The Simple Dollar
An employee picks up a gold bar at the Austrian Gold and Silver Separating Plant 'Oegussa' in Vienna in this August 2011 file photo. When we wish for just one big thing that can transform our lives, we often overlook the thousands of little steps we can take right now that can add up to real change, Hamm writes. (Lisi Niesner/Reuters/File)
Dreaming of a windfall
I love reading random Twitter feeds.
I’ll wonder what random people are thinking about a particular topic, so I’ll go to Twitter and search for that topic. Often, I’ll see an interesting remark from someone and wind up on their personal Twitter feed, reading about their lives and stories.
More than anything, this has taught me that even with the great diversity of people on Earth, there are a lot of experiences people have in common. They have hopes and dreams. They have disappointments and failures. They have joys and things that they cherish.
One dream that I often see mentioned is that of a giant life-changing windfall. People often lament that their life would be better if they suddenly discovered some money, as it would free them from whatever situation that they’re currently struggling with. ( Continue… )
Online vendors will try to lure you to spend more money with free shipping minimums. Ignore them, Hamm argues. (PRNewsFoto/File)
Is that free shipping really free?
It happens to almost everyone who shops online.
You go to a site to order a specific item that you’ve already decided on. You add that item to the cart and head to the checkout.
But wait!
The site informs you that if you add just $12 more in items, you can get free shipping on your order! Ordinarily, the shipping costs $8, but if you just add another item, they take away that fee.
You can get a $12 item effectively for just $4. That’s a deal, right?
Not really. Let’s walk through this.
First of all, you have to find an item at exactly $12 in value to maximize this deal. If you end up buying something for $20, you’re getting it for $12. If you find something for $40, you’re getting it for $32. A minor discount, but not a big one.
If you try too hard to find something that matches the “maximum value” here, you’re more likely to wind up with something you don’t even want. If you broaden your search, you wind up not getting much of a bargain and you’re buying something you didn’t intend to buy anyway.
Second, you’re still spending extra money on something you don’t need and had no intent of buying. In order to do this, you have to search around to buy another item that you never intended to spend your money on in the first place. Spending money on something completely unnecessary is never a good idea.
Unless I am picking up something that I’m absolutely sure that I need (like toiletries and so on), I consider it a waste of money to tack on something more just to get free shipping.
Sure, I might be missing something of a bargain, but I don’t consider it a bargain to wind up with something else that I don’t really need.
Leave free shipping behind. Do price comparisons that include the shipping costs and stop buying more just to “save” money.
This post is part of a yearlong series called “365 Ways to Live Cheap (Revisited),” in which I’m revisiting the entries from my book “365 Ways to Live Cheap,” which is available at Amazon and at bookstores everywhere.
In this September 2012 file photo, Jeff Bezos, CEO and founder of Amazon, speaks at the introduction of the new Amazon Kindle Fire HD and Kindle Paperwhite personal devices, in Santa Monica, Calif. Do price comparisons across the real world and the internet and you’ll end up finding the biggest bargains of all, Hamm suggests. (Reed Saxon/AP/File)
For big savings, compare prices online
It seems pretty common to use online sources to comparison shop for the big items. The internet is a powerful tool for finding the best bang for the buck on automobiles, homes, televisions, cameras, and so on.
Yet that’s just a starting point. I use the internet to comparison shop for anything non-perishable that will cost me more than $20 or so over the course of a year.
Garbage bags. Toilet paper. Socks. Laundry detergent.
I use the internet to comparison shop for all of these things, and many, many more. ( Continue… )
Mary Williams, left, sizes her son Rhoderick Williams for a shirt during Tax Free Weekend shopping at JC Penney in Turtle Creek Mall in Hattiesburg Miss., in this May 2011 file photo. Sock away a few dollars each month so that you have a healthy budget of cash to spend when the tax free holiday comes around, Hamm writes. (Ryan Moore/Hattiesburg American/AP)
Shop and save on tax-free holidays
On the first Friday and Saturday of August each year, Iowa has a sales tax holiday on “select clothing and footwear,” which actually translates into “virtually all clothing and footwear.”
It’s at a great time of the year. A lot of parents are ready to start shopping for back-to-school clothes for their growing children and may be looking for new fall and winter items for themselves, as the weather starts to cool off starting in September here in Iowa.
Thus, the savvier shoppers in Iowa tend to do much of their clothes shopping on that weekend.
Of course, smart retailers recognize that there will be a lot of clothes shoppers out and about that weekend, so they advertise hard for their business. They usually run pretty strong sales to get those savvy shoppers into their stores. ( Continue… )
Grocery store clerk Mike Saladino places a customer's purchased items in a paper bag in Palo Alto, Calif., in this June 2010 file photo. Hamm advises that you never buy anything that you find in the checkout aisle. (Paul Sakuma/AP/File)
Avoid the lure of the checkout aisle purchase
Grocery store designers are smart people.
They know that when you check out with a cart load of groceries, you’re going to be standing in that spot for a while. They also know that sometimes you’re unfortunate enough to have children with you.
Thus, they stock the checkout aisle with things that are perfectly selected for you to just toss on the conveyor without a second thought.
Magazines. Beverages. Gum. Candy. Car fresheners. The list goes on and on. ( Continue… )
In this September 2012 file photo, Katie Myers, 25, puts gluten-free chocolate Chex into her cart while shopping at a grocery store in Sycamore, Ill. Hamm recommends pledging to not buy a single item that’s not on your grocery list. (Kyle Bursaw/DeKalb Daily Chronicle/AP/File)
Stick to the shopping list
Yesterday, I mentioned the idea of using a “time limit” to keep yourself from spending too much time in a specific store. It’s a tactic I find useful, particularly when I visit a store that’s full of temptation for me where very few things are items I actually need, like a bookstore.
In other stores, though, I find such a “time limit” to be difficult. If I’m going to the store to buy groceries, for example, and I have a list with forty items on it, it’s pretty hard for me to gauge exactly how long it’s going to take. It takes time to find the items, compare sizes, and pick the right one, after all.
Of course, when you spend a lot of time wandering up and down the aisles, it’s incredibly easy to find something that’s not on your list but that you can easily fit into a meal at home. I do this all the time.
I’ll be strolling down the aisle looking for eggs and I’ll notice that they have fresh feta in stock, which both Sarah and I love sprinkled on our salads. ( Continue… )
Watching your time in a store can help you avoid unnecessary spending, Hamm says. (Tim Kimzey/The Herald-Journal/AP/File)
Avoiding spending: It's all about timing.
As I’ve mentioned many times before, when I walk into a bookstore, I can easily get distracted and find myself with my nose in one book or another. I’ll walk in, intending just to spend a few minutes, and find myself an hour later sitting in a reading chair surrounded by books.
I dawdle. I browse. I find interesting new books I just can’t live without. Often, I’ll leave the store with more books than I ever intended to buy when I went in there.
Obviously, the best strategy for countering this is to have a very specific list when I walk in the door. In other words, don’t walk in the door unless you know exactly what you’re looking for.
That doesn’t always help, of course. I’ll be in the cookbook section looking for a particular title, stumble upon something interesting, and before I know it, I’m buying a book I didn’t plan to buy when I went in there.
Of course, I’ve also noticed that if I go into a store with a list and a tight deadline, I tend to dawdle a lot less. I head right for the item I need, don’t stop even if I see interesting things, and try to get out of there quickly.
Of course, you can’t always shop with a pre-existing deadline… but you can always make your own.
Whenever I find myself walking into a store of any kind, I try to set a “time goal” as I approach the door. I review what I need, figure out roughly how long it will take if I head straight for that item and then get out, and then set a deadline for myself to get back out the door.
How do I “enforce” that idea? I try to think about all of the things I have to do that day besides this shopping trip. I think about the things I could get done if I get out of there quickly.
In other words, I put the idea that I have more important (or better) things to do in the front of my mind. This makes it much easier to stick to my time goal.
Then, when I enter the store, I get down to business. I keep an eye on my watch as I look for the items I need and, since I’m so conscious of the need to take care of business quickly, I don’t dawdle.
The end result? I walk out the door with just the items I need and with time to spare, time I can use on something else in my life.
A money changer shows some one-hundred US dollar bills at an exchange booth in Tokyo in this 2010 file photo As a tactic for transitioning into better spending habits, Hamm recommends setting aside two days to spend absolutely no money. It's not as hard as it seems, he argues. (Issei Kato/Reuters/File)
The weekend money challenge: Can you go two days without spending a dime?
If I had infinite money, I can think of a few things I would buy. I’d own some land in the country with a nice house on it, probably with a gaming room and a library (in other words, space for my big hobbies). I’d probably own a newer car than our current Pilot, which is pushing ten years old.
There are smaller things, too. I would buy more original artwork for our walls, for one. I’d probably own more cookbooks and I’d completely re-do our kitchenware, which is still in large part a mishmash of items picked up at yard sales over the years. There are all kinds of smaller things I wouldn’t mind owning.
Right now, I’m in a financially secure place. I could afford to buy most of those things. I don’t.
If you roll back the clock several years, the opposite was true. I was in a financially disastrous place. I reallycouldn’t afford to buy most of those things. Yet, I bought an awful lot of those things.
What would cause such a flip-flop? What would change my mindset so radically? What steps did I take to start shifting that mindset?
I’ve received a lot of emails from people who are in a precarious debt situation, one that was almost certainly created by purchasing far more things than they can afford. They send that email because on some level they’ve realized how precarious the situation is and they want something different.
The problem is that on some level, they’re emotionally tied to buying many of the things they want, and they usually spend a lot of time thinking about the stuff they wish they could have.
You have to break that mindset. There’s no shortcut around it. If you stick to thinking that way, you will never achieve financial security.
So, how do you break it? What do you do when you can’t afford all of the stuff that you want? I usually point people to four specific tactics that worked for me.
Sketch out your future in detail
Where do you want to be five years from now? I don’t mean in terms of your financial state, though that’s a part of it. It’s a much broader question.
Where do you want your career to be at that point? What about your family life? How is your relationship with your parents? Your spouse? Your children? Your close circle of friends? Have you taken a real shot at the big dreams that you have in your life? Where do you live?
Be optimistic but realistic when you answer these questions. You’re probably not going to be insanely rich and famous at this point. However, you can achieve some very impressive progress in each of these areas.
Simply think about where you want to be in five years, then write it down in as much detail as you can. Answer all of those questions above as well as any others you can think of that are important to your life. Try to imagine where you want to be in five years and think about that question frequently.
Journey into a money valley
The next tactic is a straightforward one. You need to dive deep into spending as little money as possible.
I like to call it a “money valley.” Just take a period of time and pledge during that time to spend no money. Nothing. Not even a dime.
Try it for a weekend. See if you can go for two full days without pulling out the cash or the plastic. Eat the food you have on hand. Do things that don’t require any expenditures at all. Only go out if you can do it on foot and are heading toward something with no additional cost.
Two days. Can you do that? Just hand over two days to this challenge.
Likely, you’ll think it sounds really hard. What you’ll find, though, is that it’s not as hard as you thought once you start doing it. It’ll become an opportunity to take care of some things you been meaning to take care of but haven’t. It’ll become a chance to catch up on some hobbies around the house.
You’ve done it once? Try it again in a week or two. Then, build it up to a full week. Can you go seven days without spending a dime?
The goal of this is not to change your lifestyle to spending no money. It’s simply to give your plastic a chance to cool off and, more importantly, to show yourself that there is a life without spending, and it’s a pretty good life.
Filter your social world
When I was overspending, the biggest consistent drain on my money was my social life. I had a circle of friends who went out regularly to expensive places, constantly bragged about and showed off their new possessions, and were pretty insulting toward anyone who didn’t have “nice” things.
When you hang out with people, it’s incredibly easy for their mindset to seep into your thinking. If your friends all sit around talking about how great all of their expensive stuff is and make fun of those who have less expensive stuff, it’s pretty hard to avoid the mindset that expensive stuff is good and anything else is bad. If your friends are constantly spending money by the truckload, it’s pretty hard to not get swept up in it.
Look around your social circle. Do you have friends who seem to spend a lot of money on unnecessary stuff? Do you have friends who make fun of others with fewer or less expensive items than they have (like cars, cell phones, etc.)? Do they have a much higher income level than you and flaunt the extra money in subtle (and not-so-subtle) ways, nudging you to try to keep up?
Most likely, you’ll have some friends that behave like this and (hopefully) other friends that do not. My suggestion is to simply spend more time with the friends who don’t have those attitudes and less time with those who do. Reach out and build up friendships with your more financially sensible and less judgmental friends, and spend a little less time with the big spenders.
Over time, your spending will slowly begin to imitate the spending of those you spend more time with.
Fill your life
This final tactic ties together the three things above. You simply need to fill your life with the things you’ve discovered above.
Take the five year picture. That idea of your life in five years can be – and should be – a source of a lot of goals. How exactly do you get to that point? What do you need to do to make that happen? If you think it out for a while, you can begin to translate that picture into very small steps that you can take today.
Get started writing that first chapter of the book you’ve dreamed about. Spend the weekend getting that basement finished so your house will have a higher sell value. Actually look into graduate school instead of just thinking lightly about it.
Spend more time with your kids, perhaps even setting aside an hour a day to just talk with them, play with them, or help them with their homework. Start an exercise routine, even something simple like jumping jacks, sit-ups, push-ups, and mild jogging. Work on building a stronger marriage with your spouse.
The list of things you can do right now to bring that future into focus is a long one. The vast majority of things people do to build their future costs very little.
At the same time, you can work on building up friendships with your friends who are financially sensible, or even seek out new ones by engaging in groups related to your lower-cost hobbies.
You can also start doing some “money valleys,” starting with a two day trip and eventually building to week-long periods without spending cash. What you’ll find during these periods are tactics that you can carry forward into the rest of your life without skipping a beat (but which save you money).
The end result of all of these things is a life that begins to transform into something different than what you have right now. It’s a life that doesn’t constantly empty out your wallet. It’s a life with stronger relationships. It’s a life that is moving forward toward the big dreams that you have.
How did I change so much about my life? These four steps pretty much describe how I did it, and you can do it, too.
In this Monday, September 2012, file photo, shoppers leave a store in Salem, N.H. Shopping with friends can be distracting and lead you to spending more, Hamm writes. (Elise Amendola/AP/File)
Weakness in numbers: the case for shopping alone
When I’m buying groceries, I shop alone. When I’m buying household items, I shop alone. When I’m buying gifts, I shop alone. The only time you’ll find me in a store with others is when circumstances practically force it on me.
It’s not that I’m anti-social – I quite like spending time with people.
It’s simply that shopping with others costs me money. It’s an expensive proposition, one I’d rather not engage in.
I think I can best explain this idea by talking about my experiences grocery shopping with my children. ( Continue… )
A customer peruses peppers in the produce section at a Costco in Everett, Mass., in this September 2010 file photo. Price books can help save you money, Hamm writes. (Melanie Stetson Freeman/The Christian Science Monitor/File)
How to save money with a price book
When my wife and I first moved to our current home, we took a look at all of the grocery stores available to us within reasonable driving range and made a list of them. It turned out that there were quite a few of them – three Hy-Vees, two Fareways, a Super Target, two Wal-Mart Supercenters, a Sam’s Club, a Dahl’s… that’s a lot of grocery options, and I’m not even counting the food co-ops.
The prices at all of these stores aren’t equal, of course. Some of the stores will have higher prices than others. Some stores have a better selection than others.
Like anyone with a busy life, I don’t want to shop at a lot of different stores. I want to shop at the store that has the lowest prices on the items I buy most of the time. In other words, where can I get the staples at the best price?
That’s where a price book comes in. ( Continue… )
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