Found Money:
How To Generate Quick Cash In An
Emergency
More
Serious Savings Strategies
If you are serious about having a
healthy emergency money fund, you might
want to curb the consumer in you. This
means, instead of spending, saving. Of
course, the number one, best way of
saving remains to have a portion of your
weekly paycheck automatically deposited
to your savings account. If you like the
idea of deciding, week by week, how much
savings you will deposit, take heart and
adapt a serious tip or two. It’s all
good if the end result is better and
more savings.
Hold that “mother” of all garage sales,
once and for all! Do your homework and
literally do a house inventory. Journey
back, all the way back, into the
furthest reach of every closet and
decide that, if you have not used it for
more than six months, it will have to
go. Most people have at least $1,000
worth of garage sale items hidden away
in their home. This turns out to be a
veritable gold mine for many.
Just how much do you need that nasty,
pack-a-day smoking habit? In Washington
state, that’s easily $5 a day—or about
$1,800 a year—that can go right into
your savings. This does not even begin
to touch the savings in insurance and
health care.
Tame the driving tiger in you. Instead,
carpool or use public transportation.
This will save you on gas, insurance and
maintenance costs—not to mention any
money spent on a headache. Using the
IRS’s 2002 mileage reimbursement rate of
36.5 cents per mile as a proxy for the
cost of commuting, you could save $1,141
a year by driving half the time for 50
weeks of the year (based on a 25-mile
roundtrip commute). For an even more
serious approach, consider nixing your
car if you live in the city. Some cities
are now implementing progressive
programs that allow you to have access
to a car without the ownership hassles
(e.g. “Flexcar” in Seattle, Portland and
Washington, D.C.)
Buy items used. The average consumer
spends about $1,750 a year on clothing
and its upkeep, according to the U.S.
Bureau of Labor Statistics’ most recent
Consumer Expenditure Survey. You can
easily cut that in half by shopping at
consignment shops and auctions, though
the life of the goods may be a bit less
than buying new. To account for that,
the annual savings may only amount to
25%, or $437.
Become a homebody. At just over $1,800 a
year on average, entertainment spending
has a way of eating up the best-planned
budgets. Consider the library for books,
music and movies. Eat out less often.
The average person spends $2,276 a year
on eating out. Try cutting your spending
in half on both areas for annual savings
of more than $1,900.
Cut your housing costs. While a move
across the tracks may save some money,
moves are expensive. Consider renting
out a room in your house. The average
housing costs per person in 2004 were
just over $13,200. In metropolitan areas
such as Seattle, rooms easily go for
$400 a month. Figure about $20 of that
goes to increases in utility costs, and
you’ve still realized annual savings of
more than $4,000 before any income
taxes.
Cut up every one of your credit cards.
Build an emergency fund first to handle
most unexpected expenses. This allows
you to become your own lending agency.
Credit cards can be a cash-flow
management tool, but paying only the
minimum will keep you in debt for years.
If you’re the average American with at
least one credit card, you probably have
close to $8,523 in credit card debt,
according to industry research group
CardWeb.com. At an average APR of 14.4%,
it could cost you as much as $1,100 a
year in interest rates alone. By simply
waiting until you’ve saved enough money
to make purchases, you could eliminate
those interest payments.
If you’re very ambitious and follow all
the above tips, you could be looking at
savings of some $12,000 a year. Figuring
you can invest that at the historical
rate of return of 10%, your savings do
start to compound nicely—and rapidly.
Instead of the debt, go for the
emergency fund and save.
>>> Table of Contents <<<
|
