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Personal Finance


Spending Strategies To Help You Live Within Your Budget

By Scott Houser
Sound Mind Investing

CBNMoney.comMany people are considered "cheap" if they pursue bargains or seek out the most economical sources in town for products or services. Yet, when people need advice on where to shop because of an unexpected major purchase or financial emergency, they run to the "cheapskates." Why? Because they see the wisdom of saving every possible dollar in order to use it for more productive ways. The following list of money saving tips is not meant to be exhaustive, but it does represent ideas our family has used in order to allocate our resources efficiently and accomplish our financial priorities.

Buy used, especially for major purchases. Contrary to popular belief, buying used is not risky and does not take a lot of expertise. It does take planning and a little bit of elbow grease. A few years ago, we needed to buy a refrigerator. New refrigerators at that time cost about $750, way more than we had in cash after purchasing our first home. We decided that buying "used" was our best option. First, I studied refrigerators in Consumer Reports. Second, I began scanning the classified ads and made a lot of telephone calls. After you become adept at classified shopping, you soon learn how to screen people who are overselling or "hyping" their merchandise and those who sincerely have a genuine reason for wanting to sell. The result: I bought an almost new frost-free refrigerator for $250. There was nothing wrong with the refrigerator except that it was the wrong color for the seller's new home!

One of the main points in buying used is that, if at all possible, you should anticipate your need. If you know you are going to need a new appliance or a car, begin shopping three to four months before replacement becomes necessary. The following are items we have bought used: automobiles, television, stereo equipment, refrigerator, furniture (all types), children's clothing, and tools. One of the most obvious items to buy used is an automobile. Studies indicate that new cars depreciate as much as 20-40 percent in the first year of ownership. Let someone else pay for that depreciation!

Rent. Some things you just don't need to own: timesharing arrangements, boats, major tools, the list goes on. It amazes me how easy and cheap it is to rent state-of-the-art equipment, return it when you want to, and not have to worry about maintenance, depreciation, obsolescence, property taxes, etc.

Comparison shop. If you need to make a major purchase or have major repairs done on your car, get more than one estimate. Often the prices will vary by several hundred dollars. The same holds true for your annual auto insurance and homeowner's insurance.

Pay cash. This offers two advantages. First, you may be able to buy an item for less by offering cash instead of charging. Second, it forces you to "count the cost" of each purchase more carefully. You won't make as many impulse purchases.

Generic food brands. Major grocery stores offer generic or house brands. Don't be afraid of them! They are often made by the same manufacturer who makes the name brand but puts a different label on it. It doesn't hurt to try the product once; then if you don't like it you can go back to the name brand.

Anticipate needs. We have five children so we often buy in quantity when going to the grocery store or membership warehouse to take advantage of quantity discounts. If a store in our particular area is having a year-end clearance on items such as tennis shoes, shirts, or pants, we will buy half a dozen or a dozen of each. They may not fit our children now, but sooner or later one child will grow into them.

Baby sitting co-op. Get together with other couples you know in your area to develop a baby sitting co-op or club, trading time on a child-per-child basis. This will provide quality care without the expense. I estimate that in one year we saved over $300 by using our baby-sitting co-op, and we've developed stronger friendships as well.

Dental schools. If your county or state has a dental college or hygienist school, you may be able to get your teeth or your children's cleaned at a considerable savings. These hygienists in training are supervised by a dentist, and treat your children's teeth methodically. In the eleven years we have visited our community college clinic, we have never had a bad experience. For an average cost of $8 per child, they get their teeth cleaned, plus fluoride treatment, sealant, and X-rays if necessary. On top of that they also get a new toothbrush!

Medicine/generic drugs. With a family of seven, we have many miscellaneous medical needs. Whether it is the local drugstore's house brand or buying our antihistamines via mail order, we rarely pay top dollar for a brand name drug. For the one antihistamine/decongestant we use for the kids' colds, we pay less than 10% of the price of a popular brand name, and the formula is exactly the same.

Read part 2 of this article, which includes nine more spending strategies, at the Sound Mind Investing website.


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