Learn how to defer costs so save you thousands of dollars a year with virtually no impact on your daily lifestyle.
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We've talked a lot about saving money before with articles like Financial Wisdom: Live Beneath Your Means, Five Ways To Save Money On Food, Living Below Your Means, and Practicing Financial Wisdom. But did you know you can save bundle of cash simply by deferring costs?
What Does It Mean To Defer Costs?
Quite simply, deferring costs is nothing more than delaying or putting off the spending of money. It's an incredibly simple concept and something virtually everyone can do with little to no impact on their lifestyle. Best of all, you can reap huge savings using this method.
So, What's The Downside?
There is really no downside to this method of budgeting your money. The problem is knowing when to defer costs and when not to defer costs. If you defer some things now they could come back to bite you later with much higher costs later. This article is going to explain, with real world examples, when you may want to defer and when you may not want to defer costs.
What Costs Should I Defer?
While this isn't intended to be a complete list of purchases you can defer, as everyone is different, it will give you a good idea where to start deferring costs and saving money.
Grocery Store - Avoid Random Trips
Look at your monthly food budget and you're probably spending hundreds to thousands of dollars (depending on eating habits, family size, etc). You can't stop buying food to eat, but you can defer it by sticking to a schedule. For example, avoid random trips because you need milk. Those "milk runs" often end up in many other items being purchased as well. Defer that milk run until your next scheduled trip to the store. Chances are good you'll live without milk.
Grocery Store - Extend Scheduled Trips
Adjust your grocery shopping schedule by extending it. For example, do you normally go shopping every Saturday? If so, you're going to the store every 7 days. Try extending that to 8 days or longer if you can. After 7 days you probably still have food in your house so eat that food rather than letting it go bad and getting tossed out simply because you bought new food.
If you're on a weekly schedule you're grocery shopping 52 times per year. Adjust that just one extra day, to an 8 day cycle, and you're now shopping 45 times per year. That's 7 fewer yearly trips and if you're average grocery bill is $200 then you're saving $1,400 per year or over $115 per month!
The cell phone companies have gotten us used to getting a brand new phone every two years because we have to have the latest, greatest, shiniest new iThing even though it's basically the same as the last iThing. Face it, we're iSheep. Break out of this nonsense and save big! When you're phone is paid off (usually after two years) drop your monthly cell bill down (as your phone is now paid off) and avoid jumping right back into a new phone.
Wait 6 to 12 months or as long as you can and then buy a new phone. Better still, wait for a deal on a phone that's a model year older than the latest and greatest. Many of those are a fraction of the cost of the newest models. This is even easier if you know how to Easily Kick Your Smartphone Addiction.
Impulse buys are the easiest way to throw your money away. What's worse is that we live in a world that is run by marketing and advertising campaigns designed to separate you from your money. This one takes self control, but if you master it you'll save in amazing ways. See something you want? Avoid buying it right then. Wait a while and see if you still really, really want it. Wait a week or a few weeks if you can and chances are good you won't want it as much or at all then. If you still want the item then wait for a deal or sale before picking it up.
Got to have your Starbucks every day or week? As a shareholder, I thank you for that. But as somebody trying to save you money I want you to do better. If you go weekly then use our grocery store trick above and go every 8 days (or longer). If youre Starbucks (etc) habit is a daily one try going every other day. Too much to handle? Then skip one day per week and you'll be buying 52 fewer coffees and probably saving $250-$500 annually.
Besides, processed foods probably aren't the best for you. See Are Processed Foods Bad For Your Health? and Processed Foods And Your Digestive System for more on that. Have to have that daily coffee no matter what, then buy yourself a coffee maker and use that on your "skip" days.
Grooming & Personal Care
First off, I don't want you to stink like a patchouli wearing hippie at any point. But you can certainly defer some personal care and grooming costs very easily. Do you get your hair cut or styled every month? Add an extra week in between visits and you'll drop your annual visits from 12 to 10 which could save $50 to $250 every year.
The same goes for things like manicures, pedicures, hair dye, etc. The best option is to skip these things entirely but if you must "treat yoself" then just extend the time between visits and save big.
The Internet didn't kill the magazine world and likely won't anytime soon. We still like magazines but rather than renewing yours when the subscription is up let it cancel instead. Then, wait a few weeks or maybe a month or two. Watch as most publishers send letter after desperate letter trying to get you back at a reduced rate, often in the single digit dollar amount for a year. These rates are often far lower than the "renew before your subscription expires for our lowest rate ever" deals. Then renew and repeat the following year but avoid being put on any type of auto-renewal / auto-payment plans (the real reason for those ultra-low "come back" offers).
Next to home buying and car buying, vacations are one of the biggest items we spend huge amounts of money on. Want to visit a paradise like Hawaii? It's going to cost you! We've already covered Five Ways To Save Money While On Vacation so what's left? Defer your vacation!
Do you take an annual vacation? Then extend that to every 18 months instead. You'll even get to experience places at different times of the year by doing this rather than the same season every year. Or, take that big vacation every 24 months and then on "off" years take a smaller and cheaper vacation instead.
It's insane to think that a family can easily drop $100 to go see the latest movies at a theater when you factor in ticket prices and snacks. Instead, stop seeing the latest movies and find a cheap theater that plays older movies and enjoy those. Many cities have older "dollar theaters" that play movies that might only be 6-12 months old for a fraction of the price of the latest films at a fancy theater. Do this for a little while and pretty soon those "new" movies are now older and at the cheap theater but still brand new to you. Want to save more? Stay home and stream your video entertainment, starting with the Best Netflix Shows You've Never Seen.
I love dining out. I'd eat out daily if I could. I love trying different types of food and not having a mess to clean up when I'm done. Instead of eating out 3 times a week you can try eating out 2 times a week. If you eat out weekly try going every 8-10 days instead. You'll save a bundle and hardly notice the difference. You can also swap a dining out experience with takeout and save on drinks and tips while still eating the same food.
The best way to save on energy bills is to stop using energy. Since that isn't realistic, the second best thing is to use less. We cover this in detail in Five Home Improvement Projects That Increase Energy Efficiency and Seven Energy Efficiency Tips for Your Business but there's another way. While you can't defer paying your energy bill, you can defer your energy schedule.
If you normally turn your heating or air conditioning on at 6:00 PM when you get home from then work try waiting a bit longer. Maybe 30 minutes or 60 minutes longer. If you normally schedule your thermostat to turn offer at 7:00 AM when you leave for work then try setting it for 6:00 AM instead. You don't need to heat/cool your house right until you leave as it will retain comfortable temperatures for quite a while much like an insulated mug keeps coffee warm.
What Costs Should I Not Defer?
Just as important as knowing what you can defer is knowing what not to defer. Here are a few of the top costs you shouldn't consider deferring.
If your home is in need of a repair then take care of it right now. Putting off a home repair can lead to huge complications and costs later on. For example, a small roof leak now could lead to thousands in water damage if left for weeks or months. It's been suggested that for every $1 you defer in home repair costs, you'll end up spending $4 in repairs down the line.
Just as with your home, keep your car well maintained at all times. Think you can drive another week with that check engine light on? You might be further damaging your car with every mile you drive. What could have been a $250 fix may end up being a $2,500 fix or more.
Human Repairs (aka, Your Health)
Your home and car maintenance is important, but it doesn't compare to maintaining your body, mind, and overall health. Keep yourself in shape, eat right, and see a doctor when needed. Don't skimp in areas of health. Not sure where to begin? Then read A Healthy Lifestyle - Where Do You Start?, Effects Of Exercise On Medical Conditions, Finding The Right Balance For Optimal Health, and Reducing And Managing Stress.
Never skip or defer paying your bills. If you owe it, then you need to pay it. Trying to go without home, health, or car insurance for a while isn't smart and not worth deferring. Buying on credit is a recipe for disaster as well. Credit cards getting you in trouble? Read When Should You Cancel a Credit Card?
So there you have it, a complete guide to saving huge piles of cash simply by deferring costs. As you've learned, this is an easy concept as long as you understand the fundamentals of what can be deferred and what cannot be deferred.
If it seems a little overwhelming then start with just one of the items listed here. Give that a try for a few days, weeks, or months and then add a second item to your defer list. Keep adding items and pretty soon you could be saving thousands of dollars every year without noticing any really impact on your daily lifestyle.
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