Pay Yourself First To Save Money And Enjoy Life

One of the best strategies I’ve heard as method to save money is to pay yourself first. With this approach, you address your savings goals as the first item in your budget, rather than the last.  The principle is that if you address savings as a goal on the bottom of your list (meaning you ‘pay yourself last’), you’ll always find other things to spend the money on and you’ll miss the opportunity to meet or stretch your savings goals.

The money approach.  Say your goal is to save 10% toward retirement.  If you use the ‘pay yourself last’ approach, you’ll address most or all of your budget items before you get to savings.  More often than not, you’ll have less than your stated goal available when you get to the end (and if you still do, then it’s probably time to increase your goals!)  Many times, there won’t be anything left at all, which is how so many people go years and years without saving a single dime for retirement.

By paying yourself first, you put that goal first and foremost at the top of the list. You list the 10% as your top item and work down from there.  The idea is that, by doing this, you will likely find ways to cut spending in other areas so that you can satisfy your savings goal.  It forces you to work a little harder, where the ‘pay yourself last’ approach makes shrugging your shoulders and thinking you can worry about it next year a perfectly acceptable option.

Even though it isn’t.  Not by a long shot.

In some cases, you may truly have such a tight budget that you have to readjust your ‘number one’ goal.  You certainly don’t want to put yourself in a position to lose your house or miss paying a bill.  At that point, the benefits you’d get from that savings goal would be very negatively offset.  But, in many cases, it allows you opportunities to question whether you really are that tight in your budget.  Can you cut a premium cable channel?  Can you eliminate your home phone line and do everything via cell?  Can you limit yourself to one drink at the bar instead of three when you go out? Paying yourself first will put you in a more forced position to ask questions like these, and more importantly, to answer them and apply those answers to your budget.

This is a valuable approach to reaching your savings goals, so why not apply it to other areas where resources are spread thin?  Namely, why not apply it to the one resource that we all have which we’re all faced with the same constraint?

Of course, I’m talking about time.

We all have 24 hours in a day, and only 7 days in a week.  No amount of money or sorcery can buy you anything extra.  How many of us feel ourselves getting stretched thin?

I know I just raised my hand and I’m guessing you either just did or mentally thought about it.

Now, I’m not going to spend the remainder of this article talking about how you can find more time to get things done or to be more productive in your work day.  Nah.  I’m going to talk about how you can apply this principle to give yourself more time which you can enjoy.  That’s a lot more fun to do and it’s a lot more fun to write about.

And, let’s face it, I think many of us could use a little bit more enjoyment out of life.

So, how do you get this extra time?  Simple.  By using the same ‘pay yourself first’ approach which we went over above, you can give yourself time to enjoy life.  I’m sure many of us work, come home, do chores around the house, work on this or that, and if there’s any time left in the day, we might kick back for a few minutes, and that’s our enjoyment time.

How fun is that?  Not very.

It’s important.  The fact is that we need to enjoy ourselves.  The human body and human mind need to experience pleasure on a regular basis.  Otherwise, we get depressed.  It causes us to make poor decisions about what we eat.  We don’t exercise.  Our health can suffer.

So, yes, enjoying yourself is essential for your health.

Therefore, it’s extremely important to ‘pay yourself first’

Time ticks away.  Not only is it important for your health, it’s important to enjoy yourself so that you are getting the most out of your life.  I’ve heard it said many times that, when on their deathbed, people will often wish they spent more time with family, with friends, with their young kids.  Nobody ever says that they wished they had spent more time in the office or cleaning out the basement.

If you have young kids, you need to spend time with them because they will only be this young once.  I look at our kids and they seem to grow every day.  Every once in a while I will just put aside what I’m doing and spend some time playing a game with them or reading books to them.  Even if I have a list of twenty things to do, in ten years nothing on that list or any similar list will be important enough to remember, but there’s a good chance I’ll remember the bond that I built with my kids during these times with them.

Later is there.  Besides, when my kids grow up and move away someday, the list of things that I’ll have to do?  That will still be there even though my kids won’t.  So, while crossing things off a list can make you feel accomplished, it doesn’t matter as much in the long run.

Understand balance.  One of the things that’s important to remember and figure out is how to balance this.  In no way am I advocating skirting all of your responsibilities and living every moment for the moment.  If you go overboard like that, chances are you’ll lose your job or things will start to look so bad around your house and yard that life will become unbearable in new ways.  This is not what I’m suggesting at all.

The key is to find a balance. The financial example I used above had 10% as a target number for retirement savings.  Set a similar percentage of time where you enjoy yourself first.  If you get home at 5:30 and you go to bed at 11:30, that’s six hours.  Dinner and such likely has an obligation there, but if you find the rest filled up with ‘things to do’, set a goal of 15 minutes a day or, maybe a half hour two or three times per week, to do something enjoyable.  Spend time with your family.  Catch a favorite TV show.  Go outside and do something you enjoy.  Exercise.

Making up the difference.  One of the concerns she has is that if you take that time away from ‘getting things done’, you’ll end up leaving things undone or incomplete.  This can cause a certain amount of stress that could negate the good that comes out of your newly taken enjoyment time.  If you get stressed out, chances are you’re just going to drop your time to enjoy life.  So, what do you do instead?

  • Prioritize – Out of all the things you do on a regular basis that take your time, chances are some of the tasks could be eliminated.  If you’re not getting value from something you’re doing regularly, reduce the frequency or eliminate it altogether.
  • Set time limits – One blogger I follow addresses this issue by carrying around a timer for certain tasks.  This causes her to ‘work’ faster and limits her time on some tasks that could otherwise consume massive amounts of time if left open ended.
  • Outsource – If you have a ton of things that have to get done, sometimes paying someone to do one or two of them is a worthwhile approach, especially if it frees up some time for you to enjoy life.  You have to look at the opportunity cost and available money to pay someone, but now and then adding an extra expense can be worth it, so long as you have the money to do so.

I guess this post is about as close as I can get to tying back to the old adage of ‘Time is money’ because for most of us, they are both limited resources that we must make work effectively, and in both, we must find ways to achieve balance.  So, in the end the ‘pay yourself first’ approach is a pretty natural fit if you think about it.

Do you use the ‘pay yourself first’ approach in how you handle money or time?  Do you think there are areas where this would make sense?  Readers, I’d love to hear your stories and thoughts.

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I Saved $62 Just By Asking

It never hurts to ask, right?

That’s never more true than with two examples in the past week that have saved me $62.

First stop: The vet

If you haven’t been able to tell, we’ve been getting good use out of our new (to us) camper over the summer.  We’ve taken ‘The Bird’ (as we affectionately have nicknamed it) for two trips over four days, and have one additional one planned later in the month.   In addition, we’re doing a weeklong trip with my in-laws around Labor Day to cap off the summer.

As any cat owner knows, cats generally don’t vacation well.  Dogs, you can take them on a trip and they’ll love it.  Not so much.  Add to this the fact that I have two old cats, both of whom need medicine and special food served to them at set intervals of the day, and leaving them home for more than a couple of days isn’t an option (and even then, we have to rely on the generosity of family or neighbors).  This means we have to board the cats.

I’ve been using the same vet for sixteen years.  I know this because I started going when the sixteen year old cat was a kitten.  They’ve taken care of all of my pets exams, medical issues, and boarding needs for that entire time.

And with all the trips this summer, the boarding costs added up quick.  I also purchase all of the special food that they get, as well as most of the medicine.  Between exams, food, medicine, and boarding, I shudder to add up the costs except to know it’s ‘A Lot’.

So, I sent an e-mail to the office manager asking for a courtesy discount.  I politely outlined the length of time that I’ve been a customer as well as pointing out the services and goods we purchase from them and how they add up to what has to be good revenue for them throughout the year.  I asked for a 5% reduction on everything moving forward.

I knew perfectly well that they were going to say no.

And they did.

But they offered me two free nights of boarding costs for the cats.  We have two more boarding visits left this year, so that’s one night off each one.  They charge $25 per night for the two cats, including their food and special medicine and all that.  This will save me $50.

Actually, I think this works out almost as good as the 5% I asked for, especially if I ask (and I will) again next summer for another discount.

Next stop: The Newspaper

I get the paper delivered to our door.  Well, actually the bottom of our driveway, but you get the point.

The Detroit papers now only do home delivery three times per week as a cost-saving measure.  Along with that, you can’t really get a ‘Sunday only’ option as you could in the past.  You pretty much have to get all three days.

I signed up a couple of years ago at a really good price.  I think it was around $25 for a six month subscription.  Every six months they automatically renew you, and they bump up the price so that the promotional rate gets smaller and smaller.  The increases went up around $10 per six months.

Even with the raises, it was still a pretty good deal considering that the Sunday paper alone was $1.75.  This was recently raised to $2 about a  year ago.  Meaning that anything over $52 for a six month period was ‘costing’ me money, but anything under that was a savings to me (this works if you value the non-Sunday papers at $0, which I do).  So when the price went up to $54 last time, I called and inquired if they would reduce the price.

At that time, they wouldn’t.  I figured an extra $2 on top of the $52 was worth it for the fact that I wouldn’t have to go out every Sunday and get the paper.

So, it worked.

Until the last bill, when they raised it again and it was $66.  This time I called and once again asked for the price to be lowered.

She told me, no, that the ‘regular’ rate was $90 so I was still getting a discount.

Fine, I said, then go ahead and cancel my subscription and refund the money (they charge in advance).  I can just go down the street and get the paper for what amounts to $52 a period.

With a $14 difference, I actually was prepared to do so this time.

Hold on, she said.

Two minutes later, she came back on the line and said that they would do the next six months at $54.  Actually longer, because I just let them extend the subscription to cover the extra $12.  So I have about eight months before I have to deal with it again.

All told, that adds up to $62 in ‘savings’ just by asking.

When was the last time you saved money just by asking? 

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Planning For A New Roof

Our roof is around 13-14 years old depending on what period of the construction process in which it was installed.

In any case, it’s showing it’s wear and is probably not long for this world.

The deterioration of the roof has become apparent in three ways:

  1. Eroded valleys – This is a design flaw more than anything else.  Our house has two stories, and the second floor is a little smaller in the front of the house than is the first floor.  As such the downspout from the front portion of the second floor simply drains straight down into the valley that takes it the rest of the way.  All this extra run-off has rapidly deteriorated those valleys (there’s another around the garage area).  When I get the roof re-done, I’ll either have them install extensions to carry the water all the way to the lowest level of drainpipes, or have it doneafter the roofers are done.
  2. Shingle curling – The shingles are starting to curl along the edges, likely from all the exposure to the sun.  I had given thought over the last year or two to having the valleys patched to give it some time, but once I’ve seen the rapid pace at which the shingles are curling, that would likely be wasted money.
  3. Discoloration / mildew – The north facing side of the house typically doesn’t get as much sun, so the dew and rain don’t dry off as fast, which leads to many houses developing mildew.  We also have a few trees overhanging this, so this has reared its ugly head over the last couple of years, as the roof above our garage looks nasty.Had the shingles been in better shape I would consider power washing them to temporarily remove this discoloration, but as it stands, the power washing would likely just accelerate the deterioration of the already-wearing shingles, so it’s not even worth the bother.

I had been hoping to make it to 2014, but things are progressing rapidly enough that I could see this taking place in 2013.

I’ve been asking the neighbors their thoughts, as many of the houses around us were completed around the same time.  Some neighbors in other parts of the subdivision have already replaced the roof, and most of the ones I’ve spoken to have indicated that they’re estimating the next couple of years as the time, so I know I’m in the right range.

I’ve also been asking around to neighbors that have already had their roofs done or who have received quotes, just to see if I can estimate what our costs might be.

I know I want to have the current roof removed.  Technically, you can add another layer but I’m not interested in putting new shingles on top of ones that have already deteriorated.  I just don’t see them lasting very long, and that would just hide any potential damage that lies under the current shingles.

I also want to replace the big box vents that air out the attic with ridge vents, that run along the top of the roof line, give  more even distribution of heat out of the attic, and I would also think would release more heat, given that they’re at the peak of the roof versus the box vents that are located at least a few feet below the roof peak.

I’m estimating that this will probably cost $5,000 – $6,000 given what I’ve heard from other neighbors and comparing the sizes of our houses.

We’ve been saving for a new roof since we moved in, knowing that it would eventually happen, so if we can wait until 2013, we should have all of this covered in our earmarked account.  If it needs to be done this year or if the cost is higher, we have enough other earmarked accounts that we could cover ourselves easily.

I also wonder if it would be of any benefit to try to collaborate with the neighbors.  If we all plan on getting it done at around the same time, it might be worth checking with a company to see if there could be any type of a break for multiple neighbors on the same block agreeing to do their roofs simultaneously.  I am not putting a lot of hope in this, as everybody has different schedules and will likely be looking at different criteria when choosing a contractor, but still, you never know.

What has been your experience with a new roof?

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