If you're like most Americans, you feel like you've tightened your belt to its last notch.
You've cut the eating out; the gym membership is a distant memory; date night with your spouse has turned into quiet night on the couch; you've cut your shower time down to a two minute rinse; and you've forgotten what the inside of a mall looks like.
Saving has been in vogue since the economy crumbled in 2008, setting waves of cost-cutting and streamlining across industries. And for many of us, the effects are more serious than skipping the morning latte -- we've had to downgrade our lifestyles practically overnight to cope with lost jobs and high debt.
But what can you do when you've tweaked your budget as far as it will go, and it's still not good enough? Maybe you're still just breaking even or you're not making a sizable dent in your debt. What if your retirement fund hasn't seen a new deposit in quite some time, and the last time you took a vacation we had a Republican president?
Maybe it's time to start thinking outside of the box.
The idea behind becoming a super saver is that true changes to your financial circumstances require aggressive moves. No more penny pinching. Your objective should be to seriously attack your financial goals by either reducing expenses or increasing earnings by thousands of dollars every month.
Some people make these changes part of a new lifestyle, but for most of us, the key is to remember that they generally are an effective, short-term solution to big problems. Rip off that Band-Aid. Once you're on top of your debt and expenses, you can slowly return to a more "normalized" way of life. Hopefully, though, you'll take with you some priceless knowledge on ways you can cut costs in the future.
Here are seven innovative ideas that can make a big difference in the amount you're able to save:
Super Saver Tip #1:Your Home
You'd be surprised at how little of your house you actually use. These days, money-savvy people live in (and pay for) only as big a space as they need to be comfortable. Why pay for a garden when you're two blocks away from the park; or a four-bedroom house when you only use two?
A smaller home means a smaller mortgage, cheaper utilities and a reduced urge to buy more stuff (since there's less room for it). And don't overlook the added expenses of owning a big home: insurance, mortgage insurance, taxes, a hefty down payment, repairs, remodels, etc. In comparison, apartment living certainly has its benefits: cheaper utilities, no maintenance costs, smaller move-in expenses, plus the added perks of a pool and gym.
Go Even Further Outside the Box: Invest in a duplex, live in one half and lease the other.
Super Saver Tip #2: Sell Your Car
I came across one extreme saving site that makes people's obsession with cars analogous to Golum's obsession with "My precious…" Most people aren't willing to give up their "precious," but when you think about the percentage of cash you spend on it, maybe you'll find an opportunity for change.
Unlike houses or other assets, cars begin to lose value the minute you walk away with the keys. And the monthly expense of owning a car -- the loan payment, maintenance, insurance, fuel -- can quickly eat into your budget. Ask yourself, "Can your household make do with only one vehicle?" There are lots of options here: buy a used second car outright and finance only the family car; carpool with your spouse; downgrade your primary vehicle; or move closer to work.
Go Even Further Outside the Box: Take public transportation to work -- or carpool -- and invest the savings instead.
Super Saver Tip #3: Live On One Income
If you have two incomes in your family, try living on one income while saving the other. This is probably one of the best ways of dedicating large chunks of cash to debt or savings while simultaneously enforcing fiscal discipline. And it makes for a powerful safety net should one of you experience a pay decrease in the future or (knock on wood) find yourself out of a job.
Go Even Further Outside the Box: Make a single-income budget that forces you to live on your income as it exists today, and then negotiate a raise or find a higher paying job to turbocharge your savings.
Super Saver Tip #4: Turn Your Home into an Income Property
If you're not ready to part with your home, there are ways to earn money from the extra space while hanging on to your house. Upgrade your basement/garage/second story into a separate living space and rent it out. Rent your garage to someone who needs the space for extra storage or a luxury car. Or, take on a roommate to help cover the costs of your mortgage and monthly utilities.
There are lots of options here if you open yourself to possibilities. Thinking outside of the box is not so hard when you're motivated by the extra income it could potentially bring in.
Go Even Further Outside the Box: Move into your basement, garage or attic and rent out your home for maximum income potential.
Super Saver Tip #5: Minimize Your Tax Expense
If you're having too much withheld from your payroll, you're basically giving the U.S. government an interest-free loan. While it's nice to have a sizable refund to start off the new year (which should be applied toward your financial goals, of course), you might be better off decreasing your withholding so you have less cash taken out of your paycheck. Then apply the extra cash to debt repayment or savings.
Also, be sure you're taking all the deductions you might qualify for -- dependents, homeownership, education interest payments, etc. -- which might qualify you for a return come tax time.
Go Even Further Outside the Box: Create a retirement savings account to defer or avoid future taxes. If you contribute to a traditional IRA, you can deduct the contributions on your tax return. If you contribute to a Roth IRA, your withdrawal will be tax-free when you retire.
Super Saver Tip #6: Make More Money
Weekends are fun for relaxing, but they're also a lost opportunity for making more money. After all, the interest on your credit card never takes a break, so why should you?
The Internet makes it possible to work from home at a variety of jobs that can help bring in extra money. Have a knack for crafts? Etsy.com has blossomed in recent years as the go-to marketplace for handmade items. Use Ebay or Amazon to create an online store where you can sell almost anything. Are you a wordsmith or expert in your field? Take on assignments as a writer or article editor for websites like eHow and Scriptlance. Teach at a community college. Write an eBook. Or start your own small business.
Go Even Further Outside the Box: Start a website that chronicles your journey to financial independence and monetize it with Google Adsense.
Super Saver Tip #7. Don't Indulge Your Champagne Tastes
A credit and debit spending report from Citibank showed that Americans spend anywhere from $2,246 to $12,447 on food every year, but that it's always proportionate to how much they're making (15% to 20% of the total income). What this tells us is that the more money we have, the more we tend to indulge.
But why pay $50 for a meal you can have for $15 at home? You have to do your own dishes, but thousands off the annual food and beverage tab is well worth it. It's this kind of thinking you have to employ every day. It's not fun, but neither is bankruptcy.
Go Even Further Outside the Box: Don't be afraid to go to the extreme here. Grow your own vegetables; mend your socks; use solar-powered lamps in your living room. The more sacrifices you make now, the quicker you can get back on track.
Saving isn't just about spending less, but choosing well: the right home, the right food, the right budget, even the right luxuries. This means giving more thought to both big and small decisions and knowing how to cut down without depriving yourself. When you do it right, living on less may actually make life more enjoyable!
- Create a retirement savings goal
- Design an investment plan to reach it.
- Get a professional money manager to continually monitor and rebalance your portfolio
Sound complicated? Don't stress. Vanguard's new robo advisor service can help you put all of this (and more!) on autopilot, all for an annual gross advisory fee of just 0.20%.