Saturday, June 14th, 2008
Saving Money On Groceries
My wife and I made our weekly trip to the grocery store last evening. We normally shop for groceries on Sunday evening, but this week was different.
It is important to take advantage of sales on items that we purchase on a consistent basis, especially those that do not spoil. The Simple Dollar has a nice coupon strategy for this type of shopping that can often allow you to get items for free by using multiple coupons on a sale item.
No Tax!
Yesterday evening from 5:00-9:00 PM our local grocery store was having a no-tax sale. This even happens maybe a couple of times per year and we always make sure to take advantage of it.
Our grocery store also has a gas program whereby each gas purchase gives you $0.05/liter in store coupons. We have been saving these coupons for the last couple of months in anticipation of the no-tax sale.
When we heard that the no-tax sale was coming up, we made sure to add up our gas purchase coupons and search for additional coupons on staple food items during the month prior to the sale. (See coupons.com etc.)
With the arrival of our new baby, we have been intensely developing a price list at several stores for essential items such as diapers, baby wipes and baby clothing. We buy most of our baby clothing used from a local classifieds site or garage sales, but diapers and wipes are constantly on our watch list and my wife is always getting diaper coupons in the mail!
The Perfect Savings Storm!
With crippling gas prices hitting the nation, even my household with our two gas-sipping Honda’s is starting to feel the pain!
Enter the best coupon we’ve had to date!
We just received a coupon in the mail last week that offers double the cash back on one fill per month from our grocery store gas bar. Sweet! That means instead of $0.05 per liter of gas, we will get $0.10/liter for one fill only.
Knowing that the no-tax sale was coming up, drove both of our vehicles until they were bone-dry and proceeded to use the double savings coupon.
I know what you are thinking- “I thought you said it was only good for one fill”?
The coupon actually states that it is good for one gas “purchase”. So, without hesitation I filled both vehicles from the same pump so that it read one transaction of ~88 liters, or $8.80 of store credit.
I view gas purchases as somewhat of a necessity, so the additional $4.40 in grocery store credit was certainly worth it to me.
Adding Up The Savings
When all was said and done, our grocery bill shrunk substantially from $86.48 all the way down to $53.11.
A savings of $33.37 just by using some simple planning and being aware enough to combine a few savings strategies into one shopping trip.
One of the many complaints that I hear about people who don’t use coupons is that it takes too much time in comparison to the savings that can be had. While I did not count the minutes that it took to decide on the choices to make in order to make this shopping trip, I highly doubt it exceeded $33.37 worth of my time.
Do you have any favorite money saving tips or tricks? If so, please leave them in the comments…I’m always up for saving a few bucks!
Posted in Saving Money | 1 Comment »
Monday, June 9th, 2008
A recent article in The Globe and Mail has me slightly concerned about the financial well-being of our baby boomer generation. It appears that there has been a trend of late (from 2001-2006) according to census data that shows baby boomers assuming more debt.
Why This Concerns Me
At a time when many folks should be enjoying life and harvesting the fruits of their labor, they have assumed more debt. Why are taking on more debt?
It appears that many are completing renovations to their homes, and that is not all bad. If the repairs are needed to sustain the home for the rest of their days, like new windows, shingles, furnace etc. then so be it. However, taking out a second mortgage to add a sunroom or additional living space does not make sense for the majority of empty-nesters.
Even worse, some are taking out a second mortgage to buy depreciating assets like vehicles and may find themselves on the car loan treadmill for the rest of their lives if they are not careful.
Why This Is Smart
Taking out a second mortgage is smart if you are not planning on retiring until the mortgage is paid off because mortgages are the cheapest source of capital (next to student loans). There is no sense paying more interest that you have to, which is why I have a large line of credit on my home. The line of credit on my home is currently at 4.75% and is interest only. This works great for acting fast on “no-brainer” investing opportunities.
Another reason that this data might not represent a clear picture of a trend is that it is not indexed to life expectancy rates. You see, people of a certain age, even 10 years ago, had a much lower life expectancy that baby boomers do today. Not only that, their health and quality of life is much better than previous generations. What this means is that they may be working later in life and they expect to live a healthier and longer life being more active. All in all, today’s baby boomers may not be in as much trouble as this data may lead us to believe.
My Take
While I certainly don’t plan on having to use the equity in my home when I am in my 60’s (at least for anything other than investing), I suppose we never know what circumstances might present themselves in the future.
I am a relatively conservative individual by nature and I don’t really like to own “stuff” just for the sake of having something, so I can’t see myself wanting to increase my standard of living if I don’t have the additional income stream to provide it.
Have the baby boomers finally fallen victim to the consumer driven marketing ploys that have been so effective at convincing those of us in our twenties and thirties that we must keep up with the Jonses?
What do you think?
Posted in Investment News | 1 Comment »
Monday, March 3rd, 2008
I’m about to let you in on the secret of how I used my student loans to build wealth. Now, coming from a frugal individual like myself, this secret may shock you.
Are you ready? Do you have your notepad and pen? OK.
I maxed them out.
Yes, that is correct. I completely maxed out every penny that I could in student loan funds. I took advantage of every student loan program that I could find and you should too!
Why You Should Max Out Your Student Loans
No Collateral Needed
The premise behind student loan programs is that the financing institution is banking that your education will allow you to repay the loan at some point in the not too distant future. These programs are put into practice to assist those of us who came from poorer backgrounds as a way to enhance our futures by financing an education. The education is then supposed to lead to a successful career that will allow us to be a contributor to society instead of a drain on society.
This means that your future is all you need for collateral. This is great for students, if it used correctly. When you view student loans in this light, they hold more wealth building power as financial tool of leverage than a mortgage does!
How To Leverage Student Loans To Build Wealth
First off, don’t take my heading the wrong way. I lived rough in college - but I had a purpose!
Most student loan programs, or the ones that you should take advantage of, have deferred payments until after graduation. Essentially, this means that you have access to FREE MONEY for at least 4 years!
*Note: Some programs require minimum - interest only payments.
Student loan money is meant to be used for tuition, books, and living expenses. The first trick to leveraging this student loan money is to ask scholarship or grant money after you receive your loan. I accomplished this by simply approaching the financial aid department at my University for additional funding. I would make an appointment and plead my case days before the semester would begin. It wasn’t often that I received less than an additional $500.00/semester.
So there I was with an extra $500 in free money along with my student loan that would pay for my tuition, books and allow me to live comfortably. This was the beginning of my strategy. Read on to the end of the article to find out how to leverage this money!
Get A Job
Put time and experience on your side.
It is essential that you have a job in college. I know that sounds obvious, but I’m heading in a different direction with it. I don’t suggest working full time or finding the job that pays the most money; I’m suggesting that you get a part-time job in your field of study.
Working at even a menial job within your field of study will at least give you some experience when you head out into the workforce with your hard earned degree. This will often allow you to skip the entry-level positions and actually earn a mid-level salary right after graduation.
The Strategy
Live like a peasant and invest like crazy.
Because repayment of student loans is deferred until after graduation, sometimes up to one year after, it provides the perfect opportunity to leverage free money to your advantage and harvest the growth of investments over a short time period.
As long as you invest the money and don’t use it to live “high on the hog” in your college years, this strategy works. Depending on the investments you choose and their performance, you could graduate with a positive net worth! So, don’t go and blow the money - be smart.
We have all heard the stories of the poor college student living on Ramen noodles and kool-aid. Well, that’s how I did it. Actually, mine was more of a macaroni and cheese and canned tuna - I need my protein!
Anyway, I took all of the money that was left over from my scholarships, student loans and part-time job and rolled it into certificates of deposit that matured in the year I was to graduate. I would have invested in the stock market, had I had the knowledge that I do now.
Hindsight is always 20/20!
This has been the basic strategy of leveraging student loans, if I have skipped over something or if you have any suggestions, please share them in the comments below.
Coming Up!
Find out how I used Credit Cards to my advantage and still do! If you can’t wait for that article, part of the secret is using the right credit card to suit your needs. There is a website that helps you sort through the thousands of cards to find one that suits your needs - you can try out that site for free here.
If you have children that are heading off to college in the next few years I have an even more powerful strategy for you to use. I’ll be posting that article within the next week - so stay tuned!
Posted in Investor Education | 5 Comments »
Monday, February 25th, 2008
In a previous post I wrote about how I manage debt and how I believe that making payments on a car loan is the absolute worst financial move I could make. I also talked a little about how I use a credit card to manage my monthly cash flows and the advantages that I receive from it.
Along these lines, I must convey a story about my brother that just recently happened. This is not fiction and is the honest truth. First off, let me say that my brother is the exact financial opposite of myself. He is out for one thing and one thing only - to spend all, and more, of the money he makes!
On With the story.
My brother recently decided that his 2001 Chevy truck was costing him too much money in fuel and maintenance costs - not to mention the $400/month payments he was making on his loan that he is upside down on (he owes more than the truck is worth). So, he decided that it was in his best interest to sell the truck.
I said “Good Idea”!
He then proceeded to sell the truck and even went a couple of weeks without a vehicle. I thought that maybe he had changed and that he was going to purchase an older, more reliable vehicle that he could afford. He even mentioned to me that he found a grandmother with a 1991 Ford Tempo that had very few miles on it and she would sell it for around $1500.
I said “that would be a great idea”!
At this point I really thought that he had changed and I started to feel proud of myself. I thought that my explanation to him about how he couldn’t get a mortgage for a house that he desperately wanted if he had to make lofty monthly car payments had finally hit home.
The Call Came
I received a phone call from my brother and I could tell that he was very excited on the other end.
Me: “So did you buy the car”?
Him: “Even better, I got a 2005 Chrysler 300 for $3000 less than market price”!
Me: “That’s great, so you can sell it and make about $3000 toward a down payment for a house”.
Him:“Well, I just talked to the loans guy at the Credit Union and he said that since I just started a new job I wouldn’t be able to get a mortgage for a couple of years anyway, so I might as well drive a sweet car”. He didn’t even ask the loans officer how he could improve his credit score in order to qualify for a better rate on his loan. In fact he doesn’t even know what his credit score is!
If you live in the United States and you don’t know what your credit score is, you can find out for free from Experian.
Me: “Sigh…Well if that is more important to you than buying a house (sarcasm here)”.
My soul fell directly to my boots as I realized that my “talk” had not sunk in and he had certainly not changed. He has continued to run on the Car Loan Treadmill and I’m saddened to say that he will likely never get off of it.
I have had several conversations explaining to him the basics of personal finance to no avail. He continuously declares that he wants to save money, have an emergency fund and buy a house, but he refuses to follow even the most basic rule of spending less than you earn.
Moral of the Story
If you spend more than you earn and owe more than you own (negative net worth), you will not be wealthy.
Posted in Investor Education | 1 Comment »
