Expert penny pinchers tell all
How far would you go to save a buck in today’s tumultuous economy? People are finding more ways than ever before to scrimp and save. But some take it to extremes.
Read on as expert penny pinchers detail six bold ways to cut costs — and in some cases, generate a little revenue — during tough economic times. Are you extreme enough to give them a try?
Get rid of your car
Trading in your beloved wheels for public transportation is definitely extreme — especially if you live in the suburbs. However, doing so saves a bundle.
“If you can walk, bike or take public transit where you need to go, get rid of your car entirely,” says Francine Jay, author of “Frugillionaire: 500 Fabulous Ways to Live Richly and Save a Fortune.”
Jeff Yeager, author of “The Cheapskate Next Door,” agrees. He cites AAA figures showing that the average cost to keep a car on the road is close to $1 per mile after factoring in all of the associated costs.
“That’s probably close to $10,000 a year,” he says.
Yeager, who shares a car with his spouse, is a big proponent of renting a car when necessary.
“Think about how much of the time your car is sitting unused. It’s just a tremendous waste of resources,” Yeager says.
Jay says people who need cars only to run occasional errands can join a car-share program. For such people, “it’s more financially savvy to borrow than to own,” she says.
Take in a renter or boarder
Sharing your living space may seem unappealing at first, but it’s a great source of extra income.
“I always encourage people to at least consider getting a home that could allow them to get some rental income, such as a duplex,” Yeager says.
Again, Yeager speaks from experience. He and his wife have had renters for the past 20 years. By doing so, they were able to pay off their house in 15 years instead of 30.
“The beauty of it only begins with the monthly rent check you’re collecting,” he says. “Obviously, there are incredible tax benefits to it, too … and much to our surprise, my wife and I found that it’s actually nice having other people around.”
Don’t own a duplex? Jay says all you need is an extra room to take in a boarder and “raise some cash and help pay your mortgage, rent and utility bills.”
Jay says if you decide to make this money-saving move, be sure to draw up a tenancy agreement to specify payment terms and the sharing of common facilities.
“Check local zoning laws to confirm that such an arrangement is permitted in your neighborhood,” she says.
Downsize your home
If you feel as though your home is too big, it probably is. Selling it and buying a smaller one may help beef up your bank account.
“The best way to save big money is to cut big expenses — and housing is the biggest of them all,” Jay says.
Jay says trading down to a smaller house or apartment also lowers the mortgage or rent, as well as the utility bills.
“A smaller space will slash your spending, because you can’t buy things when you have no place to put them,” Jay says.
Yeager also is an advocate of living smaller.
“People don’t really stop to think about it, but for every square foot that they add to a house — square feet they often don’t need — first they have to buy it, then they have to maintain it, they have to pay property taxes on it, they have to insure it, they have to decorate it, they have to heat it and so on,” he says.
“One of the upsides of the recession has been that the average home built now is about 300 square feet smaller than those built prerecession,” says Yeager.
Change how you use credit cards
Taking a pair of sharp scissors to credit cards can help plug a big hole in your wallet or purse.
Jay advocates paying with cash only.
“This strategy saves you a bundle in finance charges and puts the brakes on your shopping habit; because without credit, you can’t spend more than the money you have,” Jay says.
Jay says paying with plastic “is far too painless,” making it easier to spend.
“It almost feels like you’re getting something for free,” she says. “When you have to hand over cold, hard cash, you’ll probably think twice about making the purchase.”
Yeager urges consumers to go cash-only for at least a month.
“If you don’t have the cash on you, it might give you reason to stop and think (before buying),” he says.
“I always think spending procrastination is a virtue, not a vice. Put off buying until tomorrow what you want today, and maybe you’ll change your mind about whether you really want it.”
However, Yeager acknowledges there is “much dispute in the cheapskate community” over whether it’s better to never use credit cards or to always use them so you can “rack up frequent flier miles and other bonus points.”
Only use coupons or go generic
Jay says the secret to saving on groceries and other items is to “ditch the brand loyalty, and be open to alternative products or generics.”
“Be adventurous and try out that bargain-priced shampoo, cereal or detergent,” says Jay. “If you’re shopping online, search Google for coupons before making your purchase; you’ll be surprised how often you’ll find vouchers for free shipping and other discounts.”
As with credit cards, coupons divide the cheapskate community.
“As many cheapskates swear about them as swear by them,” Yeager says.
According to Yeager, many naysayers believe coupons cause people to buy things unnecessarily.
Yeager says coupons are most popular among penny pinchers who eat more processed foods and have plenty of storage space.
By contrast, Yeager prides himself on being able to “go into any grocery store at any time and come up with a delicious healthful meal that’s really cheap without ever having to use a coupon.”
He simply takes advantage of “the loss leaders that the grocery store has on sale that day” and buys generic.
Dump high-tech toys
Many extreme savers embrace the simple life, which means either forgoing the latest toys and services or waiting until they’re no longer “hot ticket” items.
In addition to saving cash, Jay says “you may find happiness in being less connected to the virtual world and more engaged in the real one.”
Erin Schneider, who writes the Cheap Chick blog, also recommends cutting out unnecessary services — “cut down on cell minutes, cancel your home phone, cancel your gym membership” — and opting for the least expensive options that present themselves.
“Cut out Netflix and get your movies from the library,” she says. “Cancel your lawn service and either mow your own, or hire that kid from across the street for less.”
If you can’t give up high-tech toys, at least wait to purchase them, Yeager says. The price will drop over time, and kinks in the original product likely will be worked out in subsequent generations.
“It’s like the old Elvis song, ‘Only fools rush in’ when it comes to buying tech gadgets the day they’re released,” says Yeager, who has never owned a cell phone and refers to them as “electronic tethers.”
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