KNS Financial

Personal Finance From a Biblical Perspective

20 Money Saving Tips for Low Income Earners

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[The following is a guest post giving 20 great money saving tips for low-income earners!]

Many people across the country are having a hard time making ends meet at the end of each month. With the price of many goods and services increasing at a faster rate than people’s pay checks, it is easy to see why this has become an overwhelming problem for so many families.

This can be especially true for low income earners, who are already feeling stretched to the limit and have very little resources left after paying just their basic bills.

20 Money Saving Tips for Low Income Earners

The good news is that there are some basic ways that everyone can save money on their day-to-day purchases. Below is a look at the top twenty money saving tips that are perfect for anyone, including low-income earners.

Money Saving Tips

  1. Change to a bank account that does not charge account-keeping fees or requires a minimum balance in their accounts. Some banks also refrain from charging low-income people additional fees like overdraft charges.
  2. Look for ways to save on transport expenses like walking instead of driving, when possible, or using public transportation instead of driving yourself.
  3. See if a couple of co-workers are willing to carpool, so everyone can save on transport costs.
  4. Eliminate your Pay TV services and use Free-to-Air TV instead.
  5. Instead of stopping at the coffee shop for coffee on your way to work, make your coffee at home and take it with you or wait until you get to work.
  6. Instead of heading out to the movie theater where tickets are fairly expenses rent a movie or watch a free movie at home.
  7. Never run the washing machine or dishwater unless you have a full load to help reduce your water bill.
  8. If you have a cell phone plan already, you may be able to eliminate your home phone, or consider running your phone through your internet service at a reduced rate.
  9. Shop for sales items at the grocery store and purchase items in bulk, to get the cheaper per unit price.
  10. Rent books and movies at your local library instead of purchasing them at the store. They usually have a wide selection to choose from.
  11. Limit the number of times you eat out each month and choose to eat at home instead. When you do eat out, be sure to ask for water instead of more expensive drinks, and skip dessert at the end of your meal.
  12. Consider making homemade gifts or offer to provide a service, such as dog walking, instead of going out and purchasing a gift.
  13. Lower your energy bills, by turning down your thermostat when you are not home, turning off your air conditioner when you go to work, turning off your lights and TV when you are not in the room, and unplugging your appliances at the outlet when not in use.
  14. See if you can group all of your insurances into one package to get a reduced rate on all of them.
  15. Sell and buy items at a local consignment shop or thrift store when buying clothes, household furnishings and miscellaneous goods.
  16. Contact your utility companies and ask about bill smoothing to keep your bills consistent and budget better.
  17. Check your bank statement each month and make sure that no additional charges are added on. If you do have additional charge find out why and if they can be eliminated.
  18. Instead of going to the gym, start a walking club with some of your friends, or purchase inexpensive fitness videos that you can do at home.
  19. Purchase generic-named medications, cleaners and groceries instead of the more expensive brand-named products.
  20. Trade services with someone else. For example, maybe you can babysit a friend’s children in exchange for a manicure or haircut.

Combined these twenty money savings tips can help you spend less on the everyday items you purchase, so you have more money available. While not all of the tips may be applicable to you, just doing five or ten of them on a regular basis can help you save a lot of money over the course of just a few weeks.  You should always be on the lookout for ways to save money, no matter how much you earn.

Why You Should Rent a Car for a Long Trip

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The holiday season is upon us and for many of us, that will mean long distance travel. Every holiday season me and my family travel from Georgia to New Jersey, and other parts of the Northeast. Since there are four of us the cost of airfare is out in orbit, especially at the holidays. So each year we make the approximately 2,000 mile roundtrip by car.

One thing we have found to be an incredible benefit on these trips is to rent a car rather than to use our own. On the surface, it may seem that using your own car would be less expensive, but have we found that the exact opposite is true. And not only do we save money by renting a car, but there are other advantages too.

Rental Car for Long Trips

A Rental Car Is Probably Newer Than Your Own Car

My wife and I don’t like having car payments, so our cars are – shall we say – more mature than average. For that reason we don’t like taking our cars on out-of-state trips. But even if our cars were newer, we would still rent cars for long-distance travel.

Rental cars tend to be late-model, usually not more than one year old. They also typically have fewer than 20,000 miles. That makes them more reliable than a car that’s a few years old. It also generally means the latest safety features and maximum fuel efficiency. You need all of that on a long-distance trip.

You Can Choose The Vehicle You Need

Another advantage of renting a car is that you can choose the vehicle that’s most suitable for the kind of trip you’re taking. For example, on a long trip fuel efficiency would be really important. You can choose a car that gets better mileage than the car that you own. You could also choose a larger vehicle if you’ll have an excessive amount of luggage, which is usually the case when we travel for Christmas.

Mechanical Breakdown

This is a factor that has always been super important to me. When you’re traveling on a long trip, especially during the winter months, you can never ignore the possibility of having a mechanical breakdown. If it’s your car that has the breakdown, your only choice will be to interrupt your trip and have the car repaired.

There are two issues here, cost and time. On the cost side, the repair may be only $200 – but it could also be thousand dollars. That’s a lot of money to be spending when you’re already paying a lot for the trip itself. In addition, the repair work may require an extra overnight stay in a hotel, which will add still more to your cost.

Then there’s the time factor. If you are on a tight schedule for your trip, you may not have time for a one or two day delay for repairs. And near the holidays it can be difficult to even find a mechanic, not the least of which because you’re from out of town and not likely to be a repeat customer. A single repair episode could compromise the whole trip.

If you rent a car and there’s a mechanical breakdown, all you need to do is call the 800 number that the car rental company provides and they will take care of everything for you. They will tow in a replacement vehicle and you can be on your way while they tow out the broken vehicle. It will cost you nothing and it will take no more than an hour or two and you will be back on your way only having been slightly delayed.

This alone is worth the price of paying for a rental car, but there’s more.

Lower Cost To Rent A Car For A Long Trip Than To Drive Your Own

I can rent a Toyota Corolla in Atlanta for one week and drive back and forth to New Jersey for the holidays for a base price of $175 through Hertz. Now there will be add-on fees, but I also have a discount through Triple A, so let’s say the final price settles at $200 for the week.

Now let’s compare that to driving one of our own cars instead. We may save on the rental fee by using our own car, but there is a hidden cost to doing that.

The Internal Revenue Service allows 55 cents per mile as a mileage allowance. Since the trip is about 2,000 miles round tip that would mean – according to the IRS – that we’ll have incurred expenses of about $1,100 if we use our own car for the trip. But some of that is gas, so let’s back that out. 2,000 miles would mean using about 100 gallons of gas; at about $4 a gallon, the total cost for gas is about $400. If we subtract that from $1,100 we still have $700 left. Let’s cut that in half to allow for the fact that some of the IRS allowance also includes other auto costs, like insurance.

That leaves us with $350. That’s a rough estimate of the wear-and-tear costs on our own vehicle for a 2,000 mile trip. Even though we can save the roughly $200 car rental fee by driving out own car, the cost of using our own vehicle is at least $350. That’s what we’ll eventually pay for repairs and replacements by using our own car for a 2,000 mile trip.

By using this estimate – crude as it admittedly is – we’re actually saving $150 by renting a car instead of using our own. Saving money, in addition to having greater peace of mind, is something I’ll choose every time on a long trip.

Do you ever rent cars for long trips? Do you agree that you save money (and hassle) when you do?

An Emergency Fund: The First Step to Financial Independence

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When we think of financial independence we often think about having a lot of money, of having a fully loaded retirement plan, a house that’s paid for and being able to spend money any way we want.

That may be financial independence on the high end, but you’ll never get there without taking a few less glamorous steps beforehand. One of those steps is creating an emergency savings fund. It will be the foundation of everything that comes afterwards.

Why An Emergency Savings Fund

Emergency Savings Fund

You May Not Be Ready For Stocks, Bonds And ETFs – Yet

Talk about financial independence often focuses on investments. Where’s the market going? What are the hottest stocks? What winning ETF will get me to my investment goals? How much do I need to save for retirement?

That’s all good, but if you don’t have any of those activities going right now, you need to back up and do something more basic. You need an emergency savings fund. As boring as it sounds, an emergency fund does several things that will start you on the road to financial independence:

  1. It gets you a basic savings balance
  2. It proves that you can save money, which is critically important if you never have before
  3. It provides a measure of insulation between you and financial desperation
  4. It lays the foundation for greater savings—and investments—later
  5. When you have investments, an emergency fund will keep you from having to liquidate those investments to pay current expenses or emergency situations

I think it’s safe to say that until you get the items above going, financial independence will never be much more than a dream.

Starting Off On The Wrong Foot

Financial resources have three main components in most households: income, savings and credit. Each of these can be used to pay obligations, but they aren’t all equally up to the task.

1. Income. This is the preferred resource to pay obligations, especially current ones. When your income meets your current obligations your household budget is under control and you’re ready to move on to better things.

2. Savings. In a perfect world, savings should be available to back up your income in the event that it isn’t enough to cover your immediate expenses. You’re in a good place if that doesn’t happen too frequently, but it’s there if you need it.

3. Credit. Credit should be used only for the purchase of major assets that will provide you with benefits for a long period of time. It’s a way to spread the expense of high cost items over a longer time frame. Houses, cars and a college education are the best examples, and even then only if they aren’t taken too far. Credit can also serve a secondary role as the back-up to your savings, in the event they won’t cover a large run of expenses.

Income and savings are the preferred financial resources, with credit as a need-to-use-only resource. The problem is that for many people, it’s not savings that backs up their income, but credit. This comes about because while savings take time, effort and sacrifice, credit comes about with the swipe of a card.

The need to save money is skipped entirely. That’s bad because having savings, and at least an emergency fund, has fantastic advantages…

An Emergency Savings Fund = ”Sleeping Money”

Have you ever lost some sleep, or even an entire night’s worth, worrying about paying your bills? More specifically, this is likely to happen when you really can’t pay your bills. This is what happens when your budget is stretched too tight, when there aren’t enough resources to meet obligations.

If nothing else, having just a few thousand dollars sitting in a savings account might bring you the blessed sleep that you need to live your life.

Debt Can’t Go Away Until You Stop Using It

An abundance of debt is usually accompanied by an absence of savings. Is there a connection? I think so.

When you have no savings, you’re forced to rely on credit to cover those income shortfalls. And when you’re constantly tapping your credit lines, you’re going deeper into debt.

Most people who are in debt would do just about anything to get out, but that can’t happen until you stop using credit. The only way to do that is to live on less than you make and be prepared to cover emergencies with your savings—a true emergency fund.

Being Ready For Trouble

When you have savings—at least an emergency fund—you’re ready for problems. It’s not that you want them to happen, but rather that you’re prepared if they do. Any trouble you face will be that much easier to deal with if you have a savings cushion to back you up. Savings give you options, and that can take the panic right out of a troubling event.

The more you have saved the more trouble you’re ready to deal with. But at a minimum, you should have an amount sufficient to cover predictable shortfalls, such as major car repairs, medical deductibles, or a job loss.

When you’re ready for these, life becomes more predictable, and that puts you in better control – it’s almost like having a self-funded insurance policy.

How To Get There

There are different ideas as to how much you should have in emergency fund, but I think the best is having at least an amount equal to 30 days of living expenses. If you have 30 days of expenses saved, you’ll have enough to cover the first month of a job loss, which will give your unemployment checks a chance to start showing up.

How do you reach that goal?

  • Start by selling anything you don’t need with a garage sale or on Craigslist, and banking the money.
  • Bank your bonus, your tax return or any gift money you receive.
  • Bank 10% of your net income for the next ten months, or use some other percentage strategy that will get you there. A temporary part-time job can help with this too.

Any difficulty you’ll encounter in building your emergency fund will be less than the trouble you’ll be getting out of by not having one. That’s the first step to financial independence. Everything else will flow from that.

7 Simple Ways To Save Money

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The following is a guest post about simple ways to save money…

It’s important for everyone to save his or her money. In the current recession, millions of Americans have devised clever ways to spend less while doing the things they love.

Saving money is one the best ways to get ahead in your finances. By stashing away cash, you’ll be able to achieve more of your financial goals.

Here are seven painless ways to save money while living better.

Make Energy-Efficient Home Improvements

Completing energy-efficient home upgrades is a fast, easy and affordable way to save money on utilities. Install attic insulation, and caulk cracks around windows that cause year-long energy drains. Put up insulating window coverings that block out the summer sun and also prevent heat from escaping in the winter.

Install a programmable thermostat to save money on utility bills, and keep the air conditioner at 78 degrees to avoid unnecessary energy use.

Saving Money

Check Your Auto Insurance Coverage

Insurance is one of those unavoidable expenses that can really impact the household budget. Fortunately, there are several simple ways to earn big discounts. Make sure that you aren’t paying for coverage that you don’t need. Bundle coverage for multiple vehicles or insurance policies.

A multiple-line discount is a great way to save on annual premiums. Try combining auto, life or home insurance. 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 sizeable annual discount. Remember to check your auto insurance quote online regularly.

Pay Off High-Interest Debt

Paying down high-interest debt isn’t a quick way to save money, but it will save you quite a bit down the road. Lowering the amount owed on credit card balances and personal loans will improve your credit score and help you get better interest rates in the future.

Instead of making the minimum payment and spending hundreds in interest every year, get proactive. Make larger or more frequent payments to slash debt faster. After your debt is gone, make payments to yourself that you can put in a savings account and use to achieve financial goals.

Cut Down on Nonessential Services

Every month, the average American pays a considerable amount to maintain their phone service and cable TV access. Check your coverage to find out exactly what you’re getting. If you’re paying for TV channels or telecommunication services that you don’t use, switch to a different plan.

Compare online streaming services that allow you to watch your favorite shows for little or no cost. Current shows are often available on demand the day after the episode airs on TV. If there’s an option that is free or costs less than the services you currently have, it’s time to switch providers.

Find Discounts on Essential Purchases

Whether you need to fill up the gas tank or decorate your home, there are plenty of ways to save money. Always buy items when they’re on sale. Look for discounts, two-for-one deals and rebates on sheets, curtains, blinds, towels, socks and personal items.

Everything will go on sale sometime. If you need to make a big purchase, wait until you find a sale. When shopping for school clothes or work apparel, look for seasonal specials, introductory offers and used items.

Find Free Events

Saving money doesn’t mean that you have to stay home. Look for takeout deals and specials that restaurants might have on slow days. Check the local newspaper for free cultural activities and events that are open to the public.

Instead of paying to exercise in a gym, go to a local park, or find nearby bike trails where you can exercise for free.

Do It Yourself

Creating gifts for friends and family and doing things yourself are great ways to save. If you need to paint your guest room or upgrade your kitchen, simple DIY projects will save you a lot of money. However, even frugal homeowners need to know when to call a professional for help.

Attempting to complete critical repairs can cost more if they aren’t done right the first time.

Saving money on day-to-day expenses is easier than you think. Once you start saving, you’ll be inspired to find more ways to stash your cash and to reduce the cost of everyday services.

photo credit: FreeDigitalPhotos.net

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