image source: sxc.hu

1. Know the price of items you buy. I cannot stress enough how important it is to know the going price of things you buy. When you go from store to store you can compare and know if you are getting a deal or not. This is especially important if you sometimes shop at discount stores. Every now and then I go to Big Lots. They definately have some deals to be had. However, I often find that their groceries are higher than the big box grocery stores. This is also important if you shop at warehouse stores, like Sams or Costco. Sometimes buying a large quantity is a great deal. Other times I find their prices are identical to the regular grocery stores per unit. Why should I buy 8 gallons of syrup when I can get a more convenient size for the exact same price per unit at the grocery store.
2. Shop around. You probably won’t find one store that has the best prices on everything. Granted, Wal-Mart comes close, but some people don’t want to support Wal-Mart. Also, they don’t always have the lowest price. When other stores run specials or double coupons, their prices can be considerable lower.
3. Read the Weekly Specials. Every Wednesday my mail man brings the specials of all the local stores. Wednesday afternoon I look through these specials and see if I can find anything worth the trip to the store. If I find some good deals in one paper, I go through the entire circular carefully. I circle things that I know are good deals (because I know the going rate).
4. Clip Coupons. Coupons can really help. And it’s not necessary to become a coupon-freak. Don’t waste your time clipping every coupon in the book. Just buy the Sunday paper (or get it free on Monday). Only clip coupons for items you regularly purchase. Then keep those coupons in your purse or wallet so that you have them anytime you need them.
5. Buy Produce from a local produce stand. Fresh fruit and veggies are expensive at grocery stores. (And often bad quality). Buy from a local produce stand for MUCH cheaper and they usually have better quality. I usually only do this about once a month instead of weekly to save time and travelling.

Although I don’t like credit card debt, I do like credit cards. By using credit cards to pay for most of my purchases throughout the month, I get rewards points. Then at the end of the month, I pay the balance in full. It’s like getting a 30 day loan of money, plus rewards points, 100% free.

All rewards are not equal in the credit card reward world. If you notice while shopping through rewards stores, you will notice some things cost more points per dollar equivalent than others. One way to get a big bang for your rewards bucks is with American Expresses “Pay with Points” for travel. Your points are worth basically 1 cent (about the going rate). So by saving up 20,000 rewards points, you can purchase flight tickets for nearly any airline through the site, use your American Express card to pay and get $200 off the price. Since your using your American Express card, you also get a little extra protection that comes with the card, which can be useful if your luggage is lost. You would expect the prices on the airfare to be pricer on the rewards site, but I actually found my tickets lower on the American Express site than on anywhere else. I even used Yapta to track prices and when the prices on Yapta dropped, the prices on AmEx dropped even more.

One other way that I saved money on the flight was by simply asking American Express to use my pending points. With AmEx, your points take about 1 month after the purchase to become active in your account. For the 1 month in-between they remain “pending” and cannot be used. However, by simply calling and asking them to instate these pending points, I was able to get an extra month of points to use toward the flight. It never hurts to ask.

I originally budgeted $1424 for 2 tickets. I saved nearly 50% and here is how…
Originally $712 per ticket
Used Yapta and waited until tickets dropped to $509
The AmEx site had same tickets for $476
Used $170 from Pay with Points
Also got an extra $7 off from pending points
Ended up paying $775 for 2 tickets (54% difference)

*Note: You do have to pay $13 to buy tickets through the AmEx site, but I figured that into the cost of the tickets.

At the start of a new year, many people set resolutions for themselves.  I see these people at the gym every year.  This coming Monday after work time, the gym will swell with new faces and hopeful aspirations for rock hard bodies.  Precisely two weeks later, like clock-work, the gym will resume to it’s usual size with it’s usual suspects.  Only a rare few from this sudden influx will actually stick around. 

What can these observations from fitness world tell us about the financial world?  Resolutions don’t work.  I think they are worthless.  Usually I make stupid resolutions that are bound to fail… I resolve to eat nothing.  I resolve to rule the world.  I resolve to make a fortune this year.  Nope, those didn’t work. Instead, I am much more fond of goals.  Goals, unlike resolutions, set progress mile markers.  Goals are the vehicle toward your future, not the destination.  While I may want to be filthy rich, this is not a good goal.  A good goal would be to increase my income by 20% and decrease my expenses by 10% this year.  That goal is attainable, definitive, and calculable.  This goal puts me on the road toward being wealthy. 

However, even though this is a good goal I can’t just say my goal is an overall net increase of 30% and be done with it.  We can’t pat ourselves on the back and expect that come next year, this will be done simply because we will it.  No, we must plan plan plan.  Think about what smaller steps are necessary to reach that goal.  What are the ways in which we will increase income and decrease expenses?  Each smaller step under our main goal may need several baby steps. 

Then, once we have all these steps and sub-steps and baby-steps we can place self-made deadlines.  For instance, If I want to increase income by 20% in one year, it might be a good idea to decide I need to increase it by 10% by the year half-point (June).  Now, suddenly I have a sense of urgency.  When I needed 20% by January I could put it off, work on it later.  But once I give myself a deadline of June, I feel like I need to get this ball rolling.

As an example, here are a few of my 2009 goals with their corresponding steps.

Goal 1: Finally be Debt Free (minus the mortgage)
Step 1: Pay off Student Loan (Deadline: April)
Step 2: Pay off Car Loan (Deadline: December)
Step 3: Vow to never buy things I can’t currently pay for in cash.  And follow through. (Deadline: Ongoing)

Goal 2: Save for Retirement
Step 1: Max out IRA contributions (Deadline: October)
Step 2: Research moving to Vanguard (Deadline: March)
Step 3: Make move to Vanguard (Deadline: June)
Step 4: Create my own diversified portfolio after thorough research (instead of using a targeted retirement fund) (Deadline: December)

The Art of Nonconformity has a great excel template to put your goals down on electronic paper and review how far along you are periodically.  I love this template, it really got my gears turning and inspired me to fine-tune my goals.