I am starting a new on-going feature that will provide money saving ideas. My goal is to contribute something on saving money about once a month. In the current economy we need all the help we can get. If you have any money saving ideas please send them to me and I’ll include them in the blog. I’ll start with a few ideas that have worked for me.
• Start shopping for clothing at consignment stores. I love good quality clothing but hate to pay the price. For years I’ve been meaning to stop by this cute little boutique on the west side of town and I finally did. Three hours later and two hundred dollars poorer, I walked out with what would have cost me at least $1000 in a regular retail store.
• Save your change. Do you have loose change all over your house and car? I started putting all my loose change in a jar and I had over a hundred dollars saved up in no time!
• Identify and focus on one or two problem areas. We all have areas in our lives where we spend too much. Mine is spending too much eating out. I am trying to focus on this area by keeping groceries in the house, taking breakfast and lunch to work, going to restaurants when they have special deals, sharing a meal and going to a nice restaurant and eating at the bar (same chef ).
• Lengthen the time between personal care appointments such as hair-cuts and manicures. I used to get my hair cut every 4-5 weeks. I found I could go about 6-8 weeks without any problem. Do some of your own personal care and limit that professional manicure or pedicure to once a month or to special occasions.
• Take the time to really shop around for airline tickets. We recently saved $400 per ticket by shopping around and checking numerous different possibilities. Take advantage of opportunities to get airline miles on your credit card. I have two cards that give me airline miles and I make a point to put all of my large purchases on a credit card to get the mileage credit.
Jane M. Young, CFP, EA
1. Don’t lose sight of your investment timeframe. You’ve heard it time and time again but stock is a long term investment. So, don’t let the current drop in the stock market cause you to make drastic changes to money you won’t need for 10, 15 or 20 years. If you don’t need your money for 5 to 10 years stop worrying about it, the market will recover. If you are in or approaching retirement, you should have put aside the money you will need in the short term. Use this for your immediate needs. Down the road in 5 or 10 years when you need to tap into your stock mutual funds they should be back to reasonable levels. Don’t lose sleep about the level of your investments 10 years from now.
2. Every financial crisis feels like the end of the world while we are in it. If you were to look at the headlines during any one of the past financial downturns you couldn’t differentiate them from today. Every time we go through a financial crisis whether it’s the savings and loan crisis in the 80’s or the dot.com crisis the message is the same. This time it’s different, things will never be the same, the sky is falling and so forth. Everything isn’t rosy, but we will recover from this. We need to avoid making decisions based on emotion and fear. The media is in the business to sell papers or increase viewers. They are going to sensationalize our economic situation. Good news does not provide high ratings. Take a deep breath, hug your kids, walk your dog, live your life and stay the course with your portfolio – this too shall pass.
3. Don’t pass up a once in a lifetime opportunity to invest in stock at exceptionally low values. Sure it has been exceptionally painful to watch the stock portion of our portfolios drop by 40% but what a great opportunity we have. If you have a long time horizon now is a great time to invest in the stock market. I encourage you to invest a set amount of money into a diversified set of stock mutual funds every month (dollar cost averaging). Investing in your company 401k or a Roth IRA is a great way to make systematic investments. Now is the time to invest, not to sit on the sidelines. It is always darkest before the dawn. Remember, the stock market is counterintuitive – you feel like selling when you should be buying and you feel like buying when you should be selling. Therefore, right now we should be buying!!! When you feel it is safe to buy again it will be too late.
4. Choose your battles and focus on what you can control. You can’t control the fluctuations in the stock market or where the market is headed. However, you can better prepare yourself for a weak economy. Maybe now is the time to cut your personal spending and build up your emergency fund. Evaluate how to reduce your expenses and pay off debt. Make sure your skills are current and relevant. Build and strengthen your network now before you really need it. If you are approaching retirement, and the market has set you back, evaluate alternatives and contingency plans. Take advantage of opportunities available to you – buy stock mutual funds at low values, re-finance your home at a low interest rate, convert your traditional IRA to a Roth and sell those especially weak stocks to harvest tax losses.