What does it mean to “cash-in on saving money”? To the average American, probably the most immediate thought is, like, savings accounts or something. That’s not what we’re talking about here. People use savings accounts as a means of “saving money”, in their mind. My question is: Do you really save money by utilizing a savings account? And, more importantly, is that savings account allowing you to truly “cash-in” on the act of saving money? When you begin to shift your mentality, you’d likely agree with me that the answer to those two questions is “no”. So what do we mean… and how do we do it?
Awareness is the first step in change, so we have to recognize that “saving money” is a different beast from “building assets” (or, more loosely referred to in terms of investing, generating more money from your savings in the form of dividends, and so on). For me, the purposes of saving money are to (a) accelerate and eliminate debt (if you have any, which most Americans do) and (b) redirect that savings into assets and the generation of more money.
Below are some suggestions for simply saving money, and your daily or monthly budget is the easiest and quickest place to start. Take a good look at all the expenses currently coming out of your budget (net funds available for paying your living expenses and necessities).
- Cell Phone – A common expense these days that practically every person has. (I know homeless and unemployed people who somehow still manage to
have a cell phone!) The competition in this service and the products offered is fierce, so use it to your advantage.
For instance, my service was acquired through a major carrier eons ago. In my opinion, as the company grew, their quality of customer service and ability to be competitive in the market place dropped, so, you guessed it, I switched. Initially, I moved my account to a small, regional provider. As it turned out, their service left me with “dead spots” on highways that I traveled frequently. This wasn’t good for me. If I broke down or something, I’d have no use of my cell phone – for any reason. Outside of that, they were actually a good and far less expensive alternative. (Regional providers are probably great for those who stay within a certain area, therefore experiencing fewer “dead spots” when it could prove to be not just an inconvenience, but perhaps also a safety issue.) So, I went back to a major carrier… but one that offered a plan better suited to my particular needs.
Then, in my own quest to “cash-in on saving money”, I began to research and talk to other people about their choices and reasons for those choices. In the end, I was able to move my account to a lesser-known provider… who contracts with the exact same major carrier (thus the exact same coverage for my phone usage)… resulting in a cell phone expense reduction of nearly 50% — with a few more and better features than I’d originally had.
Just saved money. Now it can be reallocated to another area in my budget.
- Insurance – If you’re like me, you’re likely “insurance poor” – either by mandate or the fact that you have liabilities you want to protect because you’ve yet to accumulate a significant enough amount of cash to become self-insured (the ultimate goal). Besides, who really even likes insurance? I mean, for the
most part, you pay your premiums for a long time, nothing happens, no claims are processed (for you personally), the insurance company gets to keep your money, and you have nothing to show for it. Then, you finally do have a claim of some sort, and you’re either hassled over it or the insurance company wants to pigeon-hole you into some kind of repair or replacement that’s lesser for you but allows them to retain more of your money that they need to now “give back” to you. In my opinion, insurance does serve a purpose and has a very viable market: Those who lack the self-discipline to save money and not touch it so when “stuff happens” they have their own funds to go to for those repairs or replacements. (Yes, that’s the majority of the American population, I understand. Their market is HUGE!)
Again, I had multiple policies (mostly for the meager discount you get by bundling policies) with a major, well-known provider. When you break those policies down, however, and begin calling around, comparing genuine apples with apples, you’ll find discrepancies and a few absolute gems. Now, that said, the last time I did this, I honestly would’ve paid more (to a point) to stay with my then-current agent simply because of him and his staff. They were awesome! My point? “Price is only an issue in the absence of value.” I checked a lot of places and found them all to be somewhere in the same ball-park. Then, I found an insurance broker who did some shopping within their network for me.
Bottom line: I was able to get pretty much the exact same coverage and benefits for just over 50% less each month! (That said, if my old company ever gets it together and revamps their programs so they’re more realistic and competitive for me, I’ll switch back in a heartbeat. Why? Because the communication and customer service of this broker’s office… well, let’s just say it’s lacking. As I said, I’m okay with paying a little bit more in exchange for the peace of mind knowing all I have to do is make one phone call and never worry about whether or not things will get done or done the way I was told – over 50%, though, nah.)
More money saved… to be redirected elsewhere.
- Utilities – This is an area where the vast majority of people think they’re stuck. Like, you gotta have ‘em, right? I mean, water, electricity, gas… You have no choice, so you’re held over a barrel when it comes to whatever they want to charge you. Well, yes, but no. You may be surprised. Just hear me out.
Let’s first get clear that when it comes to normal living expenses, you’ll do best to do your own forced level-pay, whether you actively do this with the provider or not. It’s a budgeting tactic, but one I like quite well and relieved a lot of stress for me when I implemented it. Second is when you learn little tricks – unknown to average consumers – that will allow you to have at least some control over what you’re being charged and how it impacts your life. We’ll break ‘em down one at a time.
Here’s how you do a self-inflicted, forced level-pay: Take every statement for the past year and add up what the actual bills were. Take the sum and divide it by the number of pay periods you have in a year (i.e., 52 for weekly, 26 for bi-weekly, 24 for semi-monthly – You get the idea, right?). The answer is the amount you’ll automatically put in a separate “household” account (whether an actual bank account like I do or a simple jar at home – The bank is a better choice for most because it’s less likely you’ll get into it for other reasons, resulting in you not having money to pay those bills when you need it.) each and every time you get paid. Then, when the monthly bill comes in, you either pay directly from that account, or, if you’re like me, you transfer that amount from that account (savings) into your normal checking account, and pay the bill through that account. When the bill is less than the average amount, the overage just accumulates to off-set the times of the year when you use more of that commodity. When the bill exceeds the average amount you deposited, you’ll be drawing on the overage you’ve already created.
Here’s a little-known trick with our local water: I learned that, although the usage fluctuates from month to month, the rate applied to each level is based upon an average usage over a particular quarter each year. So, if you just know which quarter that is, you purposefully remain conscious of the amount you use during that period, which means the records (aka paper trail) will reflect that your usage went down or is minimal. Then, when that quarter is over and, say, the usage goes back up, the rate applied to that usage will be less because your actual usage during that time was lower. Make sense? (Discreetly ask your own water and other utility personnel about similar workings in your own local area. You may be able to capitalize on this also.)
Again, a money savings to be reallocated elsewhere.
These are just three examples of how you can cash-in on saving money; there are a multitude of others. Remember, though, once it’s saved, you must decide what to do with it. My personal favorite is to do several things simultaneously, depending on your personal circumstances:
- pay yourself first (especially if you’re not already)
- establish financial freedom accounts (such as savings, emergency, and investing)
- add a portion of that saved back toward debt that you need to accelerate to eliminate more quickly.
Using this strategy allows you to protect yourself against future debt while paying off existing debt.
And that… is how you…
Cash-In on Saving Money!
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To you and your success…