Let’s face it, Americans have a big problem saving money. The saving rate in the U.S. has recently become negative for the first time in recorded history. So we need some help. Periodically, I will list some examples of potential methods to use to save money.
Save Money Tips
- Load up on necessities at the dollar store
- Load on on non-perishable often-used items when they are on sale
- Buy generic if you can
- Try low cost entertainment alternatives such as: walks, tennis, go to the park, etc.
- Eat out less often
These are just a few of the many to come.
You might want to check out this blog.
http://oldprof.typepad.com/a_dash_of_insight/
He makes some valid points when it comes to the negative savings rates.
Also, picture something like this.
Person A:
Mortgage: $850/month
Utilities (electricity, heat, water): $250/month
Food: $350/month
If they had a brokerage account (not a traditional retirement account per se), and this account earned 8%/yr, and merely distributed the interest when necessary. That person would only need to have $217,500 in that account. Not pocket change, to be sure, but still very plausible, even to those who earn say $50k/yr.
In my personal case, I’d have to have $1,125,000 in such an account to offset my living expenses (merely because we have a shorter term mortgage than most folks bother getting – a 15 year mortgage). Keep in mind that I’m targeting $3.3 M so that I only withdraw 4%/yr.
Oh, and you missed a couple of non-necessities, such as cable/satellite TV. Don’t forget, an antenna from your local supplier, should only cost $150+, and that cost can be spread across your lifetime. Or, if you think of cable/satellite TV a “necessity”, you can simply get the $30+/month option for basic service instead of all the pay channels, etc.
If you live close to work, do you really need a vehicle? After all, you have initial cost of a vehicle, gas, maintenance, and insurance. Now, if you drive 2-3 times a month, and it only costs a couple hundred dollars use public transportation (i.e. bus, train, cab), you may just be better off not getting a vehicle.
Personally, I want my children to pay cash for a vehicle when they need one, but also have money left to take care of routine maintenance and repairs for it.