Written by Brett McKay
Americans are the world’s worst savers. Nearly a quarter of American consumers have no money left over after paying for their essential living expenses and spending discretionary money. Instead, we’re take on more and more debt. Poor savings not only hurts individual consumers it also hurts our national economy.
Why aren’t more American’s saving? We give plenty of excuses why we don’t. Further analysis show that these excuses are bunk.
“I don’t have enough money to save.” Hogwash! You don’t need hundreds in access dollars to start saving. Most banks allow you to start a savings account with as little as $25. Some require less. Even if you saved small amounts each month, it’s better than nothing.
“I’m focused on paying off my debt.” Paying down your debt is an admirable goal, but its not wise to do so at the expense of saving . Without savings, you might find yourself going back to credit cards when an emergency hits.
It’s too late to start saving. If you’re in your twenties and thirties and you’re giving this excuse, you need to be smacked across the head. You’ve got plenty of time for the wonders of compounding interest to work for you. If you’re older and are giving this excuse, you should be smacked, too. While you don’t have as much time for compound interest to work for you, having a solid savings built up will protect you from any financial misfortunes you might face- job loss, hospital stays, ect.
How to Start the Savings Habit
If saving money is not a habit for you, here 3 tactics to make it one.
Start today. Not tomorrow, not next week, today! If you don’t have a savings account, go down to a bank and open one. It takes about 15 minutes. If you already have a savings account, but are looking for a better interest rate, check out some of the online banks like ING and HSBC. (If you’re interested in ING, shoot me an email and I’ll send you a referral that will give you $25 for free when you start an account.) After you open your account, start looking for ways you can start filling it.
Automate. There’s no better way to make saving money a habit than making it automatic. Go down to your employer’s HR department and ask to have a percentage of your paycheck deposited in your savings account automatically. If saving is new to you, start small. Try 5% at first. Gradually build yourself up until you can save between 15 and 20 percent of your paycheck each month. After you set up your direct deposit, forget about it.
Save the difference. Next time you use a debt card, before you enter the amount in your registry, round up to the next dollar. So, if your total is $12.24, enter $13 in your registry. At the end of the month, your actual balance will be more than you have in your check registry. Take the difference between the amount actually in your checking account and the amount in your registry and stash it in to savings.
What tactics have worked for you in developing your saving habits? Drop a line in the comment box.
Written by Brett McKay
This is a guest post from Ann K. Levine. Ann is a law school admission consultant and proprietor of www.LawSchoolExpert.net and http://lawschoolexpert@blogspot
1. Ask each law school on your list for a fee waiver. (But be wary of law schools that voluntarily offer you an application fee waiver)
3. Don’t take the LSAT without preparing adequately for it, otherwise you’ll waste the cost of taking the exam, the opportunity cost of having missed out on the benefit of rolling admissions, and the potentially increased cost of having to sign up late in the game for LSAT prep courses. While some people are good standardized test takers and/or skilled at self-study, I’ve found that most law school applicants benefit from an LSAT prep course. Sometimes you have to spend money to save money.
4. Choose your schools wisely. Don’t waste application fees on schools that aren’t right for your qualifications and/or goals. Analyze location , apply to the appropriate number of schools, and choose some schools where your LSAT and GPA are at or above the 75th percentile for that school so you can (hopefully) receive some great scholarships and save some major money down the line.
5. Put 100% effort into the quality of your applications. Avoid having to re-apply to law school. Every year, I work with people who tried to apply the previous year and were disappointed with the results. Don’t let this happen to you – apply wisely so you don’t have to spend money to re-apply the following year, and you don’t want to delay the year of post-law-school income either.
6. Participate in one of my Free 1-hour Webinars. The next one, entitled “I’ve taken the LSAT; Now What?”, will be offered twice in October – October 1st at 8 p.m. EST/5 p.m. PST and October 6th at Noon EST/9 a.m. PST. Each webinar is limited to the first 15 registrants to assure that everyone has a chance to ask questions. To sign up, e-mail me at firstname.lastname@example.org
7.Hire a Law School Admission Consultant. Seriously. Good advice is worth a lot. And that advice could save you from wasting money applying to the wrong schools, buying the wrong law school admission related books, taking the wrong prep course, using a letter of rec that kills you, submitting an inappropriate resume, and writing a trite or cliched personal statement. Hiring a law school admission consultant means doing it right the first time and saving money by increasing your chances for admission at more of the schools on your list, and increasing your chances for scholarships at more of the schools that admit you. Here are some tips for choosing a law school admission counselor.
Thanks, for that great post! If you’re interested in guest posting on The Frugal Law Student, please feel free to contact me.
Written by Brett McKay
The New York Times hs a great article about the lengths young people are taking in order to save money to buy a condo in Manhattan.
The Agueros married five years ago. They dreamed of owning an condo in Manhattan; however, the $445,000 price tag for a two bedroom condo made that dream seem impossible to reach.They both had student loans and credit card debt, and their combined income is a little more than $100,000. On top of that, they welcomed a new baby into their life. While their salaries qualified them for the mortgage, it was going to be a challenge to come up with a down payment.
But the Aguerros made it happen. How’d they do it? Let’s take a look.
Have the right mindset. If owning your home or paying off your student loans is your goal, you have to make that your top priority. As Mr. Aguerro says, â€œIf you want to own a place, you have to do everything to own a place and everything else comes second.â€
Quit your vices. The Aguerros quit smoking and stopped going out with friends to drink. By quitting they not only saved a lot of money, they also received the side benefit of a healthier life.
Cook at home instead of going out. Instead of going out with friends, the Aguerros started having meals at their home. Eating out may be convenient, but costs can add up quickly.
Save your tax return. Most people look at tax returns as free money they can use to splurge. Instead of buying stuff you may not need, sock that money towards your goal. The Aguerros were able to put a couple of thousand dollars towards their goal by saving their tax returns.
Quit impulse shopping. Mrs. Aguerro had a weakness for $300 Prada shoes; however, after they made it a goal to buy a condo, frivolous purchases stopped. By watching what they bought, the Aguerros saved over $15,000 in a year. If you feel the temptation to make an impulse purchase, remember to practice tantric shopping.
Get a second job. Mr. Aguerro did freelance work, but was scarce. So he got a job at a bank. The couple lived off just Mrs. Aguerro’s salary and socked Mr. Aguerro’s pay into savings. One possible side job is to become a consultant of some kind.
Amy Wegaenarr is single and 31 years old. She had a dream of owning her own place after she started to find paying rent in the Lower East Side difficult. How did Ms. Wegenaar make her dream come true? Let’s see.
Set aside a certain amount each month. Ms. Wegenaar started putting aside $400 from each pay check toward her downpayment. Make savings automatic by setting up an automatic deposit into a high yield savings account. The less you have to think about saving, the easier it is.
Save all your bonuses and raises. Instead of splurging, Ms. Wegenaar saved her bonuses and raises. Whenever you get a raise, act like you never got it and put the money into your savings.
Shop with a grocery list. Shopping with a grocery list is the best way to cut back on food costs. When you know what you’re going to get at the store, you’re less likely to make impulse purchases. Also, look for other ways to cut your food bill. It’s possibly the easiest thing to reduce in your budget.
Make your own clothes. Ms. Wegenaar sewed her own dresses from discount fabric she bought in the Lower East Side. Do it yourself is always a great money saver. If you don’t know how to sew, at least buy your clothes at thrift or discount stores.
Mr. Onyejekwe really impressed me. He had been saving in a 401(k) since his first job at J.C. Penny. After college, he saved over half his salary from his first job. When he decided he wanted to become a homeowner in Manhattan, he had over $50,000 saved. The only problem was he became a big spender. Luckily, Mr. Onyejekwe turned it around. Here’s how he did it.
Surround yourself with people who have similar goals. Part of Mr. Onyejekwe ‘s spending problem was that his friends liked to spend money. As a result, he spent money. When Mr. Onyejekwe finally decided to get serious about saving money for the condo, he surrounded himself with people who were as obsessed as he was about owning a condo. If you want to save money, avoid hanging out with big spenders. Additionally, friends with similar goals are a great resource for encouragement and ideas on how to make your goals happen.
Carina Katigbak and Michael Lenton
Carina and Michael were engaged to be wed. They had the goal of purchasing a $300,000 apartment on their combined annual income of $100,000. Their biggest obstacle was paying for a wedding. How could they do that and still afford owning a condo? Here’s how they did it.
Set priorities. Carina and Michael made owning a condo a priority. When they considered the cost of a fancy wedding they would ask themselves, “Do you want to have a fancy wedding, or do you want a place to live in?” I like this exercise. My wife and I have started doing it as well when we’re tempted to buy some frivolous thing.
Written by Brett McKay
Cell phones have become a necessity. Many young people are forgoing land lines and just sticking with a cell phone. However, the costs of owning a cell phone can get out of control if you don’t pay attention. Here are 4 things you can do to save on your next cell phone plan.
What kind of user are you?
How much do you plan on using your cell phone? Cell phone plans are based on use, so the more you use, the more you spend.
Look to see how many anytime minutes you get and the costs that go with using them. Also, check when those free night and weekend call times start. While most companies start at the same time, some start later.
Check for long term deals
If you really like the service provider, look into signing a long term contract with them. Companies offer discounts for longer term contracts, such as waiving initiation fees.
Pay only for the services you need
If you don’t text message, don’t buy text messaging service. Also avoid sending pictures through your cell phone. Many providers charge a fee for each photo you send. And please, don’t waste your money on stupid ringtones and games.
Written by Brett McKay
One of the best ways to save money and invest in your future is to cut back on frivolous shopping with your disposable income. Instead of having so many CDs that you don’t have time to listen to them all, you could have an index fund earning you a nice return for retirement or a big purchase like a house.
But how do you know when you’re making a frivolous purchase? Our mind can play tricks on us and make us think what we’re buying is exactly what we need. Well, here are two symptoms or warning signs to look for in yourself to see if you’re making a frivolous purchase.
While you’re cruising the mall, you see a shirt you would like to buy. It’s the perfect shirt. You know if you have it you’ll be sexier and more confident. This is when the adrenalin starts rushing through your body. Your pulse quickens. You’re heart palpitates. Your palms start sweating and you start salivating. To our brain, shopping is like hunting. Instead of mastodons, the prey is a CD or a piece of clothing. Because shopping is like hunting, our brain prepares our body for the shock by pumping out adrenaline. That’s why you see these kinds of physical symptoms.
After the physical signs, come the psychological ones. You’ll find yourself listing all the reasons you should have this shirt. You’ll rationalize. You’re basically trying to convince yourself that you have to buy this shirt, despite knowing you don’t.
If you find yourself experiencing these symptoms while in a store, put down the item, and walk out the store. As soon as you leave the store, bust out your “I will buy this in one month” list, and add that item that had you drooling to the list. As you delay the purchase, two things will either happen. The feeling that you need to buy that item will either stay or go away. Most of the time, you’ll forget that you even wanted to make the purchase. If you still have desires to make the purchase, start making a plan so you can afford it. When you do purchase the item, it will be much more enjoyable to own. By delaying gratification, you’ll not only increase your buying pleasure, but also save money in the long run.
Written by Brett McKay
Lately, I’ve had an itch to get a Blackberry. It started after I read Never Eat Alone. The author discusses how he uses his Blackberry to keep track of and nourish his contact list. My only problem is that Blackberries and the data plans that go with them are pretty expensive. (Also, I’m afraid I’ll become a Crackberry-head)
My friend, John Barghols, let me know about a great cell phone deal from Sprint that includes a Blackberry like device.
Sprint Employee Referral Offer (SERO)
The Sprint Employee Referral Offer is a $30 a month cell/data plan. It includes
- 500 anytime minutes, free weekends/nights from 7PM-7AM
- Unlimited Sprint mobile to mobile calls
- Unlimited Nationwide long distance
- Unlimited data (e-mail, instant messaging, web browsing)
You can purchase a Motorola Q with the plan for $99. The listing price is $450.
In order to get in on the SERO deal, you have to enter a special e-mail address: email@example.com
This looks like a pretty good deal. But alas, I won’t be taking part. While unlimited e-mail from my cell phone would be cool, I just don’t have the $30 for the monthly plan or $99 for the phone.
Before I get angry comments from people about how having a Blackberry isn’t frugal, let me say I agree. However, as I’ve written before, I’m of the opinion that frugality is relative. For many of my readers, the SERO plan is definitely a frugal option. For others, sticking with a normal cell phone/cell phone plan works for them. I’m not going to force my idea of frugality on other people. I just hope to help people from different walks of life save money.
Note: This was not sponsored post. John thought my readers would appreciate the tip and shared it with me. Thanks for the tip, John!