Spending Strategies to Help You
Live Within Your Budget / Part 1

People are considered "cheap" if they pursue bargains or seek out the most economical sources in town for products or services. Yet, when others need advice on where to shop because of an unexpected major purchase or financial emergency, they run to the "cheapskates." Why? Because they want to learn how to save every possible dollar and use their money in more productive ways.

The following list of money-saving tips isn't meant to be exhaustive, but it does represent ideas our family has used to allocate our resources efficiently and accomplish our financial priorities.

• Buy used, especially for major purchases. Contrary to popular belief, buying used is not risky and does not take a lot of expertise. It does take planning and a little bit of elbow grease.

A few years ago, we needed to buy a refrigerator. New refrigerators at that time cost about $750, way more than we had in cash after purchasing our first home. We decided that buying "used" was our best option. First, I studied refrigerators in Consumer Reports. Second, I began scanning the classified ads and made a lot of telephone calls. The result: I bought an almost new frost-free refrigerator for $250. There was nothing wrong with the refrigerator except that it was the wrong color for the seller's new home!

After you become adept at classified shopping, you soon learn how to screen people who are overselling or "hyping" their merchandise and those who sincerely have a genuine reason for wanting to sell. If you have Craig's List in your community, you can hunt for bargains from the comfort of your computer.

When buying used, you should anticipate your need if at all possible. If you know you are going to need a new appliance or a car, begin shopping three to four months before replacement becomes necessary. The following are items we have bought used: automobiles, stereo equipment, TV, refrigerator, furniture (all types), children's clothing, and tools.

One of the most obvious items to buy used is an automobile. Studies indicate that new cars depreciate as much as 20%-40% in the first year of ownership. Let someone else pay for that depreciation!

• Rent. Some things you just don't need to own: timesharing arrangements, boats, major tools, the list goes on. It amazes me how easy and cheap it is to rent state-of-the-art equipment, return it when you want to, and not have to worry about maintenance, depreciation, obsolescence, property taxes, etc.

• Comparison shop. If you need to make a major purchase or have major repairs done on your car, get more than one estimate. Often the prices will vary by several hundred dollars. Shop that annual auto and homeowner's insurance expense every few years. I just saved 20% on these premiums by taking one minute to send my agent an email.

• Pay cash. You may be able to buy an item for less by offering cash instead of charging. Also, it forces you to carefully "count the cost" of each purchase. You won't make as many impulse purchases.

• Generic food brands. Major grocery stores offer generic or house brands. Don't be afraid of them! They are often made by the same manufacturer who makes the name brand but puts a different label on it. It doesn't hurt to try the product once; then if you don't like it you can go back to the name brand.

• Anticipate needs. We have five children so we often buy in quantity when going to the grocery store or membership warehouse to take advantage of quantity discounts. If a store in our particular area is having a year-end clearance on items such as tennis shoes, shirts, or pants, we will buy half a dozen or a dozen of each. They may not fit our children now, but sooner or later one child will grow into them.

• Baby sitting co-op. Get together with other couples you know in your area to develop a baby sitting co-op or club, trading time on a child-per-child basis. This will provide quality care without the expense. I estimate that in one year we saved over $300 by using our baby sitting co-op, and we've developed stronger friendships as well.

• Dental schools. If your area has a dental college or hygienist school, you may be able to get your family's teeth cleaned at a considerable savings. These hygienists in training are supervised by a dentist. In the many years we have visited our community college clinic, we have never had a bad experience. For an average cost of $8 per child, they get their teeth cleaned, plus fluoride treatment, sealant, and X-rays if necessary. On top of that they also get a new toothbrush!

• Medicine/generic drugs. With a family of seven, we have many miscellaneous medical needs. Whether it is the local drugstore's house brand or buying our antihistamines via mail order, we rarely pay top dollar for a brand name drug. For the one antihistamine/decongestant we use for the kids' colds, we pay less than 10% of the price of a popular brand name, and the formula is exactly the same.

[You can read part 2 of this article here. ]

• Spending Strategies that Will Help You Live within Your Budget / Part 2
• SMI's Money Saving Tips page
• Six Keys to Responsible Spending
• Book Review: Tiptionary 2
• A Plan for Making Your First Million

• Ronald Blue & Co.
• Budgeting on a fluctuating income | Crown Financial Ministries

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