frugal underground

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You should always have a plan when you are going to spend money. Consider just three areas where we regularly save by planning.

Groceries. Planning the meals to cover a week or two weeks will help you stick to a budget. Instead of buying food on impulse, you can plan each meal ahead and get the necessary ingredients. You should also make sure that you check the levels of household cleaners and toiletries. Avoiding an extra trip to the store will bring down the chances of an impulse purchase.

Entertainment. Everyone likes to get out and have fun. If you really need to get out once in a while, plan an inexpensive night out. Set the amount you will spend and stick to it. If you use cash only, you will be more inclined to stick to budget.

Major purchases. You can save a fortune if you explore your options. When looking for a car, furniture or major appliances, there is much room for error. Think about quality. It might not be the best choice to buy the cheapest thing out there, because it may not last as long. Check the consumer ratings on the brands you are considering. You don’t have to pay top dollar, but cheap isn’t the way to go with certain things.

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Pay your savings account like a bill. The age old method of promising to put aside whatever is left over at the end of a month just doesn’t work well. When you get paid, the first thing you should do is put money away into savings.

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Budget a specific amount of your check to put aside every time you are paid. If over time, you think you can put aside more, go for it. Just be consistent.

Make sure you are earning interest. There are several excellent savings accounts that will earn you over 5% APY. I have accounts with HSBC, and ING Direct frequently offers good deals, too. This money will be liquid, meaning you can withdraw money any time, without penalty, if you really need to (the idea is to have a fixed amount that you can afford to set aside).

You should also make a deal with yourself that if you get extra money (gifts, tax returns, a bonus, and especially a raise) that you will use it to reach savings goals.

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You should never underestimate the power of the coupon. You may think, “What difference will it make if I save $0.25 on bread this week?” When you are tight on funds and have numerous bills to pay, every little bit helps. Clipping coupons can really save you money in the long run.

Here are some coupon rules:

Don’t go out of your way to buy items that you don’t need just because you have a coupon. Unless it is free, you will save more by not buying it.

Wait until the item goes on sale to use the coupon. (Many stores also offer double or triple coupon weeks, and you can hang on to coupons until then and save even more)

Don’t be afraid to try a new brand. If it costs less, why not try it?

You can find coupons in your local Sunday paper, right in the store, or online. All you have to do is visit a reputable coupon site, like SmartSource.com or CoolSavings. There are many more sites that offer coupons. The best way to save is waiting until the item goes on sale at your local grocery store to use the coupon. You can save hundreds of dollars per year!

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I am one of the many people who are better at “paying back” than “saving up” for bigger ticket purchases. That’s obviously not a good reason to use credit cards (or any other form of debt), but that’s my personality.

So what is a spender to do when faced with this dilemma? Anyone remember layaway?

For those who don’t, layaway was a service that many stores used to offer (but most have discontinued, thanks to the popularity of credit cards). Instead of buying something now and paying for it later (the credit card model), layaway let you pay for something over time for a small, fixed fee (if there was one), and have the product stored for you until you’d paid for it. Maybe not as fun as instant gratification, but much more responsible and frankly, more satisfying in the long run.

Well, as it turns out, the fabulous Internet has enabled layaway to make a comeback. Enter eLayaway, the online service that gives you the old layaway benefits with modern technology. There are some smart features, like auto draft from a checking account to make it easy to stay on top of it, and automatic shipping when the item is paid for.

The only downside is that there aren’t very many participating merchants at the moment. I expect this is a short-term problem, because they’ve made their pricing very attractive to merchants (much cheaper than credit card processing if there’s any sales volume at all) and merchants will be able to use this service to differentiate themselves and show they are thinking of their customers’ best interests.

Found via Springwise.

Related Link: Cash back credit cards for consumers with good credit.

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There are a limited number of good, free personal finance programs available, and less that are web-based and platform independent (meaning I can recommend them to anyone). So it was with great interest that I read a press release today announcing a new online personal finance budgeting application: MySpendingPlan.com.

A first glance at the site was promising: it’s attractive, simple, and provided some enticing information. Top on my list?

MySpendingPlan.com is budgeting software that uses a modernized version of the “envelope system” that fits today’s lifestyle and home budgets.

I am a big fan of the envelopes concept, just because it’s forward-thinking decision-making rather than after-the-fact “guess that’s where we spent it” reporting. We use envelopes-style budgeting in my household (though my husband insists on referring to it as “funds” and “accounts”). The only software out there that I’m aware of currently promoting this kind of system is Mvelopes, who annoyed me both with their crappy Java interface and their spendy, monthly payment plan. No thanks, I want to save money. So free seemed exciting.
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