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Start saving: Pennies can turn into big dollars

June 1, 2009

Have you ever heard the tongue-in-cheek saying, “Why do today what you can put off until tomorrow?”

Despite its sarcastic nature, there are plenty of people who procrastinate and actually live by this philosophy. (Full disclosure: If I’m not careful I can be quite the procrastinator myself, so I’m certainly not looking down on those who tend to put things off.)

I think people tend to procrastinate particularly if the task is either difficult or boring. And this is what leads many people to put off fixing their finances. Let’s face it, budgeting and saving isn’t exactly exciting. And it can be scary and seem impossible, especially if you are facing a big financial crisis.

I always tell people that it’s easier to pay off $5,000 in credit card debt than it is until you’ve amassed $50,000 in debt. It seems like a no brainer, but sometimes it’s easier said than done.

The same goes for saving. According to a Bankrate.com survey, fewer than four out of 10 Americans have an emergency fund to fall back on. Roughly 70 percent of people have some sort of savings, but it’s less than the recommended three months of living expenses.

Not long ago I was reading an MSN Money article by Liz Pulliam Weston. She was writing about the importance of saving right away and compounding that savings. Here is her illustration of how compounding works:

“If I gave you a penny and promised to double it every day for a month, at the end of 31 days you would have — this is no typo — more than $10 million. At first, the doubling is no big deal, as 2 cents becomes 4 cents becomes 8 cents. As we keep going, though, those gains start to build up. The return on your money earns its own returns, and by the end we’re talking real cash.”

Granted, we aren’t going to save $10 million in a month, but if you’re not putting anything aside, and you can start to save something and gradually add to it, you could manage to save a larger amount of money than you thought capable.

Don’t procrastinate. And don’t feel overwhelmed with a large savings goal. Start with what you can, even if it’s only pennies. It could turn into real dollars.

Here’s a calculator to help you figure out how much money you can save.

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Save money on food by using your freezer

May 26, 2009

How many times have you gone grocery shopping, bought food anticipating cooking every night for a week, and then wound up not using what you bought?

I think it happens to many of us. We have good intentions of eating everything we purchase, but life gets in the way. Someone invites you out to dinner. You get held up at work and are too tired or grumpy to make dinner, so you order pizza. You decide you’re not in the mood for fish and rice after all.

Whatever the case, we end up tossing what started out as perfectly good, and probably expensive, food. It’s an awful feeling to throw away squishy cucumbers, moldy bread or meat that just sat for too long uncooked and uneaten.

I saw an article in the New York Times that points out how your freezer can save you time and money when it comes to food. It’s a solution to the problem of throwing away food that’s so simple, so right there in front of our face, that we don’t see it.

As I read the article, I thought, “Hello! Why didn’t I think of that?”

Writer Mark Bittman describes how to properly freeze foods and organize your freezer to avoid throwing away perfectly good food. His ideas range from freezing fresh vegetables to creating your own frozen TV dinners.

If you have ever found yourself buying too much food, or having your dinner plans derailed, only to have a refrigerator full of spoiling goods, I suggest you read the article.

Please feel free to share any tips you have for using food quickly or preserving food so it doesn’t spoil.

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Don’t lose potential savings when tackling projects yourself

May 18, 2009

I just read an article in the New York Times that made me laugh.

The article is about do-it-yourselfers who actually ended up costing themselves more money than they tried to save by tackling projects at home. Some of the people tried home repair, while others tried home beauty treatments or auto work.

Why I really laughed is that I made myself victim to this very thing about 10 years ago.

One evening I decided to save some money by lightening my hair myself. I already have dark blonde hair, but I wanted it lighter for the summer. I knew better, yet I ignored my inner voice that was telling me, “This is not a good idea. You should never color your own hair. Call and make an appointment with a professional.”

My attempt at subtle highlights resulted in a shock of bleach blonde hair that, with my short hair cut, I thought looked like the hair on Dr. Frank-N-Furter’s creation from “The Rocky Horror Picture Show.”

My family assured me it wasn’t as bad as all that, but I wore a hat the next day until I could get an emergency appointment with my very amused stylist.

The end result?

It cost me about four times as much to have my hair color corrected back to its original color and properly highlighted. And you can’t put a price tag on my embarrassment and bruised ego.

There are many, many competent do-it-yourselfers out there. My family is full of them. I’m incredibly lucky that we rarely have to pay a professional to do anything at our house. But not everyone is good at home repairs or hair coloring. Not everyone has the proper tools to work on a car or tackle a major plumbing problem.

If you, or someone you know, are skilled at a certain project, it’s a great way to save money.

However, if you are tackling a big project and don’t know what you’re doing, it might be more cost effective to hire a professional. If you are going to have to buy special tools, will they eat up any potential savings? Likewise, if it’s a potentially dangerous project (Think replacing a roof or working with electricity), you might be further ahead to hire a professional. If you are injured, hospital bills and time off of work — depending on the severity of the injury — could end up costing you a bundle.

If you are going to tackle a home project, make sure you read all instructions. At least talk to someone who knows what they’re doing. Take the proper safety precautions.

Are you a do-it-yourselfer? Have you ever had a project go haywire and cost more to fix than you saved? Please share your comments and suggestions.

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Financial advice for the masses may not be right for you; Look for individual counseling and advice

May 14, 2009

Giving financial advice has become almost a celebrity business in the television world. There are plenty of financial experts who have achieved not only fame from offering advice about money and investing, they’ve pretty much gained a dedicated following of fans who cling to their every word.

Many of these famous financial experts (like Suze Orman and Dave Ramsey) offer good, solid advice. However, not all of that advice is a good idea for every person who watches them on television.

Liz Pulliam Weston recently wrote an article about why she doesn’t always agree with the advice Orman gives. The main point of the article was that Orman’s advice doesn’t make sense for everyone.

This is true of nearly anyone who is talking about personal finance to a very, very broad audience. It’s important to do your own research and get one-on-one help and advice from someone who understands your individual situation.

If you are facing unmanageable debt, a credit counseling session is a great place to start. A certified counselor will sit down with you and take a detailed look at all of your income and expenses. From there the counselor will help you create a budget and an action plan to reduce your debt.

If you have questions about investing, you should find a reputable financial planner to advise you. Don’t make the mistake of thinking that financial planners are only for the wealthy. They can be of great value to anyone with a 401k, an IRA or anyone who wants to start investing for the future, but isn’t sure how to start.

While celebrity financial advisors do offer up useful advice, it’s important to make sure that you glean the information that will be helpful to you and to learn to leave behind what won’t work for your situation.

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Make better use of your freezer to save money and save time

May 8, 2009

How many times have you gone grocery shopping, bought food anticipating cooking every night for a week, and then wound up not using what you bought?

I think it happens to many of us. We have good intentions of eating everything we purchase, but life gets in the way. Someone invites you out to dinner. You get held up at work and are too tired or grumpy to make dinner, so you order pizza. You decide you’re not in the mood for fish and rice after all.

Whatever the case, we end up tossing what started out as perfectly good, and probably expensive, food. It’s an awful feeling to throw away squishy cucumbers, moldy bread or meat that just sat for too long uncooked and uneaten.

I saw an article in the New York Times that points out how your freezer can save you time and money when it comes to food. It’s a solution to the problem of throwing away food that’s so simple, so right there in front of our face, that we don’t see it.

As I read the article, I thought, “Hello! Why didn’t I think of that?”

Writer Mark Bittman describes how to properly freeze foods and organize your freezer to avoid throwing away perfectly good food. His ideas range from freezing fresh vegetables to creating your own frozen TV dinners.

If you have ever found yourself buying too much food, or having your dinner plans derailed, only to have a refrigerator full of spoiling goods, I suggest you read the article.

Please feel free to share any tips you have for using food quickly or preserving food so it doesn’t spoil.

Written by admin · Filed Under Misc. | Leave a Comment 

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