Save money like the pros and really plump up your wallet.
How to Save Money
I come across lots of tips for saving money. Some of them are brilliant, but some are downright ridiculous. The worst suggestions I’ve read lately are to raise your own chickens, grow a mushroom log under the kitchen sink, and stop eating a couple days a week! In this article I’ll share my favorite, practical money-saving tips for ordinary folks. None of them require you to build a chicken coop, get closer to fungus spores than you really want to, or starve yourself on a weekly basis.
I like to think about personal finances from a business perspective. We can get some industrial-strength tips about money management from the big boys and girls at large companies. After all, corporate finance is really just personal finance on steroids. There are five broad tactics I’ll discuss to help you save money at home.
Negotiate to Save Money
The first tactic for saving money is to get comfortable with negotiation. It doesn’t matter whether it’s your gym, hair salon, landlord, or mortgage lender. Make “ask, ask, ask” your new mantra for any bill or purchase that you think could be up for discussion. However, do some homework first and be sure to speak to the right person—someone like a store manager or owner who has the authority to lower a price. Let them know in calm, clear language that you’re cutting back your expenses. If you know their competitor’s prices are lower, mention it. If you’ve looked at renting less expensive apartments that are bigger than yours, give your landlord the specifics. If you’re having trouble meeting your mortgage obligation, let the lender know your potential risk of defaulting on the loan. You get my point; bring the reality of the situation to the other party. Then ask if they have a less expensive payment option or would be willing to work with you to keep your business, instead of losing it.
If you’re buying a big ticket item like a new washer and dryer, and can pay cash, ask if they’d consider giving you a cash discount. That works best at smaller mom and pop stores as opposed to the huge national “big box” retailers. Most stores pay anywhere from two to five percent in transaction fees when you pay with a credit card or an in-store financing offer. Retailers who accept credit cards are generally not supposed to advertise that they will discount the price if you don’t pay with plastic. But they aren’t obligated to turn down any offer that a customer puts on the table. You never know what the other side may be willing to do for you in our current economy.
Lower Your Taxes to Save Money
Another big way to save money is to lower your taxes. For some, taxes are the biggest bite taken out of their income. Take every deduction, credit, and exclusion that you can to legally lower your tax liability or to increase your refund each year. If your income has been reduced, you may qualify for tax benefits that are unfamiliar to you. Do some research to see if you qualify for brand new benefits such as the First-Time Homebuyer Tax Credit, the Recovery Rebate Credit, or the exclusion for forgiven mortgage debt. If you want to learn more, Money Girl show 113 was about the homebuyer tax credit and you can also do a search at irs.gov for new tax law changes. Episode 159 is devoted to ways to reduce your taxes, so head on over there for more.