Your Daily Savings Tips

This post is Part 11 of our ongoing series of tips designed to help find ways to spend less and save more.  Each day for the next week and a half we’ll offer three new tips you can put to work immediately.  Here are today’s tips:

33) Don’t ignore your credit score.  If you think your credit score doesn’t affect your cost of living, think again.  A credit score is a number based on a complex mathematical formula that tries to evaluate your riskiness as a potential customer.  It’s based on your past actions—how and when you pay bills, how much credit you have, whether you’ve ever filed for bankruptcy, etc.

Your credit score affects how much you pay for insurance, the rate your bank charges you for interest on a loan or a credit card, and what kind of interest rate you’ll get from an auto dealer as you go to buy a car.  It therefore pays to know your score and do everything you can to protect it.  The good news:  You can log on to AnnualCreditReport.com for a free credit report.  Most financial experts suggest checking your score at least one or twice a year.  (One note: You only get one free report from any credit bureau per year.)  Once you receive your free report (which can be in just a few minutes if you do it online) you should review it for any errors.  If you find any, try to resolve them as soon as you can.  For a good basic explanation on what a credit score really is see this Wikipedia article.

I love the feeling I get when I pay with cash.

34) Make big purchases with cash, not credit. I’m not suggesting you drag around a bag of cash.  Instead, I’m suggesting to pay for your big ticket items with funds you have stashed in the bank—that is, from your checking or savings account.  Credit can save the day in an emergency, but whenever I can, I try to buy my larger ticket items with cash.  Not only do I avoid paying interest charges, which could potentially double the cost of my purchase if I don’t pay it off in a timely manner, but sometimes it’s possible to negotiate a better up front purchase price by offering to pay with cash.  If I really want a particular item, it can feel hard to wait while I save up enough funds.  Yet when I finally do get to make my purchase, it feels terrific to know I own it free and clear and I won’t be adding to my debt.

35) Use the 24-7-1 rule. How important is it to buy something today?  Can you put it off until tomorrow, next week or next month?  It’s easy for buying to become an unconscious process that ends with owning lots of things we never needed in the first place.  We hear lots of messages to buy things or see a bright shiny store display and are hit with an overwhelming urge to consume.  The stores have figured out hundreds of ways to relieve us of a lot of our hard-earned cash—money we hadn’t planned on spending.  To take control of your budget, a good rule of thumb when shopping is to wait at least 24 hours, 7 days or 1 month, depending on what you plan to buy.

When shopping for groceries it’s best to work from a list.  If it’s not on the list, don’t buy it now.  Instead, wait 24 hours to see if it’s something you really needed after all.  If it is, get it on your next shopping trip.  If you’re shopping for clothes or smaller household items and run across items not on the list, don’t just wait a day, wait a week.  If it’s important enough you can go back for it later.  Finally, for all large purchases, like furniture, appliances, televisions, cars, boats, etc. put the item on your 1 month list.  If you even remember you want it after a month has passed, you’ll know whether it’s important enough to own.  Taking the time to rid ourselves of the emotional energy around buying a particular item is the key for deciding if we really wanted it in the first place.

Come back tomorrow for 3 more tips!

By Bob Anderson

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