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Staying Ahead in A Down Economy
By Leslie A. Smith
 It's
what you spend
As a Financial Advisor for over 20 years I'm often asked
about the differences between people that meet their financial goals
and those that don't. The single most important factor is not in
what people EARN but what they SPEND. Think Small, Save $700 per
month
The average household can save $700.00 per month in expenses—a
whopping $8,400 a year.
Let's take a look at some common budget busters:
- Cell Phone Bills—remember the WIC member that had just
received a phone bill for $600? She is now shopping for a better
provider or a better plan. You should too if your bill averages
more than $100 per month.
- Credit Card Late Charges—Many people pay off their credit
cards every month but get busy and send their payments late. Most
credit card companies charge a $25.00 "late fee" even
if you're only one day late. Set up a reminder system to get your
bills paid on time and avoid the late charge.
- Credit Card Finance Charges—The average consumer debt
is $5,000 to $8,000. Even if you have "low" interest
credit card of 9.9% this amounts to $66 per month or $792 in finance
charges. Sometimes people have money in the bank and still carry
credit card debt. This is an easy save.
- Magazine and Newspaper Subscriptions—Do you subscribe
to magazines you never have time to read? How much would you save
if you shared a subscription with a friend?
- Borrow vs. Buy—A client of mine was stunned recently
to discover she had spent almost $100 a month in books she read
once and could have borrowed from the library. Buy books you'll
reference borrow if you'll read once. Some libraries will even
order books for you for a nominal charge.
- Auto Insurance—Most auto insurance carriers will charge
you a higher premium if you commute long distances. When I became
self employed and stopped commuting I saved $150 a year on my
auto insurance. I didn't think of this until I got my next bill,
so I asked my carrier to rebate the overcharge and they did!
- Ask for Discounts—I'm always amazed at this one. From
hotels to car rentals to retail stores to homeowners insurance
its surprising what discounts become available when you ask.
- Eat In—Did you know that the average family of 4 will
spend $17 when they eat out at McDonalds? Eat at Mac's once a
week and you've spent $68 for the month. Do you go out for lunch
often? Lunch out is often $10 x 5days x 4 weeks =$200. Is it worth
it?
Make it Personal
If none of these work for you come up with your own list.
The key is to cut expenses you'll never miss. When people think
of reducing expenses they often first think of big-ticket items
like insurance. Don't skimp or cut back on important things like
insurance. Find savings in things you'll never miss. Personal luxuries
aren't always the best place to cut either. If a good haircut and
a manicure make you feel good but you don't mind going to the library,
keep your manicure and get acquainted with your librarian.
Put it in Writing
When clients come to me and say "we make a lot of money
we should have more" they're usually hoping I can increase
their investment returns. While this may be true we usually start
with their budget and expenses. Track your spending for one month
and see where your money goes. Then annualize your numbers and look
for places to save that you'll never miss.
Have some ideas on cutting expenses that you'd like to share with
the group? Send them to me in e-mail and I'll compile them for the
group.
About the Author
Leslie Smith is an independent financial advisor practicing
in San Mateo. As a general securities Principal she has earned and
holds professional licenses through the National Assoc. of Securities
Dealers. These include series 24, 7, 63 and 65, the registered investment
advisors designation. Additionally she maintains a California Insurance
license. As a registered branch office of SunAmerica Securities,
she has at her disposal a team of specialists that can offer the
financial planning tools and products most suited to the needs of
the individuals and businesses she serves. Her areas of expertise
include retirement planning, estate planning, investment management,
disability insurance and life insurance. Prior to becoming an independent
financial consultant she was a Vice President of Investments with
Bank of America. She has provided wealth building strategies to
individuals and businesses for nearly 20 years. Email her at lasNvst@aol.com
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