Don't Get Into Debt - Save Money

They say that if you watch the pennies the pounds will watch themselves!

When you meet or hear about the very rich; do remember that they got there by mastering the art of saving or economizing. The Warren Buffett’s of this world did not make their billions by frittering away money. The wealthy realize that the money earned and saved rewards them in return. ‘Money saved is money earned’ is a dictum the wealthy understand.

For the vast majority of people, paying off debt and saving money can be done painlessly. That is to say, most people can pay off their current debt and start a saving fund without making major changes to their current lifestyle. How can this be done? By simply rearranging how you spend your money.

Although we don't often think about it, there is an art to spending money efficiently. Like any skill, it's a matter of study and practice to get better at it. While some people are better at picking up the skill than others, anybody can easily learn the basics of this art which can save them thousands of dollars a year.

Let’s take an easy to understand example. Let's say that you purchase a cup of coffee on the way to work everyday at a local shop for $2.00. This would meant that you spend $40 (20 days x $2) a month. Most people would probably do this without even thinking twice about it.

Now if you made the same cup of coffee and placed it into a thermos each morning before you went to work and took it along with you, the same coffee it would cost you about $0.50 a day. That adds up to a total of $10 a month. By making your own coffee instead of purchasing it at a store on the way to work, you save $30 a month (over $350 a year) without giving anything up (you still get your coffee everyday). All you have done is rearranged the way that you spend your money.

Let's take another example. You have your phone service and pay a certain amount each month for it. But are you getting the best deal on your service for the way you use the phone? Chances are you aren't, but the phone company isn't going to tell you that on their own. Most people can save over $100 a year on their phone service by calling their phone company and signing up with a discount or bundled plan geared toward the way they use the phone as opposed to the standard plan with extra options that most people have. Here again, you are getting the exact same service you currently receive, but are paying less for it by rearranging the service to your advantage.

There are literally hundreds of ways that you can rearrange the way you spend money. In the process, you will get the same goods or services that you are currently receiving at a fraction of the cost that you are currently paying. The money saved can then be put forth to eliminate your current credit card debt and start a savings plan. All it takes is a little understanding of the art of spending efficiently and to actively look for ways you can rearrange how you spend your current income to make your purchases more efficient.

This write-up is about various methods of SAVING MONEY, i.e. avoiding spending money unnecessarily. To a lesser extent it's about SAVING MONEY in the sense of saving-up money, collecting and stashing away money so you have a lot of it, but this latter concept is often a consequence of the former.

Being mean and stingy with money is an art and a virtue, and is often misquoted. The moral is: Be mean about money but be generous to people.

Tips around the Home:

So far, we've looked at ways of how to save money in banks and shops, but there is a surprising amount we can do around the home to cut down on costs without cutting corners. For instance:

Don't leave your television on standby. Turn it off from the mains, as leaving it on standby actually uses up quite a bit of juice.

Use energy-saving light bulbs - they're planet friendly too. Incandescent light bulbs are outdated; 95 percent of the energy used goes to heating the bulb, adding unwanted heat to your home in the summer. Replace your five most used light bulbs with ENERGY SAVING compact fluorescent bulbs to save $60 each year in energy costs. These light bulbs use two-thirds less energy and last up to 10 times longer. Use dimmers, timers, and motion detectors on indoor and outdoor lighting.

Switch radiators off in the summer.

Only have the heating on for long enough to heat the water in the winter. Put it on for an hour before you get up in the winter, so the bedroom is warm for getting dressed, and then for about three hours in the evening.

Switch lights off in rooms you're not using.

Turn the thermostats down 5°C and avoid using electric blankets as they are real energy guzzlers.

In the summer, open the windows; turn off the fans and air conditioners until you absolutely must go to sleep.

Activate "sleep" features on computers and office equipment that power down when not in use for a while. Turn off equipment during longer periods of non-use to cut energy costs and improve longevity.

Pay all bills by direct debit. You usually get a slight saving for paying this way. If you can't pay DD, pay through your bank, not via the post as it will save the price of a stamp.

Use Solar panels wherever possible. If it is your own independent house have a solar panel for at least heating up the water. You will get hot water 24 hrs a day. The investment will pay back in a couple of years.

Buy books second hand.

Here are Some Tips on How You Can Save Money in Other Areas of your Life:

There are ways you can cut back and increase cash on a regular basis without resorting to extreme measures. Below are some tips for areas in which you can save without necessarily compromising quality and/or service:

Airline Fares
-you can lower the price of a round-trip air fare by as much as two-thirds by making certain your trip includes a Saturday evening stay over, and by purchasing the ticket in advance. Plan your travel. If it is not planned try last minute online auction of tickets.
-to make certain you have a cheap fare, even if you use a travel agent, call all the airlines that fly where you want to go and ask what the lowest fare to your destination is.
-keep an eye out for fare wars. Be prepared to act quickly.

Car Rental
-since car rental rates can vary greatly, shop around for the best basic rates and special offers.
-rental car companies offer various insurance and waiver options. Check with your insurance agent and credit card company in advance to avoid duplicating any coverage you may already have.

New Cars
-you can save thousands of dollars over the lifetime of a car by selecting a model that combines a low purchase price with low Halal financing, insurance, gasoline, maintenance, and repair costs. Ask your local librarian for new car guides that contain this information.
-having selected a model, you can save hundreds of dollars by comparison shopping. Call at least five dealers for price quotes and let each know that you are calling others.
-remember there is no "cooling off' period on new car sales. Once you have signed a contract, you are obligated to buy the car.

Used Cars
-before buying any used car, compare the seller's asking price with the average retail price in a "bluebook" or other guide to car prices found at many libraries, banks, and credit unions.
Have a mechanic you trust check the car, especially if the car is sold "as is."
-consider purchasing a used car from an individual you know and trust. They are more likely than other sellers to charge a lower price and point out any problems.

Auto Leasing
-don't decide to lease a car just because the payments are lower than on a traditional auto loan. The leasing payments may be lower because you don't own the car at the end of the lease.
-leasing a car is very complicated. When shopping, consider the price of the car (known as the capitalized cost), your trade-in allowance, any down payment, monthly payments, various fees (excess mileage, excess "wear and tear," end-of-lease), and the cost of buying the car at the end of the lease.

Gasoline
-you can save hundreds of dollars a year by pumping gas yourself and using the lowest-octane called for in your owner's manual.
-you can save up to $100 a year on gas by keeping your engine tuned and your tires inflated to their proper pressure.

Car Repairs
-consumers lose billions of dollars each year on unnecessary or poorly done car repairs. The most important step that you can take to save money on these repairs is to find a skilled, honest mechanic. Before you need repairs, look for a mechanic who is certified and well established, has done good work for someone you know and communicates well about repair options and costs.

Insurance
a. Auto Insurance
-you can save several hundred dollars a year by purchasing auto insurance from a low price, licensed insurer. Call your state insurance department for a publication showing typical prices charged by different companies. Then call at least four of the lowest-priced, licensed insurers to learn what they would charge you for the same coverage.
-talk to your agent or insurer about raising your deductibles on collision and comprehensive coverages to at least $500 or, if you have an old car, dropping these coverages altogether. Taking these steps can save you hundreds of dollars a year.
-make certain that your new policy is in effect before dropping your old one.

b. Homeowner Insurance
-you can save $100 or more a year by purchasing homeowner insurance from a low-price, licensed insurer. Ask your state insurance department for a publication showing typical prices charged by different licensed companies. Then call at least four of the lowest priced insurers to learn what they would charge you. If such a publication is not available, it is even more important to call at least four insurers for price quotes.
-Make certain you purchase enough coverage to replace the house and its contents.
-Make certain your new policy is in effect before dropping your old one.

Banking/Credit
a. Checking
-you can save more than $100 a year in fees by selecting a checking account with a minimum balance requirement that you can, and do, meet.
-banking institutions often will drop or lower checking fees if paychecks are directly deposited by your employer. Direct deposit offers the additional advantages of convenience, security, and immediate access to your money.

b. Credit cards
-avoid using credit cards when you can. If you do, make sure to pay off your entire bill before the deadline, so you avoid the Haram, by not paying interest, and obviously saving because you don't have to pay this extra amount.

-never use credit card for withdrawing cash. The rate of interest can be very high.
-you can reduce credit card fees, which may add up to more than $100 a year, by getting rid of all but one or two cards, and by avoiding late payment.

Auto Loans
- try to get an interest-free loan from a relative or friend, so you can avoid interest. But have enough cash saved so you don't have to borrow too much.

- Ask how interest rate is quoted, flat rate or reducing balance rate. Don’t get fooled.

Home Purchase
- you can often negotiate a lower sale price by employing a buyer broker who works for you, not the seller. If the buyer broker or the broker's firm also lists properties, there may be a conflict of interest, so ask them to tell you if they are showing you a property that they have listed.
- do not purchase any house until it has been examined by a home inspector that you selected.

Renting a Place to Live
-do not limit your rental housing search to classified ads or referrals from friends and acquaintances. Select buildings where you would like to live and contact their building manager or owner to see if anything is available.
-remember that signing a lease usually obligates you to make all monthly payments for the term of the agreement.

Home Improvement
-home repairs often cost thousands of dollars and are the subject of frequent complaints. Select from among several well established, licensed contractors who have submitted written, fixed-price bids for the work.
-do not sign any contract that requires full payment before satisfactory completion of the work.

Major Appliances
-consult Consumer Reports, available in most public libraries, for information about specific brands and how to evaluate them, including energy use. There are often great price and quality differences among brands.
-once you've selected a brand, check the phone book to learn what stores carry this brand, then call at least four of these stores for the prices of specific models. After each store has given you a quote, ask if that's the lowest price they can offer you. This comparison shopping can save you as much as $100 or more.

Utilities

a. Electricity
-to save as much as hundreds of dollars a year on electricity make certain that any new appliances you purchase, especially air conditioners and furnaces, are energy-efficient. Information on the energy efficiency of major appliances is found on Energy Guide Labels required by federal law. Check with your electric utility to learn if it has a program to help reduce the costs of any appliance purchases.
-enrolling in load management programs and off-hour rate programs offered by your electric utility may save you up to $100 a year in electricity costs. Call your electric utility for information about these cost-saving programs.

b. Home Heating
-a home energy audit can identify ways to save up to hundreds of dollars a year on home heating (and air conditioning). Ask your electric or gas utility if they can do this audit for free or for a reasonable charge. If they cannot, ask them to refer you to a qualified professional.

c. Local Telephone Service
-check with your phone company to see whether a flat rate or measured service plan will save you the most money.
-you will usually save money by buying your phones instead of leasing them.
-check your local phone bill to see if you have optional services that you don't really need or use. Each option you drop could save you $40 or more each year.

d. Long Distance Telephone Service
-long distance calls made during evenings, at night, or on weekends can cost significantly less than weekday calls.
-if you make more than a few long distance calls each month, consider subscribing to a calling plan. Call several long distance companies to see which one has the least expensive plan for the calls you make.
-whenever possible, dial your long distance calls directly. Using the operator to complete a call can cost you an extra $1 to $3.

Food Purchased at Markets
-you can save hundreds of dollars a year by shopping at the lower-priced food stores. Convenience stores often charge the highest prices.
-you will spend less on food if you shop with a list.
-you can save hundreds of dollars a year by comparing price-per-ounce or other unit prices on shelf labels. Stock up on those items with low per-unit costs.

Shop on the web
Online stores often give a discount as they don’t have the same overheads involved when selling online. Search for the goods that you want using a search engine or ask the retailers themselves if they have an online store. However use a web based credit card where your bank tracks your spending on the web. Buy only from encrypted websites.

Prescription Drugs
-since brand name drugs are usually much more expensive than their generic equivalents, ask your physician and pharmacist for generic drugs whenever appropriate.
-since pharmacies may charge widely different prices for the same medicine, call several. When taking a drug for a long time, also consider calling mail-order pharmacies, which often charge lower prices. See the October 1993 issue of Consumer Reports (available in most public libraries) for a list of several of these pharmacies and their toll-free phone numbers.