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Newsletter - December 2008

OI Partners

Learning to Live on Less

December 11, 2008 - N. Susan Abentrod

Do you ever imagine what it would be like to get up in the morning without a financial care in the world?  There are many, many people who do, and lots of them are between jobs.  The majority aren’t rich, haven’t inherited a trust fund, or won the lottery. They are simply people living contented and full lives because they know how to live beneath their means.

Here’s how you do it (it’s almost embarrassing to say because it’s so very simple): Spend less than what you make.  No matter what you make, learn to live on less. “Impossible!” you say? Well, walk outside and look up and down your street.  You’ll see homes of people who make much less than you, people that appear to live the same lifestyle as you, take vacations, put kids through school and plan their retirements.  Yet, although you don’t see the difference, their bank accounts are growing, not shrinking, or completely nonexistent.  And this is because they respect the money they earn and spend their money carefully.

We all know the saying “A penny saved is a penny earned,” and it is.  How many pennies fall through your fingers each day?  What if you could stop the leaks and redirect those pennies into financial security?  You can -- just keep your eyes open to the small things you can do that, in the long run, can make a huge impact on your spending.

Take a look at the yearly cost of buying a few common items just three times a week.

• One cup of gourmet coffee  @  $1.70 = $ 265.20
• A sandwich @ $4.50 = $ 702.00
• One bottle of soda pop @ $1.25 = $ 195.00
• A pack of cigarettes @ $5.75 = $ 897.00
• A lottery ticket @ $2.00 = $ 312.00
  Total yearly cost $ 2,371.20

I rest my case.  And this doesn’t even include the dozens of other small expenses that arise, whether it’s a pack of gum, or a six pack of beer. 

Here are some pretty easy money saving tips that won’t change your quality of life.

  • Make lists.  Take a list when you go to the grocery store or shopping for clothes for the kids.  If you just stick to the list, you’ll buy only what you need and spend less.  So don’t waste time dawdling in the frozen food aisle if you only need a bottle of milk.
  • Shop around.  At least every two years shop around for less expensive auto and homeowners insurance.  You can save hundreds of dollars this way.  Try these websites: insure.com or insweb.com.
  • Maintain your car.  Keep up meticulously with car maintenance.  It will save on expensive repairs in the long run and your car will last longer.  And while you’re at it, learn to change your own oil. Or sweet-talk someone else into doing it for you.
  • Keep your eyes open.  Stay on the look-out for coupons and discounts.  Check newspapers, magazines and on-line.  A couple of good sites to try are thefrugalshopper.com and coupons.com.
  • Buy on sale.  If you really need something, wait to buy it until it goes on sale. Meantime, while you’re waiting for the sale to come along, you can be asking yourself “is this something that I really need – or just something I want?”  Try to stick to buying just the things you need.
  • Fix things.  As good as buying new stuff may be for the economy, hold on to the things you have.  When they break, fix them.  It’s amazing what a little household oil, glue and duct tape can do.
  • Leave the kids.  How do all those mysterious items get into the shopping cart when you’re not looking?  I have a pretty good idea.  Get someone to watch the kids while you do your weekly shopping.
  • Keep lists.  As you move through your day, keep a small notebook so you can jot down the items you buy and what you pay for them.  The simple act of recording your purchases will really open your eyes to where your money is going and I guarantee you’ll find you spend less.
  • Pay cash.  I’m not sure exactly why, but pulling money out of your wallet to make a purchase just seems to make the transaction more real.  Besides, by using cash and not a credit card you’ll save yourself from adding the 18% interest onto what you buy.
  • Find something to do.  People often shop when they’re bored, anxious or lonely.  And let’s face it, bored, anxious and lonely are a pretty big part of being out of work.  So find things to creatively occupy your time, like tweaking your resume, expanding your job search network and practicing for interviews.

Spending less money than what’s coming in is a combination of self-control and habit.  By living beneath your means you can use extra cash to add to your freedom fund and stretch out the time you need to find a new job.  And once you get into the habit of spending less than what you make, you’ll be well on your way to the sweet feeling of financial security.

N. Susan Abentrod, CFP is a financial consultant, author and workshop facilitator with OI Partners - Compass Career Management Solutions (Charlotte). She teaches workshops covering Financial Planning, Transitional Financial Planning and Planning Your Retirement. For the past 15 years, she has focused her career on financial education and developing and conducting comprehensive financial seminars for employees of Fortune 500 companies throughout the United States. Susan can be reached at 704-849-2500 or info@compasscareer.com.