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 ways 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.
McCluskey’s Tips:
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.
Conclusions:
As I mentioned above, I think all of these tips have great intentions. 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.
If you are really interested in living well for less, check out these luxury condo rentals in Toronto.
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
When my wife and I go out to eat, we make it a habit not to order drinks of any type. We will ask for tap water. Its better to eat at home, but when we want to eat out, we try to reduce our expenses.
We are also looking at buying less packaged foods. For example, baby carrots are a dollar a bag (8 ounces). You can buy quadruple that if you buy unprepared carrots. I don’t mind eating the skin, so making them into carrot sticks is minimal work.
We have the same strategy when we dine out! I use to work at a restaurant and I can tell you that soft drinks (along with liquor) are one of the most over-priced items on the menu. My wife and I usually just order water as well. It cuts $5 off our bill ($4 for the two soft drinks and $1 dollar extra for the 20% tip). Besides, drinking (more) water is one of the healthiest things you can do for your body.
I’ll drink (tap water) to that!
I have the same water ordering in restaurants strategy. It’s amazing how much drinks of any type, even soda, in restaurants add up over time.
Especially the wine and liquor! I remember waiting on couples who would order 2 to 3 glasses of Merlot – each! At $4 to $5 a serving, that really was a lot of money to drop on just drinks! They could have bought the same bottle of wine for $6 to $10 at the grocery store.
That last point also reminds me of something I read. If anyone ever tries to argue with you that rich people always drink fancy, expensive wine, you can argue back. In the book “Stop Acting Rich: …And Start Living Like A Real Millionaire” by Thomas Stanley, he points out that most “true” millionaires spend less than $15 on a bottle of wine. So who is buying those $100 bottles of wine? The Aspirationals – the people he characterizes as “pretending” to be rich. It was pretty interesting. There is a review of the whole book over in my “Books” tab.
Especially the wine and liquor! I remember waiting on couples who would order 2 to 3 glasses of Merlot – each! At $4 to $5 a serving, that really was a lot of money to drop on just drinks! They could have bought the same bottle of wine for $6 to $10 at the grocery store.
That last point also reminds me of something I read. If anyone ever tries to argue with you that rich people always drink fancy, expensive wine, you can argue back. In the book “Stop Acting Rich: …And Start Living Like A Real Millionaire” by Thomas Stanley, he points out that most “true” millionaires spend less than $15 on a bottle of wine. So who is buying those $100 bottles of wine? The Aspirationals – the people he characterizes as “pretending” to be rich. It was pretty interesting. There is a review of the whole book over in my “Books” tab.
Well written. I agree with you on your assessment about the article. I know that I can’t live without bill pay as it does the job for me at no cost.
Thank you for the compliment! I signed up for automatic bill payments years ago and have never looked back. No more writing checks, buying stamps, going to the mailbox, etc. I meant no disrespect to this article, but that tip was one of the ones where I really felt it could get misinterpreted and would do more damage than good to the casual reader.
I like your analysis of the article. The article’s advices indeed seem to be with good intention but doesn’t seem to stand simple test of reality. I like your take better. I think in general it’s about daily discipline of cutting on things like cable tv in sake of netflix, bringing lunch from home vs. eating out, cutting on necessary rides saving on gas. It’s death by thousand papercuts and it’s about simple discipline to bring it to the minimum. Here is my take – stop watching mindlessly TV and write valuable content on the blog and make few bucks on adSense, how fresh is that? – 😉
Agreed! It really is all about discipline and being adult enough to manage your own well-being. Cancelling Netflix had one of the best residual effects ever – making me realize I shouldn’t waste my time on bad movies. This blog started right around the time I cancelled my subscription. I’m pretty sure that the effort I put into this activity versus the time I spent watching sub-par movies will have much more valuable consequences; both for the readers and myself. Thanks for visiting!
Your interpretation of my article is misleading. I stand behind my assertion that for some people, renting a home and a car is a better value than buying, especially for people in urban areas where the costs of renting are lower than the costs of owning, factoring in maintenance, repairs, and the current economy for both homes and cars. While I suggested turning off automatic bill pay for some bills, I never suggested going back to a stamps and mail method, or paying bills late, and incurring fees. Finally, I included research on the buying habits of those swayed by e-mail marketing and smartphones to show that it’s more than a fluke. You mention none of this research in your interpretation.
This piece was vetted by editors at both The Motley Fool and AOL’s DailyFinance. I welcome alternative views, and am happy to have a discussion with you about them, however, I was unable to find your name or contact information on this blog. While you may disagree with my advice, none of my articles are written anonymously, and none profit off another person’s work.
@Molly, First things first – I’d like to apologize. I am not seeking to cause harm. Although we do not see eye to eye on these topics, I really do not mean to disrespect your opinion or your integrity. Like I said, I believe all your tips certainly had their heart in the right place. I just cannot relate to them.