Saving money is my passion! I consider myself a value shopper although I do very little actual shopping. Do I do extreme couponing or camp out at sales? No, that would be a waste of time since I do very little shopping. My grade as a consumer is probably “F”. I am not a minimalist, but I try to maximize value from my purchases with very little work.
Housing is generally your biggest expense! It represents the highest percentage of your income and it cannot go away. Sure, you could move in with Mom and Dad, but you should pay them rent. I live in one of the most expensive areas (Los Angeles) of the country and housing can approach forty (40%) percent of income. Whether you rent or own your home, housing expense is increasing. Rent for a one bedroom in Los Angeles is about nineteen ($1,900) dollars per month.
When I rented my first apartment, my budget was equal to one week’s pay. If I used the same formula today, I could not rent even a one bedroom apartment in Los Angeles. What would I do? I would probably look for a two bedroom apartment and share the rent with a roommate. It may even make sense to rent a small home with three bedrooms and split the rent three ways. There are lots of solutions, if you are willing to look for them. Of course, the fallback solution is to remain living at home with Mom and Dad.
Transportation is another area that can cost thousands of dollars every year. It starts with the choice of cars! As a young man and a recent college graduate, I had a Pontiac. Gas was $.35 per gallon. No, that is not a typo! My commute was less than two miles and my wife’s commute was about a mile. We lived near family/friends and weekend trips drove locally. MPG was not even discussed! Repairs and maintenance were a minor expense. Everything has changed, but you can do something about it.
The average cost of operating a small or medium sized car according to AAA is roughly $7,000 to 9,500 per year. This includes fuel costs, maintenance, tires, insurance, license, registration, taxes, depreciation, and finance costs. These costs are an average of costs nationally for 2012 model cars. It is very likely the costs are higher now. What can you do to reduce your costs? You could buy a used car, pay cash or incentive financing and definitely drive less than the average 12,000 miles per year.
I believe that there are many solutions to reducing expense s and gain more value from your purchases. Whatever your strategy, you are in control of many of the changes you can make in your transportation costs. You have no control of the price of oil or gas, but you can reduce the number of miles you drive. I used to carpool, have paid riders, and even take public transportation. I generally keep my cars for a very long (17 years, last 2 cars) time which means no financing costs.
In my former careers, I drove an hour to an hour and a half each way to work. As a consultant, I drove significant miles per year because clients were spread out over Los Angeles. I carpooled or worked remotely in order to reduce my driving. Now I work only three (3) miles from home, but have a very economical (Toyota Hybrid) car. I bought it when it new and still was able to get it for dealer invoice. I bought my wife’s popular (Honda, Civic) car at $1,500 below dealer invoice recently too.
Many personal finance experts recommend buying used cars versus new ones. A three year old hybrid or economical car was only $1,000 less than a new one. Financing incentives were close to zero interest and I can keep my money earning more somewhere else. Everything is a matter of choices! I will sell my hybrid car in three years and pay off our Civic. We will be the rare couple in Los Angles with just one car with very little miles.
I may do very little shopping, but I still spend money on food, clothes, entertainment, insurance, cable (questionable), utilities, vacation, travel, dining out, etc. I am not a minimalist or a hermit! We like to enjoy life, but get value in my purchases. In some ways, I use Warren Buffett’s value investing style which is based on Benjamin Graham who introduced value investing (selecting stocks that trade at less than intrinsic values) in the late 1920’s.
I consider myself a value shopper and look for opportunities to buy products and services below intrinsic values. A fifty percent (50%) discount is my normal goal, but not my only criteria. I cannot achieve a fifty percent (50%) discount grocery shopping, but I can get the best prices on a routine basis. My wife shops at three (3) stores every week. She uses menu planning and a list when she shops. I also shop at Costco when warranted and Target for household goods to get the lowest prices.
When I do shop for clothes, I use discount stores such as Marshalls, et al. I also shop online quite often which makes it very easy to find the lowest prices. If I cannot find at least a fifty percent (50%) discount, I probably will not purchase it. I sometimes locate certain personal items online at deeper discounts, if I plan ahead. I even subscribe with some vendors (websites) to replenish automatically to get the maximum discount. Shopping bots (algorithm automates shopping) facilitates value shopping.
I try to take advantage of every discount, coupon or sale if possible. It helps that I have savings and it provides additional choices. I do not have to take the advertised offer, financing or marketing scheme. My credit union and bank offer me better than market financing and I can keep my money invested earning a higher rate of return. If not, I still have the choice to pay cash. It helps that I have a high FICO score and no debt. In less than three (3) years, I will have no mortgage or any car loans. All part of my value strategy!
If you are a value shopper, every purchase is a challenge! I do not spend money every day because I take my lunch to work. I limit my spending through a budget for dining out, coffees, ice cream or other treats. I enjoy a Starbucks and cookie once a month when I am at the bookstore (second library). I can catch up on my reading and enjoy a treat. It is relaxing and only costs $4.85. If you have not figured I out, I plan my purchases to maximize value. Getting value from my money is important to me!
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