General Topic: > Smart Spending

Summary: Valentine's Day is just around the corner, here's how to save money and still be the best boyfriend/husband ever (Tweet This!)

[Note: Like all my posts, this one comes from the gentleman's perspective. If you are a lady out there, perhaps you can subtly leave this post where your loved one might stumble upon it by accident ;-).]

Save Money Valentine's Day

Use these tips to save some green on Valentine's Day

Valentine's Day is right around the corner. If you have a special person in your life, now is the time to start planning for the Day that Hallmark Built. (Disclaimer: I'm not sure Hallmark created Valentine's Day, but it seems like it sometimes). If you don't have that special someone, you could do what my wife did for years... rename it National Do Your Taxes Day. Yes, it's sad, but at least that story (luckily for me) has a happy ending.

One of things that I've learned over the years is that it doesn't make much sense to overspend on events like Valentine's Day. I think it's much more meaningful and spontaneous to celebrate the random May 21st or August 3rd with a small gift. Plus, a lot of the time, you get stuck with a bunch of things that are pretty overpriced for what they are. This time of year you can expect big mark-ups on flowers and chocolate. One of the central tenants of this website is to save money to give yourself the financial freedom for the life you want rather than the life that "pays the bills." With that in mind, here are some ideas on how to save money on Valentine's Day.

Stay in For Valentine's Day

It can be tough to pull off the "Let's stay in this year" conversation. It is my experience that women like to get dressed up and go out... and this is one of the premier nights to do just that. However, going out gets expensive. Dinner and movie can cost upwards of $200 in some places (wine isn't cheap sometimes). If you can win the battle to stay home, the dividends not only pay off in the wallet, but the journey to the bedroom is much quicker. What can you do to pull of the "stay at home" plan?

  • Make Her Breakfast in Bed - I'll admit that it can be tough to pull this off in the start the week. My wife is a pretty deep sleeper, so I've been able to execute the breakfast in bed in the past. It's worth the effort.
  • Make a Special Dinner - There are a lot of ways to make a special dinner. You know her favorite foods, right? That's a good place to start. You can order some heart-shaped pasta online. Pair that with a white wine sauce recipe and you are in good shape. Don't forget the dessert wine with dark chocolate. The whole dinner may run you under $30... or a little more if you opt for seafood and more expensive wine.
  • Cue up a Movie - This is a good time to set up that Netflix queue. Look at what she's added and bump up a romantic option to the top. If your dinner is good enough, you might be able to pull off a romantic sports movie like For the Love of the Game. (Just go in with the mindset that you are watching a "chick flick", but with bonus sports footage.)
  • Cue up Music and Dance - Songza is a great free music service that you can set to your mood. It doesn't get any easier than that. However, if you want to go the extra mile , make a mix with iTunes or your smart phone. I personally skip that, as I'd probably just put Paramore's The Only Exception on repeat. (Take a minute to watch the video, especially the ending, and sing with me "I'm on the way to believing.")
  • Massage Oils and Candles - You've done the dinner. You've done the desert and wine. You've done the movie... or if your lucky only a small part of the movie. You probably don't need massage oils at this point, but it can't hurt.

Get out of the House

All is not lost if you didn't with the "Let's stay home" conversation. One of my favorite tips is to relocate the celebration of the Valentine's Day to a day on the nearest weekend. Who wouldn't want to a full day to enjoy the holiday instead of spending half at work, right? In addition to that, I usually try to earn extra points by surprising her with some kind of comfort food take-out that we like for the 14th itself.

When you move Valentine's Day to the weekend, you open up more options (including the breakfast in bed mentioned above):

  • Go for a Picnic - If you live in a warm climate, planning a picnic is almost always a winner. This year, most of you can scratch that idea.
  • Go to a Museum - Museums are typically the same price year round and they aren't nearly as crowded as movies.
  • Take a Stroll Down Memory Lane - Literally. Take her to places where you had your first kiss or went on a first date. Just be careful with this, because when it happens on those diamond commercials, it always ends in a proposal.
  • Create an Adventure - If you have some time you can plan a treasure hunt in the style of Midnight Madness. (Don't feel bad if you didn't see it, I think my wife and I are the only two people in the world who have).

Give the Frugal, High Value Gift

At the risk of sounding corny and cheesy, there are a lot of inexpensive gifts you can give. Here are some ideas to help you with that.

  • Give a Coupon Book - Make a book of coupons of favors that you'll do. This could range from chores to massages. (Bonus Tip) You might want to start with doing a few chores right away. Studies show that women like men who do housework.
  • Write a Love Note - This may sound difficult if you aren't the creative type. However, this is another reason why you should hone your writing skills. Look to the internet for advice on how to go about it, here's some from a female romance reader.
  • Exchange Small Practical Gifts - My wife and I keep our Amazon Wishlist updated throughout the year. Usually we have a few of these small practical gifts on the list. For example, I'm heavily considering putting the Wrap-a-nap on there. I showed it to my wife and she thought it looked pretty cool

Finally, since we are trying to be better, why not donate some of the money you save to charity? You can't go wrong by giving money to breast cancer. What tips you do you have for planning a frugal Valentine's Day? Let me know in the comments.

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Summary: These simple tips on how to save money at restaurants can keep thousands of dollars a year in your wallet. (Tweet This!)

Today, I thought I'd write about some more ways to Save Money. In the past I've written about how it is important to spend less than you earn, which lead to me writing about these high level tips on how to save money on almost anything. One of the items that I mentioned were the cost of "outings..." and the obvious example is the cost of going out to restaurants.

Save Money at Restaurants

Save Money at Restaurants

The average American spends thousands of dollars a year at restaurants. I've got nothing against restaurants. I'll be the first to admit that the food is generally better than I can make at home. However, I don't think it is that much better. I will say that my taste buds and sense of smell (which factor into taste) are, well, defective compared to most people's.

That said, I think for many people, there are ways to save money at restaurants. Here are some basic tips:

Avoid Restaurants

It shouldn't come as a surprise, the best way to avoid spending money at restaurants is to avoid restaurants. It is easier said than done. There are restaurants everywhere - and people need to eat. The combination of the two has made going out to eat an important social aspect of our lives. A lot of people don't go to restaurants for social reasons - they just want the convenience of a quick meal.

It's reasonable to fall for the social value eating out - a lot of people do. That said, it's worth suggesting an alternative such as a pot luck dinner. If your difficulty is in finding time, the answer is easy. You can make a few minor changes to your daily schedule and enjoy great quality food at a great price. I suggest you follow some of the tips in Be Better Now's Productivity category.

You want another reason to avoiding restaurants? It's often difficult to find nutritional information of the food (unless it is a large chain). If you are fortunate enough to find nutrition information, you'll quickly realize that it's next to impossible to maintain a healthy diet or lose weight, if that's your goal.

If you can't avoid restaurants the next best thing is to limit the damage to your wallet. So let's look at:

Top Ways to Save Money at Restaurants

  • Do Lunch Instead of Dinner - Lunch prices are typically significantly cheaper. Not only do you save money, but the portions are usually smaller and you are less likely to knock down a days worth of calories.
  • Save Half Your Meal for Leftovers - I sometimes ask for a take-out dish right away, so that I'm not tempted to eat the whole thing. This is another tip that's about health as much as it is about money. If a restaurant is going to give me 2,000 calories of food or more, I might as well space them out over a couple of days.
  • Split a Meal - Similar to above, the idea here is to split something with your companion. My wife and I do this regularly for lunches. She loves the salad and half sandwich. A half sandwich and fries (or steamed vegetables if I feel like being better) is enough for me. She orders the salad. I order the sandwich. I give her half with her salad. Sometimes a restaurant will charge a "split-plate fee." Some call this tacky, but I think you could just claim it's for portion control.
  • Cash in on your Seniority - If you are a senior citizen, you can often get a discount. You've earned it.
  • Skip the Alcohol - The margins that restaurants make on wine and other alcoholic beverages are tremendous. If you can save the drinks for home, you'll not only save money, but also avoid any nasty DUI incidents.
  • Look for Restaurants with No Corkage Fee - Bringing your own bottle of wine can lead to savings. If you find a restaurant that can't get an alcohol license it can lead to big savings. My wife and I found a pasta restaurant in western Massachusetts that allowed this. Cheap pasta and your own wine is a big win.
  • Take Advantage of Happy Hour - If you can't skip the alcohol and the corkage feeds are high, maybe you can get a half-price or 2-for-1 special during happy hour. They work equally well if your companion wants a drink too.
  • Cash in on the Early Bird Specials - There's a lot of money to be saved by dining at off-peak hours. This can also be nicely combined with the above tip about happy hour. Have a drink at the bar and bring it to your table. While on the topic of early bird specials I'm reminded of this great moment in Seinfeld history from the episode The Cadallac:

    "MORTY: Alright, are you ready to eat?

    HELEN: (glancing at her watch) Oh, right, let's go. Jerry, let's go, it's time
    to eat. We're going to dinner.

    Jerry wanders into the room. He's in a t-shirt and sweatpants, and holding a
    comic book he's been reading.

    JERRY: (confused) Dinner? W..What time is it?

    HELEN: (pulling on a coat) It's four-thirty.

    JERRY: (bewildered) Four-thirty? Who eats dinner at four-thirty?

    MORTY: By the time we sit down, it'll be quarter to five.

    JERRY: I don't understand why we have to eat now.

    HELEN: We gotta catch the early-bird. It's only between four-thirty and six.

    MORTY: Yeah. They give you a tenderloin, a salad and a baked potato, for
    four-ninety-five. You know what that cost you after six?

    JERRY: Can't we eat at a decent hour? I'll treat, okay?

    HELEN: You're not buying us dinner.

    JERRY: (emphatic) I'm not force-feeding myself a steak at four-thirty to save a
    coupla bucks, I'll tell you that!

    HELEN: Alright, (sitting on the couch) we'll wait. (pointedly) But it's unheard

    I'm with Morty and Helen. Grab that tenderloin, salad, potato for $4.95 (or whatever the incredible special price is). I'd probably aim to eat closer to 5:30, but other than that it sounds fantastic.

  • Eat on nights with "specials" - Many chains and even local restaurants offer incentives (i.e. good deals) during their slower nights of the week. You won't many specials on Friday or Saturday, but it's fairly common to find a good deal on Tuesdays (as one example).
  • Drink Water - Not only is water healthier than soda it's cheaper. In this case cheaper equals "free."
  • Use Coupons - There are a lot of coupons out there. Many of them offer a buy one get one free meal. You can sign up for Groupon and get free daily deals. You could also buy an Entertainment book an Entertainment Book full of coupons. You might also consider a website where you can by vouchers for very cheap dinners (though they often come with restrictions).
  • Buy a Gift Card at a Reduced Rate - On Ebay you can often find people looking to get cash for their gift cards. With a quick search, you can save 10% or more.
  • Use a rewards credit card geared towards restaurants - If you can't find a gift card or don't have the time to wait for delivery, this is a good back-up. Some credit cards offer 3-5% or more cash back at restaurants. Some credit cards give you cash back at grocery stores or drug stores. You can take advantage by buying a gift card and using that for your bill.

With any and all the above tips, use your common sense. Don't try to split a meal with your boss. Have an alcoholic drink (if that's your thing) with a colleague. Don't pull out the coupons on the first date. In short, be smart and pick your spots.

Bonus Tip: Though it won't save you money, we like to think about health here at Be Better Now. Americans underestimate the calories in restaurant food by 642 calories (Official study by American Journal of Public Health).

That's another reason to share or save half of your meal for leftovers the next day.

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Summary: Housing is American's biggest expense - 40% on average. Make smart choices and save hundreds of thousands of dollars! (Tweet This!)

Did you know that according to government data Americans spend 41% of their money on their home? Sure that’s data from December 2011, and furnishings and utilities, but still nearly a third of everyone’s money goes towards their rent or mortgage.

Saving money on housing

Plan well and you'll be tossing money around like this house.

Housing is the highest living expense for most people. It is one place where saving a little money can have a tremendous impact on your finances for years.

Buy Vs. Rent

There are epic debates on whether you should or buy or rent. The war has been waged for decades and will likely continue for many more decades. Those on the “buy” side say that renting is “throwing money away.” Those that rent say that they enjoy not having to fix everything themselves.

At some level, both situations can work. If someone were to rent you the perfect home for a single dollar a month, for life, you’d be a fool not to take it. If someone were charging you a thousand dollars a month for rent, but willing to sell it to you for ten thousand, you’d be a fool not to buy it.

The final answer is very complicated, but it comes down to:

  1. What is best for you
  2. The valuation of buying vs. renting

How do you calculate the valuation of buying vs. renting? Take the price to buy a property and divide it by the annual cost to rent a similar property. If that number is around 16, it doesn’t matter. If it is over 16 you want to rent and if it is under 16 you want to buy. If it is just 15 or 18, that’s only a small indication to buy or rent. However, if the number gets to be 12 and under or 20 and over, you’ve got yourself a fairly definitive valuation.

For example, let’s imagine I have a small starter home that costs $100,000 to buy. However, there’s one in the same development that’s for rent at $900/mo. The price-to-rent is 9.25 ($100,000 divided by an annual rent of $10,800). This number is far below 16 and a strong indication that you’d do much better to buy.

It isn’t likely that your perfect home is going to fit that ideal scenario, but you can do this calculation for similar properties to get an idea if your area is a buyer’s or a renter’s market. You may even find that there are helpful tables like this one from Bankrate that give you the price-to-rent ratios in many cities as well as the United States in general. As I write this, Honolulu is 34.63, which almost commands you to rent. Conversely Detroit’s 7.16 number couldn’t scream “Buy Me!” any louder.

Improve Your Credit

Whether you are buying or renting, you’ll want to have the best credit score possible. If you are renting a great credit score tells the landlord: “I’m a responsible person who pays my debts on time.” A poor one says, “You are taking a big risk if you rent to me.” Which renter do you think has more power when it comes to negotiating a rent?

When buying a home, your credit score is even more important. It is used by banks to determine how much interest you’ll pay on a mortgage. A small difference in an interest rate means quite a bit over the 30-year span of mortgages that most people get. It can easily lead to a difference of a hundred thousand dollars or more.

Learn to Negotiate

Whether you are buying or renting, you are going to end up at the negotiating table. The seller or the landlord wants to maximize their money too. If you can negotiate just $50 a month off rent, you’ll save your $600 a year.

If you are buying, you may be able to shave ten or twenty thousand dollars off of the price.

Don’t Buy Too Much House

You’ve probably heard the expression “House Poor.” This happens when people pay too much for their home. The monthly payments are so large, they don’t have enough money for other necessities. And that means no money for saving and investing. And that means delaying your journey to financial freedom.

Your goal should be to buy a home that fits your needs. Many people think they need a McMansion, but living in small home can lead to a big payoff. They are (typically) cheaper to buy, require less furniture, and are easier to heat and cool saving money on utilities.

Some people take the “smaller is better” saying to the extreme and choose to live in very tiny houses. This allows them to pay off their mortgage in just a few years. The tiny house lifestyle isn’t for everyone, but eliminating one of life’s biggest expenses in a couple of years is a huge step to financial freedom.

Putting it All Together

These tips can save you hundreds of thousands of dollars over your lifetime. They could jump-start you to financial freedom. When buying a home, the stakes are tremendous. Decisions that seem small make a huge difference.

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Summary: Knowing how to save money on all your purchases will help you buy the important things, such as financial freedom. (Tweet This!)

Last week, I wrote about Spending Less Than You Earn, and how there are two components to that... spending less money and making more money. I'd like to dive in a little deeper into the area of saving money today.

When I think about how to save money, I look at my spending in five areas: big one-time purchases, small daily purchases, recurring monthly expenses, and the medium cost splurges, and outings. Today, I'd like to touch on how these five categories impact your overall financial picture.

Save Money on Big One-Time Purchases

Save Money buying a House

Save Money buying a House

It's hard to downplay how much shelter costs. Even if you are renting and not buying, your home is likely to represent a large chunk of your spending. There are a lot of ways to save money on housing. That article gives a few tips such as living in an area with a cheaper cost of living and choosing a smaller home.

For most people, the other big purchase aside from a home is a car. It isn't unusual for a car payment to be up to ten percent of a person's take home salary. A couple of ways to reduce that is to buy a cheaper, used, brand that has already depreciated in value. A three year old Hyundai is going be a lot cheaper than a new BMW. Don't expect the used Hyundai to compete with a new BMW, instead try to focus on how much financial freedom you'll be earning.

Cars and homes typically add up to 40% of the average person's income. Those two purchasing decisions will make a huge impact on your financial freedom.

Here's one final tip to save money on these big purchases: have good credit. Few people buy cars and houses without taking out a loan. When you get a loan, you want to pay as little as interest as possible. The best way to do ensure that is having good credit. A person with bad credit pays a lot more for the exact same purchase... and that earns them a nomination for the Be Worse Now Hall of Shame.

Save Money on Small Daily Purchases

David Bach's The Automatic Millionaire famously coined the term, Latte Factor, by examining how people can get rich just by reducing or eliminating small daily expenses. Of course the key example of a small daily purchase is... wait for it... the morning latte. It may not seem like much, but $3 a day adds up over time. If you make your own coffee at home and bring your lunch to work that can be a savings of $10 a day or around $3500 a year. Investing $3500 a year goes a long way towards any financial freedom goal. With the power of compound interest it may be enough to fund a retirement.

Save Money on Recurring Monthly Expenses

Much like the small daily purchases, these add up over time. Some monthly expenses like utilities are pretty hard to escape - although you can certainly do a lot to lower those costs. I like to call these necessary expenses. Others like to call them their monthly nut. These are things that you really need to have every month such as: housing, transportation, utilities, food, insurance.

There are also the unnecessary monthly expenses like cable television, Netflix, or a wine club can add up over time. I'm not going to ask you to give up your entertainment, but reducing and eliminating these costs will fast track you to financial freedom. (You noticed the trend to financial freedom, right?).

Somewhere in the middle of the necessary and the unnecessary sits the Internet connection. I require it for my business, so it is necessary just like transportation to a job, but I also get a lot of entertainment from it. That's why it is one of the last things that I'd look to eliminate.

Save Money on Medium Cost Splurges

This is where I group the "everything else" that I spend money on. I, like many people, really enjoy technology gadgets. So this means that I have to have the latest smartphone every year or so. In addition, there are costs for video game systems, new laptops, tablet computers, etc. This isn't to say that you should avoid all these things - I think you simply need to be consciously aware of these expenses. A few hundred dollars here and there really crowd that credit card statement. I've started to look for cheaper ways to get gadgets such as buying a used previous generation version on Craigslist.

Save Money on Outings and Entertainment

The last area that seems to eat up money is what I like to call the "outings" category. Some example "outings" include going to a restaurant, going to a concert, or going to a bar with friends. A few outings per month can add up to a couple hundred dollars very quickly. These tips for saving money at restaurants may save you a thousand dollars a year.

It's all a game of balance. I'm not suggesting that you avoid buying your dream home, a nice car, or a tablet computer. I'm not trying to ruin all your fun. I enjoy concerts, sporting events, and the theater (well let's not stretch it) as much as anyone. I'm asking that you be conscious of your spending and think about what your goals are with money. For me, having a safety net that allows me to go a year without working and building towards an extremely early retirement are top priorities.

Photo Credit: Apartment Therapy

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Summary: When you spending less than you earn, you protect yourself from financial disaster and head towards financial freedom (Tweet This)

I've been interested in money for a long time. At age 7, I learned the concept of interest and more importantly compound interest. Even at that early age, I was enthralled by the concept of getting free money for doing nothing. As a natural progression, I started reading personal finance magazines like Kiplinger's Personal Finance and Money Magazine. In some 27 years of studying personal finance I have learned a lot.

You'd think I would have learned it all in the first 15 years. Unfortunately I didn't. It wasn't until age 30 when I started blogging about personal finance that I really started to learn about money. After a few months of blogging and reading other blogs, I came across one statement that summed up everything:

Spend Less Than You Earn

Saving Tons of Money Works Too!

Spend Less than You Earn

There are few topics as large as money that can be summed as succinctly. Though it sounds simple, it is very complex. There are a lot of people who either don't realize that's the secret or can't follow it. Too many people are living paycheck to paycheck. It's a dangerous and stressful way to live. It can shut you out of opportunities to pursue your dreams. What's the answer? Educate yourself (as usual).

Spend Less

There are a lot of ways to spend less money. I'll be covering many of them over the next few years. I thought I'd just tease you with a few though. What if you could save $100 a month on interest payments? What if you could save another couple hundred on subscription services and utilities? What if you didn't buy that doohickey that now sits in your closet? If you learn about how to get more value for your money, spending less doesn't have be as painful as it initially sounds.

Earn More

On the other side of things, there are a lot of ways to make more money too. What if you were better at giving presentations? What if you were better at writing proposals to your boss? Perhaps those things that are going to get you a promotion or a raise? What about simply knowing how to negotiate for a raise? What about investing your money so that you get more free money for doing nothing? What about side businesses or hobbies that actually make money? We'll get to these in time, but hopefully you can see the possibilities here are endless.

When you put together spending less and earning more, you grow that nest egg that hatches into financial freedom. That is when a lot of people's dreams come true.

Photo Credit: Binary Dollar

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