No one can deny the economy has seen better days. The housing collapse, bank bailouts, and layoffs are a constant presence in the news and in our personal lives. For many of us, that means we need to ebb the tide of cash flowing out, especially as less flows in. For others, with financial certainty a thing of the past, learning to save during the good times to have a nest egg to fall back on is the only way to get peace of mind. Nothing is certain, least of all our finances. I should know…
I used to work in a very lucrative sales business. We lived in a beautiful golf-course home in Florida, complete with a hot tub and minutes from the number one beach in America, Siesta Key. I was in a very secure job that provided a company car and phone allowance for all my sales calls. I didn’t really need to budget, although in retrospect, I should have. Because with one decision, it all went away. How that transpired is another story for another time.
So now, I find myself living on $18,000 in student loans for the next 16 months. We live on a Caribbean island where the cost of living is double what you would see in the US. I need to get creative, and nothing breeds innovation better than necessity. As I’m learning new savings tips and dusting off old ones, I thought I would share the top 15 that I’ve found most helpful.
1) The 3 Rs aren’t just for Earth Day.
Reduce, Reuse, Recycle: it’s not just a great idea for our planet, it’s a great idea for our budget. I now wash zip lock baggies, sauce jars, and butter tubs. I then reuse them to store food and homemade sauces. I also save glass bottles to recycle them. I’ve made beautiful hanging flower pots from friends’ throw-away coffee cans and gift bags. Now, I’m not telling you to be a hoarder, but if you know you can fill a need with an item that you are about to throw away, do so. You will save and increase your creativity at the same time. I highly recommend Pinterest for ideas!
2) Eat at home.
This one was the most painful for me, as I have never been Betty Crocker in the kitchen. But, every time I looked at our budget, food costs were out of control. When you eat out or buy pre-packaged foods, you are paying a price for convenience. I now make all meals at home from scratch. I will sometimes take a day and make several meals and freeze them for busier times. Aside from the incredible savings, eating real food at home is also much healthier. Yes, I wash more dishes. Yes, I spend more time in front of a hot stove in a house without A/C. But, we have saved over $300 per month by choosing to eat in. On those few occasions when we do eat out for a special event, it just makes it all the more of a luxury.
3) Get out of debt – starting with the highest interest credit first.
This is something that every financial counselor will tell you. You will end up paying over double your original purchase in interest if you pay only the minimum payments. Put as much cash as possible into paying off the highest-interest debt first, and pay the minimum payments on all other debts. Once the worst debt is paid off, roll the same amount you were paying monthly into the minimum payment of the next highest debt. So, for example, if you are putting $200 monthly into your highest-interest credit card and paying a minimum $50 on the next debt, once you pay off the first card you will now put $250 monthly into the second to pay that off. This way, you have a cascading effect with each debt you satisfy, and you pay off the next one that much faster. Keep an eye on your budget and make sure you allocate this money upfront, leaving cash for incidentals left over only after everything else is paid. Once your debt is paid off, don’t carry a balance on your credit cards. You can use cards for points and savings, but make sure that you can pay off the balance at the end of the month. Also, go over your bank statements and make sure you are staying true to what you allocate for spending categories. Don’t spend more than you bring in.
4) Start a home-based business.
I have done this multiple times while I worked my day job. The tax advantages are amazing. Even if you are unable to make any income, which is doubtful if you work hard and pick something that maximizes your skills, you can still make deductions that will bring you big tax refunds. You can expense internet, phone calls, training, office supplies, travel expenses, even part of your utility bills. You are spending this money anyway, why not make it tax deductible? The tax advantages alone make me wonder why more people don’t take advantage of this. And, you may bring in a second income that will one day outgrow your salary so you can quit your day job to be your own boss!
5) Cancel your cable.
It’s just a time waster anyway! I haven’t paid for cable in years. Think about it, where could you be if you had used all that time in front of the TV to work on a business idea, educate yourself on a new skill, learn a new language, or spend quality time talking with your loved ones? If you just can’t break away completely, you can get most television shows on your computer for free. You just have to watch them a few hours after everyone else does, but you skip the commercials. However, for those times that you want to decompress with movies, go with a service like Netflix for $8 per month. You still get great programming, but at a faction of the cost.
6) Get out of your cell phone contracts.
I know, cell phone companies lure us in with the hottest phones fresh off the market and great prices – if you sign up for a two-year contract. It took moving to another country for us to wean off them, but I’m so glad we did! Once our contract was over and we came back to the US, we paid under $10 to get our smartphones unlocked, bought a SIM card for a few dollars from a wireless provider that used AT&Ts network, and paid $40 per month for unlimited talking and texting. We could have paid for a data package, but it seemed unnecessary given all the hot spots in my area. If I’m out and need to check e-mail that urgently, any free hotspot will be able to accommodate me. I found that I really didn’t need a data plan for my phone. And, with a wifi at home, I could still use my phone’s internet capabilities around the house. Also, I found my coverage to be just as strong and no difference in reception clarity as the national phone companies.
7) Run or bike to save gas and minimize trips in your car.
Are you going to run a few errands in town? How about literally running those errands? Weather permitting, jump on your bike or lace up your running shoes. You get a great workout and save gas money too. I love doing this in Grenada, as most of the population doesn’t have a car anyway. When I do use the car, I try to plan my trip so I don’t have to backtrack. For example, instead of driving to the grocery store three times per week, I meal plan for the entire week and do one big shopping trip. This way, everything is done and I’m not wasting time and gas making two more unnecessary trips back and forth.
8) Your freezer and dehydrator are your new best friends!
I love my dehydrator! I use it whenever I can to preserve food and make yummy raw vegan recipes. I often use ripe fruit that I won’t be able to eat before it spoils to make raw fruit leather or dried fruit. I also utilize my freezer to make sure food doesn’t spoil. I will peel and freeze bananas that I buy in bulk for breakfast smoothies. I also freeze fresh herbs in ice cube trays to throw in soups and stir-fry dishes. Bread always goes immediately from the grocery bag to the freezer due to how fast it can mold. Then it takes a quick trip through the toaster and it’s ready to eat. The possibilities are endless for stretching your food dollar using these two invaluable tools. Inventory your food, just like a restaurant owner. Remember, every time something spoils vs. feeds your family, you are wasting money and wasting resources.
9) Plant a garden and compost.
While you may not have a green thumb, most people can at least start with a herb garden. If you can grow flowers, you can grow your own food. Depending on where you live and your resources, you can save so much money on fresh fruits and vegetables. Also, you can get away from eating GMO foods and pesticides you find at grocery stores, and spend time getting fresh air, exercise, and sunshine working in your own organic garden. You can also use all of your organic kitchen waste to compost and make nutrient-rich soil. Your budget and health will be better for it.
10) Two words: Electric Showerhead.
We don’t have a hot water heater. Did you know that keeping your water hot in a tank can account for up to 25% of your electric bill? It really makes no sense to pay to keep a tank of water hot twenty-four hours per day when you can install an electric showerhead heater and heat the water as it comes out of the shower. Now, we live in a warm climate, so water coming out of our tap is never uncomfortably cold. I will often take cold showers after working out in the tropical sun because it feels refreshing. But, for those times when I want a hot shower, the electric showerhead is wonderful. I never run out of hot water and I don’t pay to keep it hot for hours in a tank. I just use the electric heating coils to heat the water when I need it by flipping a switch before jumping in the shower. The electric showerhead works just fine in colder climates too. You may want to still keep your hot water tank, but you can set the temperature much lower to a comfortable level for washing hands. You won’t need to heat the water for a hot shower. You can buy an electric showerhead for between $50 and $200, so it is well worth the investment as it will pay for itself in no time in utility savings.
11) Reduce utility bills.
There are many ways you can save on your monthly utilities. You don’t need to use hot water to wash your clothes or dishes. We have been hand-washing our dishes and clothing in cold water for over two years with no ill effects. Also, turn off lights, the AC, and the heater when you don’t need them. We only use our AC unit in our bedroom at night to help us sleep. The rest of the time it’s fans and open windows. We also don’t have a dryer. I line-dry all our clothes and it doesn’t take much additional time. This may not be as big a savings for my American friends as in Grenada, as most dryers only cost between $.50 and $1 to operate for an hour in the US. But, sunshine is free, so if you have the time, it’s worth it to line dry. Every little bit helps.
12) Drink water – it’s free!
The health benefits are obvious, but the benefits to your budget can be liberating as well. We have a Brita pitcher to filter tap water that we keep in the refrigerator. We always have cold water ready to go, which is essential in the tropical climate. I also carry it with me when I go out, so I don’t stop and buy expensive drinks. Juices and soda pop just contribute extra calories and extra costs. Now, for those times when I need liquid fuel for longer workouts, I make my own natural sport drinks. However, water is the staple drink in our home. This really lowers our monthly grocery bill.
13) Buy used whenever possible.
This concept could be for purchases as large as cars or as small as clothes. New cars lose 20% of their value the moment you drive them off the lot, so it makes sense to buy used. I have clothed our family in great fashion with items from outlet malls and thrift stores for years. Even my unlocked smartphone is refurbished, and it still works great. Estate sales and craigslist are convenient ways to get great deals on furniture. When I was liquidating our household to fly overseas, I gave people amazing steals on household items and electronics due to my time limitations. You need to be smart, but with a bit of research, you can get plenty of life out of used items and save big.
14) Learn how to give haircuts, it’s really not that hard.
When we first got married, we were living below the poverty line as we started our careers. I decided we didn’t need to spend $20 on haircuts for my husband every six weeks. So, I went to YouTube and taught myself how to cut his hair. Over these 11 years, we have saved about $1800. Every little bit adds up over time. He also benefits, as I know exactly how he likes his hair cut and no matter where he moves, he always knows he will look sharp as his stylist tags along.
15) Live with breathing room.
This concept applies to more than just finances. In every area of life, decide how much you can comfortably handle and guard that boundary. In our financial situation, we decide on the percent of our paycheck that we feel comfortable living on. It’s way under 100%. The rest gives us breathing room. We learned this lesson the hard way. When I rose up the corporate ranks, we had more money than we were used too. We fit our lifestyle to our salary with little room to maneuver. Even though I made a great salary, our lifestyle ate into it so that we didn’t save very much. I was trapped to continue to make a certain amount of money to pay for the life we had built around that paycheck. Looking back, we would have been much less stressed if we had decided to live on less and save the rest. Living in a third-world country has taught me that I don’t need much to be happy. I would rather have less nice stuff and more breathing room for my peace of mind, than be chained to a certain salary and enslaved to debts.
While in the conserving period of life, it is tempting to look at what you don’t have or compare yourself to others. However, you can also view it as an opportunity to learn to be a wiser steward of financial resources. Wasting money is still wasting money, whether you live below the poverty line or make millions. It’s amazing how much you can squeeze from a dollar when you are forced to get creative, and this skill can only serve you in your financial future. So start saving today; your future self will thank you!