If you want to save money you don’t necessarily have to live without. You can keep the same standard of living by buying creatively and learning the marketing game. The goal of this list is to let you maintain the same quality of life and pay less for it. There are two parts to this article: how to save money now and how to save money long term.
Five ways to save money starting now
1. Use GasBuddy to find the cheapest gas based on your GPS location
When gas prices first skyrocketed during the last decade many sites appeared offering crowd-sourced information on where the cheapest gas prices were in a given metropolitan area. These sites have evolved to the smartphone era and you can now access them on your phone with an app called GasBuddy. GasBuddy uses your GPS location to suggest gas stations and lets you sort by price or distance. It also lets you look at the prices for regular, mid-grade and premium gas. GasBuddy is free and can be found on the Android/Iphone app stores.
2. Addicted to soda? Get a machine to make your own at home
If you have an addiction to soda, consider buying a soda machine to brew your own at home. Soda machines can turn your favorite juice or drink into a carbonated beverage. If you want to fizz up brand name drinks prepare to pay through the nose for a fountain drink system. There are cheaper options available if you just want to carbonate juice or generic sodas. Amazon has generic machines as low as $40.
3. Don’t buy groceries, eat off the dollar menu
This is going to outrage a lot of money saving gurus so hear me out first! Fast food has historically been the Antichrist to those on budget. This is understandable, the price of a meal for out for one person could buy enough groceries to prepare a meal for an entire family.
That being said, by all means don’t spend $5 – $7 a meal. It IS a waste of money. The dollar menu, however, is not. Yes, the picture of that tiny hamburger or wrap looks small and unappealing on the menu board. This is done intentionally as they want to up-sell you into a full meal. Fast food restaurants typically do not make money off the dollar menu. The purpose of it is to get you inside so they can woo you into eating enough food to make a third world country cry. If you stick to your original plan, you can eat a full meal for $1. This is cheaper than most anything you could prepare at the grocery store for that cost and is certainly cheaper than a full price meal.
Can you really fill yourself up for a dollar?
Typically yes. Since the majority of meals at fast food restaurants offer you half a days calories (the equivalent of two meals), a dollar menu item has around 1/4 of a days calories. It will satisfy you, but won’t stuff you. This is good for your wallet and your waist. Instead of eating two or three big meals a day (and spending almost $10), you can spend $4 a day on four separate meals. If you’re concerned about health, many fast food places offer wraps on their dollar menus. The only way I can see this not being an effective saving method would be if you live more than ten minutes from a fast food restaurant.
4. Skip the bar
It’s no secret that bar drinks are overpriced. The cheapest bars mark their drinks up close to 200% ($2 beer as opposed to a six pack). The worst bars inflate their drinks upwards of 1000% – 2000%. That is insane. On top of all that you are usually expected to tip the bartender, pay a cover charge to get in and buy a girl a drink. The worst part is the bars that charge you $10 – $20 for a shot usually have an equally high cover charge.
5. Buy electronics and appliances online
General merchandise retail as we known it may soon go extinct. Many big name stores deserve this, specifically one large company (that will remain nameless) that sells cheap cables at triple digit percent markups. Buying online offers superior pricing, comparison shopping and the ability to read reviews. The only real cons are having to ship the item back if it breaks, however most reputable online retailers will cover this cost.
A great site for general electronics and merchandise is Amazon. They pool together many merchants into a single market place and do the shopping around for you by showing you the highest and lowest prices available. They also have extensive reviews from actual users of the products, as well as the ability to ask pre-sales questions.
Five ways to save money over the long term
1. Lease a car instead of buying
Like the fast food tip I’m sure I’ll take a beating over this, but again hear me out. There is a reason financial advisors recommend buying appreciating assets and leasing depreciating ones.
If you buy an asset you’re still leasing it (via depreciation), the only difference is you aren’t allowed to give it back. For example if you borrow your friends car for a week, in addition to putting gas in it you might slip him an extra $20. You’d likely do this because you realize that simply covering the gas alone is not enough. The car depreciated by every mile you put on it that week. By giving your friend some cash for your use you are covering the depreciation.
When you lease a vehicle, it’s essentially the same arrangement between you and the bank, except you’re borrowing the car for a few years instead of a week. The bank calculates roughly how much they think the car will depreciate over the time you have it, adds a small amount of markup for profit, and then divides the depreciation over a series of monthly payments. You also have the option of buying the car when you’re done borrowing it.
You can lease a new, inexpensive car for as low as $150 to $200 a month. This gives you a tremendous advantage over purchasing a new car as you get a chance to “try” it for a few years before committing to buying it. You do pay a small premium for this trial, but it might be worth it if you don’t like making commitments. Another great advantage of leasing is you don’t have to worry about repairing the car, you just pay for brakes and tires.
Yes, you could easily buy a clunker for a few thousand dollars but you would probably have to make payments on it too (which would be around the same as a cheap lease). Plus, the moment you drive it off the lot the engine could fail and cost more than you paid for the car to fix it. Unless you’re a mechanic or like living dangerously, I recommend leasing a car.
2. Raise your car insurance deductible
The only point in paying for insurance (of any kind) is for that one in a million catastrophic accident that could cost you a fortune. With that being said, set your deductible at $1000 or more so that you’re still covered in a crisis, but aren’t paying for the privilege of saving a few hundred dollars if something does happen. Take the money you saved by lowering your deductible each month and put it into a savings account. If you have an accident that requires you to pay the deductible you can essentially be your own insurance company. If you’re an exceptionally safe driver, give yourself your own safe driving discount by keeping your savings account minimum balance to whatever your deductible is and splurging on yourself with the rest.
3. Shop at Costco or Sam’s Club
Costco and Sam’s Club offer near wholesale prices and large volume discounts in exchange for paying an annual membership fee. Costco specifically, has an outstanding return policy and allows you to return most items with no set time frame. While this seems like a risky practice, customers have mostly been loyal and have not abused this policy. You can even get a refund on your membership if you aren’t satisfied. Both Costco and Sam’s Club have gas stations you’ll have access to as a member which are generally 10 – 20 cents per gallon cheaper than surrounding stations. While the warehouse feel may not be for some, remember that the more extravagant a stores decorations the more markup you pay.
4. Rent a room instead of an entire house or apartment
This, like other items on the list goes against conventional advice. Renting a room is definitely a smarter option financially than renting an apartment or even buying a house, if you can handle it. Renting an entire apartment or house for yourself is a waste of money. You spend as much in rent as it would cost you to get a mortgage. The main reason most people rent instead of buy is because they lack the credit or down-payment to buy a house.
Even if you have the credit and down-payment to buy a house, renting a room may be a better option. Homes used to be considered a very safe investment. This is no longer the case as we have seen with the housing bubble. Paying $600 a month for rent is a waste of money when you can get a mortgage on a modest house for roughly the same payment. Paying $200 – $400 to rent a room is, in my opinion, superior to both renting and buying a house if you can deal with sharing a few things. The amount I quoted for a room rental usually includes utilities, which are not included in a mortgage or rent. You might argue that you would still be throwing away that $200 – $400 a month, but remember that’s about what you would spend on utilities if you owned a home.
If you manage to rent a room in the house of someone who works an opposite shift of you, you could potentially have the house to yourself during your waking hours. Thus you would feel like you were renting a home for what you paid for the room. There are risks to renting a room, but there are also risks to buying a house. If you don’t like being tied down and want to save a few hundred dollars a month, renting a room might be a good idea.
5. Play your credit card companies against each other
Having no debt is always preferred, but if you do have a credit card balance consider exploring balance transfer options. Typically the cards that give you the most generous credit limit also have the highest interest rate. This causes people to avoid charging anything to these cards. Credit card companies will try to lure you into paying the 20%+ interest rate by offering a limited time balance transfer for little to no interest for a set period of time. This can save you money but you need to carefully research the terms and conditions. For example, if a card offers 12 months at 3% interest but requires a 2% transfer fee, the real interest rate is 5%, with 2% of it paid up front for the year. If you take advantage of this offer make sure to either have a plan to pay the debt off or another card with enough available credit to absorb the balance before the promotional period ends.
(By Cheapskate editor)
All photography on this page courtesy freedigitalphotos.net unless otherwise stated.
Artists for each picture listed below in order:
Cover photo: stuart miles
Soda maker courtesy Amazon.com
David Castillo Dominici