Work From Home Jobs Angus
How To Live Cheaply
Saving Money, Spending Wisely, and Living Well in Today's EconomyEveryone wants to make more money, especially in today's economic climate. But what if I can show you how to spend less, rather than make more? What if you make 10 small changes to your life that boost your spending power by 5 to 10%? That's like getting thousands of extra dollars per year in your savings, or to chip away at your debt! Stick with me, I'll teach you how.
Preface
Since becoming a featured, front page Knol, I'm getting a lot more comments and feedback on this article. Since I'm in the process of writing a full length book on the subject, this is certainly a welcome turn! All I ask is that if you make claims about aspects of this article, please provide the science. Please provide the proof! I'm more than happy to do the research if new evidence is unveiled, believe me. Thanks!*Update* - Living Cheaply in the U.K. is now 0.95 on Amazon U.K.!
The video blog companion to this guide has arrived! The Living Cheaply Youtube channel can be found here. Enjoy!
Getting Started
The first thing that you need is organization. You won't be able to save money unless you can figure out where all of your money is going. We're also working on the assumption that you have access to basic computer and Internet services, either at your home, at school, or at the local library. So what you need is:  |  |  |  |  |
Calculator: Costs $3.50 at a major office supply store. You want a basic model with memory, solar preferred. You will use this to help you compare the costs of products and services, and figure out how much money that will save you.
Clipboard: Costs $1.79 at a major office supply store. You want a basic legal size, 9" by 15.5" with a clip. You will use this for writing notes while standing, gathering clippings or notes that you want to keep, and leaving important reminders on something that you can hang from a nail or peg.
Paper: Costs $1.99 at a major office supply store. 150 sheets of loose, 3 hole punch paper is what you're looking for. That way if you want to put it in a binder later, or even make your own with a couple of paper clips or rubber bands, you can. This is what you'll use on your clipboard.
Pencils: Costs $1.99 at a major office supply store. A small pack of mechanical pencils with refill lead is cheap, and allow you to have an erasable writing tool without needing to sharpen. Lead refills are cheap as well. You will use this to write your notes and figures.
Printer: Costs $29.99 at a major computer retailer. You don't care much about quality, this is only to print black and white text documents, receipts, and coupons. Only needed if you plan to do the computer and online parts of this program, and only vital if you own your own computer and (in the case of receipts and coupons) have an Internet connection.
If you wanted to buy all of these things, it would cost you less than $40. But the truth is, you probably have a lot of these things around the house already! Pencils, paper, probably even a printer for a lot of people. Your real costs might be under $5. Money well invested to get organized and save yourself a whole lot more.
Chapter 1: Living Conditions
Shelter is one of the most basic needs that we all have. It is the most tricky subject to attack within the scope of your personal finances, but it is also the place where you can save the most money in the long term. I have been a Realtor in one of the toughest California real estate markets, and I have been the U.K. client liaison for an international real estate investment company. I can say with confidence that my number one rule for saving money applies here:
Rule #1 - If you can spend a little more money today and save a lot of money in the future, do so.
This brings us neatly to our first subject:
Buy or Rent?
The preference here is almost always to buy, if you can afford to buy. If you plan on staying in the area for more than four years, if you can afford a decent mortgage, if your credit rating is good enough, then buying will probably save you thousands of dollars in the long run. I'll explain why.
There are a lot of people who will explain to you that you don't 'break even' on a typical home investment for 10 to 20 years, and try to use that as a reason for you to rent instead. This is an asinine line of thought. What they should be doing is comparing the amount that you lose to rent, versus the amount that you lose when buying in the medium term.
Rent is money that is spent, and you get nothing for it. A clear loss. The first few years of most mortgages are also a loss, mostly paying the interest of the loan back even in a fixed-rate scenario, but you get something for it. You get the appreciation of the home, and some tax breaks depending on your financial situation. So the only question is, do those benefits equal or exceed the difference in price between renting and buying? The answer is normally 'yes'.
Even at only 3 percent average appreciation, you're saving $6, 000 per year on a $200, 000 home buying now rather than later. That's $500 a month. In places you can actually get a home for 200K, you'll find that the difference between a typical fixed rate monthly payment (around $1, 175/mo at 5.75%) and renting a similar place (around $875/mo in suburban areas of MA, MO, OR, and TN as a random sample) is less than $500 a month. Even if the tax savings and the extra money that you save is a just wash with maintenance (and it usually isn't), in 30 years of buying you would own the house and land, in 30 years of renting you would only have what you would make on a typical investment of (in the above example) $300 per month minus inflation. It isn't even a contest with such low interest rates.
Note that I said 'saving' and not 'earning' in the above example. One thing I should make clear: Paying a mortgage on a home that you personally live in is NOT an investment! You might make money if you sell it in the future, but then you have to move somewhere else that might have a different lifestyle, you have to pay a real estate agent to sell it, and you have to go back to renting at a loss. Why would you ever do that?! At best you'll trade the value of your home for the value of a similar home in another location, minus transaction fees of course. Paying a premium to eventually own your own home is a mitigated loss, rather than the unmitigated loss of renting! A real investment is something that generates income after putting down a chunk of money, or making some other commitment. If it doesn't generate income, don't call it an investment.
How to Save if You Have to Rent
If you must rent, and there are still ways to save money. These will test your powers of negotiation, but it is well worth it! You can save hundreds of dollars preying on the one weakness of landlords: Landlords will do a lot to avoid vacancy, because even 1 month of missed rent is hundreds of dollars! You have the freedom to move (whenever you like, with a month to month lease), and though it can be a pain, the process is quite cheap if you do it yourself. Your landlord knows that, and when confronted with real world numbers you can realize a lot of long term savings.The first thing to do is compare rental prices online and in the local paper. If you're looking for a new place, information is the weapon that you use to get the lowest price. If you're already renting, information is the weapon you use to avoid rent hikes or even get your rent lowered!
This is where your calculator and clipboard come into play. Write down all of the monthly prices of similar units that are available in your area. Remember, only similar units; your landlord will know if you're fudging the benefits, costs, and amenities. If your rent is not one of the positions towards the bottom, you have ammunition to work with. Simply show the list to your apartment manager or landlord, and ask them if there is anything they can do. This can work wonders, at least it can if you're towards the end of your current lease, or you have a month to month contract. If you want to show them how serious you are, calculate the cost of moving based on van rental, packing materials, and the like. Then show your landlord how many months it would take to recover those costs if you moved! For example:
| Current Rental | Other Rental | |
| Monthly Cost | $725/mo | $685/mo |
| Moving Costs | $0 | $50 Truck / $150 Packing |
| Time To Recover Costs | - | 5 Months |
| Monthly Savings After | $0 | $40/mo |
| First Year Savings | - | $280 |
| Next Year Savings | - | $480 |
A simple chart like this will put a chill in your landlord or apartment manager. It shows that you put thought into this, and might seriously consider moving! The result really depends on the financial situation of your landlord, and the rental demand in your area. If you are in the right, they might offer one of many things. They could lower your rent by perhaps $20 a month. They might offer a written agreement of no rent hikes for a year, maybe longer. They could offer you perks instead, perhaps they have a spare new appliance in storage or an extra parking space.
The worse they can do is say 'no', and you still have the option to use your knowledge and actually move to a cheaper place with similar amenities! This is an example of my number two rule of saving money:
Rule #2 - The truth is your best bargaining chip, as long as you document the truth completely.
One other way you can save on your rent is to get a bigger place and find others to rent the extra room along with you. This is more complex of course, there are social dynamics and multiple credit ratings to be checked, and more people that might move in and out. But in a strictly financial sense, a one bedroom place is generally the worst deal, and a 3 or 4 bedroom place costs less per bedroom while having more communal space! When I was renting in California, a 3 bedroom with 2 friends was over 40% cheaper per person than getting a 1 bedroom for myself.
How to Save if You Can Buy
The rate of foreclosure is at an alarming high over the past two years, and no bail out is going to reverse this trend quickly. Rather than picking up these properties at auction, which can require you to put down a huge chunk of the property's value in cash, I suggest that you work with a pre-foreclosure service or specialist in your area to cut a deal before the property goes to full default. They will commonly deal with the short sale department of the lending bank to try and craft a win-win deal for all parties involved. The option of buying on the foreclosure market narrows your options quite a bit, but can yield excellent deals if you aren't picky.Getting a Real Estate license in your state can save you thousands of dollars on the purchase of your home. I'm not suggesting that you do the deal yourself through a temporary broker, that would probably leave way too much liability in your lap for a novice real estate agent! Instead, take the courses, pass the test, and refer yourself to a seasoned professional for 25% of the brokerage fee (if your state allows that of course, sometimes it can be arranged as a commission discount). If the courses and test cost you 250 dollars between the community college, text books, and state fees, and you get 25% of (for example) a 2.5% commission on a $200, 000 home... you've made $1, 000. More importantly, you've learned a lot about the most important financial transaction of your life. And that license often qualifies you for careers that you might never have considered in the loan, real estate, and other property related industries. You can refer other people to real estate agents and probably pick up between 20% and 25% of the brokerage fee for each referral, for example! My license was still active after I started my own business outside of the industry, and I made thousands just by referring 2 friends to a broker I trusted.
The most common way to save money is mortgage shopping, of course. Low fixed rate mortgages are the most advantageous loans on the market right now. Yes, you can save some money in the short term by getting an ARM. But rule #1 applies here! Pay a little bit more now for a fixed rate mortgage, so you can save thousands of dollars in years to come! It is so rare that we see interest rates as low as this, you must take advantage of it. Remember to shop around! Get real quotes, and compare them. I suggest that you go to at least one broker, and at least one large financial institution with a good reputation.
You want to be as efficient as possible, as multiple credit checks in a short period of time can have a negative impact. Remember that a change of 0.25% APR on a $200, 000 loan can mean over $11, 000 in interest over the course of a 30 year loan! Shop hard, get a fixed rate while they're nice and low. If you're reading this years down the road and interest rates are high, then you can consider an ARM.If you need any specific references for good real estate professionals in your area, contact me and I'll have a look.
Chapter 2: Food and Utilities
Along with shelter, food and heating or cooling are basic needs that everyone needs to attend to. Because we're human, we often choose to live in environments that don't have fruit hanging from the trees and natural caves to take shelter in! As a matter of fact, most of us live in places where energy is expensive, food costs are on the rise, and paradise seems farther away than ever. So being able to save on your food and energy costs is a critical skill in today's economy.How to Save on Food
I don't want to be harsh here, but the main issue people have in this department is willpower. The first thing that you have to do is cut down on eating out! Every meal that you buy at a restaurant is more expensive than that same meal made at home. Get your paper and calculator out and run this example of brown bagging your lunch just one extra time per week:| Cost of Eating at GrinderWay | Cost of Brown Bagging It | |
| Half Pound Chicken Sub | $5 | $1.80 |
| Once a Week for 50 Weeks | $250 | $90 |
| Yearly Savings | $0 | $160 |
Note that I'm allowing 2 weeks a year of splurging as well. These figures are taken from the biggest East Coast and the biggest West Coast supermarkets. A half pound of chicken breast (or boneless pork for that matter) is about a dollar. 40 cents worth of bread, 10 cents worth of lettuce, 20 cents worth of tomato, and 10 cents of salt, pepper, and mayonnaise. And you save even more if you buy and cook a whole chicken, using it throughout the week. This is a perfect example of my third, and final, rule of saving money:
Rule #3 - Do the little things, and do them well.
Now let's give you an example of eating out or ordering in dinner, again one time per week, this time for a family of two:
| Eating for 2 at Steak Angus | Cost of Home Steak Meal for 2 | |
| Sirloin Steak Meal for 2 | $30 | $16 |
| Once a Week for 50 Weeks | $1, 500 | $800 |
| Yearly Savings | $0 | $700 |
That's a little more meaty! Sorry about the pun. But you can see what kind of savings we're talking about now. Again, I've taken the figures from major supermarkets and I'm allowing 2 weeks a year to splurge. Boneless sirloin steak is 5 dollars a pound. Crinkle fries, 75 cents. Soda or fruit drinks, 75 cents. French bread, 50 cents per portion. Steak sauce, salt, pepper, butter, 50 cents per portion. Fruit cocktail, 50 cents. $8 per person. Do these calculations for your eat-out and order-in meals, see how much you'll save every year for such a simple switch.
The second way you can save money is to make a shopping list and stick to it! Impulse buys on expensive foods destroy a family's food budget. I know that some people cannot resist what they consider a good deal at the supermarket, whether they need it or not. Fine. But allocate a small budget for those impulse buys, and subtract it from your overall food purchase budget every week. While you're at it, look for alternatives to name brands. Often times, the same food is being packaged side by side in the exact same factories: One is a major name brand, and the other is the generic store brand. Look at nutritional values, and be brave enough to try something different. You might like it, and it will save you money at the same time!
Another tip that might suit larger families, and even smaller families that have a little extra freezer or shelf storage: Buy in bulk. Always look at the per-unit or per-weight-unit cost of the product! If it is canned or frozen, and you can get a better deal on a bulk purchase, spend a little more now to save a lot later (back to Rule #1)! Don't get to the point where you're stocking items that you'll never use, of course.
I cannot count the number of times that people ahead of me in line are asked, "Do you have a club card?" and they answer, "No, and I don't want one." Don't be hard headed folks! Join points clubs and clip coupons! It isn't for poor people, it's for SMART people! They don't cost you a dime, and you'll often get vouchers sent to you for $2 off when you spend over $25, $1 off milk and dairy, 50 cents off your next bread purchase. Use those discounts! If you have the time, check your grocery store's website and make use of that printer I mentioned earlier. Print out online coupons that match your shopping list. You really are printing money, since it costs just a few cents to print out those coupons in paper and ink, but they can save you a dollar a week or more! Look at my average savings over the course of a year:
| Method of Saving | Savings Per Week | Savings Per Year |
| Coupons (Club and Internet) | $1 | $52 |
| Club Card Rewards | 40 cents | $20.80 |
That's an extra $72.80 every year. That would pay for multiple For Dummies books!
How to Save on Utilities
There are many ways to reduce your heating, phone, and electricity bills. Other than the obvious things such as turning off lights when you aren't around and making sure your appliances enter standby mode when appropriate, most utility-based savings fall under Rule #1. In other words, you make small investments now, and you'll reap major savings later. You can also comparison shop if there are multiple utilities available in your area, but all too often this is not the case.
The first option isn't available to everyone, but it can eventually make your heating or electricity free. You might even make some money in the long run! I'm talking about generating your own power. Use your judgment here. If you rent, you would have to convince your landlord to go in with you, which is usually not going to happen. You're going to need to research permits in your local area and what it takes to get hooked up to the grid if you want to sell excess energy back to the utility company. Solar is normally preferable in more sunny areas, wind in windy areas, wood pellet stoves in frigid areas, and geothermal if you have access to a basement.
This is a complex subject, but the important figure that you need to work out is the break even point. The break even point is how long the system will take to pay for itself, when you include all equipment, installation, and maintenance costs. Normally this will be between 3 and 10 years depending on the system you install. But it also improves the base value of your home somewhat, and if you ever turn it into a rental property, this is a BIG feature for your tenants!One thing that I cannot stress enough, in the arena of home heating: Use blankets and area heating instead of central heating whenever it is logical! Every day use blankets are a one time investment, usually very inexpensive.You can get great all weather blankets at the army and navy surplus stores for 10 bucks or less! There's something special about the family sitting around the TV after dinner, snug in their blankets and munching on popcorn. But aside from that, use this general rule: If the family is all in the same room, use a space heater. This will save the average family between $100 and $130 per year, easily paying for the blankets ($50) and the whole room space heater ($50) in the first year alone! Every year after that is pure savings. Turn on central heating just before bed or if everyone is in separate rooms. Make use of your central heating's timer functions to turn the heat off shortly after the family is asleep. If you wish, you can have it turn on automatically for an hour or so in the morning to take the chill off as people are waking up.
Preventative maintenance, like double pane windows and insulation, can save you hundreds of dollars a year in the long run. If you're handy, a DIY project with the right insulation, caulking, and paint will cost you very little, but the impact on your energy bills can be drastic. If you need to use contractors, it will cost more. What I would suggest is take advantage of any free estimates that are available to you. Get multiple quotes if you can. Use the most realistic figures available to you.Finally, consider using Voice Over Internet Protocol (VOIP) or calling cards over traditional telephone plans. The options are many, but which one is correct for you depends on how much long distance is used in your household. There are unlimited plans that let you call any land line in the US for under $10 a month or anywhere in 40 countries for under $20 a month, as long as you have a decent broadband connection and a computer with a microphone and speakers.
There are also calling card services that will let you call countries not covered under these plans for pennies a minute, and they can be used even if you don't have a computer. Along these lines, you can look into 'black box' solutions that just plug into a broadband line, without need of a computer at all! They cost a little bit more to set up, but if you use enough long distance, they'll save you a bundle in the long run. There might also be an unlimited national plan available through your normal phone provider (typical costs in the $40 to $50 range). An example of coast to coast US calls:| Normal Long Distance - 10 Cents/min Plan | Calling Card - 3 Cents/min Plan | Flat Rate VOIP - $8/month Plan | |
| 50 Minutes a Month | $5 | $1.50 | $8 |
| 100 Minutes a Month | $10 | $3 | $8 |
| 500 Minutes a Month | $50 | $15 | $8 |
| 1000 Minutes a Month | $100 | $30 | $8 |
If you would like recommendations for energy and VOIP services in your area, feel free to contact me and I'll let you know what your options are.
Chapter 3: Technology, Goods and Services
This is a rather broad category, and very little of it qualifies as 'basic needs'. But there are some very easy ways to save money on the technology that makes life easier and more fun. And there are ways to get your goods and services at discount prices as well. So I will briefly go through some of the main ways to save money in this arena.
Finding the Items
One of the most important skills that you'll need to locate deals on goods and services is searching on the Internet. Use Boolean searching to locate exactly what you need. The easiest way to do this is to use the word 'buy' and then put the exact name of the product in double quotes. This works in nearly every search engine out there. For example:buy "pink diapers"
But let's say that all you get off of your first search is something that doesn't apply to you. You can put a minus sign in front of the words you want to exclude. For example, if your search came up with all adult diapers but you wanted diapers for your baby instead:
buy "pink diapers" -adult
This search would exclude all results with the word 'adult' in them, increasing the chances of you getting what you want. If all else fails, try to find different words to describe what you're looking for. Paraphrase it, find a synonym for it, or try a different search engine.
Buying the Items
Try to comparison shop between specialty stores and online retailers. The key here is to calculate and compare total cost. For example, offline stores will charge you the price of the product plus tax. Online stores might charge you taxes, or they might not depending on location. They may charge shipping, or they may ship free. Make sure you compare total cost to total cost!If it is more advantageous to shop at a particular store, take advantage of their price-matching policy, if they have one. Remember Rule #2? Print out the offer you want them to price match, write down the details, and present it to your preferred shop. Use the well-documented truth as your bargaining chip! Along these lines, always get multiple quotes when buying a service! This goes double for insurance and loans of any sort.
One of the best secrets to saving big money is to buy things on sale, and out of season. For example, if you want winter clothes, buy them in June. If you want a snow blower, buy it in April. If you want a swim suit, get it in November! Probably the best time to get your seasonal goods is just AFTER the use for them has expired. If course, you can buy them now and use them next year, saving yourself a bundle! Where can you find these deals? Make use of deal-a-day websites, online auctions, and surplus retailers. There are dozens of sites that do product comparison, feature deals, and bidding on goods and services. Make use of them! Buy while the price is low, as long as you will eventually need the things that you buy.
Remember that with a lot of products, you can save money by buying in bulk. The most common savers in this area are paper towels/toilet roll, canned goods, and energy efficient light bulbs. But candidate products include anything that will keep for a long time, that you know you will eventually use. There are also 'product-a-month' clubs that can sometimes save you money while delivering quality products directly to your home. This can be anything from wines and cheeses to bulk frozen meat. But it isn't just food, it can be materials for your hobbies, wood for your fireplace, you name it. Services are structured along these lines as well, such as unlimited DVD or game rental clubs. If you rent a lot of movies and games, these services will certainly save you money on your entertainment budget!
In Closing
Remember the three golden rules:
Rule #1 - If you can spend a little more money today and save a lot of money in the future, do so.
Rule #2 - The truth is your best bargaining chip, as long as you document the truth completely.
Rule #3 - Do the little things, and do them well.
This just scratches the tip of the iceberg, but I'm hoping that these tips will save you at least $1, 000 a year, at least that would be my goal. In these hard times, everyone could use an extra $1, 000 to save, pay down debt, or take a much needed vacation. The people who take my tips to heart could save much, much more than that in the long run. If there are any questions, contact me and I'll do my best to answer them.
Buy Living Cheaply in the U.K. today!
For more money saving tips, please check out the Living Cheaply video blogs. Thank you!
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