“You gotta spend money to save money.”
Sometimes spending a little money is the best way to save a lot of money. In this episode we look at three ways to spend some money in order to save more. They are
- Detail your Car
- Buy Gift-cards
- Hire a Coach
Detail your Car
One of the great draws of buying a new car, even a new-used car, is the condition of the car. There’s the “new car smell” and the sparkly clean of a detailed used car that’s up for sale. Compared to our dusty, smudgy, rolling trash can that we’re currently driving, it seems like a dream.
You can get that same feeling by getting your car detailed. You can always do it yourself, but let’s consider spending $200 on a professional detailing twice a year. Why?
It will reduce your total life-time vehicle purchases.
By detailing your car, you will love it again. It will feel new. And you won’t be seduced to get a new one since yours is a dirty pile of junk.
Let’s say you’re buying cars for 60 years, from age 20 to 80.
If you buy a car right now every five years, getting that car detailed will help you enjoy it longer and you can stretch it to six. That’s now two less cars over your lifetime. If you spend $20,000 (above your old vehicles worth) on each purchase, that’s going to save you $40,000 in car purchases alone. And that’s before you factor in the investment income by leaving money invested a bit longer each time or the debt savings by paying down a more debt before shelling out the money. That interest income/savings will actually pay for the detailing.
If you buy a car every three years and you can stretch that to four, you will buy five less cars. At $20,000 you are now saving $100,000, plus interest.
And you’ll enjoy your cars more in the meantime. Take your vehicle purchase frequency and multiply it by the amount you spend. Add one more year and you can figure out your savings.
Go spend $200 to save thousands.
Detail your car, save money.
Many of us suffer from mosquito bites. The lots of little purchases that add up. Exactly how much are we spending on that morning Joe? Who knows.
It’s easy to let little expenses add up. And many people track their expenses for the first time are flabbergasted by how much they spend in certain categories. When asked, they’re pretty sure they spend $20-30 per month at Starbucks. When tallied, it comes out to $80-90. They spend $500-$1,000 more per year than they think.
An easy way to limit this is to buy gift-cards to the places you frequent.
These aren’t to give away, they are to spend yourself. A modern day “envelop system.”
Only want to spend $30 per month at Starbucks? Refill your gift-card with $30 at the beginning of the month. Then be shocked when you run out on the 10th. But eventually you’ll get to a good spending pace in the easy-spend categories.
It works in may categories, and with digital wallets and apps, it’s easy to keep them going once you get going.
Buy gift-cards, save money.
Hire a Coach
This doesn’t mean an advisor. Most financial advisors don’t do cash-flow coaching.
A good financial advisor can help you clarify your goals and align your use of capital with your values. This can also help save money, buy limiting bad purchases. Also worth it.
I mean a coach. Someone who is really going to sit down with you and study the cash flow. Someone to help you identify ways to save and give you tools to manage your cash flow better. And someone to hold you capable of saving money.
Most people need someone outside the spouse. Spouses can be just as guilty as each other at spending money.
But nothing helps you actually save money like knowing someone else will be checking in to see how you’re doing.
Like hiring personal trainer to get you going on your health journey, you may need to spend money on a coach to breakthrough the financial gravity holding you down. Once you get the momentum, you can continue on your own.
Hire a coach, save money.
This article is educational only and is not intended to be investment, legal, or tax advice or recommendations, whether direct or incidental. Again, this is not investment advice. Consult your financial, tax, and legal professionals for specific advice related to your specific situation. Never take investment advice from someone who doesn’t know you and your specific situation. All opinions expressed in this article are the opinions of the people expressing them. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. RetireMentorship is not affiliated with any Registered Investment Advisor, Broker-Dealer, or other Financial Services Company.