savings Archives — Page 3 of 4

Ways to Save with Banking and Recurring Payments

August 10, 2011 By MelissaB 17 Comments

If you are new to saving money and cutting expenses, you may search the internet where you will find such tips as “Skip your daily coffee fix” and “Buy store brand foods instead of name brand foods.” While this advice is good, it only offers a superficial way to cut expenses. You may need to look beyond this generic advice to find other ways to trim costs. My family is in this situation currently; our income does not add up to the equivalent of our expenses. Not only are we making less than we spend, we are not able to add to our savings. This situation is temporary, until my husband finishes his post-doc, but obviously it is not sustainable for the two years he will be in a post-doc position. Here are some of the extra ways we have found to trim our budget:

-Stop writing checks. We have automated our bill paying online. At first I was resistant to do this, but when I added up how much I was spending on checks ($38.12 for a year’s worth) and stamps ($52.80 a year) for a total of $90.92, I decided to do it. I can’t eliminate all check usage, but automating our bills has reduced our check usage by 3/4s, which will save because I won’t have to buy checks as frequently.

-Cancel automatic payments for services you no longer use. One downside of automating payments online is that you may stop using a service and yet forget to stop the auto payment. I recently closed an eBay store that I had. As part of my eBay business, I had automated payments to a template service (that basically made my auctions look prettier by putting a design in the background) at $12 a month and to a selling newsletter for $8 a month. I was annoyed when, a month after I closed the eBay store, I discovered I was still billed the $20. I forgot to cancel the subscriptions.

You may find that some companies make it difficult to cancel online subscriptions. (Remember the old Friends episode where Chandler wants to cancel his gym membership, and every time he tries he is instead convinced to stay?) While it may be very easy to sign up for recurrent payments on your credit card, when cancelling you may need to call the company and listen to them try to upsell you. Persist because it is not worth paying monthly for a service you are no longer using.

-Change to online bank statements. My bank recently began charging $3.00 per month for paper statements. That adds up to $36 per year per account. Because I have 3 accounts with them, it adds up to $108 a year wasted. Yes, I prefer to have physical copies of my statement, but not at a cost of $108 a year.

-Consider changing banks if the fees get too high. Last January, my bank started charging me $9.99 per month for my eBay business checking account. That is $119.88 a year just for the joy of banking with them. I have since cancelled the account. I am now in the market for a new business account for my writing and blogging service, and you can bet I won’t be going with my current bank, and I’ll be looking at well reviewed banks that maybe have good new account promos.

There are plenty of ways to save money if you look carefully. These are just a few ways you can save at your bank and online, but they clearly add up. Making these small changes has saved my family $230 a year!

What other ways do you use to save money?

photo credit: Patrick Hoesly

Sometimes Saving is Wrong

August 20, 2010 By Shane Ede 11 Comments

Invariably, every few months, we get a wave of posts talking about “what would you do if you won $x,xxx,xxx?” Or, what you would do with a smaller windfall. And invariably, a majority of the people talk about how they would save the money. And in some cases they are right. But, most of the time, they are wrong.

Why are they wrong? Because they’re looking at saving from the wrong direction. I wouldn’t save a dime of it. I would use every last cent of it to pay off debt. And until I have no more debt, that’s what I would do every time. Sure, maybe I’d by a few things that I needed, but the rest goes to debt. Saving in a savings account doesn’t do you damn bit of good if you have debt.

If you have any debt at all, you really should think twice about having any savings at all except for an emergency fund. Why? Because, there is no savings account in the world that will guarantee you more interest than what you are paying on your debt. If you pay off $100 of your credit card debt, you’ve just earned the 19% interest that you would have paid. You “saved” more with that $100 than you would have in years if you had put it into a savings account.

Don’t fool yourself into thinking you need to have anything more than an emergency fund in the bank. All the rest is just money that could be making you 19% interest instead of the paltry 1.30% that you’ll get at that high-yield online savings. When you get rid of your debt, then is the time to start building your savings!

Some of you will likely ask “what about retirement savings?” That’s a gray area. There are some that would argue that if you don’t get that debt paid off, you’ll end up taking that money out early anyways. Others would argue that due to the tax benefits of retirements accounts, and the magic of compound interest, you really should be putting money into your retirement too. My current opinion is stuck somewhere in between. I think that you should be putting a little into retirement, just so you have something going. But, I also think that you should keep in minimal until your debt is gone and then ramp it up like gangbusters.

So, what would you do if you won $x,xxx?

Starting a Business: Can You Afford the Risk?

August 13, 2010 By Shane Ede 2 Comments

Freedom! Be your own boss! There are plenty of people out there that will tell you that starting your own business is the only way to go. You can set your own hours, and do what you are passionate about. And, sometimes those things happen.

Eventually, you might be able to set your own hours. Eventually, you’ll be able to make gobs of money doing what you are passionate about. Eventually. Until then, you’ll work long hours and probably not make much money doing it.

As with anything, starting a business can be a very risky proposition. If you decide to do it full time, you’ll have to leave your job. Doing it part time is a valid response to that, but then you’ll be working even longer hours than you already do. And, sometimes, your passion just isn’t profitable.

But, I’m not here to discourage you from trying. In fact, I’d like to do the opposite. But, if you’re going to start your own business, do it responsibly. Know ahead of time that you will likely be working long hours and making less money than you have planned for. And know ahead of time that a very large portion of new businesses (about 60%) fail within the first 5 years. I’d be willing to bet, however, that a very large portion of those failed businesses failed because the business owner didn’t do their research and didn’t know what they were getting themselves into.

But you will.

Can you afford the risk of starting a business? Let’s ask ourselves what we will need financially to devote ourselves to our new business. We’ll need to have a way to pay ourselves. You cannot count on the business to make enough revenue to pay yourself with. You’ll have to have a way to pay for start-up costs. It’s actually pretty expensive to start a business.

If you’re still in the planning phases, visit your local branch of the SBA, or find a local business incubator, and sit down with someone to discuss your business plan and the costs that will be associated with it. Those experts do this all the time, so they’ll have a much better understanding of what it will cost you to get running.

Once you have a firm idea of what it’s going to cost you, you’ve got to start saving up. Plan on saving at least a few months of salary and personal expenses, but I would shoot for at least 6-12 months. And if you can, start saving any extra so that you can put that towards business costs as they come up. Again, the business isn’t likely to pay for itself right away.

A solid savings plan will not only help you get your business started properly, it can also do a great deal towards keeping your business operating if necessary. And having an extra cushion to pay your own expenses will save your sanity while you expend all your energy into your business.