Everyone has a secret or two. Do you? Forty percent of married Americans admit to keeping a secret from their spouses. Most secrets do not involve secret lives, extramarital affairs, or fantasies–most secrets between spouses center around how much money they spend. Forty-eight percent of respondents in a poll about secrets conducted by Ipsos-NPD, an Illinois-based research group in March 2001 revealed that they had not told their spouses about the true price of something they purchased.
“‘I don't think there's a marriage where that didn't happen,' said one respondent, a woman married 26 years. ‘You always get those good bargains, you know?'
“Another wife said: ‘I don't like to tell him how much I spend when I go shopping. I'm afraid he'll cut back on the budget.'
“ . . . the percentage was the same for husbands. One man concealed the price of one small purchase: ‘The item wasn't very big but the price of it was.'” 1
These are secrets with danger written all over them. The art of saving money comes with its own set of secrets, healthy ones, which carry the potential of huge rewards. Let's examine a few:
Keep Good Records .
We live such a fast-paced lifestyle that it is hard to keep good financial records, but taking time to record your purchases, balance your budget, and organize your money reaps huge windfalls which could be the means of realizing long-sought dreams. You don't need to take a lot of time to organize yourself. Once you have your records safely stashed and a system established for tracking yourself; good records can be maintained for as small an investment as fifteen minutes each week.
There are many books and websites which offer document organizing materials. One of our personal favorites was actually developed for senior citizens, but it can be adapted to individuals and families of any age. You will find this personal document organizer at www.TodaysSeniors.com or http://www.a-guide-for-seniors.com/pages/organizers.html. If for some reason, this particular record- organizer should disappear from the internet, others will pop up to replace it. Check the internet for a system which works for you.
Precisely what documents should you keep? Tax statements, receipts relating to itemized deductions such as charity donations, business deductions and interest payments, warranties, retirement account statements, a year's worth of utility payments and other monthly bills, insurance policies, and automobile and major appliance service manuals. In addition, you should keep receipts for the purchase of major expenditures such as furniture, electronic equipment, appliances, automobiles, mortgage papers, etc. A good rule of thumb is to keep any receipts and warranties for equipment which could potentially malfunction and for which documentation might prove effective in achieving a reduction in the cost of the repair or a replacement should it be irreparable. We cannot tell you how many hundreds of dollars have been saved over the years by having these useful papers at our disposal.
Rid Yourself of Huge Credit Card Payments .
It's highly unlikely that the average family can get by without even one credit card. Plastic is becoming a way of life yet everyone knows that nothing contributes more to that giant sucking sound in your personal finances more than the drain created by ever-increasing credit payments. In fact, the American Bankruptcy Institute found that one of the greatest contributing factors for the rising bankruptcy rate was “ease in obtaining credit and credit cards.” 2 Minimum monthly payments are deliberately set at low amounts and credit card companies survive on the assumption that few cardholders will ever pay their balances in full without first accruing more charges.
Credit has become a major industry worldwide and it has become the curse of our time. Reader's Digest found that “if you owe $2000 on a credit card with 16 percent annual interest and make only the minimum monthly payment, as many people do in tight times, it will take more than 24 years to pay it off–including a whopping $3329 in interest. But if you double the minimum monthly payment, you'll pay it off in less than seven years and save $2467 in interest.” 3
In addition, many consumers do not realize that they can lower the interest rate on their already existing credit cards even during the pay-off period. If you pay your bills on time there is no reason you should have to pay an enormous interest rate. You can compare credit card companies by clicking on any number of web sites which list cards along with their interest rates.
Ask your cardholder to lower your rate if you discover that you are being charged an interest rate larger than that charged by a comparable card offered by a different lending institution. Many do not realize that credit card companies will negotiate interest rates. Document your claim and ask your cardholder to match the rate of its competitor.
Also, be careful to never run late on a payment. Late fees are huge and your interest rate will nearly always rise, sometimes double digits, if you are late or miss even one payment.
Check your credit card statements carefully each month. Are you being charged for any purchase you did not make? Dispute it. Are there charges for services you no longer use? Call and follow up with a letter requesting that the charge be stopped. Mistakes are made, even by reputable credit card companies, make sure the mistakes on your statement do not cost you a lot of money.
Save any Extra Funds which Come Your Way.
If you receive a bonus, sock it away. You could use it for emergencies or for next year's Christmas presents. You could save it for the purchase of a future automobile or for mission funds or for family vacations. Just forget you ever saw it and down the road it will reap you huge dividends. Save your raises by moving the new sum to a separate account each pay period. If more than one member of your family works or if one family member holds two jobs, consider banking one income and living on the other. Try not to spend your tax refund for additional purchases. Bank it instead. Remember that those who understand interest earn it, while those who do not understand interest pay it.
Compare Prices and Return any Unused Purchase.
Whether the expenditure is major or minor it pays to compare prices now and again. Have you compared your prescribed drugs with different pharmacies in your area? You will find that the very same prescription may vary in price depending upon where it is purchased. What about toilet paper, milk, cereal, produce, and gasoline? Prices are not uniform but vary from store to store. Obviously, you cannot know the price of every item nor can you expect to always purchase at the lowest price, but comparison shopping once in awhile, using household staples as your guideline, can tell you which stores really do carry the lowest prices in town.
How about buying in bulk? Bulk can save you money if you use the bulk purchase before it spoils or grows stale or loses its potency. You can also make bulk purchases bundled together in smaller packages. Eight small packages of cough drops can be purchased at a wholesale club for less money than purchasing one bag at a time. The savings is great if you plan to use them before the expiration date. This is equally true for cases of soup, juice, spices, spaghetti sauce, cereal, and many other household items.
It is not unusual to over-estimate the amount of a particular product we need to complete a project. For example, at the end of painting a bedroom there might be a gallon or two of paint, a few rolls of masking tape, and a trio of never-been-used paint brushes. That unused product might add up to $50 or or more. The same scenario exists at the end of a large family event. After one family's wedding reception, there was an entire case of never-opened serving trays, two packages of plastic drinking cups, several packages of plastic forks and spoons, half a dozen packs of colored napkins, a package of unused candy mints, and seven bottles of unopened soda. All the items were taken back. It didn't seem like much but the price of all the unused products added up to nearly $80. Returning what we do not use adds up to considerable savings and saves us precious storage space.
See Part 2 tomorrow for more ideas.
1 Jim Fitzgerald, Associated Press Writer, “If a spouse has a secret, it's usually about money,” Deseret News, July 2001, 151 st year, No. 39
2 American Bankruptcy Institute, statistics collected in twelve month period ending March 31, 2004
3 Max Alexander, “Staying Ahead in Tough Times,” Reader's Digest, August 2001, p. 84.
