Living On A Shoestring
(Common Sense Ways to Save Money)
by Anna Florin
Smashwords Edition
Copyright 2003 Anna Florin
All Rights Reserved
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Table of Contents
I would like to thank all the people who contributed their strategies on saving money, for the writing of this book. Their suggestions proved invaluable.
I would also like to thank my husband and editor, Mick. The time and effort he devoted is very much appreciated.
Lastly, I must thank my dad for showing me how to make a dollar stretch and how to stay out of debt. Without his guidance and example, this book would never have been written.
This is a compilation of common sense ways to save money. It’s amazing how little families can live on when necessity forces them to. Learn how to live below your means, how to tuck your money away before it’s spent on unnecessary items and discover why investing in yourself is essential in today’s economy. If you follow some common sense lessons you’ll be able to “squeeze your pennies” now, to provide for your future tomorrow.
Remember, there’s nothing less common than common sense.
Money- Where does it all go?
It sure seems to go out faster than it comes in. If you were to compile a list of expenses that your household pays in a typical week, or month, you’d be surprised at the maze of places your money falls into. We have utilities for the home, mortgages and rents, car and credit card payments and insurance… for our health, our lives, our vehicles and our homes. Then there’s food and entertainment. The list goes on and on.
It’s important to know exactly where your money is going each month. Begin your saving plan by writing down where you spend your money and have your spouse and children do it as well. Do it on a daily basis. If you’re comfortable using a computer, there are several programs (like Microsoft Money) that will assist you in keeping track of the money and it can work directly with your bank account.
After a few months, it will amaze you just how much those fast food lunches and bottled waters are costing you when you add them up. You’ll be surprised at the amount of unnecessary things we all buy that really don’t cost a lot by themselves, but when you put them all together and add them up, they become major expenses. Budgeting your money is a necessity today and finding those little nonessentials that need to be gleamed out of your budget is the first step to living debt free. You have to take control of your spending before it’s too late.
I recently heard from a local District Judge that 90% of all divorces that came through his court were over money issues. You might think that life would be easier if you just made a little bit more money. How much money do you make a year? Take the amount you get paid for an hour and multiply it by 2. Now add 3 zeros behind that number and that’s approximately how much you’ll earn in 50 weeks…or about a year. Remember this saying, “It‘s not how much money you make, it’s how much money you spend, that matters”. With that said, life would be easier if you knew the secrets of saving money.
Everyone has expenses and yet some people always seem to have just a little bit more, even though they make about the same amount of money as you do. Why is that? Perhaps they know how to squeeze their pennies and make them go further. Let’s explore some ways that they do that.
Housing Savings
If you’re young and single and you still live at home, my first suggestion is to stay put. The easiest way to save money is by not having to pay housing expenses. Renting is by far, the most expensive place to put your hard earned cash (and you get nothing tangible in return). If you live at home, you forgo not only the house payments and rent, but you forgo the electric bills, the water bills, the gas bills and sometimes even the food bills. The savings are immense. A young person could easily save half of what he makes and stash it away for a future investment (namely a home of his own or an investment that pays a nice dividend).
Usually when you’re out of school but still live at your parent’s house, you will be asked to pay a little rent when you begin to work full time. This is a great idea. It prepares you for the real world and helps you understand that there are no “free rides” in life.
It’s difficult to stay at home forever though, so if you’re out of the house with no savings, you are probably renting. To save some money here, you could rent a single bedroom instead of the whole apartment or you could arrange for a roommate to share the apartment with you and then split the costs down the middle. But remember, whenever you live with other people, you’ve got a lot of give and take. Hopefully the people you live with aren’t a bunch of takers. Renting in a different area of town that isn’t so expensive might be feasible and you can save some money as well. Renting close to where you work is a good idea to cut down on travel time and gas. If you’re handy at fixing things, you might apply for a manager’s position at a small apartment complex. Often the job comes with a free apartment and some hourly pay as well.
One rule of thumb is never get an apartment that takes all your money each month, even if it has a great pool. Always keep enough for other things like food, entertainment, utilities and yes... even savings. People don’t consider “savings” a monthly necessity, but it should be viewed as just another bill that needs to be paid. A certain amount, somewhere around 10% of your take-home, should be saved each month. Keep it in an insured interest bearing account and never, ever touch it… until it’s invested. A good book to read that’s been on the shelves for many years is entitled The Richest Man in Babylon. It explains how the saving idea works and how an initial “head start” now, when you’re young, will benefit you your whole life by compounding the interest you earn. It’s like having your money work for you. This book should be available at your local library and it’s always cheaper to borrow, than it is to buy.
When I talk about insured savings, I mean the FDIC (Federal Deposit Insurance Corporation) and the NCUA (National Credit Union Administration), both of which are respectable insurances that haven’t had any trouble with their banking practices, yet. There are other places that boast higher interest rates but offer little or no insurance. Let me warn you about these. A few years back, in 1986, the Savings & Loans (also some Thrift & Loans) institutions all across America, went belly-up. Yes, they claimed they too were insured, some by the states that they were in, and yet when it came time to pay up, the money was simply gone. Very little money was repaid (at least here in Utah) until a lawsuit urged them to find it.. somewhere. It took over 10 years to rectify the situation, but in the end, about 90% of the deposited money was returned (without a penny interest). Hopefully, the two insurances I mentioned will remain solvent. But remember, whenever you have money, there’ll always be someone out there trying to get their hands on it. So be careful.
Saving at your place of work is a great idea. Many companies will contribute 50% of whatever you put into your 401K (retirement account). That means that for every dollar you invest, they’ll put in 50 cents. Wow... you just made 50% on your money. Some give you an option to put the money in stocks or bonds. If it’s the company’s own stock you choose, they might even let you have it for its lowest price during the past 6 months. Check into what your work offers and you may find it worthwhile. However, remember to not invest more than 20% of your savings into the stock of your workplace. The fiasco at Enron a few years back taught us that even the best of companies can be ruined by greedy corporate heads. Equal disasters can be caused by a careless worker or a simple change in the law and the big losers always seem to be the employees.
Investing the money you save is so very important if you want to someday be financially independent. Whether it’s in stocks, bonds, gold, CDs (certificate of deposit) or real estate. Invest in something that has a documented history of making money. During the first few years of the new millennium, the stock market took a big turn down and erased all the gains investors made from the growth cycle from a few years before. Then it slowly turned around and began to climb again. In 2007 it reached an all time high, just over 14,000 on the Dow Jones Industrial Average.
Remember, nothing is guaranteed 100% except that the market will fluctuate up and down at its own pace. Investing in the stock market can be exciting and fruitful, but it can also be very risky. Don’t invest more than you care to lose.
One of the most stable investments you can make is housing. Even if the housing market slips during a recession, it usually rebounds within a few years. Buying a house isn’t for everyone though. If you like to move frequently, it wouldn’t pay for you to buy one house after another. You may get caught in an economic downturn when you needed to sell and then you could lose money “big-time”.
If you do decide to buy a house, rest assured that you have made a wise decision. Remember this saying, “Whether you rent or whether you buy, you pay for the home that you occupy.” This is so true. Why let the landlord end up with the house after you’ve paid for it? Buying your own home is a good investment, but there are a few things you should and shouldn’t do.
Buy close to where you work, only if it’s affordable. If the city you live in has a high cost of living, consider moving to an area where it’s more affordable, whether that’s across town or in another state. Unless your job is fulfilling or pays well, all this should be considered. Consider buying a house that can hold more people, allowing not just your family to live there, but a relative’s or friend’s family as well. Then split the costs down the middle. Housing is one of your major expenses. It’s often better to share that cost.
When buying a house, save up enough money for a good down payment. 20% of the cost of the house is a good amount to strive for, otherwise you’ll be forced to buy mortgage insurance for your loan. If you can’t seem to gather that much cash together, buy the house with whatever down payment you can come up with and work on paying it off quickly. When you get down to the 20% paid off mark, be sure to advise the mortgage company and let them know you no longer need their mortgage insurance. That alone should save you hundreds of dollars a month.
Don’t fall into the trap of buying the biggest house that you qualify for. High rolling investors recommend this tactic because the value of the entire house rises with the market, earning you a large equity on the home for when you resell it. But houses don’t always go up in value. The recent “sub-prime” mortgage crisis can attest to that. Be sure you can afford to keep the house you buy if the economic situation slows or you lose your job.
Everyone thinks their job is secure and there’s no way they’ll get laid off. Guess what? In this fast pace economy, where things occur in an instant, it could happen. Prepare for it in advance. Always have a little “nest egg” of savings for just such emergencies and never make your house payments so large that you have to scrape by in every other area of your life. You should never buy a house that requires more than 25% of your gross monthly income. Experts in the mortgage field have recently raised this number to 30% because house sales were falling off, but logically it shouldn’t be over a quarter of your income. Why? If too much liquid income gets taken away at the beginning of each month by the house, you’ll suffer in the other areas of your life, especially if an emergency arises.
Remember, you also have to pay taxes on your income, buy food for the month, pay bills like electricity and gas, and you might have other expenses such as medical bills or schooling. You also need to save 10% of that monthly income for your future investments. Now whether you want to sink that investment money back into your house that month, is up to you. But at least that’s a flexible option. Your house is a good place to put your investment money, but with a lower house payment, you’re not ‘forced’ to. It will make your life less stressed if you say where the investment money will go each month, not someone else.
After a few years, your financial situation should stabilize. You’ve invested quite a bit of your money and are making some good returns. Now you might be able to afford more and only now should you move up to a larger home. Remember that a home, in itself, is a good investment.
There’s lots of different types of loans out there. Conventional loans, ARMs (adjustable rate mortgages), Interest Only, the list goes on and on. Which one to get depends a lot on how long you plan to live in the house, how much down payment you have and how much you want to pay per month. Homes used to always be written on a conventional loan of 30 years. That means if you pay monthly payments using the same interest rate and the same amount per month, in 30 years you‘ll have the loan paid off. They now have 15 year, 10 year, even 40 year loans. Usually the lower time frame loans will have a lower interest rate.
ARMs (adjustable rate mortgages) on the other hand, have adjustable rates, which means they need to be readjusted every once in a while… after 3 years, 5 years, or 7 years, whichever you choose. If you plan to only live in the house for 5 years and their rate is lower than a conventional rate, it might work well for you to get one of these for 5 years. However, if you don’t move or can’t sell your house in time, you’ll still have to refinance the loan, which will cost you lots of money and the rates might then be higher. It’s all very risky when you carry an adjustable mortgage. So be wary of these loans, especially if you’re planning to stay in the home for a long time.
Interest Only loans are new and interesting. The monthly payments are lower because the buyer never builds any equity in the home, unless he pays extra money to go towards the principal. The bankers are betting most people won’t be able to do this. With these loans, you’re really just paying the interest only. When you reach retirement age and want to stop working, you’ll still need to keep paying on your house, forevermore. It will never be paid off. This type of plan will not fit into our debt free living plan and should be avoided at this time.
When buying a home, try to find a seller that isn’t using a realtor. I have nothing against realtors except that they’re like a middleman in the transaction. They take a bite of the money that passes between the buyer and the seller. Most sellers know the percentage that the realtor takes and will raise his asking price to cover this amount. You’ll get a better deal, usually, if you don’t use a realtor. Go ahead and get an inspection on the home if you feel better about it, but it’ll cost you over $500 even if you end up not buying the property. There’s a lot in a house that can be fixed for that amount of money. If you use a good standard contract, most problems that arise in a house are addressed, which the seller then is legally bound to fix. Be sure to obtain and use a good contract.
When you go to sell a home, don’t use a realtor either. You’ll be the person paying him and if you raise the price of your home to cover his costs, you’ll immediately cut out some potential buyers that might otherwise be interested in the house. There’s plenty of free places to list your home here in Utah (ksl.com) and nationwide (Craig’s list). You’ll get plenty of “hits” and hopefully a mob of people at your weekly open houses. Have the place look nice and be prepared to sell. Don’t be in a hurry whether you’re buying a house or selling it. It takes time, depending on the market, so be flexible. This just might not be the right time.
In the end, always use a title company when buying or selling. They handle all the legal aspects of the transaction and keep everyone honest. These companies are all competitive and charge different amounts, so don’t hesitate to shop around. When selling your home, don’t underestimate its value. Do a thorough check of the area and find out what it should sell for. If you don’t get many nibbles when you first try to sell it (but you know its worth every penny) try raising the price to the next $5,000 increment. Example…you try to sell a home for $145,000 but aren’t getting many nibbles, even though the home is well worth the price. Try asking $150,000-$155,000 for it. Some people put lower limits on what they’ll look at. They expect the lower end to look shoddy, even when many of the homes are not. It doesn’t hurt to be flexible when you’re trying to sell your home.
If you can’t sell your house right away for the price you want, yet you still want to move (and can afford to), consider renting your house out. Make sure you screen the applicants closely and visit the place often (to be sure everything is being taken care of). Don’t hesitate to give constructive criticism if something isn’t right and praise them when it looks good. You can check the newspaper for what houses are renting for in that area and charge a similar rate. You’ll have to be handy and fix things, but the rent should cover your monthly payments, plus give you a little bit more cash at the end of the month to fix things up.
Mortgage Savings
Did you know you could save thousands of dollars on your home loan by paying “principle payments”? As you know, when you first buy a home, most of your monthly payment goes towards the interest. Let’s say your new loan payment is $900/month. Out of that, let’s say $880 will go towards the interest and taxes and only $20 of that payment actually goes to the principle. As time goes on, more and more of the payment goes into principle, but at the beginning of the loan, not much does. Here is where it’s easy to pay for extra months, by paying extra principle payments. (Be sure to check with your mortgage company to be sure the type of loan you’re getting allows this before you secure the loan. Most of the reputable institutions don’t mind if you pay off the loan early).
Now look at your amortization sheet (provided by your lender) and you’ll find the $20 that goes to the principle this month, while $20.90 goes to it next month. The month after that, perhaps $22.31 will go towards the principle. Figure out how much money you’ve set aside this month for investments (let’s say you have $250 set aside). That’s more than 10 months of principle payments you can pay off now. That means that if you send in the $250 with your regular payment and tell them you want it to go towards principle payments, they will pay off the next 10 principal payments with that money. You’ll still have to pay a house payment the following month, but your loan will be paid off 10 months sooner (almost a whole year earlier). This is quite easy to do at the beginning of a loan, but it’s very difficult after the loan gets about half way in. To understand this further, have your mortgage consultant walk you through it. They know how it works.
Refinance your home loan if the rates are down 2 percentage points from where your loan is now and you’re planning to stay in the house for at least 5 more years. It usually costs about $2,000-$3,000 (or more) to refinance and doesn’t make sense to do it unless you’re planning to stay in the home for several more years, since it will take a few years to recapture the refinancing costs. Rates today in 2008 are quite nice.... just over 6% on a conventional 30 year loan. (I’ve seen them as high as 12-14%). Check around for the best rates and don’t pay to have someone give you a "good faith estimate". It should be free. Remember not to release your social security number until you know you are going to deal with a certain company. (They'll check your credit and in doing so, tarnish your credit rating.)
Credit Card Savings
Sadly to say, most of us have too much debt. Credit card companies have proven their power over us, luring us into their webs of “live for today, don’t worry about tomorrow”. The ‘instant gratification’ generation is finding it difficult to navigate through the sea of piling bills. What once was thought to move the economy, is now becoming a pit of bankruptcies that threaten the American way of life. More people are declaring bankruptcies now, than are graduating from college. It’s estimated that today, in the United States, over one trillion dollars in debt are on our credit cards. We’ve got to pull ourselves out of this pit and like a drug addict, wean ourselves off our credit cards, away from temptation and away from debt. This isn’t an easy task, especially when the credit card institutions seduce us at every turn. But we can do it and we will do it. If we don’t, their high interest payments will destroy us.
Some people claim they can make credit cards work for them, but this takes organizational skills, a strong will power, knowledge of math skills, and a lot of luck. We won’t go down this road right now, since many people who try to work the system this way will fail and fall deeper into debt. For now, we’ll travel a safer road.
First of all, try to pay off your high interest credit card bills as quickly as possible... the highest one first. How? If you own a house, see if you can take out a loan from your local credit union with a “home equity line of credit”. The rate you’ll pay on this loan will be very, very low compared to the credit card’s 18-26% rate. (I’ve recently read that some credit card loans are as high as 40%. Ouch!) Pay off your credit card’s balance and then get rid of the credit cards. Cut them up and don’t reapply. Then as quickly as you can, pay off the credit union debt, putting down as much as you can each month to get away from paying more interest than necessary. Regardless of what you’ve heard, debt is not your friend. (The federal government needs to go back to school and relearn this lesson.)
If you don’t own a house or can‘t get a home equity loan, see if you can secure a different type of loan at a lower interest rate than your credit cards are charging. That will save some money right off the top. If you can’t get a loan from a bank or credit union, try getting a loan from a family member or a friend. Offer to pay them interest (say 6-10%) on their money and put up some collateral for their protection and peace of mind. They will be having a hard time finding anything else that will give them a 6-10% return on their money these days and if the collateral is worth the amount they loan you, they just might go for it. (Collateral is any item that’s worth something... a car, furniture, clothing, land, a gun, art, musical instruments, even a portion of a business. Whatever you both agree on.)
Write up a legal contract, stating what amount was loaned, what the interest rate is, how long the pay back period is and what the collateral is. (The loaner must return the item of collateral back to the borrower once the loan is paid off in full, with interest. Remember, if the loan is not paid back, on time, the loaner legally gets to keep the collateral item.)
Take that money and pay off the high interest credit card bills and pay back your friend on a monthly basis until it is paid. Pay the loan off early if you can. Get back your collateral piece and never get another credit card again. In fact, never buy anything, except a house, on credit. A house will usually increase in value over time, off-setting the interest you pay for it (plus the interest is tax deductible on your federal tax return, at least right now it is). Almost everything else you buy loses value (it depreciates).
If no one will give you a loan, cut back on all spending you do that isn’t necessary for life. Cut out the movies, the eating out dinners, the cable TV, the cell-phones. Everything goes. Live like a pauper for a few months until those credit cards are paid off. Food pantries are usually available in town that give out food to deserving citizens (which you are). Thrift stores have articles for sale at much reduced prices, but only get what you absolutely need right now. Otherwise, wait until the credit cards are all paid off. It will feel like hell for a while, but remember, it’s only for a few months and then you’ll be out of credit card debt. When this happens, remember the pain and suffering you had to endure during this timeframe. It’ll help you from obtaining another card in the future.
Remember that when you buy on credit, the cost of the item automatically increases unless you pay off the card in full each month. So even if the item was on sale, once you have paid the interest, it could cost you double or more what you originally paid for it. And that’s no sale.
There are cards out there that “pay you back” 1% or more of your spending each month. If you can keep these credit cards paid up and never have to pay their interest, they actually do save you money, as long as you don’t feel forced to shop at any particular store that might have higher prices. For most people that are having trouble saving money, I would recommend staying away from these too. They’re a temptation you don’t need right now.
Car Savings
These days we think we can’t live without an automobile. But cars are expensive. They not only cost a lot to buy, but they cost a lot to maintain. They cost a lot to insure and a lot to gas up. If you possibly can live without a car, that’s your best bet. You will save so much money if you are able to bike it, car pool it, or bus it to your destinations. Granted, that’s not for most people. We have come to rely so much on cars these days, it’s difficult to fathom life without them. So, if you must have a car, get a good buy for your money.
To lease or buy? Not a difficult question. It’s like saying to rent or own. Remember what we said about owning a house. You have equity in it over time. Cars are similar, but it’s a different type of equity. It’s just cheaper to buy one than rent one. Why? Because you’re going to keep it much longer (probably 10 years or more), offsetting the costs of buying it. Wait until you’re rich before you decide you need to rent a new car every 3 years.
A new car is really great, but loses much of its value in the first few years simply by getting old. However, some car dealers have tempted us lately with tremendous savings on new cars. They have recently offered zero percent interest or $3,000 (or more) off the cost. Both are exciting ideas, but do you see that the zero percent loan is going to cost you $3,000 more right off the bat. This is why you should not buy a car until you have the money for it. Then when you do buy, you can get $3,000 off the price. And remember, most car dealers will still “negotiate” the price of whatever car on the lot strikes your fancy.
For most of us, a brand new car is simply out of the question. A good used car will do nicely. Look for one in the newspaper or on a web site listing service in your area. Select a car with low miles and buy it from a private owner. Low miles usually means fewer repairs. Check the internet for what the car should sell for (try Edmunds and Kelly Blue Book sites) and then try to talk the owner down a little. It’s not that difficult if he knows you are serious and are paying cash. Just by showing him the money will help him make up his mind. And remember, a used car can be insured for a lot less than a new car can.
All cars need gas. Try to select a car that gets good gas mileage. You’ll save every time you fill up. Keep an eye on the current gas rates. They fluctuate hourly sometimes, but if you have an idea what the prices are, it’s easier to know when you see a good deal. Don’t fill up your car when you see a tanker truck fueling the gas station. Often his pumping will stir up debris in the bottom of the station’s gas barrels and if that gets into your tank, it could clog your fuel line. You’ll get better gas mileage when it’s cooler and the humidity is higher, so if you can, save your long trips for these time periods (night-time possibly).
Keep the car tuned up. If you get into the habit of checking the vital signs in the car, it won’t break down as often. Check the fluid levels weekly and top them off if they need it. Check for leaks under the hood of the car and on the ground under the car. If left unattended, they could lead to a fire. Change your own oil and filter every 3,000 miles and replace the air filter as needed. You’ll save between $15-$20 every time you change the oil yourself, especially if you get the oil on sale.
Examine the tires to be sure they have the correct air pressure in them. They’ll wear funny if they don’t and will need to be replaced early. And don’t be afraid of fixing your own car. Get to know it. Most people can do minor repairs on a car. They sell manuals and tools at most car part stores and many of those stores will loan you the fancy tools if you attempt a big project. Fixing water pumps, radiators, belts and the flushing of the antifreeze coolant system are all possible by the home mechanic. You will surprise yourself at your own ability. You can often reset your “check engine” light simply by unhooking your battery for an hour, then hooking it back up.
If you just can’t manage to fix your own car, perhaps you know a home mechanic neighbor that would be willing to “trade” work with you. He’ll fix your car if you do something for him, like mow his lawn for several weeks or supply him with whatever your talent is. You might offer to pay him. Car dealerships charge anywhere between $75-$95/hour (sometimes more) for their mechanic’s time. I bet one of your neighbor mechanics would be cheaper.
If you do end up taking it in to be fixed, be sure and keep the receipt (along with the car’s VIN number) in a safe place. Even after you sell the vehicle, keep this information. We’ve seen recalls come in the mail years after we’ve sold our old cars. And we’ve gotten a letter on a lawsuit against an old insurance company that hadn’t paid us what our car was worth when they totaled it a few years before. Thus, keep records of repairs, accidents, insurance account numbers and VIN numbers even after you sell the car.
Wash your car in your own driveway. A bucket of soapy water and a quick rinse with the hose is much cheaper than the $5-$6 you’ll pay at the gas station. Wash it in the cool summer morning to avoid window cracks (cold water running over a hot window) and be sure to rinse it before the wash water dries. In the winter, wait for a nice sunny day and give your car a “sponge bath”. By that I mean take your soapy bucket and wash a fender, then take another bucket of clean rinse water and rinse off the fender. Wash the hood, and rinse the hood. Wash a door, rinse it, etc. etc. It takes about 20 minutes to do it this way. Have your kids help you by bringing the clean rinse water out.
Today, the IRS allows around 45 cents a mile to run a car (the actual cost is really over 65 cents a mile). This takes into account the costs of buying it, the oil, the tires, etc. Thus, if you think a little trip to the store isn’t worth the 65 cents times the mileage, don’t take it. Wait until you have a few more reasons to make that trip, then it might be more worthwhile. Try carpooling to work as much as you can. Take turns driving or pay the designated driver a reasonable sum every day you ride with him (make it at least the cost of a bus fare to your destination).
Sign up with your county to vote through the mail. The cost of a stamp will save you all kinds of gas spent running around looking for the new location of your precinct. Lastly, keep your car as long as you can, as long as it runs well and doesn’t need constant repairs. No reason to surrender a good car as long as it works for you.
Utility Savings
Electricity payments are a constant demand on our money. We can use less by using it wisely. Large amounts of electricity are consumed when heat is produced in electric ovens, stoves, toasters, dishwashers and clothes dryers. Washing machines and central air conditioning also use a significant amount of electricity to turn their big motors. Wouldn’t it be nice to be able to buy a windmill or solar panels and bid our electric companies goodbye? The fact is, for most of us, the electricity produced from large power plants is still cheaper than individual solar and wind power units. However, with the recent rate increases and the greater availability of these enviromentally friendly items, it won’t be long before solar and wind power units will be cost effective, so keep them in mind for the future.
But for now, think smaller. Smaller means less money. An evaporative cooler (a swamp cooler) takes less electricity than central air conditioning. A fan takes less than a swamp cooler. A 40W light bulb uses less than a 60W bulb, which uses less than 100W bulb. Think of your needs and use the correct size bulb. Florescent tubes and bulbs last about 5 times longer than incandescent light bulbs and take much less electricity.
A toaster oven takes less electricity than heating up your regular oven and the microwave takes less than a toaster oven. When using your big oven, try to make maximum use of it. Cook not only the main dish, but throw in the vegetables and some bread or potatoes. Then when they’re finished and the oven’s still hot, toss in that pie or some cookies. Why not? No need to reheat it. It was hot anyways. Make the most of it.
The same goes for the washing machine and dishwasher. Make sure your machine is full before you run it. If you have a hot tub, you can turn it off in the summer, but still use it. It only needs to cycle once or twice a week for an hour or so to keep it clean. That’s when you’ll chlorinate it and filter out any dirt particles.
A furnace that has difficulty blowing, wastes energy. Be sure to change or vacuum your furnace filters every month in the winter, and in the summer as well, if you use central air.
Having a fan over your bed is a good idea for those hot summer nights. That way you won’t need to run the big air conditioner all night. Putting that fan on a timer is also a great idea (it’ll turn off while you’re sleeping). Open the windows at night and let the cool night air in and close them in the morning (trapping the cool air inside). Close down the shades on the east side of the house in the hot summer mornings, so the morning sun doesn’t heat up the rooms. In the evening, close down the western facing shades and shut the windows as well.
Plant deciduous trees (the kind that drop their leaves) on the south and west sides of your home to shade it from the summer afternoon heat. The trees will lose their leaves in the winter so you needn’t worry about its shade then. Keep in mind that a large tree behaves like a huge air conditioner when properly placed in your yard.
Always pay your electric and other utility bills on time. It can really mess with your credit report if they’re late. Try to avoid paying any late fees or penalty fees, whether on utility bills, rents, mortgages, taxes and even movies at the video store.
Natural Gas or heating oil are big contenders for our money during the winter. Saving here is not impossible. They heat our homes, so you’ll need to turn down the thermostat so it’s not above 68 degrees in the day, around 62 degrees at night. The lower you can move it down and comfortably live, the more you’ll save. Keep the furnace filter clean and the furnace will work more efficiently. Keep all the air vents clean and free of obstructions, both the return air vents and the heating air vents. Remember that sweaters, slippers and blankets can all be used when trying to stay warm on a cold night. Different foods like soups and chilies tend to warm us, as does spicy foods and hot drinks. Exercise and movement warm our bodies. Don’t rely so heavily on the furnace as your only heat source.
One of your best investments is a programmable thermostat. It remembers to turn down the heat after you’re in bed, and turn it back up ten minutes before you get up. It turns it back down after you leave for work and back up just in time for you to get home. These are not too difficult to install and cost very little.
Have your furnace ‘tuned up’ every once in a while to be sure the flame in your furnace isn’t set too high. Even though the call will cost you some money up front, in the end you’ll be saving a lot on your gas bill.
Leaks and cracks around your windows, around your recessed lights and under your doors are major reasons why a heating bill might be high. Check out these places and try to plug up the cracks and leaks. Plug them with anything, even tape them if you have to. A towel pressed against a crack under the door will work or you can visit a home improvement store and get something more permanent. Placing plastic sheeting over single pane windows (either on the inside or on the outside) helps keep the cold winds out in the winter and will cut down on the gas you use. In the cooler months, keep the blinds open on the sunny side of the house and let the sun in. The sun has magnificent heating effects on a room.
Insulation in the attic should be around 15.5 inches thick. If it isn’t that thick, add some to bring it up to that level. It will save you up to 20% on your energy costs. If you have a crawl space under your house, seal under your floorboards with a thick plastic sheet to keep the moist, cool air from seeping up into the rooms above.
Showers and baths are robbers of hot water. While you’re in the saving mode, try to cut back on how full you fill the tub. Perhaps more than one child can use the tub water or you can wash several kids at a time. Showers need not be any longer than 5-6 minutes of water running down the drain. Try turning off the water while you soap up and shampoo and then turn it back on to rinse. Shaving your legs in the shower wastes a lot of water (unless you turn off the water while you shave). Be sure to have a water flow reducer installed on the showerhead.
Like I mentioned before, make sure your washing machine loads are full when you run them and then wash most of the clothes in warm or cold water, with a cold rinse. Only whites need the hot water. You can turn down the water heater in the summer time when you shouldn’t need all those hot showers. You could also turn your water heater setting to vacation when you leave for a few days.
There are smaller sized water heaters today that are installed closer to where they’ll be used. They heat the water rapidly when called for and only keep a small amount in them as a reserve. Watch for the prices of these to come down in the future.
Gas water heaters, clothes dryers and stoves are cheaper to run than electric ones, at least here in Utah (check your own local area for the best rates), so if you’re buying a new appliance, consider switching to gas. Grill outside on propane gas grills. They are a cheap alternative to cooking on the stove and they keep the kitchen cooler in the summer as well (and there’s no pans to wash!)
Water is always a fundamental commodity. Out here in the west, its value is increasing quickly. During Colorado’s recent drought, their motto was “Only wash the smelly parts” (that might be a little too extreme). It’s ok to use water, just don’t waste it.
Most of the water we use daily in the summer is used outside on our lawns and shrubs. Try cutting back on the lawn watering so that the lawn has a touch of brown in it. It will survive the heat as long as the grass doesn’t get too brittle. I’ve seen a lawn return to life within a few weeks after being forgotten for three hot summer months. They are quite resilient. The bushes can be watered less often because they usually have longer root structures. Once a week with the hose should be enough for them. Flood them for a few minutes each. Trees need water less often than that because they have real deep roots (unless they’re younger than 3 years old, then they’ll need watering about once a week, same as a bush). Hose the older trees down about every 3 weeks. When the trees are mature and really tall, experts tell me that they can get all the water they need from groundwater. I don’t believe it. Not if your area has been in a drought for several years and there is no ground water left. If you’re in a drought, go ahead and water mature trees with a soaker hose for a few hours once a month. Place the soaker hose around the drip line of the tree (where rain would normally drip off it in a rain storm). That’s where the youngest roots are and where it needs the water the most.
Bushes will use less water than grass, so why not remove some of your lovely lawn and plant some nice bushes instead, surrounded by a few feet of compost (about 3 inches deep). You don’t need to water the compost.
Drippers are an alternative to watering by hand. In theory they seem like a great idea. They do the dripping and the water goes in slowly. It all sounds wonderful and it actually works pretty well on hills because when you water with a hose, the water just runs off and flows down the hill anyways, without much going in. The problem with drip irrigation is the initial cost. It is simply too expensive if you have a large lot. And if you have gophers, watch out. They’re always nibbling through the quarter inch tubes, ruining any chance of the water making it to its correct destination. You’ll need to decide if the benefits of going this way outweigh the costs. Soaker hoses, on the other hand, are becoming cheaper and their seventy foot length can reach a long ways with little waste of water. Also, I’ve noticed that, so far, the gophers seem to leave them alone.You can purchase quarter inch soakers and run them down vegetable garden lines, connecting them to their half inch feeders on both ends. What a wonderful way to water wisely and the weeds won't grow because they don't get watered at all.
Phones have really come a long ways over the years. What used to be a luxury, is now deemed a necessity. You can pay almost anything these days for phone use. If you want to save money, most connected telephone lines are cheaper than cell phones. A basic old fashioned telephone service (land line) is around $25/month here in Utah. Cell phones are available for not much more than that, but you don’t usually get unlimited minutes for that price and then they can end up costing a lot more. While you’re trying to cut back and save some money, you don’t need stuff like “call waiting”, “who’s calling” and a bunch of other attractions (including long distance) that are available to phone users. Just get the bare bones and live with it for a while. Save some money. Don’t pamper yourself with expensive habits that you really can’t afford, at least not right now.
My dad rarely uses his phone but felt he needed a cell phone in case of an emergency when he was out alone in his car. He opted to purchase 1,000 minutes for $100. These minutes last him over 10 months, essentially costing him just $10 a month.
Long distance is not hard to figure. Some cell phones allow free long distance, but their monthly bill is more than a land line. If you’ve decided you need to keep your internet service, you might look into obtaining an internet phone (with free long distance). Either way, you’ll need to decide which is cheaper for you. If you don’t talk a lot on long distance, I recommend picking up a prepaid long distance phone card that charges by the minute, available at Costco’s, Sam’s Club or other big lot stores. These cards cost less than 3 cents a minute for long distance and some are rechargeable, so you can add an extra $20 whenever you want. You don’t even need a long distance carrier if you use these. Try to find someone that has an account at one of these big lot stores and can pick up a card for you. (The big lot stores charge around $50/year just to shop there, so for the time being, don't buy a membership card. Just tag along with a friend or family member.)
If you have a cell phone, but no longer want one, there are places on the internet that will sell your contract and relieve you of your obligation. A small fee is charged.
Internet service is catching on as one of life’s little necessities. There are lots of different costs for this service. Check out the local markets and pick one that’s right for you if you think you must have it. If you don’t use your computer’s internet more than once or twice a week, you might opt to forgo this service and just use the computers at the local library or at work for free. It would save you a bundle of money and having this at home is really just another habit you probably don’t need.
Cable and satellite TV are becoming an obsession. Think of how often you watch the shows and consider if you really need this entertainment on a 24/7 basis. Is this stopping you from doing other things in life that need to be done? Perhaps renting a movie once or twice a week would be cheaper than paying the high cable charge? Redbox and Blockbuster both rent DVD movies for $1.00-$3.00/night, but you will need a credit card account for these services. It gets to a point when our desires cost more than we can afford to shell out. If you’re serious about saving money, this is one area that won’t hurt you when you give it up.
Food Savings
Food is a necessity of life. Remember that it always costs less to prepare your own food at home than it does to eat out. Don’t make more than you’ll eat, unless you like leftovers. Leftovers are great for the following night’s meal and you won’t have to cook. They also make wonderful lunches for the next day, especially meats (like ham or beef) for sandwiches. As you know, turkey is inexpensive and goes a long way. It should be served several times a year, not just on Thanksgiving. Pizza can be reheated for a delicious lunch, as can a casserole. Rinsed, cooked leftover spaghetti noodles (without the sauce) can be made into a nice antipasto salad the next night just by adding Italian dressing and a few tomatoes, olives and cucumbers. Many leftovers can also be added to a pot of soup for the next night’s meal. Leftover potatoes, carrot sticks, even gravies can go into the pot. And soup is a good filler. Canned soups can be enhanced by adding your favorite vegetables or celery and onions, whatever’s on hand.
Crock pots (slow cookers) are wonderful for the busy person who needs to toss something together quickly and run. Returning home after a busy day to a savory hot meal saves not only money but energy (yours) when you need it the most.
And remember, a portion of food is about the size of a deck of cards and since meat is usually the main cost of a meal, limit the amount of meat you serve to one portion per person. Let them fill up on the vegetables, potatoes, rice or noodles, soup and bread. Remember that you shouldn’t eat meat every night. Experts say too much meat may lead to cancer. Fish should be eaten once or twice a week and meatless/fishless meals are encouraged as well. These are cheaper to prepare and healthier for you in the long run.
Sharp cheddar cheese is more flavorful than mild and goes a lot further when making a sauce. A package of corn meal can make lots of nice, hot bowls of cereal on those cold mornings and is a lot less expensive than a box of the wheat stuff. If you’re only making one or two servings, be sure to save energy by cooking the cereal right in the bowl, in the microwave oven (must stir the bowl every 20 seconds to prevent lumping). Bag and freeze that brown banana to use later in a batch of banana bread, or buy yellow bananas when there’s a great sale and peel them, bag them and freeze them to use in smoothies (be sure to use them within 3 months.) Rotate your freezer storage as well as your pantry items and be aware that pork, chicken and ice cream don’t store for very long in a freezer (3-6 months tops).
Water can be served with every meal. Try to eliminate high sugar drinks like pop and canned fruit juices from your meals (not just expensive, but drinking too many may lead to diabetes). Serve these only on special occasions. Habits are formed early in life and it’s good to get the kids use to drinking water when they’re young. Add a twist of lemon to the water and see the difference it makes. Sun tea is easy to make. Simply slip 2-3 teabags into a large gallon container and set it out in the sun. By evening, you can sweeten it and put it in the fridge for a delightful cold drink, costs about 10 cents for the gallon.
Eating out is a treat and should be done only about once a week, if that. When you do eat out, see if you can secure a “buy one, get one free” coupon to stretch the meal ticket. And then take home any leftovers. They usually serve you twice as much food as you can eat, so why not enjoy the food again the following night. Order water with a lemon in it for a drink instead of pop. It satisfies and is healthier for you.
In addition to the meal cost, you have the tip. 10%-15%-even 20% more has to be added nowadays for the opportunity of being served dinner. Instead of going out to dinner, try having friends over to your house. Either throw a pot luck meal or take turns staging a regular dinner. It will feel like you went out, but will cost less than that restaurant will. Don’t get in the habit of eating out. It’s expensive.
Gourmet meals can be made at home for half the price of eating out. On birthdays or special occasions why not get that steak and crab at the grocery store, and pretend you’re "rich" for the evening.
Delis that are located in grocery stores are cheaper than restaurants and if you just need to have a night off, consider the deli the place for getting the food. You can take it back home with you and relax. Just sit back and enjoy someone else’s cooking fare.
Grocery stores have food in the freezer section and throughout the store that’s practically fully prepared for the consumer. All one needs to do is heat it up. Even though these are convenient and easy, they are still more expensive than if you took the time and prepared them yourself. They are very easy however, so if you need to have a night off, these “almost prepared” foods are probably cheaper than any other route, including deli.
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