is one of the most powerful ways to make a huge impact on shortening the life of your mortgage without paying extra.
You simply make your first payment on the day the loan is activated (the day the lender starts charging interest) instead of waiting until your first payment is due.
This works so well, because this way, your entire first payment goes towards principle. Principle payments have the most impact during the early years, especially this first payment.
It will make you sick to see how much of each payment is going to principle in the early years of a mortgage. There could be as little as $20 or $30 each month going to principle on a $1200 payment. The rest is going towards interest.
If are already the proud owner of a mortgage, you can still apply this strategy by simply making one extra full payment. It won’t have quite the same effect as it will on the first day, but you will still knock some time off your mortgage.
3. The Famous Split-Payment Strategy
You’ve probably heard of it. Some people think it’s magic, but it’s actually a really simple concept.
You simply pay half your payment twice per month, instead of making one full payment.
This works in 2 different ways…
- Paying half-payments every 2 weeks will cause you to automatically make one extra full payment every year. (26 half-payments per year comes out to a total of 13 full payments instead of the usual 12)
- You will lower the principle balance 26 times per year instead of 12.
You can usually set this up with your bank, but if they won’t do it, you can still take advantage of this strategy by adding a little extra to your principle each month.
To figure this out for your mortgage, simply divide the amount of your principle payment (principle only, not escrow or interest) by twelve and add that amount to each month’s payment.
For example, if you have a $500 payment, add $41.67 to your principle every month and you will achieve the same effect.
How does your realtor get paid?
Only a few sellers prefer to purchase or sell a home without help of a real estate broker. But most of those for-sale-by-owner transactions are done between buyers and seller who are already related to or know each other. On the other hand, most home-buyers work with a real estate agent while buying a property.
Here’s how your realtor gets paid…
How They Get Paid – In a Nutshell
Unlike other professionals who get paid on hourly basis or send an invoice after finishing a project, real estate agents get paid only at the end of the sales transactions. If an agent works with a home-buyer or seller for even a couple of months sans a successful transaction, he or she won’t get paid for his or her time. They earn commission on the basis of the sales price of the property and only if the transaction goes into an agreement.
Amount of commission is also negotiable between the listing agents and the clients. Though some brokers provide a discount to the sellers, typical commission is 6% (total) of the sales price.
In some cases, commission is uniformly divided between the buyer’s agent and the listing agent, while in other cases, the division is done unevenly.
The Broker and the Real Estate Agent
While some realtors are brokers – commission payment goes to the brokers who handle the brokerage where realtors work.
The commission is then divided between the broker and the real estate agent as per the agreement done between them. This split of commission differs from agent to agent with new real estate agents usually getting a smaller percentage of commission than the experienced ones who sell more properties or rather pricier properties.
Officially, the commission is paid by the seller at settlement table where the fees are deducted from the proceeds of the sale. But, in a sense, the buyer pays commission as they pay to buy the property and the seller has taken the realtor commission into account while fixing the listing price. The commission usually (though not always) gets divided at the settlement table between buyer’s agent brokerage and listing agent’s brokerage. After that, both the agents get paid by their respective brokers as reported by top real estate agents Noe Valley, California.
Commissions and Contracts
The precise percentage of realtor commission must be spelled out in the listing agent’s contract with the respective seller so that the former gets paid if the home sells, irrespective of who purchases it.
Listing agents along with the brokers spend both money and time for the marketing of a property, advertising and making the home ready for sale and they get paid for these services. The buyer’s agent typically has a contract with his client so that he gets paid when the buyer completes the purchase even if he has found that specific home on his own.
How do you get a mortgage when you’re self-employed?
You don’t have that pesky boss looking over your shoulder all the time, you get to make your own decisions about the direction of the business, and if you work from home you don’t even have a commute.
Of course, there are always negatives to balance things out, and with self-employment getting a mortgage is often one of them.
However, just because you’re self-employed doesn’t mean you’ll never be able to get a mortgage.
It just means the rules are a little different…
If you’re self-employed and looking for a mortgage, set aside some time to fill out lots of forms and documents to complete the process. Being self-employed means that you don’t have the benefit of a steady pay check from an employer, so you really have to prove that the income will be there on a consistent basis before you are approved.
A handful of years ago, a self-employed person could essentially declare an income and in many cases they’d be approved on that number. Now, the rules have tightened and you have to show that the number you state is actually true. This means tax returns and any other documents the lender wants to see during the approval process. You also might have to show that you’ve been making this type of money for more than just the previous tax year. In short, you will have to back up your claims with evidence.
Don’t Hurt Yourself
One area that might help the self-employed at a certain time, could hurt when it’s time to apply for a mortgage. Since you have to prove your stated income when looking for a mortgage, using creative accounting techniques to lower your income at tax time, could hurt your chances.
You can’t very well say, “I know it looks like I made $50,000 but I actually made $80,000.” Many creative accounting techniques aren’t legal anyway, but that doesn’t stop people from using them to lower their income and pay less in taxes. Keep it as honest as possible and don’t hurt your own chances of getting a mortgage down the road.
Being organized and truthful with your statements and returns is important from your end, but it’s also wise to seek out a lender that will benefit your situation. Don’t just put all your eggs in one basket and dive in with the first one that comes your way. Take the time to shop around a little and investigate before you sign on. Even if they are receptive to your self-employed status and seem to want to help, check out a couple of others before you commit. They will still be there when you’re done, and if they say they won’t be, better off to go elsewhere anyway.
Look for lenders who aren’t against giving mortgages to self-employed people, and who have a solid track record and reputation in the community. Just because a place agrees to give you a mortgage doesn’t automatically mean they are trustworthy and professional. It’s important to keep in mind that just because you are self-employed doesn’t mean you don’t deserve the same as everyone else, or that you should accept any less.
Specific Bank Programs
With more and more people entering the ranks of the self-employed, many banks and other lenders have developed specific programs geared toward self-employed mortgages. Many of these programs make the process easier and will base the loan on your personal credit history and not on that of the business.
If you already own a home and are looking for an additional loan, a self-employed mortgage loan program will help you leverage your home equity to get what you need. These loans are good for home renovations for your family or the self-employed business, debt consolidation or purchasing another property.
Whatever the exact details of the situation, if you’re self-employed and you require a mortgage, gather up all your information and bring it in to a mortgage professional so he can take a look. If you feel like you’ll be searching for a mortgage in the future, get in the habit of saving all your statements and receipts and organizing everything by year.
It might take a little more effort and you might have to prove yourself a little more, but if you are self-employed you can have a mortgage just like all your friends and family who work for someone else.
What happens to a mortgage when the homeowner dies?
Sometimes a homeowner with a mortgage will die before the mortgage has been completely paid off.
Since mortgages can last 20, 30, even 40 or more years, a lot can happen to a person between the time they start and the time it finishes.
If you are worried about confusion with the house and mortgage if this happens to you or a loved one, here are some things to know…
Details of the Mortgage
In most cases, the details of the mortgage agreement will specify how to proceed should the homeowner pass away. Depending on the family, financial situation, and what has been agreed upon previously, there are a few different ways the mortgage can be handled.
The central issue is to determine how the remaining balance on the house will be paid back. If no person or source of money can be found, the lender may foreclose the property.
Keep in mind that many mortgages contain clauses that will require full payment whenever the mortgaged house is sold or transferred (called the “due on sale” clause). When the property is transferred to an heir, this type of clause would take effect. So you should be prepared to arrange for the hand-over of debt payment soon or find a way to finance the home.
Transferring to the Co-Signer or Spouse
If there was a co-signer on the loan, they may take responsibility for continuing the mortgage payments. In many cases, this is the husband or wife of the homeowner. If they had a life insurance policy, the surviving spouse may use that money to help make the mortgage payments.
Transferring to an Heir
If there was no co-signer or spouse, or if the spouse is unable to afford the remaining mortgage payments, the next person to consider is an heir. If the original homeowner left the house to an heir in his or her will, that heir will have the option to take over the mortgage payments. When no heir was specified, the executor of the estate can look for another family member willing to come forward as well.
Other Liquid Assets
Sometimes, no heir was specified or those that were named cannot afford to pay off the debt directly. However, there may still be ways of keeping the home in the family in these situations. If there is enough money or other assets in the deceased’s estate to fulfill their debts, then the executor of the estate must let the mortgage lender know how the estate plans on paying. While this means that there will be less money available in the inheritance, the home may stay in the family.
On the other hand, if there are not enough assets in the estate to fulfill the debt obligations and if no heir can take over, then there is not much else that can be done. Unfortunately, in most cases like this, the lender will have to sell the house at auction.
All of this is a greater reminder to prepare now, before anything happens. If you’re financially prepared for a tragedy like this, you can focus more on grieving and spending time with loved ones.
How does it work when you purchases a home with friends?
Two incomes are certainly better than one, and you’ll probably have a better chance if you have another strong candidate applying with you.
People buy houses with friends all the time, and while there is nothing inherently bad about it, you should consider a few things before taking the plunge.
1. For Living or Investment?
The initial discussion and decision to buy a house together will probably provide the answer to this, but make sure you’re both on the same page.
If one friend is thinking it’s a great business investment and the other is envisioning living in the house together, it probably isn’t going to work out.
2. Open Communication
It’s also very important to communicate openly about your financial situations.
Things like credit history, income and future plans are all relevant when it comes to buying a house with a friend.
You don’t want any financial surprises to come along at any point, and you don’t want the other person to suddenly change gears or tell you they are moving to another city to further their career. Obviously, you can’t account for everything that may happen, but knowing the realities of the present is a good idea.
3. House Rules
If you are buying a house with a friend so you can both live there, create a set of house rules that both of you have to follow.
Everyone has quirks and characteristics that annoy other people, and different people have different likes and dislikes when it comes to living arrangements. Things like household chores, the regular state of the home and house guests are important factors to consider to keep a harmonious home if you’ll be living together.
4. Get a Lawyer
It’s a good idea to separate the friendship and business elements and get an attorney. Right from the time you apply for mortgage make sure that every penny spent is properly accounted and documented for.
A lawyer will ensure everything is as it should be on the legal side, and the two of you can feel confident when you sign the contract.
It’s easy to put it all on a handshake, but it’s not the smart thing to do. Even the strongest friendships and relationships can fade and sour, so getting it all done legally with every aspect laid out is the way to go. This way, each party will know their obligations and can buy the house feeling secure that the legalities are all covered.
5. Insurance Policy
Another thing you might want to do is to purchase a term life insurance policy and name your friend and co-owner as the beneficiary.
With this type of policy in place, if anything happens to either one of you, the entire mortgage will be paid off.
It’s not something anyone wants to think about, but that doesn’t mean it’s not the right thing to do.
Those people did still attend college, so that’s not really an argument against attending college. They also usually dropped out with a set plan or because they were already making a lot of money with their business.
I think the lesson here is: “work to learn, not to earn”.
Whether you are working towards a degree or working for a company, you shouldn’t be doing anything strictly for the money, unless of course you want to be unhappy for the rest of your life, and then…by all means! At least you’ll have money, right?
Is it Worth It?
A degree, on it’s own, is just a piece of paper. If you have a set plan and you need a degree to reach your goals, then you have every reason to go after it, even if you have to go into debt.
On the other hand, if you don’t have a plan, a college degree is often a waste of money. I know more than a few people with a college degree and a job that doesn’t require one.
It really comes down to the specific situation.
Contrary to popular belief, going to college is not always the right answer.
I am a huge advocate for education and learning, but if you are going to go into some serious debt for it, do your research and be sure you are making a wise decision.
Let’s look at the numbers and some stats in this infographic from EducareLab to get a better understanding of the overall picture…
A better question is “should you invest for your children’s education?”
There is a simple cut and dry answer here…it depends…it’s really up to you.
Did I say cut and dry? Forgive me.
You are not obligated to pay for their college. It’s not your responsibility as a parent.
However, it is nice to be able to help them out. Here are the best ways to do it…
The Age Old Question
As long as I can remember, people have been talking about whether or not you should pay for your kid’s college.
Do I? Yes. My wife and I save for each one of our four children. Not enough for a free ride, but enough to make them feel like college is a legitimate option, even without scholarships.
I realize that you don’t have to go to college to be successful and sometimes it makes sense not to go, so nobody is forced in our home.
The thing is, it doesn’t take that much money, invested monthly, over many years, to build a decent education fund.
Let’s look at ways to build that education nest egg…
1. The Popular: 529 Plan
529s are offered accross the entire United States, but they are state-specific.
That doesn’t mean you have to open one in your state though.
You can live in one state, open an account in another and go to school in a completely different state.
If the money is used for education, your earnings are tax-free. There is a 10% penalty, if it’s not used for education.
Here are the positives to a 529:
- You, not your children, have total control over the money
- The things you can spend the money on are fairly liberal
- There are no income restrictions to open a 529 account
- Most states don’t have an age limit for using the money
- You can easily transfer the money to a different child
Here are the negatives to a 529:
- You don’t have direct control over the investments
Interested in opening one? Try TD Ameritrade.
2. The Less Common: Coverdell’s ESA
A Coverdell ESA (Education Savings Account) is another option.
This option may be useless for your child’s college fund (due to the restrictions), but they do work for some people and certain situations.
The contribution limit is currently $2,000/year (per child), which is quite low. But if you don’t plan on investing more than that, it doesn’t really matter.
There is one unique (non-college) benefit of using Coverdell’s though…you can use the money to pay for other schooling, such as elementary or private schools.
Here are the positives to a Coverdell’s ESA:
- You can use the money to pay for lower level education
- You can use the money to pay for a tutor of test prep classes
- You can easily transfer the money to a different child
Here are the negatives to a Coverdell’s ESA:
- The contribution is quite low for an education fund ($2,000 currently)
- The funds must be used within 30 days of the beneficiary turning 30
- The beneficiary must be under 18 while you’re contributing to the fund
3. The Classic: Roth IRA
IRAs aren’t just for retirement.
Roth IRAs can actually serve two purposes. Retirement and education.
You can withdrawal money from your Roth IRA, before you are 59 1/2, without the 10% penalty, if the money is used for higher education.
There are two schools of thought on using Roth IRAs for education.
One side says it’s a bad idea, because most people aren’t fully funded for retirement. In other words: don’t bankrupt your retirement account for your children’s college. The contribution limit is $5,500 (as of 2014), so you don’t have a whole lot of room to invest for your retirement and your child’s education in the same account, but you should also keep in mind that the contribution limit is per individual, not per household.
The other side says it’s a good idea, because you have the option to use the money for retirement if your child doesn’t use it for college. That makes sense too.
It all comes down to where you’re at with retirement and what your priorities are.
Here are the positives to a Roth IRA:
- You can use the money for retirement if your child doesn’t use it
- You have a wide range of investment options (basically anything)
Here are the negatives to a Roth IRA:
- The contribution limit is $5,500, which limits your retirement funding
.2 More Options
These are what I consider the .2 options in “3.2”. The above options are generally preferable, but there are some circumstances where you might need these:
Municipal Bonds are an option, especially if you’re in a high income bracket. They usually won’t yield a very high return (around 3-4% on average), but you also aren’t forced to use the money for education.
Custodial Accounts. The Uniform Gifts to Minors Act and Uniform Transfers to Minors Act allow you to make your child the trustee; however, once the child turns 18 or 21 (depending on your state), they can use the money for whatever they please. That’s a scary thought. Think: The Parable of the Prodigal Son.
All of these accounts can grow tax free. Figure out what works best for you.
If you want to save for your child’s education, you have options. Just get started.
But remember, it’s not your responsibility. It’s a privilege for your children, not a right.
Why waste your time searching for companies that offer discounts when there is a better alternative?
Here’s what you should be doing…
Start by Asking Everyone
These days most businesses do offer some type of student discount.
If you’re in a college town, you’ve probably noticed that most places offer a discount. A Pizza Hut or a Chili’s in other towns may not, but in your college town they do. Or at least, they have cheap specials directly for students.
So why search for a list of discounts when you can ask everyone?
Even if they don’t advertise it, many places will give a student discount. This goes for military, firefighters, AAA and police discounts too. There’s no need to look for a list if you can always remember to ask. I’m in the military and I don’t go anywhere without asking for a military discount. I’m also a student so I can usually get something. If they don’t have a discount, no big deal, but you asked. You’ll have a lot more luck by asking everyone rather than searching for lists.
So with all the lists out there, don’t waste your time, just ask everyone. However, I’ve included an extremely helpful list of 10 student discounts you can still get after you graduate. This list is great, since most places don’t continue the discount…
Every little bit helps and I’m all for asking for discounts, but don’t waste your time looking for an exhaustive list. Use the list above for after you graduate (or if you already graduated), but until then, ask everyone! You’ll be surprised at the places that offer a discount.
1. Save Money on Food
You do not have to live on scraps of food. No, this is definitely not what I am trying to say. But you can definitely save a lot by planning out your meals rather than getting a takeaway on your way back home. You can buy the ingredients and cook up your meal at home. It would be cheaper along with being more hygienic, healthy and tasty. If you are living with roommates you all can together buy your food in bulk, further saving on food expenses. Another possibility is growing your vegetables and fruits yourself. Again, this would lead to tremendous savings. Both your wallet and your body would be better off this way. Of course, gardening requires time and I would advise you to go for it only if you can afford to. There is definitely no point in saving money this way if it costs you your studies.
Of course you would want to dine out sometimes. Everyone likes that and a treat once, or max, twice a month should not hurt, provided you do not go overboard. Opt for happy hours or deals available.
2. Save Money on Textbooks
You have the option of renting out or buying used textbooks for your courses. Buying new textbooks costs a lot and there is no point in doing that because you would probably not need them after your course. There are textbook rentals that you can go for, or look for websites who deal in used books. Another option is to exchange your old books, or even sell them off to, at least partially, recover the costs.
3. Save Money on Transportation
If your campus is near your place it would be a good idea to walk or bike to it. Besides saving you fuel costs it would also be a good exercise for you, keeping you fit and building your stamina. If your campus is not at a walking distance from your residence you can opt for public transportation. Again, get a student discount pass if your college offers one. If you own a ride you can get your fellow classmates to carpool with you. It would be economical for all of you and you would not have to burden the fuel costs on your own. If you do not have a car, do not even think of getting one at this point!
4. Avail Student Discounts
There are loads and loads of student discounts available out there. All you need to do is look. From restaurants to libraries, accessory shops, transport and cinemas – you name it. Even if a particular outlet has not mentioned out loud about the student discounts they have, it would not hurt to ask. Chances are that they probably do have deals for students. If you keep a track of the savings you get through such offers over a period of time, you will realize how beneficial it turned out to be.
5. Avoid Credit Cards
Try not to use your credit card until and unless there is an emergency. And definitely never use it for anything that you do not really need. While you may particularly need them when you are extremely tight on money, make sure that you are not careless with it. One way to ensure that is by keeping a low credit limit. Pay off the balance every month and pay on time to avoid extra costs. Just do not let the debt manage you!
Learn the difference between needs and wants and draw out a clear line between the two. Avoid buying anything expensive that you do not actually need. I am sure you will be able to find cheaper substitutes. For example, you may have your eyes on that super pretty costume you want for the college Halloween party. Or a gaming mouse you have been after since a long time. Try to get a cheaper, non-branded version instead. The important thing to remember is to stay debt free during college and to develop a habit of properly managing your finances. These habits would go a long way in ensuring that you do not accumulate debt later on as well.
Hopefully you already have a savings program, such as a 529 plan, in place. Named after Internal Revenue Code 529, these plans are designed to invest in higher education. Parents and guardians typically open these accounts to save money for their children’s future education. All qualified education expense withdrawals from 529 accounts are free from federal income tax.
If you do not already have a savings plan in place, start now; even small savings add up and make a big difference in the long term.
Scholarships and Grants
Scholarships and grants are funds awarded to you based on merit or need. They are “free money” in the sense that you are not required to repay the funds you receive. Scholarships may be “merit-based” meaning you have to meet certain standards set forth by the scholarship giver; whether that is in the area of academic achievement, sports, or talent. Grants are typically awarded based on financial need rather than merit. Schools, employers, private organizations, and state and federal government may all be sources of free money. The funds may cover a small portion or the full amount of your tuition, easing your financial burden, in either case.
Free Sources for scholarship and grant information:
- High school guidance counselor
- College financial aid office
- Local library
- U.S. Department of Labor’s search tool
- Federal agencies
- State grant agency
Student Loans and Repayment
Scholarships and grants may not cover the entire amount of your tuition and educational expenses. There’s also the possibility that you were unable to qualify for scholarships or federal loans due to your academic standing, criminal convictions, or non-US citizenship. At this point, you may need to turn to private loans to cover any remaining portion of your expenses.
It is important to repay your loans to remain in good credit standing. Repayment is especially important if you are looking to continue your education – as mentioned above, you can be denied for federal loans if you’ve previously defaulted. Some students choose to consolidate their debts after college in order to have one lower monthly payment. Another good option is to make an ascending list of your debts and begin paying them off in that order. With the snowball, at the start you get the satisfaction and confidence boost from eliminating the small debts, and as time goes on you’ll be better equipped to take out the larger ones.
Preparation is the Key
It’s important to prepare for college. Saving from an early age can be particularly beneficial, but any and all savings can go toward your college education. Grants and scholarships are especially effective in reducing your overall financial obligation, but are not a guarantee, which is where student loans come into play. Make sure you are financially responsible and repay those loans – you do not want to ruin your financial reputation as you are just getting out of the gate.
3 Strategies to Plan Ahead for Student Debt
As of 2012, the average amount of student debt accrued by graduating students reached nearly thirty-thousand dollars.
For these graduating students, debt is a fact of life that they’ll be dealing with for around a decade after leaving their old alma mater.
Student debt can be prohibitive for many students, and the snowballing interest of forbearance makes it a highly unappealing option.
However, there are ways to brace yourself, or avoid payment entirely, by planning ahead when it comes to how to manage student debt before it becomes a problem.
Here are three strategies to consider when a future of student loan payments is just around the corner…
1. Loan Forgiveness or Discharge
Instituted by the U.S. government, loan forgiveness occurs after completing a qualifying program or community service endeavor.
If you’re working as a teacher, doctor, or are involved with the military, there may be a variety of options for you to get a free ride after college to avoid paying student loans.
Many state-based institutions such as teacher associations offer career specific loans which can be forgiven with a certain number of years of service, oftentimes as a means to encourage more professionals to work within the state, for example.
Other organizations, such as the Peace Corps., will often work with its volunteers on forgiveness programs for their service.
However, loan discharge is another type of financial assistance entirely, and possibly the silver lining to an otherwise devastating personal event. While having a relative pass away as an excuse for not completing a paper might be as popular as “my dog ate my homework”, it can have dire financial consequences when it actually happens.
The government recognizes this predicament and is often able to discharge loans when death, or serious disability, impede one’s life too severely to manage repayment.
2. Know Your Options and Best Approach
Depending on your amount of debt and the rates of interest you’re dealing with, there may be preferable options for your situation.
The popular “pay-as-you-earn” repayment plan can make payments significantly lower, but often saddles students with a decade longer of payments than they could have dealt with originally.
Only after carefully measuring each of your options, such as standard, graduated, or other models of payment, should you commit to any course.
While you should ideally stick with the option that results in the least overall sum, be careful to not overextend your finances with the ideal option if it’s not immediately affordable. After all, there’s a reason you needed a loan in the first place!
3. Strategy When You Can’t Afford It
Forbearance can seem generous on the surface, but accruing interest can be crippling in the long term.
It should only be used to keep collections calls at bay and your credit score safe, since allowing interest to accrue alone can be devastating.
Instead of relying on this as your only option for pushing back payments when you can’t makes ends meet, consider reviewing your student loan consolidation options.
Most providers are willing to compete with your current interest rates and help streamline the debt repayment process – especially if you’re dealing with multiple loan providers.
Best of all, this stems the tide of interest that has been gaining against you all the while you were attending college.
While no two financial situations are the same and a piece of cookie cutter advice isn’t always applicable, these methods can be foolproof once you’ve analyzed your personal debt situation and assessed your options.
Managing your student debt wisely – or avoiding student debt entirely – can be the bright start to your life in the “real world.”
You may have seen the late night television ads preaching the benefits of student loan forgiveness. Despite what these television ads say, not everyone is eligible for student loan forgiveness. These ads are often being run by unethical telemarketers looking to take advantage of uneducated student loan borrowers. To qualify for student loan forgiveness you must meet certain eligibility requirements for federal programs. Don’t find yourself victim to a student loan forgiveness scams.
The following U.S. Department of Education programs can actually forgive your student loan debt:
1. Public Service Loan Forgiveness (PSLF) Program
The PSLF Program was created to encourage individuals to enter and continue to work full time in public service jobs.
Under the PSLF program, federal student loan borrowers may qualify for forgiveness on the remaining balance of their Direct Loans after they have made 120 qualifying payments on those loans while employed full time by certain public service employers. Qualifying employment is any employment with a federal, state, or local government agency, entity, or organization or a not-for-profit organization that has been designated as tax-exempt by the Internal Revenue Service (IRS) under Section 501(c)(3) of the Internal Revenue Code (IRC).
Private student loans are not eligible for the PSLF program!
2. Total and Permanent Disability (TPD) Discharge
If you find yourself total and permanently disabled you may be eligible to receive federal student loan forgiveness.That being said, you must be able to prove that you are totally and permanently disabled in one of the following three ways:
- If you are a veteran, you can submit documentation from the U.S. Department of Veterans Affairs (VA) showing that the VA has determined that you are unemployable due to a service-connected disability.
- If you are receiving Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) benefits, you can submit a Social Security Administration (SSA) notice of award for SSDI or SSI benefits stating that your next scheduled disability review will be within five to seven years from the date of your most recent SSA disability determination.
- You can submit certification from a physician that you are totally and permanently disabled. Your physician must certify that you are unable to engage in any substantial gainful activity by reason of a medically determinable physical or mental impairment that
3. Death Discharge
If you, the borrower, die, then your federal student loans will be discharged. If you are a parent PLUS loan borrower, then the loan may be discharged if you die, or if the student on whose behalf you obtained the loan dies.
Depending on the private student loan lender, your loans may or may not be forgiven with death. You should check to see if your private student loans will be discharged at death. You may have seen the headlines where cosigning parents have been stuck paying the student loan debt in place of the primary borrower. Don’t let this happen to you! Check your promissory note for more information.
4. Teacher Loan Forgiveness
If you are a teacher and also a new borrower, and have been teaching full-time in a low-income elementary or secondary school or educational service agency for five consecutive years, you may be able to have as much as $17,500 of your subsidized or unsubsidized loans forgiven.
5. School Closing While Enrolled or Soon After
If your school closes while you’re enrolled or soon after you withdraw, you may be eligible for discharge of your federal student loans.
Be aware, private student loans may not be eligible for forgiveness under this rule.
Student loan forgiveness has been a hot topic and will continue to be a hot topic as long as borrowers struggle with student loan debt. There is no easy way out of student loan debt. That being said, you can improve your student loan situation through a variety of other programs. Income-based-repayment can help you better manage the repayment of your federal student loans. And, if you find yourself paying high interest rates on your student loans, student loan refinance may be a great option to lower your interest rate.
My Top 2 Go-To Stores
- Amazon – You probably already shop here. Shopping through this link will help support MoneyMiniBlog without costing you a dime!
- AliExpress – Think of a thing and they probably have it, and at insanely low prices. Some products are as much as 90% less than other websites.
Save on Your Car
- Tire Rack – We started using TireRack originally, because it was cheaper to buy better tires with the wheels included here than it was to buy lower quality tires at any store in my city.
- Autotrader – A great place to buy and sell vehicles.
- eBay – I’m sure you shop here already, but if you haven’t looked at their prices on car parts, check them out. Never buy a part for your car until you’ve checked eBay first.
- Gas Buddy – The best app to find the cheapest gas in your town and on trips.
Save on Your Reading
- Amazon – Shipping is still free for books if you spend more than $25, as opposed to the normal $49 minimum.
- Barnes & Noble – Great for comparison-shopping with Amazon.
- The Economist – Pay just $1 per issues for the first 12 weeks for The Economist magazine – the only magazine I read.
Earn When You Shop
- Swagbucks – A great cashback site, and they also pay you for completing a variety of tasks, from watching videos to games to surveys.
- MyPoints – Another awesome cashback website that seems to have a higher than average pay-out..
- TopCashBack – A cashback website that gives you 100% of their commission when you shop through them. They can do this, because they make their money with ads.
- Legal Nature – Highly affordable legal documents for almost any legal need.
Save on Music Equipment
- Musician’s Friend – Usually the first place I check for a product. Amazing service and low prices.
- Sweetwater – A second source to check for comparison shopping.
- Music123 – An additional source I use for comparison shopping.
- eBay – It’s not uncommon to find brand new products for way cheaper than the above websites. There are hundreds of small music stores on eBay that can often offer a lower price.
Save on Electronics
- NewEgg – My first stop for computer parts and electronics. I’ve built several computers and every part came from NewEgg. I’ve also purchased full computers from here, since they always have great deals on them.
- Tiger Direct – Great for comparison shopping, and they seem to have the best prices on monitors usually.
- Sonic Electronix – The best price for auto electronics. I saved almost $2000 on the sound system I installed in my car, vs. the price of the local dealer.
Save on Printing
- Create A Shirt – Extremely affordable screen printing for shirts, and you can buy just one! The shirts a re great quality – I have ordered some! They also give away a free shirt of your own design each Friday to the lucky winners.
- 123inkjets – The easiest way to figure out which type of ink your printer requires, and some of the lowest prices on the internet. I go with the remanufactured cartridges to save even more and the cartridges are as good as new.
- Shutterfly – A great place to go when you want someone else do the printing. They also send out awesome deals.
- Groupon – Anytime you’re traveling, going out to eat or purchasing something, it never hurts to see if there is a Groupon available. You may be surprised at what they offer deals for.
I put a lot of work into this, and I truly hope it benefits you.
If you have any questions about anything, please reach out to me.
All feedback is welcome…