One of the biggest problems facing the world today is our lack of patience. I am just as guilty as everyone else. It seems we are incapable of exercising patience and waiting until we can actually afford to purchase something before we pull the trigger and get it. By afford I mean actually pay cash for the object or service we desire. We want gratification and we want it now! Not next month, not next week, not tomorrow, we want it now. This requirement to be immediately gratified costs us thousands in interest and lost opportunity costs.
We make attempts to justify our impatience like how much more productive we will be with that new iPhone, or how much easier it will be to pick up the kids if we had a third row seat. In either case there is no reason why you can’t save the money up and pay cash for the iPhone or even a new car. The only obstacle in your way is time and determination. If you are determined to make the purchase and you really think your life will benefit from it then you shouldn’t have any problem socking the money away to make the purchase.
The easiest way to do this is to set a specific monthly goal amount to put aside for the purchase. If you want to have a new, well new to you anyway, car then take the estimated amount of the car and split it out into monthly payments which you make into your savings account setup specifically for this purchase. You really need a separate account so you don’t get confused or tempted to use other funds for your purchase. In this manner you are actually earning interest on your payments as opposed to paying it, you can get your car and make money in the process. Like I said the only thing standing your way is time and determination.
Lets say you want to buy a used car worth $25,000.00 that is a lot of money and you probably don’t have it right now. If you need a new car immediately get something you can afford to pay cash for and then immediately start saving for the car you actually want. Instead of making the car payments + interest and carrying the debt you will be on your way to doing something most people only dream of.
If you take the $25,000 car and assume your trade-in is worth $5,000 when you go to trade it in you are going to need $20,000 cash to pay for your car. The typical car loan runs for 5 years so you could take that $20k divided by 60 (60 months in 5 years) and you would need to make payments of $333.33 a month to get your $20k in 5 years. If you want it in 4 years it is $417 in 3 you need to pay $556 per month. Using this same scenario but getting a 36 month loan you would be paying around $2,300 in interest at 7.16%APR.
Using this method you would never have to get a car loan again. You can apply similar principles to any large purchase you plan on making in the future. If you are looking to buy a new TV but don’t have the cash, figure out how much you are willing to pay and how much the monthly payments would be and set aside that money in a savings account dedicated to that purchase.
Delaying your purchases until you can pay cash will not only save you in interest payments but could earn you interest income and reduce your stress brought on by looming debt payments.
I love Christmas because it give me a chance to decorate my house and take time off of work. This is also one of those times of the year that has historically pissed me off. As you know I used to work as a debt collector for a mortgage company. The most popular excuse for not paying your bills on time during December is Christmas. This irritates me for two reasons; 1.) Christmas isn’t really about presents and 2.) Christmas is the same day EVERY YEAR. Christmas doesn’t sneak up on you and all the sudden half way through November go BOO it’s Christmas. I understand Christmas is an expensive holiday for a lot of people but that is all the more reason to plan accordingly. There are a several ways you can prepare better for next year
Decide early on who you are going to be buying for. If you have a large extended family like I do it may make sense to draw names for gifts. My family has taken it a step further and agreed to only purchases gifts for the children. Set limits on how much you can spend on the gifts too.
Decide now how much you want to spend next year. I know it is a whole year away but this is where you start planning ahead. You need to know how much you want to spend on gifts so you will be properly prepared for next year. I would suggest putting a new line item in your budget for Christmas so you can monitor your progress as well as any spending you do throughout the year.
Once you have your goal amount in mind start setting aside the funds now so you will have the money to spend when it comes time next year. If you plan to start your shopping in November and want to have $600 to spend on gifts start setting aside $60 a month now. A good way to do this is with a goal oriented savings account. You could open a sub-account with INGDirect or there is SmartyPig which offers goal oriented accounts where you can currently earn 2.01% on your deposits. SmartyPig is designed for saving for specific goals. You can setup a direct deposit to transfer the money to your goal oriented account and track your progress. Saving in this manner will allow you to have a worry free Christmas next year. One of the best features of the accounts is the “Cash Boost” you can receive by withdrawing your money as a gift card for one of their bonus retailers.
Start shopping now. Ok well maybe not right now wait until after Christmas when people are trying to unload all their unsold Christmas goodies. You can pick up some pretty good deals for gifts next year. This is also the best time of the year to pick up decorations for next year. They can be 50% off or more. The more you spread out your shopping and your saving the more likely you are to fund your Christmas with little to no impact on your regular finances.
Photo: (HermanTurnip)
About the Book
Secrets of a Stingy Scoundrel is essentially extreme tips for saving money and losing any semblance you may have of dignity. Phil Villareal provides 100 tips to help you learn how to do things like:
- Get free meals at restaurants
- Finagle your way into a cheaper hotel room
- Save money at the club and,
- avoid contributing to company gifts
What I Liked
This was an honestly entertaining tome. The tips were wildly outrageous and in some instances down right dirty. If you are willing to take the advice with a grain of salt then you will be entertained. Added to all of that there are actually some good tips you can actually use mixed in with the tips that will get you shunned socially. A few of the decent tips include:
- Troll around campus when the semester is over looking for left behinds from snotty college kids.
- When hitting the clubs pack a flask so you aren’t paying out the rear for drinks
- Walk the extra distance to get to your own ATM and avoid paying costly out of network charges.
What I Didn’t Like
Some of these tips are down right evil, and borderline illegal. I am not certain of the laws associated with credit card fraud. I am pretty sure that running up a $300 tab and then calling the card company later and claiming it should have been $30 is shady. Other things are shady, take the recommendation that you purchase a cubic zirconium engagement ring and claim it is a family heirloom. The author even suggests you SHOULD theater hop at the movies, and pick up stray unattended tips sitting on the bar.
About the Author
Phil Villarreal is a film critic for the Arizona Daily Star, contributer to OK! Magazine, runs two blogs, and is the author of Stormin’ Mormon. He has worked as the movie critic at the Daily Star since 2001.
Overall Conclusion
The book was entertaining and it is certainly worth the read, just please don’t go through and actually do all 100 of these tips. I thought I was going to have to write a scathing review of a book about cheating the world. Instead I found the book to be written well enough that people would find the gems in the mess of humor.
