Saturday, December 24, 2011

 A Money Saving Challenge

Admit it. When you think about saving money, or pinching pennies, you think of little old ladies clipping coupons out of the Sunday paper, don't you?

Well I'm here to tell you that saving money isn't necessarily about sacrificing anything. In fact, it can be an exercise in self-discovery—finding out what you really want, and what you can live without. In most cases, the things you can live without, are things that you didn't really want anyway. They're the things you just accepted as essential because everyone you know has them too.

So let's do a little exercise. Take out a blank sheet of paper. Now list everything that you have spent money on, what you are spending money on, and what you want to spend money on. Review your bank statements if you want, but put all of your effort into this and try to be as thorough as possible.

Now look at your list. No, don't just look at it, actually take the time to study it. Consider, especially, the most expensive items.

Perhaps you own one sixth of a Piper Cherokee airplane. It's depreciated, to the point where it's worth three quarters of what you paid for it, and annual expenses average around $1,200 a year. Think about how much you actually fly it in a year. Do the math and figure out how much each flight costs. Is it considerably more expensive than renting? If so, maybe you should consider selling your share.

Or maybe you're not using that RV much, anymore. Maybe just one trip in the summer. Calculate how much it costs per day when you do drive it. Figure out how much you pay per year, the accumulated interest, and insurance premiums, then divide that amount by the number of days you've used it. Now look at the figure, and ask yourself if it's worth it to you. Don't automatically say no, even if the actual cost is astronomical. Saving money, as I said before, isn't about sacrificing anything. If it's worth it to you to pay that price for a familiar environment – a home away from home – when you travel, then by all means, keep it.

But perhaps you're spending three dollars every day for a coffee from Starbucks. That's $90 a month, $1,095 a year. Over five years, you'll have paid $5,475 in Iced Venti Americano's, alone. If being able to save that much money is more important to you than the beverage, put that $90 a way every month, and then take a trip to Italy in five years. Or invest it. Once you cut down on unneeded expenses, you'll have a lot more money to save and do the things you love.

To learn more about how you can slash your spending and put more money in your bank account, v

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