99 Ways to Save Money – Episode 204

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[00:03] Welcome to the Prosperity Podcast, fresh alternative personal finance talk for independent thinkers who prosper outside of Wall Street. Here’s your host, best-selling author, Kim D.H. Butler and No BS Money Guy, Todd Strobel. Hey everybody, welcome back to the Prosperity Podcast. This is No BS Money Guy, Todd Strobel. Once again, we have best-selling financial author, Kim Butler with us today and we’re going to be reviewing an article that I found in AARP magazine. This would be the July-August 2017, volume 58 and they put out an article called 99 Ways to Save Money. So I want to just run some of these, obviously you aren’t going to get through all 99, past our expert Kim and see what her opinions are.

[00:58] How are you Kim? Wonderful. I’m going to lend my opinion on this subject. Some of these deal with financial advising and some of them are just practical tips but either way it’s money that could be potentially better spent, maybe. So number 99 starts out at max out your retirement plan. One fourth of workers at companies offering 401k plans don’t get the full match missing out on an average of $1,336 in free money annually. Interesting. So I also want to identify that these 99 items started numbers 1, 2 and 3 with small dollars and the 98, 99 or I guess I should go 99, 98, 97, 96 ones are large dollars. So that is actually number 99, huh? The biggest thing that they can come up with is matched on your 401k.

[02:01] Alright well I can go with that. It’s interesting though, if you are right out of college or even in your first probably three, four or five years of quote adulthood, I absolutely would not contribute to a 401k because your dollars that you should be saving need to be building up your emergency opportunity fund. Now if somehow you manage to graduate college with an existing savings account or an existing emergency slash opportunity fund in some form, I’m talking liquid money, not an IRA, not a Roth IRA, not anything of the sort, but liquid dollars, then you could go ahead and yeah, contribute to a 401k up to the match level, MATCH, because we’re big believers in contributing beyond that is not efficient.

[02:55] And so for anybody else, yeah, you can contribute to your 401k. You know, just as I’m saying this, it dawns on me that really anybody of any age should start first with a savings account, a literal savings account at a bank and then upgrade to storing their emergency slash opportunity fund in whole life insurance, but then contribute to the 401k. So in my book, this is the third financial step, the 401k up to the match that somebody should take the third one. I think what you’re maybe not picking up on because you’re not looking at it written out is the title is max out your retirement, but then the comments below are put money in up to the full match and those are there. They’re associating that as being the same.

[03:53] And I have never seen a company that matched up to the maximum contribution. Those are two entirely separate numbers. Absolutely. Yeah, that’s very interesting that they didn’t pick those apart. And it’s why you and I, when we’re podcasting, spell it out because it’s so difficult to tell the difference between the words verbally sometimes. But yeah, so that I’m, I appreciate you making that distinction. And so that we’re all clear here on the podcast. It’s 401k up to the match MATCH level all other dollars should be doing something else where those dollars are not locked up in a box until 59 and a half. Number 98 is apply for free meds through the Partnership for Prescription Assistance. This is PPARX.org.

[04:48] Qualified patients can get help. Now this looks like an interesting website if you’re on a different prescription drugs. And the example that they gave was a drug named Victoza. I don’t know what it does, but you would save $2,096 a year by going through that service. Interesting. Well, cool. List the website again. PP, as in Paul, Paul, A as in Apple, R as in Rudolph, X as in x-ray.org. There you go. Away for $2,000. How about this is another one I found interesting was audit a college course. Many universities offer free auditing, particularly for seniors, which would save an average of $3,117 per course. Interesting. Do they mention whether it’s online or not? No. It just says, you know, if you don’t want the grade or in the credit, then

[05:49] you can audit a course. And it’s particularly for whatever the definition of seniors are, but I guess it’s available to. I’m beginning to read more about free college education coming out more and more online for everyone. Right. Well, learning is always good. And so, yeah, that’s a great idea if somebody is interested in learning about something that they don’t have the skills in and whether it’s online or in an actual classroom. I mean, there’s nothing wrong with getting all the social good that comes from attending an actual class. One of my mentors, Dan Sullivan, likes to have lunch once a month with a 20 year old. He’ll just pick a friend’s kid or a client’s kid or niece or nephew or whoever once

[06:39] a month. And he takes the 20 year old out to lunch and just learns whatever he can from them. So I think that’d be great to mix in some of the wisdom that the elderly people And I use elderly like anything over 25 would have with everybody else that’s in college, which, of course, is going to be mostly under 25, of course, that’s changing these days as well. A lot of 40 and 50 year olds back to school and learning new things. So that’s all good. As I mentioned, I’m not going to be able to go through all these, so I’m going to kind of skip around. But number 93 is pay your mortgage twice a month. A $300,000 mortgage at 4% costs $14.32 a month. Pay $7.16 every two weeks and cut your annual interest payments by $1,138.

[07:33] So they’re correct in that it would cut your interest payment, but it would not reduce your costs. And this is one of the hardest things to get a handle on. I literally, as a professional, like when I was doing financial advising early in my career, I had to spend a good year on this subject before I fully understood the difference between an interest payment and an interest cost. And so, of course, our recommendation is absolutely please do not do that. Do not prepay your mortgage. Do not make 13 payments a year. Do not make 24 payments in a year. Do not, do not, do not anything that causes you to have a short-term mortgage. Unless, of course, you’re just after peace of mind and you don’t care about financial

[08:22] efficiency, then have at it. Because if that’s what gives you peace of mind, then that’s what you should do. For me and my family, I have a lot more peace of mind. If any extra dollars are available, I put them into my whole life insurance cash value, either as a premium or as a paid-up addition. And then that builds sufficient value for me so that if I can’t make a mortgage payment one month or even in the future, if I wanted to pay it off, which I can’t ever see myself wanting that, but let’s say something changed, then I would have cash value to do that. So we’re not big fans of prepaying mortgages and making 24 payments a year as a prepayment, just like making 13 payments a year as a form of prepayment.

[09:10] And though technically, yes, it would absolutely reduce your interest. Your interest is what causes you the tax deduction, which is a good thing. And it is not going to reduce your cost. Prepaying a mortgage may reduce your interest, but it does not reduce your overall net-net cost. So if you’re curious about that, grab the book Busting That Interest Rate Lies. I encourage you to actually get the physical book, not the audio, or at least get both, because we walk through it with calculators from A to Z. Transfer credit card debt to a card with 0% interest will save the average American $2,400 a year in credit card interest. Wow. Yep. And so if you have credit card debt and you still have good credit, that

[10:01] is an absolutely fabulous strategy. And I think you can play that game every year or so. Of course, during that time, you’ll want to be putting those extra dollars into that credit card debt so that it gets reduced down to zero and you can get yourself in a position where credit cards are used for expenses and then paid off every month. That will save you a whole bunch of money. They also mention a website I think we should list, even though I haven’t checked it out, called wallethub.com, wallethub.com. I think what they do is they basically list how the credit cards work against each other so that you know where the best ones are. Interesting. All right. Thanks. That’s a decent one. This one I’m kind of afraid of.

[10:52] Well, I don’t know. It kind of makes sense, I guess. We’ll see what your opinion is. If your car is paid off, you can cancel the collision coverage, which will save $300 a year. Yes. I have actually done that. I experimented with that strategy because it was shared with me at some point and I didn’t have any adverse effects from it, but I will also admit I haven’t ever done it again. Interestingly enough, I ended up causing my own problem with that car by going around a corner too fast and ruining it and so the insurance did whatever it did, but yeah, I agree with you, Todd. I don’t think that that’s a wise idea, mostly because if it’s only $300, good heavens, that to me is not worth it. I would so much rather shift the risk of all things car related to a car

[11:53] insurance company because nobody can deal with that risk better than a car insurance company and I would rather take on my own risks of things that I can control and have, for example, cash value of life insurance and savings account dollars for emergencies and opportunities and be focused on the opportunities rather than be focused on having to use some of my own money to deal with a car repair in the event of a collision. So I’m not a big fan of that one either. Here’s one I found really interesting and it says to pick your flights carefully. The cheapest days to fly are Tuesdays, Wednesdays and Saturdays. Uh, fair compare.com revealed that a Boston to Las Vegas round trip costs $500 on Friday to Sunday, but $228 from Saturday to Wednesday.

[12:48] I interesting if you’re not on business and have to be there certain days, right? And I’ve definitely heard the Tuesday, Wednesday thing before. And so, yeah, if you can control that, that’s awesome and a great way to do it. And, um, if you can’t obviously still picking around amongst affairs is a good thing. Boy, something to alert listeners to. If you haven’t reserved airlines recently, airline tickets, the airlines are coming up with additional categories of economy. And so, and I think they’re all doing it like United and Delta. I know for sure you have economy and then you have economy plus, and I can’t even be specific on the differences because it was so confusing, but, um, one of them does not allow any carry on luggage.

[13:36] Like you can have a purse or a small backpack and that’s it. So, um, kind of disappointing that they’ve chosen to go that route instead of just upping the price a little bit for everybody and letting us go back to putting our bags underneath and not charging for those. And then the few people that need to can store them up top. And it was so much more peaceful on flights when it was that way. All right. Let’s see what we’ve got here. Oh, here we go. This one, I never heard of before. Hire a haggler. Companies such as bill fixers and shrink a bill will haggle with your cable TV company or other service providers to provide one third or one half off your annual bill. They claim to add their average $300 per client per year and savings.

[14:27] Interesting. Okay. Well, that’s cool. And I know some people like doing that kind of thing on their own. And then others of course, wouldn’t touch it with a 10 foot pole. So, um, you know, what is it? Fiverr and, um, well, even LinkedIn and all the various virtual assistant sites that are out there, um, up work and, uh, get leverage, et cetera. They they’ll do anything. That’s awesome. This one you’ll like quit drinking soda. You’ll save $120 a year. 120. Wow. That’s interesting. You know, I’m guessing that that’s maybe just grocery store money. I wonder if they added up the amount of money that people spend where they’re just popping through McDonald’s drive in or whatever for soda all the time, um, plus don’t we have to add some dental bills

[15:25] to that, you know, if you’re drinking water instead of soda, doesn’t that cut down on your dental bills a lot? Probably healthcare overall. Right. Right. Yeah. Absolutely love it. That’s a fabulous suggestion. Boy, I could, um, well, our mascot likes that idea. Yes. Yes, she does. Um, and the last one I think I’m going to use, and then, like I said, we invite you all to check this out again. This is AARP, um, July, August edition, um, is to, uh, get reimbursed for ATM fees, most online banks and some traditional banks will reimburse you for fees incurred when you use another bank’s ATM, but it’s your responsibility to ask. So you, it’s an average saving is a $4 and 57 cents per transaction. Wow.

[16:18] Yes, absolutely. It’s so important to keep an eye on stuff like that. That little type of thing can really add up. And if you’re willing to pay for convenience, okay, fine. But if it becomes a habit, then I think that’s where it causes you trouble. And, you know, we could take this whole bank fees discussion to the nth degree because there are all kinds of things you can do. Keep a minimum balance and add a savings account and have bill pay on your debit card, you know, just depends on the bank and their rules. But it’s definitely something to be really aware of because while banks technically are not having negative interest rates right now, they are having high fees and in essence, those fees are equivalent to us

[17:05] having negative interest rates. I mean, that’s, that’s what we’re doing. We’re paying the banks for them to store our money. And we all need the convenience of a checking account without any doubt, but when it comes to things like savings accounts and possibly storing our money in other places, it’s something that every family needs to take a look at. We personally keep checking account money, of course, to pay next month’s bills, but pretty much everything else we store in cash value of life insurance, because it earns a better overall growth rate, number one. Number two, it’s net of all fees. And number three, then it supports the death benefit and the waiver premium and all the other good things.

[17:45] Plus it’s stored at a life insurance company instead of at a bank and life insurance companies back up their reserves dollar for dollar, whereas banks do not. Awesome. Well, I think before we wrap up, the only other thing I’d like for you to address is that, you know, saving is not the only way to increase cashflow additional earnings. I mean, if you spend so much time saving that you start to sacrifice earnings, you can be digging a deeper hole. Absolutely. Yep. It’s got to have the whole point of view in your eyesight and seeing that big forest, if you will, not just the oak tree that’s in front of you is not an easy thing to do with our personal finances. So you’ll want to stay tuned. We’ve got something that we’ll be releasing in another couple months that

[18:39] we believe will help you keep a picture of your entire financial environment in your head, rather than the typical, you know, even meant.com and some of the various, like you need a budget sites, YNAB and other things. They just don’t really portray finances in the way that I feel is helpful, you know, they’re great for paying the bills and maybe keeping an eye on a budget, but I believe that what we’re going to come out within a couple months will be more valuable. So stay tuned for that. Super. Well, thanks, Kim Butler. Again, this is No BS Money Guy, Todd Strobel for the Prosperity podcast. Take care, everybody. Thank you for listening to the Prosperity podcast to take control of your money and have it work for you.

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