Friday, June 6, 2008

Free Money

With gas and grocery prices on the rise, there has been more and more info on the web and in the news about being frugal and taking advantage of cost savings wherever possible. I've always been frugal, my parents and grandparents taught me well. I thought I would share some of the great ways I get free money or save money for my family.

401k Contributions
This has been hammered into the ground everywhere, but (especially younger) people still aren't all doing it. If your company offers ANY kind of matching on a 401k/403b plan, you MUST contribute the amount to get the matching contribution. This is FREE money. It doesn't get any better than this!

I've been riding the bus for almost a year now, but this may not be available where you are or for your circumstances. If public transportation isn't an option for you, look into ride share, park and ride or even walking/biking to work. If you just can't do it for work, look at other trips you make on your spare time and try and take the vehicle in your house with the best gas mileage, take your bike or combine trips. Always, run your errands in order around town so you are not backtracking. If you have a doctor in a certain part of town and there happens to be a store there, plan to go there when you have a doctor appointment. My friend who grooms my dogs lives near Costco, so when I go visit her, I hit Costco. My son's doctor is in Meridian so when he goes to the doctor, I go to Winco. Planning ahead is key, but the pay off is great financially and you might just save yourself some time also.

Credit Card Rewards
Now, I only recommend this if you are financially responsible. It has taken me a lot of years to get to the point where I can charge my month's worth of expenses and pay it off each month. When I was younger, I had the mindset that whatever I charged was somewhat free. The bill would come at the end of the month and I would always be surprised. These days, I use mvelopes and file my financial transactions daily, so there are no surprises. I know and plan how much my credit card bill is each month. Dave and I currently have 4 credit cards that we use. The Chase visa is for main expenditures and we get 1% cash back on any and all purchases. The American Express card is a one savings account and we use that at Costco since they do not accept MC/Visa. We get the 1% reward put into a savings account. Our Discover card is just for gas and automotive expenses and for those types of transactions we earn 5%. These rewards are able to be cashed in for credit on the account, so the rewards go back into the same debit. This comes in handy now when gas prices on are the rise. I have a monthly calendar item for each card to check the balances and redeem the rewards when it reaches a certain level. There is no benefit to earning the rewards and not using them! I was actually able to buy a $399 ipod touch earlier this year from credit card points. We even run medical expenses through the credit cards to get the rewards.

Flexy/Health Savings Account
If your employer offers a flexible spending account for medical expenses you should also participate. Figure out EVERY possible out of pocket medical expense you might have in a given year and they take that amount out over your paychecks throughout the year. You do not pay income tax on this money. This year, my 13 year old was going to get braces - a cost of $4700 if I paid in full (a 5% discount). I was planning on using the rewards Visa (to earn 1% cash back) and then getting that money from my flexy. Since he was in the hospital for 10 days, we have opted to use the $5k that I elected for 2008 medical expenses for that and are submitting all the other bills in the family to reach that amount. Next year we will plain again for the braces and I'll do the same thing. So, what might have cost $4935, actually costs $3159 if you consider the cash rewards, paying in full and the tax savings. The bottom line is that any money you contribute to the flexy, you get back when you submit a qualifying receipt and you didn't pay income taxes and it may possibly drop your income to a lower tax bracket. Most employers offer this and a daycare savings plan (which works the same way for child/elderly care expenses) to employees and often times I think the benefit isn't used because people don't understand it or see it's benefit. It really is a huge money saver.

Smarter Shopping & Freezing
Shop sales, shop in bulk, shop less often and plan your meals. I don't go to the closest grocery store to my house even though it is convenient because it is expensive. Instead, when I am across town, I choose the cheapest store in town to shop. Yes, it's a bit of a drive (5 miles) and I have to bag my own groceries but if I can combine it with another trip, the only thing I'm out is the hassle of bagging my own stuff, which I don't mind because I think I do a better job than most of them anyway. If you have the storage space, buy items in larger quantities (only if it's cheaper, bigger isn't always better!) and put into smaller containers/packages and freeze. I freeze everything. I have a 21 cu freezer and keep it full of food and frozen milk jugs so it runs more efficiently. If the power ever goes out, it also has a much longer life with the extra ice inside.

Eating/Drinking Out
I am always amazed at how expensive it is to eat out. I can feed my family of 4 (3 boys 13, 17 & Dad) and myself for around $10/meal. If we eat out, it is usually $50-$100. Even little things like not getting a soda when you're out or skipping that morning coffee can add up to huge savings at the end of the month. Recently my SIL and I made 46 meals (23 each). We figured the cost to be $5.72 for each meal. This is for the main dish only, but for each of us to feed our families for 4 for under $6 I think is a steal. And it's good food. We are using the book Fix, Freeze & Feast that I heard about in the Manic Mommies podcast. I also do things on my own like make batches of rice for the freezer on a Saturday. I also make lasagnas in big batches and brown ground beef in 6 lb batches to freeze for later use (see pic). Even making your grocery list based on the meals you plan to cook for your family will save you money because you won't be running to the store for little items the rest of the month.

I donate all unwanted items to a local charity a get a tax write off for doing so. Once a year we have a garage sale and sell household items. I keep books, cd's and movies that we no longer want listed on Periodically, I sell things on ebay. Most of us have too much stuff and others would benefit from having some of our "extra". They get a great deal and you get a little money back on your investment.

There's lots of things people can do to save money. Obviously the biggest financial lesson is if you don't have enough money you have to either spend less or make more. Sometimes you can't make more and sometimes you can't spend less, but you can almost always do SOMETHING to save somewhere.