Top Seven Ways To Save Money

by Sandy L on August 9, 2012

I’ve been asked to come up with my list of the top ways I’ve saved money over the years.   When I think of my big budget busters, they have always been, house, car, and food.  I’m going to try and take a fresh twist on the subject, with the premise that  spending a little more on the front end helps you make better decisions with those big ticket purchases.

1.  Buy A Smaller Home

We live in a 1700 sq foot home and although it seemed huge when we first bought it, it’s surprising to me that the median home size of new homes being built is now nearly 2200 square feet.  I didn’t realize it at the time because I’ve never lived in a place bigger than 800 ft my entire life, but buying a house that was smaller than the median average was one of the most frugal decisions we’ve made.  A rough estimate is we have been saving at least a thousand a month in extra cost of having something larger.  Small homes require less cleaning, require less yardwork, have lower utility bills, lower tax bills, need less furniture and require less maintenance than a bigger home.  The home we have no longer works for the multi-generational family model we would like to move to someday, but we spent the last 12 years living in a home that’s just the right size for our family of 4.  That’s over a decade of cost avoidance that I’m pleased to have had and I didn’t feel deprived doing it either.  The other side benefit in my area is that homes at a lower price point usually have a higher turnover rate than their more expensive counterparts. Smaller ranches sell like hotcakes here because they are under $200K.

2. Check Your Auto Insurance Coverage

Insurance is one of those unavoidable expenses and it’s a significant portion of our monthly budget.  Between auto, health, home and life insurance, we pay a hefty sum out of pocket every month.  Thankfully a good chunk comes directly out of our paycheck so it doesn’t feel as bad as it would if I had to write a check for $5000 for health insurance.  My insurance costs have gone up over time because for me, it’s a way to level load spending for catastrophic events.  I have more insurance today than I ever did because now I have something to lose. I have assets and children and people’s future’s to think about.  For my home, auto and umbrella insurance, I bundled the policies together for additional discounts.  A multiple-line discount is a great way to save on annual premiums.  This also works with renter’s insurance policies that are purchased through your auto insurance provider. Complete a defensive driving course to remove points or to earn a sizable annual discount. Remember to check your auto insurance quote online regularly.

The unknown scares me. Insurance at least makes me feel better that if something terrible happens, I don’t have to worry about the cost of the catastrophe top of everything else.  I may air on the side of being over insured at this point, but it’s one of those voluntary expenses that I think is worth the piece of mind.  They say that  unexpected healthcare expenses is one of the leading causes of financial ruin.  After working so hard to educate myself so that I could get a good job and then scrimping and saving for over a decade, I just can’t see a reason why I would not take precautions against having all that toil and effort get wiped away with a single event.

 3. Do an Extended Test Drive

How many of you have known a person who HATED their car? I’ve known quite a few and in some cases, thousands of dollars were lost because they just couldn’t stand the fact that the car was a coupe or had too many blind spots or whatnot.  Cars are usually the second most expensive things people buy.  Have you ever thought of renting the car you wanted for the weekend and REALLY test driving it before committing to it for 5-10 years?  I think you could really learn something from that experience.

Similarly, if you’re moving to a new and unfamiliar area, have you thought of renting in your target area first before taking the plunge into house hunting?  You can learn a lot about a place after you’ve been there for 6 months.  It really is amazing how many people put their trust in selecting neighborhoods entirely in their realtor’s hands.

4. Ignorance is Bliss

Another car or house hunting tip I have used is the ignorance is bliss tactic.  For my first new car and home purchase, I refused to look at something that was outside of my price range. Back in the day when I had my bottom of the line Toyota Corolla, I was totally and hopelessly in love with my car.  My soon to be husband would always crack jokes at my little crappy car with no pickup.  I didn’t really get it until I took a drive in his Mazda Miata.  When I got back in my car I was like…what’s wrong with my shifter and clutch? Why is it so loose all of a sudden?  He said “Nothing, you just now know what a nice stick shift is supposed to feel like.”  Initially, I learned to drive on a real bear of a 70’s Firebird.  It was very hard to drive. It stalled if you didn’t tickle the clutch, it had no power steering so it had the added benefit of giving you an upper body workout when you drove it and last but not least, it was a monster gas guzzler.  Going from that beast to a Corolla was like a dream.  I didn’t realize it wasn’t the best car ever until I drove something even nicer.  I stopped driving the Miata after that experience because I still loved my car and I didn’t want to ruin my experience driving it.   And on how many home shows do you see a couple finding their dream home once they upped their budget $50,000. Suddenly there it was, the dream home.  Well, maybe it is just a perspective thing.  Yeah, it’s way better because it’s a different product altogether.

5. Start with the used or low end version of something

My mom would always tell me to buy the best thing I could afford so that it would last longer.  Now she never throws away anything and the word “upgrade” just isn’t in her vocabulary.  In general I agree with that premise on items that you know you will use all the time. I’m not going to buy a low end mattress because I sleep on it every night. On the other hand, with discretionary spending like hobbies, I generally do the opposite.  I will start with a cheap version of something and made sure I liked it before I upgrade to an item that had more bells and whistles.

My first mountain bike was nicknamed the “paper boy” bike.  It weighed a ton, had no shock and was generally not suitable for technical riding.   I rode that sucker for 2 years before I upgraded to a good bike.  My biking ability improved dramatically after I bought my nicer bike, but I would have hated spending over $1000 on something that could’ve easily turned into a towel rack if I didn’t take to the sport.  Buying something with the intention of using it doesn’t make it so.   That’s why there are so many treadmills out there collecting dust. If you really want a treadmill, try running outside for a while, say 2 months consistently before making the plunge for the indoor model.  If you find you enjoy running, then go for it.  If you hate it, then it doesn’t matter how expensive an item you buy, it probably won’t be used to it’s full potential.

6. Find Free Events

I spent a summer with the kids doing free stuff.  We spend almost every weekend either at the local playground, the lake down the street or the museum we were already members of.  My kids didn’t notice at all.  As long as they were somewhere having fun, they didn’t mind if it was in the backyard running through a sprinkler or climbing up the monkey bars at a park.  Fun is fun and it doesn’t have to be an expensive experience to be a good time.   Some of our local venues also have a community day where entry to those places are free if you live in the region.  Our nearby zoo let’s moms get in free on mother’s day.  There are lots of options to cut costs if you pay attention.

7. Do It Yourself

I have always enjoyed learning how to do things around the house on my own. It’s amazing what you can learn from google.  I know I’m not a master carpenter and one may cringe if they ever saw my work, but I like having the knowledge of how to build stuff. I’ve found that with practice each subsequent project gets a little nicer.  The chicken coop was my first attempt at framing a freestanding building.  It’s not perfect, but the chickens don’t mind and I learned a ton.  I find that that knowledge can often be translated into other areas as well.  I want to keep learning so I don’t regress.  It’s not only a money saver but also a character builder.

After all this summarizing, I find that living a more frugal life is more of a lifestyle choice than task to check off of your financial planning to do list. Frugal living should never be just about the money.  You should be selfishly getting something else out of it besides improved cash flow.  It can be learning, piece of mind, sanity, flexibility, calm or all of the above. Readers: What non-monetary benefit do you get out of your frugal living efforts?

{ 15 comments… read them below or add one }

Money Beagle August 9, 2012 at 8:57 AM

Two things about item 1 (getting a smaller home). One, you have to really make sure that this will work for you. If you figure ‘Ah, we’ll just make it work’ when it comes to getting rid of stuff and downsizing, saying it and putting it into practice are two different things. If you realistically can’t do this and make it stick for the long term, you’re just going to end up feeling cramped and likely hate the house you live in. For people with kids moving out and such, this is much more workable.

Second point is the cost. You’re going to pay moving costs, closing costs, fix-up costs, moving costs and other costs. You’re likely going to have to shell out a big amount of money, which seems counterproductive to the idea that you’re saving money, so you should be aware of this, and know exactly how long it will take before you’re recouping your costs. For example, if moving costs you $10,000 and you’re able to knock of $400 in expenses, you really won’t see a benefit for around two years. Understand and plan this.

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Sandy L August 10, 2012 at 2:04 AM

MB – yes, you are right. Making the wrong home decision is pretty hard to reverse easily because of the costs of selling and moving. My husband and I have been city dwellers for all our lives, so the size house we had purchased seemed big to us even though it is considered too small for most suburban families these days.

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Miss T @ Prairie Eco-Thrifter August 9, 2012 at 12:20 PM

Great list. We have been buying used cars the last number of years and it has worked really well. We have saved a ton of money and the cars have lasted just as good as if we bought them new.

We also try to do a lot ourselves. We have been spending the majority of our summer doing yard landscaping that we could have easily hired someone to do. It is great exercise and it saves money.

I do think MB has a good point though. You really have to have a good perspective on your own situation to see if you are picking the right option. You don’t want to make the wrong choice.

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Sandy L August 10, 2012 at 2:06 AM

Miss T – yes, used car..that would have been a great add. I have had good luck with used cars as well, but my husband is more of a buy new guy and keep the car a long time.

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Mutant Supermodel August 9, 2012 at 12:45 PM

My version of #4 is the clearance racks in clothing stores. I ALWAYS hit the clearance racks before anything else. it works many times, especially when I’m shopping for general things like play clothes for my daughter or work tops for me. When I have to find something very specific, a white blouse for me or blue jeans for the youngest, it gets trickier. But at least I know I started with the lowest priced stuff in the store first!

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Sandy L August 10, 2012 at 2:09 AM

Mutant – that’s a great tip as well. I live pretty far from any good shopping venues so I don’t hit the sale racks and thrift stores like I used to when I lived in the city. I’ve now replaced that with…shop for clothes less often. It also only works for me with tops as most pants I have to special order in tall sizes.

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Nicoleandmaggie August 9, 2012 at 1:13 PM

Great list!

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Lance @ Money Life and More August 9, 2012 at 8:52 PM

The house idea is huge! I’m living in a house well below my means and it is paying some massive dividends in the form of having money to spend on paying down our loans!

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Sandy L August 10, 2012 at 2:11 AM

Lance – that’s great and you make a good point. What you can afford for a a mortgage and what you need are not always the same things.

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Amy Turner August 10, 2012 at 8:19 AM

I would opt for a smaller house in a moderately big lot. This way, if there comes a time when I need to build up something (like a second garage or back porch), I will still have the space to construct. I don’t want to be restricted to build because there is no more room to do so. All within my budget though.

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Tie the Money Knot August 14, 2012 at 1:18 AM

This is nice list of ways to save, and I especially like the one you started out with. People don’t need 4000 square foot houses, or McMansions of the like.

Buy what you need. The notion of a “dream” house is one that harms the finances of too many people. Big ticket purchases are where the big savings can be, and a home is Exhibt A in that regard.

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VA Tax Preparation August 16, 2012 at 3:42 AM

insightful post.really helpful yopur tips and suggestiond. thanks for the posting..

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Kris @ Everyday Tips August 17, 2012 at 10:37 AM

For me, researching bigger ticket items has really paid off. Of course, it is time consuming, but when it comes to cars/houses/appliances, it can make a huge difference. Plus I usually end up being really pleased with the final product because I have read so many reviews and such on whatever the item is.

Great list!

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Crystal @ Broke-Ass Mommy August 17, 2012 at 8:31 PM

Great list! I know if we had to cut back, housing and food are our biggest categories. And ignorance is totally bliss. If we hadn’t ever walked into the floor plan of our dream house, we would never had signed up to have ours built…but oh well. At least we’ll have our dream house. I can think of worst wastes. I just have to promise myself to stick with my crappy Chevy Aveo until it finally dies. ;-)

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Little House August 20, 2012 at 10:06 AM

Terrific list. We’ve bundled our insurance and saved quite a bit on our auto coverage. Of course it also helps that our car is now 7 years old and I plan to keep it at least another 3. ;) As for a smaller house, 1700 sq ft seems plenty for a family of 2 or 3 and possibly even 4 as long as you don’t have too much stuff. We currently live in an apartment that’s just over 1600 sq ft and it’s very roomy for two people and three cats. However I’ve been yearning for a dog and I realize we just don’t have the room (due to no yard) to add another animal to the mix. Will have to wait for a house!

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