It’s Not Too Late to Save Money in 2019

How are you doing on your 2019 New Year’s resolution to cut spending and save more in 2019? Well, you’re not alone. For those of us who have strayed from the path, a few reminders and suggestions:

Build an emergency fund. Life happens. Appliances breakdown, cars need repaired, and people get sick or injured. Your emergency fund must have enough to get you through 3 – 6 months of unemployment.

Create a family budget. Having a budget doesn’t mean you will spend less, but it does give you a baseline to track success and a tool to control spending habits. Before you create one, take this challenge: write down every expenditure for one week. You will learn where the weak links are and help you be more realistic entering budget targets.

Carry a zero credit card balance. Start with a clean slate. If you can’t pay all credit cards off in one month, pay the one with the highest interest rate first and work down from there. Paying 18% or more to banks is like swimming against the current. Carry only the one credit card that you know you will pay off every month.

Save on food. Take your lunch to work. Fast food restaurant lunches are about $7.00. That’s $35 per week or $1,750 a year, almost the cost a new refrigerator or microwave and more than a set of tires. Besides, lunches packed from home are healthier, and that leads to less money spent for prescriptions, cold and pain medicines. 

Bonus food advice: Over the weekend, prepare evening meals in advance and store them in containers in the refrigerator. Knowing that a delicious homemade casserole is waiting for you makes it easier to pass up the fast foodie crowds on the way home.

Use coupons and shop sales. Never go to the food store without a list, and always check for coupons in mail, paper, or online. Almost all major chains provide coupons online on their store apps. Make it a habit to check for coupons before any shopping trip.

Have a savings plan. Have a specified amount direct deposited into a savings account from your paycheck. When receiving bonuses or tax refunds, deposit half or more of it into your savings. Maximize your 401(k) contributions as well as your employer’s match. The 401(k) contribution limit for 2019 is $19,000, plus $6,000 if you are over 50, and the IRA contribution limit in 2019 is $6,000, plus $1,000 if you are over 50 (and may be tax-deductible).

Start with the “easy” suggestions first before working your way up to the more challenging and impactful tips. Let us know how you’re doing.

Living Within Your Means

An editorial by P. J. O’Rourke, the editor of American Consequences, touched on a subject that had us thinking twice about the booming American economy and individual responsibility. He writes about the government shutdown and its effect on a married couple that happen to be senior managers in different departments of the U.S. government. He estimates their salaries to be $200,000 to $300,000 annually, putting them in the top 5% of American earners. Yet, during the shutdown, they were interviewed while standing in line for free food at a pop-up market run by the Capital Area Food Bank in Washington, DC. 

It’s shocking to realize that a recent study of 25,000 American adults shows that 6 out of 10 working adults are living paycheck-to-paycheck or, even worse, are accruing debt and saving nothing for emergencies.

Those that do save for the unexpected, the study shows, think that $2,000 is the right amount for a 3-month emergency fund. 

Earning more doesn’t seem to matter either. As incomes rise, the pattern of spending the entire paycheck every month continues!

After some research, we were able to list 7 warning signs that you’re living beyond your means:

  1. Carry credit card debt
  2. Do not contribute at least 5% to a savings account
  3. Have less than 3 month’s pay in an emergency fund
  4. Have no emergency fund at all
  5. Lease a car you can’t afford to buy or finance
  6. Have paid overdraft fees
  7. Don’t budget

If the government shutdown did any good at all (and we don’t mean politically), it may have us thinking about how to live within our means so we never have to take a handout meant for the truly poor, unlike the government employees in O’Rourke’s story. We can all live within our means and still enjoy life — it just may take a little imagination and willpower.

Avoid Debt This Christmas

Gifts can be expensive at Christmas, but with a little planning and discipline you can put the “merry” back in shopping this season. Here are a few helpful tips:

Christmas presents

  • Make a List. If you prefer to shop the stores, before you go make a list and a budget. Decide in advance how much you’ll spend for each person on your gift list and don’t let anything deter you once you’re in the stores.
  • Use Gift Cards. Before heading for the mall, consider shopping with gift cards. Some stores offer discount gift cards including Apple, Costco, Target and many of the major banks. Discounted Gift Cards
  • Get Cash Back. Rather than use an assortment of store credit cards for purchases, use your credit card with the best deal on cash back. You can’t enjoy an immediate discount, but it may pay off in the long run.
  • Explore Social Media. Social media is packed with deals. If you know where you’ll shop, check their website’s social media buttons like Facebook and Twitter and read their posts to find money-saving discount codes.
  • Ask for Discounts. If shopping online, don’t hesitate to take advantage of a good barter. Once you have a few items in your cart, before you click the purchase button, try the online chat button. Let them know your cart’s total and ask for a 15% discount or you will abandon your cart and make your purchase somewhere else. This won’t work every time, but it’s worth the effort.
  • Group Gift. When buying gifts for an entire family or group, consider a “group” gift instead of individual presents. You might consider a basketball hoop and ball for an active family, or a gift from Omaha steaks that everyone in the family can enjoy.
  • Re-Gift. If you work in an office, suggest a Secret Santa ‘white elephant’ gift exchange.

According to a 2015 Gallup poll, the average shopper intends to spend an average of $830 on gifts, and 30% plan to spend over $1,000. Of the total, the amount spent on family members was $462, and couples, depending on how long they were married, spend from $92.50 in the first year to over $300 in the later years (hmm, how love grows!).

But one statistic stands out: how much you spend on yourself while shopping for others! According to one survey, 55.8% will splurge on themselves adding an extra $132 to their Christmas spending. With all the bargains out there this season, it’s no wonder we find it so easy to justify a little pampering for the weary shopper.

Have a merry shopping Christmas from all of us at DLMoneyMatters.