Smart Reasons to Save, Use and Invest Money

Thinking Before Paying To Save Money

All to often, we don’t really think before paying  for our purchases!

I’ve been guilty of this too!  I use to get a bill in the mail and just write a check and mail it in.  But today, I’m here to tell you that this is not the best way to go about paying bills, and I’m going to explain a better approach towards your bills.

Thinking Before Paying

When a bill comes in, you should ask yourself “Is this bill for the best service and price for this particular service or purchase?”

A great example would be bills from insurance companies.  Every few years, you should go shopping for a cheaper price for your various insurance needs!  We routinely jump to different car insurance companies.  This saves us hundreds of dollars versus just sticking to one insurance company.

We do this because  most insurance companies know that you don’t want to go through the aggravation of switching companies, since it’s a bit of a pain!  So over the years they raise the fees on you more and more, effectively milking you for all they can.

I actually hate to change car insurance companies, but doing so will save me hundreds of dollars… so I do it anyway!

After a while, you kind of get familiar with the process and it does get easier each time you do this rotation!

Charging To Save Money

First let me start off by saying that I pay my credit cards in full each month.  Okay with that out-of-the-way, when possible, I like to charge expensive bills to my credit card(s) as much as I can!

Why?

I only have reward credit cards, so this give me an instant discount on the purchase price whenever I use it!  While 1% or 2% isn’t a huge discount on the cost of the product (or service), every little bit helps.

If you put some thought into it, you should use certain credit cards for certain purchases.  I say this because some credit cards provide higher reward points for certain types of purchases.

Thinking Outside of the Box

  • First, do you really need to make that purchase?  Why not try to find alternatives or try repairing the item that you are thinking about replacing?
  • Next, can you buy used (ex. cars), that could save you some big buck on high ticket items like automobiles!
  • Have you check out freecycle.org?  This is a no brainer if you are aware of the site’s existence.
  • Check out eBay, Craigslist and other online sites for deals.
  • Can you borrow the item (like an edger) from a neighbor, family or friends.  Doing this is especially good from a tool to accomplish something that is needed very infrequently (again, the edger is a perfect example).
  • Can you use your credit card reward point for the purchase?
  • Buy the item at deep discounts or when special are going on.
  • Haggle if possible…  I couldn’t hurt!

I see so many friends buying at the wrong time of the season (don’t go coat shopping at the start of winter) and on things that aren’t really necessary.

I would advise mulling over a purchasing decision on something you want to buy for at least 1 week if possible.  During this mulling week, try to think of ways you can get it for free, or reduce the cost of the item.  You’d be surprise what solutions you can come up with or comes your way.

-MR

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17 Responses to Thinking Before Paying To Save Money

  1. I think you make some great points. I’m a pretty frugal person so my expenses come down to what I need (most of the time) in which case I never have to think of my purchases. I think if we all practiced a system where it was more need based spending we wouldn’t have to worry as much as to where we are spending our money. Then again what do I know?
    Great post & thank you.

    • Even needs based spending can be reduced if you think about it hard enough. For instance, in the US to be able to drive you must have car insurance. If you look around every other year for a new company to go with, it will save you hundreds of dollars. And then if you use a reward card to buy the insurance, that’s another few percentage point off of the cost too.

  2. I’ve gotten into the habit of asking myself “can I live without this item” especially in places like walmart where it’s easy to throw household items in the cart along with your groceries and paper products. It’s really made a big difference in my brainless spending.

    • I agree, I’ll pick up something carry it around the store, then when it’s time to go, I’ll take it back and put it back on the shelf. I’m great at talking my self out of purchases. 🙂

  3. It depends on my state of mind on that day. When I am stressed and life is harder than usual, I am looser with my dollars because I am willing to pay for convenience and don’t put as much thought into my purchases as I should. Uh oh, I think I have a post sneaking up on me, better stop now.

  4. Like Ravi wrote — some good points to consider.

    I would add a couple: Shop from a list, stick to it and pay with CASH!

    I would make an exception to the “pay with cash” part of that statement for the large purchases you mention but only if you do plan to pay the bill when it comes due.

    The fact is that we tend to spend more when paying with anything other than cash so the “convenience” of credit cards, debit cards and even checks comes at a hefty (hefty!) price.

    • lol, at first I read your comment to quickly and though you said “shoplift”…

      I would only say to pay with cash if you have problems with impulse buying and credit.

      To me, money is money but to buy on credit is the worst kind of spending, unless you always pay off the balance on time and in full, which I do…

  5. With the Internet being so handy and efficient, I use shopping bots to check out prices all the time. If the item is not sufficiently discounted, I won’t buy it. For me, it is sort of a game!

    • What a wonderful game! I should start trying that too!

      I use to check out the best buy rebates (and officemax ones too) buying stuff that was almost free with the discount!

  6. Good tip on insurance companies! Even if you don’t want to switch, call your existing company and tell them you are thinking of shopping around. That alone might reduce your premium.

    Worked for me!

    • Very clever, the tactic you use with the insurance company! it’s a win-win! You get a reduced rate without all the nasty paperwork of switching companies!

  7. Paying by credit card — especially one that offers cashback — is my favorite way to “save” or “redeem” 1-2 percent of every bill.

    Whenever I go out with friends, and we’re splitting the tab, I put everything on my card and have them repay me, on the spot, in cash. This helps me get more rewards.

    Just remember: this tip only works if you pay your card balance in full each month — and if your friends repay you immediately!

    • lol, that’s exactly what I do too!

      In a way the discount rate that I get from the credit card is like a savings account, accruing till it’s time to pull that money out!

  8. I’m guilty of the same thing. Some of the bad choices we make are probably impulse buying and buying some stuff we probably don’t need.

    We do use our rewards card a lot and were able to pay it off the following month so the interest will not off set the rewards that we are doing.