Saving money is a curious term with two meanings: 1) to spend less, as in “I buy things on sale to save money,” and 2) to physically place money where it is safe from being spent.
OK, that’s fine. But here’s the problem: It’s easy to trick yourself into thinking that 1 and 2 are the same. They are not, unless, of course, you stop by the bank to deposit into your savings the difference between what you would have spent on an item had it not been on sale. That’s one clever way to boost your cash stash this year. Here are eight more:
Tax yourself. Charge yourself a specific tax each time you make an ATM withdrawal. It might be $5 or $10. You decide. Whatever the amount, make sure you become a tough tax collector. No slacking, no IOUs.
Impose a moratorium. Select a specific denomination of currency, like the $1 or $5 bill, that you will not spend this year but save instead. Forbid yourself, and get very strict. Why not go with the $5? Your stash will grow so much faster if you absolutely refuse to spend any Abe Lincolns this year.
Hoard the coupon savings. Starting today, here’s the plan: When you shop for groceries, ask the clerk to total your order, and then pay for it. Then hand her the coupons and watch your total plummet. Since you’ve already paid, the clerk should hand back the cash equal to your coupon savings. If available, open a savings account at the bank branch located in the supermarket. It’s easy to stop on your way out to make a savings deposit. Even if it’s small, it all adds up.
Rack up rebates. They’re coming back in a big way, as retailers want to make their products appear cheaper without actually reducing the price. They offer a rebate knowing full well only a small percentage of consumers who buy the item will ever carry through.
No matter how small the rebate or complicated the process, promise you will not be among the lazy bunch in 2019. Apply for rebates; follow up; and then stash them as they arrive!
Drink water. Pay yourself a bonus, like a dollar or two, each time you eat out and opt for water instead of a pricey beverage. Don’t be a slacker in your obligation to pay up. And remember, no IOUs allowed.
Make a switch. For the next 12 months, opt to exercise outdoors instead of paying a gym fee. Identify a name brand you will leave on the shelf this year in favor of its store-brand equivalent.
Give it up. Pick one thing that you will sacrifice this year. Just cut it out. Stash the amount you would have spent on whatever it is — manicures, French fries, gourmet coffee, cigarettes — into your savings container or account.
You could always do your own manicure, swear off the junk food or brew your own coffee for a year. As for that smoking habit, just imagine all the dough for your stash if you were to give it up.
Trick yourself. Whenever you write a check, record the amount rounded up to the next dollar. Then deduct it from the balance. At the end of the month, reconcile and stash the “Oops!” overage.
Dear Mary: Two years ago, my mother loaned us $6,000 to help buy a house. She didn’t charge us interest on the loan, as she wasn’t earning any at the time. We have paid back $5,000 so far and will have the loan paid in full soon.
I insist on paying her interest on this loan. What is a fair rate? And how do I figure interest on this loan? Should I give her 10 percent ($600)? Or would I have paid more, if I’d borrowed the money from a bank?
Dear Brian: A $6,000 loan at 10 percent interest over 36 months would result in a total payback of $6,970. Interest is calculated each month on the outstanding balance. Or, if you were not making payments, it would be $600 per year, $1,800 total interest over three years.
Granted, your mom could not have earned that rate with the money in a savings account over the past three years. But you could not have gotten an unsecured loan for as little as 10 percent either. Ten percent would be a good deal for both of you.
Dear Mary: My husband says that it costs more to make ice in the freezer than to buy it in bags. I find that hard to believe. Do you know the answer?
Dear J.M.: Let’s say a 10-pound bag of ice at the store costs $2. Two dollars’ worth of water from your tap would be nearly 350 gallons at the U.S. average price of about 0.0058 cents per gallon — enough to make a lot of ice. You are already keeping the freezer at zero degrees F, so it will take no more energy to make ice in it than you’re spending now to freeze other stuff.
Your husband’s theory might hold water if he’s talking about buying a separate ice-making machine that will be an additional appliance in your home and draw its own electricity. Otherwise, I think he’s all wet.