Wouldn’t it be nice to improve your lifestyle while decreasing your expenses? Wouldn’t it be wonderful to have $10,000 or more just standing by in a singing savings account to take advantage of great opportunities that may cost money? Improving your cash flow by just 10 percent and then rechanneling those dollars into your singing opportunity fund (a savings account for auditions or educational events that will help you build your résumé and your people network) can work miracles in your singing and your financial life. Ten percent savings may, at first, seem impossible, but with what seem to be insignificant savings here and there, you can do it.
Remember: “It isn’t how much you make, it is how you spend it that counts.” Typically, the wealthy follow Ben Franklin’s philosophy that “a penny saved is a penny earned.” If you take care of the individual dollars in your possession, the thousands will take care of themselves.
The little things we do can make a huge difference in our financial lives. What is the actual value of trimming dollars from your current expenses? If you trim $500 per month from your expenses, you save $6,000 per year. If you’re in the 28 percent tax bracket, you would need to earn $8,360 to net an after-tax increase in income of $6,000. Thus, a penny saved is more than a penny earned!
Since many of our expenses are “necessary,” you might as well get the most benefit for the least amount of money. Start by becoming a smart shopper. For any expense for which you’ll be paying a significant amount of money, get at least three different quotes from three different sources.
This benefits you in several ways. It enables you to set up competition between businesses, putting you in a position to get the same product for a better price. When you find a better deal, for example, you could call your current auto insurance provider and tell them you’ve been shopping around and have found a company that can provide the same coverage for $200 a year less. Use the seven golden words from Richard Paul Evans’ book Five Lessons a Millionaire Taught Me: “Is that the best you can do?” Let your current provider know you will be changing companies unless it can match the other offer you have.
In the process of getting the three quotes you’ll become more educated and know better questions to ask. You can now go back to the first source and get better information about what they’re really offering. For example, in the process of calling different companies, you may find that some cases include hook-up fees, a detail that the seemingly cheapest company inadvertently left out of the conversation.
I have to add one word of caution here. Cheaper is not always cheaper and in fact is sometimes much more expensive in the long term. For instance, a cheaper accountant may not catch the tax deductions a more expensive accountant may find. A cheaper Italian coach may not prepare you as well for a performance, which could end up loosing you a significant amount of money in the long run if your level of performing is not up to the standards an opera company expects.
Shop smarter by waiting at least three days, or sometimes even three months, before making a major purchase, especially if you are being tantalized or pressured by a salesperson into buying an item such as a time-share, a car, a fancy real estate program, or an “investment” such as whole or universal life insurance. Give yourself time to research and get educated about the subject. Look for alternatives so you’ll have a wider variety of choices and more to compare.
Every three years, shop smarter by thoroughly examining your auto insurance, life insurance (use “term life insurance”), health insurance, telephone and Internet providers, utilities (if you have a choice), and most definitely your investment service providers, since many of them charge exorbitant fees for providing the same service another company might provide for free. Question your providers about their fees, making sure, for instance, that you’re not paying for roadside service as part of your auto insurance when you already have roadside service through another company. If your vehicle is paid for, reduce your auto insurance to liability only and put the money you save in a savings account to pay for your next car.
Shop smarter by reducing credit card interest rates. You could save hundreds of dollars every month and thousands in the long term on credit card interest if you take aggressive measures to reduce your interest rates. Set up a competition between the credit card companies by calling your present credit card provider telling them you’ve received a zero-percent-interest-rate offer from another credit card company. Say that you’re going to do a balance transfer to take advantage of the zero percent offer unless your present provider can give you a significant interest rate reduction. The worst that can happen is that they say “no.” If that is the case, go ahead and do the balance transfer. Oftentimes, the credit card company’s card you just reduced to zero will send you a great interest rate offer to entice your business back. Keep track of when “introductory” interest rates are coming to end so you can then transfer your balance to another zero-percent-interest-rate credit card.
Following these guidelines while getting a mortgage can save you hundreds of dollars a month and thousands over the lifetime of the mortgage. If you already have a mortgage, examine it to make sure sticking with it is the best thing for you. If you refinance, you must calculate what adding the closing costs onto a new mortgage will cost you in the long run and what it will do to your monthly payments. (Excel has an easy-to-use mortgage amortization spreadsheet.) You’ll be able to see if refinancing to reduce your interest rate will actually save
you money.
Educate yourself about the extra fees mortgage providers often tack onto a mortgage that will cost you thousands over the course of the mortgage. Buy a book from your local bookstore or simply go online to learn about mortgage points, yield spread, title fees, back-end fees, ARMs, balloon mortgages, etc. Some mortgages will actually penalize you by raising the interest rate if you pay extra on the principal. Read the fine print. Ask questions. Go to www.bankrate.com to find out what kind of interest rates you can expect in the area you live and to get quotes from various mortgage providers. Find a couple of great mortgage brokers and put them into competition with each other to get your business.
Be a smart shopper by finding someone who is highly knowledgeable about a purchase you’re about to make, someone who doesn’t have any financial interest in your purchase, especially if it is as significant as a house. Realtors, for instance, may be more concerned with their own financial gain then getting you into the best possible house for your financial circumstances. Find a successful real estate investor, take him or her out to lunch, and ask for advice on buying a house. Go to a local bookstore and buy books on house buying.
Be a smart negotiator—get educated about the true wholesale price of the purchase you’re considering. If you’re buying a car, find the “dealer trade-in” (wholesale) price of any vehicle you’re considering on www.edmunds.com, where you’ll find prices in alignment with what dealers pay for cars. Some car pricing companies are in league with dealers and are overpriced so that buyers will think they’re getting a great deal when in reality they are overpaying by several thousand dollars for a vehicle because their wholesale information is inaccurate.
While negotiating, keep this in mind: the first person to mention a number loses. Go over the item with a fine-toothed comb, perhaps using some sort of list you were able to find on the Internet, asking a lot of questions as you go along. You will sound knowledgeable, know exactly what you’re purchasing, and will be able to use what you find as leverage in your negotiations to get a lower price. You may want to let the seller know they will have to correct the faults before you purchase the item.
Keep your emotions out of a purchase! Act uninterested in the seller’s item and again. Let them know there is competition and that the marketplace doesn’t command the price for which they are trying to sell their item. Find out how long they’ve been trying to sell the item. A significant amount of time, such as two to three months for a car, gives you a clue they have probably priced the item too high, and that they may be desperate to sell it and willing to drop the price.
Once the seller has mentioned the price they’re offering, start your negotiations with the wholesale price ever present in your mind as you calculate your “walk-away” price.
Buy smart by staying away from those extras, such as extended warrantees.
Don’t sweat the small stuff! Your time is valuable!
Choose singing and financial success. With a little time and effort you can accomplish miracles.
Assigned: Find money to put into your singing opportunity fund. Examine—with the goal of reducing what you pay—your auto, life, and health insurance, telephone, Internet, utility, investment services, and credit card interest. Apply smart shopping habits to any new purchases.
