Economics Made Economical

Tip of the Day 14: Savings Tips in a Bad Economy

  • Cut Coupons–just don’t overdo it because the retailers have begun to push back on people who abuse it.
  • Purchase only necessities until you’re back on your feet financially.
  • Pay off the credit card with the lowest debt first, saving you one whole account’s worth of interest, late fees, and one less monthly bill to worry about.
  • Keep the air conditioning at 68 instead of 65. 72 instead of 68. 85 instead of 80. Raise the thermostat gradually and realize you can still be comfortable is a “less cool” environment than you’d have expected.
  • Don’t use Coinstar machines to count your change–they usually charge a 10-15% fee. Instead take all your pocket change at the end of the day and dump it into a large jar or bin. When it’s full, take it to Commerce Bank’s free coin counter machine and use 100% of what you get back to pay off debt or bulk up a savings account.
  • Create a joint savings account with a more responsible saver; make it so that either of you can deposit at any time but neither can withdraw anything without both parties’ consent–don’t use this account for withdrawal, ever!
  • If possible invest in CD’s or long-term money market funds rather than basic savings accounts.
  • If possible cancel all checking accounts, and have your direct deposit and debit cards attached only to interest-earning savings accounts–make your debit account that’s used for day-to-day purchases a different account than your savings account that is not to be touched.
  • Use ING Direct branch-less banking–their interest rates are some of the highest in the nation, but all transactions must be done online, through direct deposit, or through free third-party ATM’s.
  • At least 50% of your direct deposit should be moved immediately from your debit account into your life savings account to avoid temptation.
  • Use public transportation, public parks, libraries, public gyms, public concerts, public Wi-Fi, and the like to your own comfort level. Keep dial-up or low-speed DSL at home if you can get away with it, and make use of all the free tax-funded services your local, state, and federal government offers for entertainment.
  • Grocery shop and prepare your own food. Don’t eat out except for the most special of occasions. Even TV dinners and frozen pre-prepared foods are cheaper than most fast food.
  • Cut up each credit card once its debt is paid off.
  • Cancel high-tier cable TV packages and stick to the bare minimum that you’re comfortable with–if you can, cancel cable TV entirely and use only Netflix.
  • Buy only used cars and only when necessary–every 10-15 years minimum.
  • Buy only used homes–rent out a room, a basement, a floor, or anything else if you’re able to.
  • If you are a renter, look into your options. If you can get a mortgage on a slightly smaller house for a similar monthly payment, do it! Your monthly mortgage payment is weighed far more heavily in your credit report than revolving loans (credit cards) are. You’ll be building a home equity line of credit–do not touch it, it’s there for extreme emergencies. And your monthly housing payment will be going toward your own property and home instead of evaporating away to nowhere when you pay your landlord. With every month, you will increase your own net worth, rebuild your credit, and have an appreciating asset in your home.
  • If you have an idea for a business, make it happen ASAP! 80% of all successful businesses started during recessions when cost of rent, labor, and loan interest were at their lowest levels, and demand for employment is at its highest.
  • Put off having children until your own finances are under control.
  • Put off retirement to boost your pension.
  • If you’re comfortable with it, choose an HMO and keep your body as healthy as possible.
  • Move to a part of the country with lower cost of living, stronger jobs, job growth, and a better economy.
  • Take a minimum-wage or entry-level job if you have to for the time being–if it pays the bills and gets you out of debt, that’s the purpose of a job.
  • Give up your landline or your cellphone or both and use free services like Skype or Gmail instead.
  • Go back to school.
  • If you have horrible credit, ask a trusted friend or relative to put you on their account as an “authorized user”–even if you never spend a cent with the credit line, your friend’s good habits will count toward your credit score but their bad habits won’t hurt you.
  • If you believe a company or an entity is somehow responsible for the current state of the economy, put your money where your mouth is. Boycott corrupt corporations, banks, politicians–start petitions or a blog or just write a letter to your local newspaper. Make your voice heard and create a movement to hold corrupt CEO X or shady politician Y accountable for their irresponsibility.
  • Listen to the experts like Suze Orman–people first, then money, then things. Live by it!

1 Comment

  1. Reblogged this on Econoblog and commented:

    Originally written almost a year ago, these financial tips sadly still apply today.

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