13 ways to live a rich life on less -- Page 2
5. Buy used.
New is nice, but for the best buy, think pre-owned. Bach points
to the classic example of a used car. After two years of depreciation,
you can get a good, high-quality car at virtually half price, says
Bach. "And if you ever do buy a new one, plan on keeping it five
to 10 years," he says.
Whatever you're buying used, Ramsey says to focus
on high-quality merchandise, "not torn up, junky or dirty."
Secondhand shopping isn't just for those who have
to watch their pennies, either. Ramsey recalls a millionaire friend
who picked up a $38,000 Rolex for $18,000 from a reputable jeweler.
"That's how he got to be a millionaire," Ramsey says.
6. Pay cash.
"When you spend cash, it hurts," says Ramsey. "And
you spend less."
Ramsey recalls a study several years ago that showed
when shoppers spend cash, "you spend 12 to 18 percent less
than when you spend plastic because of the emotional pain."
Plus, he says, you can get a better deal when you
use cash as a negotiating
7. Pick your credit card wisely.
If you must use a credit card, make sure it's one that gives
you something. Look for a no-fee card with a rewards program. Bankrate
can help in your search.
Mark Oleson, director of the Financial Counseling Clinic at Iowa
State University, recently signed up for a AAA-branded no-fee card
that rebates 5 percent of all gas purchases. The credits are applied
automatically to his account every month. Now he's getting $2 gallon
gas for $1.90 without changing his buying behavior.
8. Shop around for auto insurance.
You want your car protected, but make sure you get
the most cost-effective coverage you can. Howard recounts one
ecstatic caller to his radio show who compared rates and sliced
his annual premium by $1,433. "That's the easiest money for
someone to grab," he says. Anecdotally, Howard says, the typical
savings by shopping around for better auto insurance rates is around
While you're at it, look at your coverage and deductibles
on an annual or semiannual basis, says Oleson. Can you afford to
raise the deductible to lower your premium? Are there any overlaps
in your coverage that could be eliminated?
9. Dial up phone savings.
Your cell phone certainly comes in handy, but is
your plan really worth what you pay? "There are lots of
people who sign up for calling plans for cell phones who don't need
them," says Howard. He says a more economic choice might be
a prepaid plan.
Do you travel with your cell phone? Be sure you don't
face roaming charges. A better telephone-travel move might be a
discount calling card. "I'm a big believer," says Howard,
who finds that the average per minute price on the cards runs about
2.9 cents per minute, a far cry from regular or in-room long-distance
10. Change your mortgage payment
payments instead of monthly house payments. You don't change
the amount; simply send in half a payment every two weeks. That
means, says Bach, you make an extra payment every year and can slice
nearly seven years off the average mortgage.
11. Use family and community resources.
This is something that a lot of new parents discover when faced
with the cost of expensive baby goods that their child soon will
outgrow. "Rather than going out and buying a new crib, this
and that, there's a lot of sharing," says Chris Farrell, author
of "Right on the Money!"
You can also do the same thing at other stages of
life with furniture, appliances, electronics and clothing. Farrell
employed the strategy to get rid of a fairly recent desktop computer
when he switched to a laptop. "A lot of us are in situations
where we spend money on something we wanted, but it's outgrown its
usefulness," he says. "And someone else could get pleasure
out of it."
12. Pay yourself first.
Automatically transfer part of each paycheck to a retirement
account before you get your take-home pay. "Learn from the
government, which figured out years ago [people] can't budget,"
says Bach. His rule of thumb: Save one hour a day of your income
In addition to the longer-term retirement account,
also save for short-term emergencies. How much? "I think [a
salary contribution equal to] 30 minutes a day is a good start,"
And while the goals of the two accounts are different,
the savings method is the same: Pay yourself first.
13. Exercise restraint.
Finally, call upon your willpower when it comes to spending.
Want to save money on your phone bill? Hang up. Want to use less
gas? Stay home. Do you really need a bread maker when you have an
Sometimes cutting costs really is just a matter of
saying enough is enough.
"As long as I can remember [growing up], I never
ate out at fast food [places]," says Singletary. Why? Because
her grandmother's motto was, "I have good food at home."
That attitude helped Singletary's family flourish.
And by using at least some of these strategies, you too could find
that it really is possible to live well for less.
Dana Dratch is a freelance writer
based in Atlanta.