Learning to Save Money
One of the most valuable things you can do for yourself when recovering from bankruptcy is to learn how to economize. Most people who get into financial trouble got there by spending more money than they had coming in and relying on credit cards to bridge the gap. It's usually not easy to increase the amount of money we have coming in, but almost anyone can reduce the money going out -- at least a little bit -- and every little bit helps.
Wants versus Needs
Learning to save money isn't as easy as it may seem, however, because many people have a hard time distinguishing between things that they really need, as opposed to things that they merely want. The two are not the same. Needing something means that your life or health depends on having that thing. Food, water, shelter, medicine, and the means to get these things (such as tools needed to ply one's trade) are examples of needs.
Wants, on the other hand, are things that we like to have, but really could live without. We might not like living without them, but we could do it if we had to. They're nice things. Things that we like. Things we enjoy. But we wouldn't die without them.
Take cable television, for example. Unless you're in the television business, you don't really need cable TV. In most places, you can stick an antenna on the roof and get high-definition television for free. The antenna may not pull in all the channels you want; but again, wanting is not the same as needing. Even if you live in a rural place like I do that has no over-the-air stations at all, you can live without television altogether, or settle for the absolutely cheapest local cable plan that the company offers if you believe you can't live without some sort of television service.
Examples of Stuff You Might Not Really Need
Let's take a look at some common expenses that most people have, for things that they might not really need. Remember, by "need," we mean that we really, seriously couldn't get by without it. What that means specifically will be different for different people, but most folks can find something in this list that they really could do without. Let's look at a few possibilities.
Land line Telephones
If you have a cell phone, do you really need a land line phone? How often do you really use it? Do most people who are important to you call your cell phone, anyway? If this is the case (and if you have high-speed Internet), consider a cheap VOIP service instead. This will give you a cheap number to give to people an organizations whom you don't want to have your cell number, but at a much lower cost than a traditional land line.
One of the cheapest phone services you can get is MagicJack. This is a little gizmo with two jacks: One gets connected to your high-speed Internet router (Cable, Fiber, or decent DSL), and you plug your phone into the other jack. You can also use it on your computer by plugging it into the USB port, if that's what you prefer. Once the service is set up (which takes about a minute), you can make and receive unlimited nationwide calls.
Most MagicJacks include a full year of service with the device purchase, and the devices are quite inexpensive. So for less than the cost of one average monthly land line phone bill, you can get the MagicJack Plus Device plus a full year of unlimited nationwide service.
How's the quality? It's actually pretty good considering the very low cost, but it does vary depending on the quality of your Internet connection. With a good connection, it sounds pretty darn good most of the time. With a slow or bad connection, not so much. But truly, who cares? If you have a cell phone that all the important people in your life use to call you, why worry about the quality of calls from people you don't particularly like?
Cell phones have become as much a part of most people's daily lives as clothing. Some people wouldn't even think about going outside their homes without their cell phones. But do you really need a cell phone? Do you really need to be reachable 24 hours a day, wherever you are?
Some of you folks (especially the younger ones) may find this hard to believe, but I managed to stumble through the first 40 years of my life without a cell phone. Really. Somehow I managed to survive without being constantly connected, and on those occasions today when I forget the phone when I go out, I somehow manage to make it home alive. I know. It sounds unbelievable. But it's true.
If you simply must have a cell phone, I suggest you consider a prepaid cell phone. Prepaid cell phone service is practically identical to postpaid service in most places -- except for the price. Prepaid service with unlimited talk and text and a generous amount of data typically costs between one-half to two-thirds what postpaid service costs.
For example, back before I filed for bankruptcy, when all the bill collectors were hounding me, I simply had to change my phone number. I used it for work (I was an on-site computer technician in the New York City area), and I couldn't get any work done because of the constant calls. I decided to buy a prepaid phone, figuring I could always cancel it after I filed for bankruptcy and the creditors would have to stop hounding me. But you know what? I've stayed with prepaid ever since. Why pay more money for the same service? It makes no sense.
I presently use an unlocked Moto X Pure Edition phone with an AT&T GoPhone SIM card. I chose that phone because I liked it, because I could use it for navigation, because it wasn't filled with crappy carrier software, and because I can use it with almost any carrier's service. For example, if I ever get tired of AT&T or if they jack up their prices, I can slip a T-Mobile SIM card in there and go my happy way. I'm told that it also works with Verizon and probably most other carriers. Certainly it works with any GSM carrier. It's really a great phone. I'd stack it up against phones that cost more than twice what I paid for it.
Which brings me to another "want" versus "need" question: Do you really need the latest iPhone or the fanciest Android on the market, or is it just a status symbol? My Moto X can hold its own with the most expensive Android phones on the market. It's never given me any problems, runs every app I've ever installed on it, and with the TomTom app installed, it's the best navigation device I've ever used. I dare anyone to find any task that their phone does better than mine does.
In case you haven't guessed, I really like my phone. I also like that I saved a hundred bucks on it by waiting for it to go on sale. With the exception of iPhones, cell phones tend to come down in price pretty soon after they're released; and usually the newer ones aren't all that different from the previous year's models. So by waiting, you can save a bundle.
"Energy Drinks" and Designer Coffee
A lot of us need the occasional caffeine boost to get through the day. I'm one of them. I sit at a computer banging out Web pages for a living, and by the early afternoon, I seriously need a boost. So you know what I do? I make a pot of coffee.
Now sure, there are other ways I could get my fix. I could run to the convenience store, for example, and buy a medium-sized cup of coffee. It would cost me $1.50 -- which would come out to $45.00 a month. Or I could pay $3.00 for an "energy drink" that's basically sugar water and a bunch of chemicals -- the main one being caffeine. That would cost me $90.00 a month. Or if I were really stupid, I could go to one of those high-end coffee shops that all the yuppies love so much and pay $4.00 for the same cup of coffee. That would come out to $120.00 a month.
But I don't do any of those things. I own a coffee pot and I make my own coffee. I also buy it at Sam's Club, Costco, or BJ's in a big bag that costs about $5.00 a pound. But just so I can have a little luxury in my life, I also own a coffee grinder and grind my coffee fresh for every pot. It does make a difference.
Are you still dealing with a greedy bank that charges you a fee every time you write a check, use your debit card, or want to talk to a teller? Why? Find yourself a credit union. Credit unions usually charge no fees except for overdrafts. Or if there are no credit unions nearby, consider opening a free online bank account. Online banks typically pay higher interest and have fewer fees.
I'm often amazed at how much money people waste on their stupid lawns. It's just grass, for crying out loud. Do you really need a gang of professionals to come by every week to mow, fertilize, weed, and groom grass? Buy a second-hand lawn mower and cut it yourself. It's good exercise.
Does each one of your kids really need their own computer? What ever happened to sharing?
There's such a thing as free, over-the-air radios that don't require paid subscriptions. Every car built this century comes with one. Yes, it has commercials. No, they won't kill you. Unless you live in the boondocks like I do where there simply are no over-the-air radio stations, you don't need satellite radio in your car.
Private gym / pool / spa memberships
The Y or municipal pools are much cheaper in most places. Or better yet, just run around the block and do push-ups, pull-ups, sit-ups, jumping jacks, and so forth. You don't need fancy equipment to get in shape or stay in shape. (My drill instructor in basic training managed to beat my sorry butt into great shape, in nine weeks, using no equipment at all.)
Cigarettes. Don't even get me started on cigarettes...
You get the point. A lot of things that we think we "need" are really just things we "want" or that we "like to have." Pruning unnecessary, recurrent expenses from your life will enable you to put more money in your savings account, and will accelerate your recovery from bankruptcy.
Economizing on Necessary Expenses
Obviously, there are some things that we really do need, such as food, clothing (unless you live on a nudist colony), shelter, and so forth. But there's plenty of room for saving money even on necessary expenses. Here are a few simple money-saving tips that may not seem like much, but can add up to more money in your pocket.
Become a Guerilla Grocery Shopper
My sister-in-law and I have sort of a special relationship: We're both tightwads! We approach grocery shopping as a war, where the objective is to pay as little money as possible for the greatest possible amount of stuff by limiting our purchases, as much as humanly possible, to items that are on sale. "Guerrilla grocery shopping," we call it, and paying full-price for anything is considered a lost battle.
Men in particular tend to hate grocery shopping. No, I'm not a sexist. I've just spent all my life being male and have observed that men tend not to like grocery shopping. But if you make a sport out of it where the goal is to save as much money as possible, then it becomes almost bearable. Almost.
Most stores have "generic" or "store-brand" merchandise which usually costs a lot less than brand-name versions of the same products. The quality of the less-expensive products may ranges from horrible to excellent, but they're worth at least checking out.
Get an Online Movie Subscription
If you have a high-speed Internet connection, you can subscribe to online services like Netflix or Amazon Video, which typically cost much less than cable television or theaters. I used to subscribe to Netflix, but I canceled it once I joined Amazon Prime, which includes free streaming of a ton of free movies and other video content as part of the membership.
I actually joined Prime because living out in the boonies like I do, I place a lot of orders with Amazon; and Prime offers free two-day shipping on most orders. I recently bought a new computer for my elderly parents, for example, and the shipping savings on that order alone probably paid for half my yearly Prime membership cost. If you want, you can try an Amazon Prime 30-Day free trial. If you order a lot of stuff from Amazon like I do, it pays for itself. (And because Amazon usually has the cheapest price on stuff anyway, it's hard to think of a good reason not to order a lot of stuff from them.)
But I digress. If you want to stream videos on your Prime membership, then you'll also need to either download the app from Amazon to watch them on your phone, or buy a streaming device like a Roku box or an Amazon Fire TV box or stick. Either one will work with Netflix, Amazon Video, or many other content providers' programming. And in the case of Prime, you also get the free two-day shipping, so it's a deal that pays for itself if you're a frequent Amazon customer.
Learn How to Cook
I mean actually cooking, as in making meals from ingredients. I don't mean warming, as in purchasing over-priced, prepared dinners fulled of salt and refined sugar and heating them in the microwave. Preparing your own meals from basic ingredients is healthier and less-expensive than buying prepared foods.
I'm actually amazed at how many people, especially younger ones have never actually cook a meal from fresh ingredients. Learning to cook will save you a lot of money, can make you healthier, and will make you more popular among your friends if you do it well. Home-cooked meals are fresher and tastier than prepared foods, and also don't have all the excess salt, preservatives, and chemicals that most prepared foods have.
To get you started, I've included one of my favorite inexpensive recipes for sausage, peppers, and onions, which I'm calling How to Feed Eight People on the Cheap.
Shop in Second-Hand Stores
Second-hand stores, garage and yard sales, estate sales, and online trading sites like Craigslist are great sources for items like furniture, electronics, cameras, air conditioners, and many other items. I furnished entire apartments with second-hand items when I was a young man living in New York City.
Here's an entire page about getting good deals on used stuff.
Gas is Gas
Despite what the oil companies would have you believe, there's really very little difference between gasoline sold under different brand names.
Take Care of Your Toys!
If you have a car, make sure to change the oil and perform other preventive maintenance regularly. Blow the dust out of your computer with canned air once a while (dust buildup can cause heat buildup and premature failure). Polish your shoes. Take care of the things you own, and they will last longer.
Turn off the Lights!
This sounds obvious, but if you live someplace where electricity is expensive, simply turning off lights and electrical appliances when they're not in use can save you a whole lot of money.
Also, unplug chargers and power adapters when they're not being used. They still draw some current even when they're not attached to anything.
Finally, consider energy-saving compact fluorescent light bulbs instead of incandescent bulbs.
Consider an ESCO. In most places in the United States, you can buy your electricity from a different company than the one that actually delivers it to your home. These companies are collectively called "energy service companies," or "ESCOs" for short. You may or may not be able to find a cheaper provider than your local electric company (called the "incumbent provider") whose wires run the juice to you home, but it's worth checking out.
I save about 5 percent, om average, on the supply portion of my electric bill by buying my electricity from a non-profit electricity cooperative. My local electrical company still delivers it and bills me for it, so there's absolutely no difference to me other than the price.
Consider your Home Heating Strategy
There's more than one way to make heat, and some are a lot less expensive than others. Click here to to learn more about saving money on home heating.
Have a skill that people need? Maybe you can fix computers, build Web sites (heh), fix cars, cut hair, cook, paint walls, or refinish furniture. Consider taking out a fee ad on Craig's List or other community message boards to swap your skills with someone who knows how to do what you need done.
In short, start thinking like a tightwad. Start thinking of every purchase in terms of "need" versus "want." When you decide that a purchase is something you need, look around for the best possible deal on that item. A few dollars saved here and there can add up quickly!