I was reminded of this fact recently when I read an article on Daily Finance by Molly McCluskey from “The Motley Fool” entitled “5 Unconventional Ways to Squeeze Extra Cash Out of Your Budget”. I’m all for fresh ideas on how to save money, especially if it can be shown to produce results. But although this article may have had its heart in the right place, some of the advice may be a little misleading.
Let’s review each one and I’ll tell you why I felt this way.
1. Rent, don’t buy. Where to begin. Everyone knows you should never do a rent to own program for things that rapidly lose value like TV’s, computers, furniture, etc. I don’t think that’s what was implied here. She was speaking more to renting an apartment, home, or leasing a car.
While there may be a few rare situations where this might be true, I think the majority of people would be better off in the long run to buy a house and car. The reason is because it is always better to have something to show for your money. When you own your house or car, the payments will eventually stop and you can use both items up for as long as they last. When you rent, you lose the asset once the payments stop. Therefore, as long as you need it, you’ll always be making payments with nothing to truly show for it.
Some people will argue that renting allows them to have nicer cars or live in posh apartments. Perhaps – if that is what’s important to you. But if you realize the need to save more money than you are right now, then you’ll realize the benefits of having a used car or modest home.
2. Turn off automatic bill pay. Why?? With automatic bill pay, I’ve never missed a payment or had to pay a late fee. In fact, some of my bills are actually cheaper because I’m signed up for their automatic payment plan – a small bonus! On top of that, I rarely ever buy stamps, books of checks, envelopes, or spend any time whatsoever mailing my bills out.
The point that I think McCluskey was trying to make is “don’t set it and forget it”. Pay attention to your bills, how much you’re spending, and be proactive about how you can tackle or reduce them. I agree with that, but the article should have just said so. Don’t blame automatic bill payments.
Instead, set a goal each month to really attack one of your main expenses – little by little. Target reducing your insurance payments, car payments, mortgage, credit cards, etc. Come up with a plan, make some calls, and do what is necessary to reduce the amount of money leaving your pocket.
3. Unsubscribe, unlike, un-friend and un-follow. This tip is trying to get you out of brainless-zombie shopper mode. If your email isn’t bombarded with advertisements, then you’ll think less about spending your money. Out of sight is out of mind.
Probably once a day the Banana Republic emails me about some terrific sale they’re going to have. Sometimes it gets me thinking, so perhaps I see her point. But then you know what else I do? I delete the email.
I don’t have to act just because a store emails me. But why don’t I block these ads altogether? Because sometimes there really are some great deals! The last time my dryer died, I had two emails from Sears and Home Depot that had really great discounts for appliances. Or how about when I get coupons for restaurants, cash-back promotions, retail stores, or even for travel? Sometimes knowing about these deals has come in really handy and helped me to save a bundle!
And if it doesn’t, I just delete it.
4. Declare a weekly “Shopping Day”. Again, this tip is just trying to cut down on impulse shopping. Similar to No. 3, how about just exerting a little self discipline or finding a hobby other than shopping?
One of the points the author makes is to put together a list to help focus on your purchases. I fully back this tip. Without a list, I tend to buy a lot more than I started out needing when I first got to the store.
5. Lastly, put down your smartphone. No, she’s not telling you to cancel your smartphone service – which I think is ridiculously priced. She’s telling you to stop buying stuff on your phone.
Is this really a big problem for people? I have never made a purchase from my phone nor do I know of anyone else who has. It just seems incredibly less secure than using my home computer where I know virus protection is installed, etc.
I feel like this tip goes back to No. 3 and 4. Show a little discipline, focus on a list or the items you really need, and you’ll be okay. Don’t compulsively buy things.
One rule I like to follow before I buy anything is to get at least 3 different prices. For example, if I see something I like from Best Buy, I usually go home, get on the Internet and check Amazon and one other store before I make the purchase. Besides being a really practical way of getting the best price, this trick also has a hidden agenda – it gives me time to decide if I really need the thing or not. A lot of times, I realize I don’t and never make the purchase at all.
As I mentioned above, I think all of these tips have great intensions. But maybe they could have been expressed a little differently.
Regardless, not every financial article holds the key. And if you read enough of them, they may even start to contradict each other. We are all individuals and need to make up our own minds according to what we believe will work in our lives. As I always say – No one looks out for your money the way you do.
What are the ways you try to squeeze out a little extra money each month? Or have you ever came across an article where you didn’t quite agree with everything they suggested? Please feel free to share.
Photo Credit: Microsoft Clip Art