It’s been a long recession. I can sense the fatigue that people are feeling about the economy. When will things get better and why is it taking so long? With the up and downs of the stock market and the high unemployment rate, it is very easy to feel hopeless and out of control about your finances. But the good news is that you can do four things right now to replace that feeling with confidence that you are on the right track.
Always Ask for a Better Price: Basic negotiating is a must-have financial tool, one that can save you a lot of money. Make it a habit to always ask for a better price and know at least a little bit about how to go about it. Everyone can negotiate a better price for cell phone plans, bank account fees, credit card interest rates, furniture, appliances, costs for hotels and airfare, and even doctor bills. All you need to do is ask. Studies have shown again and again that people get a lower price over 2/3rds of the time just for asking for one; that 54% of those that ask for a lower doctor bill get one. All you have to do is ask. For even more negotiating power, learn a couple more steps: ask, skip your turn (make them go twice) and use silence.
Shop at Costco or Sam’s Club: Why wouldn’t you? The quality is excellent and you can’t beat the prices. I’m talking about food, household goods, cell phones, lap tops, TVs, appliances, auto supplies, and services—you name it. I find it hard to believe the average family can’t save at least $500 a year and perhaps a lot more by shopping this way. Just remember to keep your buying list with you and not to indulge in any impulse purchases.
Buy a Used Car Instead of New: How would you like to save $2,000 to $3,000 every year? Then buy your car used instead of new. Buying a new car is a waste of your hard earned money. A new vehicle loses an average of 20% of its value the instant it’s driven away from the dealership. When you add depreciation, your first year’s loss is anywhere from 25% to 35%. That translates to a first year $6,000 to $8,000 loss on a $22,500 new vehicle, or a $10,000 to $15,000 loss on a $40,000 one. And that’s for a vehicle only driven the average 13,500 miles. If you drive more than that, your depreciation will be greater (35% to 50% for the first year). Don’t forget to factor in your financing, which will add another $1000 to $3000 for the life of the loan.
Create a Spending and Saving Plan: On my website, MoneySmartOnline.com are some powerful free tools to help you set up your personalized money management plan, including worksheets and a very comprehensive retirement/financial freedom calculator, to guide you easily through the process of setting up a plan for how you will spend and save your money. Having a clear plan at hand provides a great deal of confidence that you are indeed on the road to financial security, and ultimately on the path to getting there and seeing your dreams come true.
Use these four strategies and feel better about your finances. In a bad economy, one of the few things you can control is your actions, so make a few changes and get your money management plan into place. Your reward will be the peace of mind that comes with really knowing that you are making good use of your money and doing all you can to create financial security.