This guest post by Al and entry in our non-fiction writing contest.
Take a five dollar bill out of your pocket and look at it. OK, if you’re under 50 years old use a twenty, if under 30, use a fifty.
Does that piece of paper work for you or for someone else?
If it’s going to pay down a credit card, it works for the credit card company. It will return to them a yield around twenty percent. If you decide to use it to increase your savings it will earn interest and thus be working for you. Today you will be lucky to make one percent at a bank. Twenty percent yield to them, one percent yield to you. Not fair, but he who has the gold makes the rules.
As consumers we need to spend money for food, education, housing, clothing and transportation. We could spend a dollar for a one pound bag of dried beans today, or continue to save so we could buy a fifty bound bag of beans for thirty five dollars. Those thirty five dollars are working for us if we spend it on the beans. The benefit to us is fifteen pounds of free beans, compared to buying them at the grocery store at a dollar a pound. Here, your money is working for you. Get out your calculator and figure the percent of return on that transaction! But if you must use the thirty five to pay the credit card company, I hope you can see that your money is not working for you, it is working against you. And just to make you feel guilty, it was the past decisions you made that ran up that credit card balance.
I would rather delay lunch by a half hour so I can drive home to avoid paying for a McBurger and soda. (You didn’t put your McBurger on your credit card, did you?) Instead I wait until I get home (I’m retired) and make a peanut butter and jelly sandwich. It’s my favorite lunch meal. I am shocked to learn that the home made sandwich and a glass of milk cost 1.70. The McBurger and drink is around 4.45, so the savings for that one meal is 2.75. If you have a job and do this five days a week, you can save 13.75 every week. Not much, but it will buy a box of shells or a roll of FoodSaver bags. At the end of a year you would have fifty two boxes of shells or two new FoodSavers or you could buy a nicely equipped bang stick. I worked for a man who was the third generation owner of a business with almost 700 employees. He brought a peanut butter and jelly sandwich to work every day, and ate lunch with us peons whenever he didn’t have a meeting to attend.
Today there is no reason to accumulate very long term savings because of the artificially low interest rate commanded by the Federal Reserve. I’m thinking here of saving for goals like retirement in twenty years. Saving for shorter term goals, like a homestead spread or a car with better mileage than the current jalopy is always a good strategy, regardless of how much interest you can get on your savings.
For the short term, like 3-4 years, we are spending every extra dime we can on long life products like appliances. My belief is that we will be hit with very high inflation when the money printed by the Federal Reserve in the last three years finally gets to Main Street where we live. We all know that prices are rising for food and fuel but I think even higher inflation is in our short term future. When that happens, we may not be able to afford those appliances. The big money boys are advising all of us to buy land and gold, both out of our reach. Our appliances are twenty years old, and we have the option of replacing them now, or wish we did when they break down a few months from now and replacements are fifty percent higher. Whatever it is, a drill or a roof or a furnace, prices are going up.
So, how do you become a tightwad? Can you identify areas in your daily life where a little self-denial can slow the drain on your cash? If you have old equipment that needs replacing why wait until it breaks and inflation has already hit it? Can you find the motivation to identify opportunities to cut expenses and increase savings?
Will you share your savings tips and ideas with the rest of us?
This contest will end on February 16 2013 – prizes include:
- First Place winner will receive Two cases of MRE’s courtesy of Camping Survival, A Wonder Junior Deluxe hand-mill courtesy of Kitchen Kneads, $150 gift certificate for Fiocchi Ammo courtesy of LuckyGunner Ammo, A Big Berkey Water Filter System courtesy of TruPrep Emergency Preparedness and a one year subscription to Personal VPN service courtesy of unspyable.
- Second Place: A $200 gift certificate for any order from their store courtesy ofShepherd Survival and A Doom and Bloom Mini Trauma Bag courtesy of LPC Survival.
- Third Place: A Bar-ricade door bar courtesy of My Locksmith, Inc.