The Definition Of “Afford”

This post was inspired by a post I read on Well Heeled Blog entitled, fittingly enough, “The Definition Of Afford.” In it, WellHeeled outlines what the word “afford” means to her. This post is an attempt to spell out, to myself as much as to anybody else, exactly what the word means to me and how I integrate it into my daily life.

Will This Purchase Improve My Quality Of Life?

This is the most important consideration for me, and it’s all about value. I don’t mind buying something expensive if I’ll get a lot of value out of it. For example, I don’t really watch much TV so I don’t own a big plasma TV. Would it be nice to have a $2000 television? Of course it would. But there’s no way I would get good value out of a purchase like that taking into account how little television I actually watch, so I don’t own one. On the other hand, I do enjoy a nice meal out and don’t hesitate to drop $80 on a good meal every once in a while. I consider a good meal with good company a good bargain at twice the price. And that $5 latte? Screw it, I love coffee! And I’m going to continue wasting money on good coffee, than you very much.

Will This Purchase Enable Me To Meet Long-Term Financial Goals?

Will I have to go into debt to make this purchase? For some things, such as a house, that’s probably unavoidable for most people. But going into debt into debt on its own isn’t enough to disqualify a purchase as “unaffordable.” For example, if the home I buy appreciates in value over the years while my mortgage payment stays the same, I will almost certainly come out ahead versus long-term renting. Similarly, where I live in Atlanta you pretty much have to own a car. Public transportation sucks unless you live and work in very specific areas of town. Thus, most Atlantans simply have to have a car to get to work every day. I think “getting to work” would fall under the “enable me to meet long-term financial goals” category, so the purchase is reasonable. I’m not going to go out and buy a Porsche or anything, but my Toyota was certainly a reasonable and affordable purchase.

Will This Purchase Negatively Affect My Ability To Meet Long-Term Financial Goals?

The flip-side of the above, any purchase that will negatively affect my ability to meet my long-term goals is unaffordable, no matter how small that purchase may be. If that $5 latte was really truly causing me to have to cut my 401k contributions I might have to reconsider. But even in that case, I think the most reasonable solution to that problem is to find a way to earn more money, not cut small expenses from the budget. It’s true cutting recurring expenses can have a positive impact on your bottom line in the short term, but at the cost of a lowered standard of living. Remember, it’s okay to spend money on things that truly make you happy. The trick is knowing which is which.

Put in my concrete terms, my target is to save 30% of my pre-tax earnings every single month. If a purchase makes it so that I won’t be able to save 30% of my pre-tax income, I probably can’t afford it. If not, I usually feel comfortable buying pretty much whatever I want so long as I meet that minimum standard of savings. Even frivolous purchases are fair game at that point.

Am I Buying This For Me Or For Social Status?

I get it: iPhones are cool. They are useful. They make pretty pictures and fun noises. But do I need one? No. Would it improve my quality of life even slightly? Probably not. The only reason I can think of that I would buy an iPhone, realistically, is to be able to say I have an iPhone. Is there anything wrong with that? Not really. And if I’ve already met my 30% savings target, there’s really no harm in buying an expensive gadget. But it’s important to at least see the purchase for what it is, and that’s to buy social acceptance. And yes, despite this example I am going to be buying a smart phone in the near future. It probably won’t be an iPhone, though.

What Is Your Definition of “Afford?”

You are bound to agree with some of what I’ve said and disagree with others, and that’s fine. Everybody has a different idea of what it is to be able to afford a purchase. The exact definition doesn’t matter so much, I don’t think, as the fact that you’ve actually sat down and thought about what’s important to you personally. So what about you? What criteria do you use to judge whether or not a purchase you’re considering is affordable?

Credit Card Reward Programs

Believe it or not, credit cards are not entirely evil! If you have a credit card, it’s possible that you could have travel benefits you aren’t aware of. Travel rewards cards offer free flights or discounted car rentals and hotel stays based on rewards earned through using your credit card. Even if you don’t have a credit card with a travel rewards program, there is a good chance that your card may offer complimentary travel accident insurance, car rental insurance coverage and even emergency roadside assistance? These extra travel benefits are offered at no extra cost to you and can save you considerably over purchasing similar coverage on your own – and they offer protection if you run into problems that would normally cost you quite a bit of money to recover from.

Travel in the Off-Season

Many people choose to travel around a major holiday, to spend the holidays with family or friends they don’t get to see very often. Prices for all travel related expenses tend to increase around every holiday, which means you’re paying more than you need to to travel during these times. Instead of celebrating Thanksgiving on Thanksgiving Day, consider celebrating a week early or a week late. You might be surprised to find the same plane ticket costs several hundred dollars less when it’s purchased for a week that doesn’t include the Thanksgiving Day travel crowd.

Save Money on Food while Traveling

If you’re traveling and don’t want to spend a lot of money on food, try to choose a hotel that offers free breakfast in the price of the room. You may be able to bring a piece of fruit with you when you finish (which is great for a snack or lunch time). Restaurants are cheaper if you go during breakfast or lunch – so why not eat a later lunch and either skip dinner or make sandwiches later in the evening?

Other ways to save money on food expenses while traveling is to order an appetizer as your main meal, or to share an entree with your travel partner.

Being flexible is the key to saving money when traveling. Even when you’re watching your spending, it can be possible to take inexpensive trips.

Free Clinics & Sliding Fee Hospitals

If you are one of these Americans there are many ways to save money and still get the quality of medication you need to recover. There are free clinics that will prescribe medicine for free or near free. Simply contact your local social services office and get a list of these clinics. If there are no free clinics in your area, look for sliding fee scale hospitals. These sliding fee scale hospitals may require you to bring proof of address, a copy of your pay stub and a statement from your bank. They will lower the cost of your visit and medications based on what you able to pay. Again – call your local social services office, and then the sliding fee hospital to see what paperwork you need to bring with you.

Charity Care Through Hospitals

If you do not have these options available to you there’s a few more ways to save money. Some hospitals may offer charity care. Call the hospital ahead and ask if they offer this solution. Many hospitals taking in funds from local churches offer this solution. The charity care forms will usually cover the Americans caught in this middle ground area. They take into account bills you may have to pay and dependents

Wal-mart Prescriptions

Another option is to choose where you get your prescriptions. Wal-mart for instance, is one of the pharmaceutical providers that try to keep prices low, but check your area for others. Wal-mart will usually substitute your brand name prescriptions with generic based. Do not for a moment think that generic medicine is worse for you. Generics are the same exact medication made by any other company other than the original makers. Remember that what your mostly paying for is the name of the company not the actual medication. Just ask your doctor to prescribe you a generic form of the medication you need, and ask Wal-mart to give you the generic form. Ask Wal-mart for a list of their $4 prescriptions to provide your health care professional to see if they can choose from one of these medications when prescribing.

These are a few simple ways to keep the cost of prescriptions and health care down. You will not break the bank while recovering from broken limbs or illness! Americans who fall in that middle ground no longer have to make the choice of alleviating the symptoms, pain or illnesses and being broke.

Smart Fortwo

It may not be everyone’s cup of tea, but the Smart Fortwo does have some plus points. If the majority of your daily driving is in the city, then the Smart’s ridiculously small size will make parking a breeze, and even better, the Smart is so economical that you won’t pay any tax on it at all. If you go for the diesel option you will have the luxury of rarely stopping for fuel – an estimated 69mpg on the combined cycle is very high, indeed.

Toyota Prius Hybrid

Economical cars aren’t always the best looking of the bunch – and the Toyota Prius solidifies this stigma. But, if you’re after a spacious, cheap to run and no tax family car then the Prius may be the vehicle for you. Its electric motor and petrol engine work together to achieve a CO2 rating of just 89g/km and theoretical miles per gallon figure of around 60mpg.

Volkswagen Polo BlueMotion

Another victory for blandness here, but the Polo does put up an interesting fight for itself. The Polo BlueMotion is just a normal car – no electric motors, no hybrids, just simple engineering in a simple small package. True, a three-cylinder 1.4-litre diesel engine isn’t going to win you many friends, but 74.3mpg will probably mean you end up richer than your peers – think of the positives!

Ford Fiesta 1.6 TDCi Econetic

The Ford Fiesta is one of the best looking hatchbacks out there, and Ford’s efforts to make an ‘eco’ Fiesta are worth a considerably amount of praise. To make a car economical, manufacturers have to fit thinner tyres, more aerodynamic wheels and a whole host of other – often visually disgusting – modifications. Ford, though, have achieved an economical 76.3mpg from their Fiesta and still managed to keep some of the sex appeal that the standard car exudes with ease.

SEAT Ibiza 1.4 TDI Ecomotive

The Spanish aren’t renowned for their economical ideologies, but SEAT has taken a huge step in ensuring that their brand is a caring and pro-Earth supporter. The Ibiza Ecomotive can reach a reported 76.3mpg, which is extremely impressive, indeed. And even better, the Ecomotive achieves a tax rating of A, which means an annual tax bill of £0 – not bad, eh?

MINI Cooper D

For consumers who want a bit of premium luxury to go with their economic priorities, there is the MINI Cooper D. The diesel version of the fantastic little road legal go-kart is as exciting to drive as its petrol counterpart and yet manages an impressive 72.4mpg. BMW have done a stand-up job of keeping the MINI’s looks despite the changes, and while it may be expensive, it is very good fun.

Volvo S40 DRIVe

The whiff of old dogs and the middle classes are finally shifting from the Volvo brand, but we fear that the S40 DRIVe is doing its best to keep the smell in. Sure, 72.4mpg will keep you away from the pumps, but at what cost? The S40 DRIVe isn’t exactly a looker, nor does it drive that brilliantly. But if all you want from a car is safety, low running costs and some form of aesthetics, then we can’t help but recommend it.

Volvo C30 DRIVe

Surprisingly, the C30 DRIVe differs greatly from its bigger – and uglier – older brother. Its looks are pleasing and intriguing – and couple that with a mile per gallon figure of over 70 and you’ll be laughing all the way to the bank.

Vauxhall Corsa ecoFlex

One of Britain’s best selling cars has been given the ‘green’ treatment, and while the Corsa’s 1.3-litre diesel engine might not induce exhilaration, it will help your bank balance keep a positive correlation. A tax band of B and 70.6mpg on the combined cycle means low running costs all year round.

Skoda Fabia 1.4 TDI GreenLine

We’ve had Green, Blue, Economic, Ecological, Ecoflex, Ecodigerydo, and now we’ve got GreenLine from Skoda. The Fabia is a great little shopping cart that will keep the kids happy whilst keeping the parents’ wallets happy, too. A respectable 68.9mpg is on offer, which isn’t as strong as the aforementioned cars, but then again, the Fabia does have a lot of strong points – it’s good looking, well made and spacious, the Fabia is a no-brainer for a family runabout.

Christmas is definitely the time of year when our pockets will feel a lot lighter! Billions of dollars are spent throughout the world during the November/December months and this year will be no different. However, with the current financial climate the way that it is, many people may be looking spend less than normal in the run up to Christmas 2010. Here’s five key money saving tips that can be applied to the Christmas holidays:

• Set up your Christmas Budget early! – Christmas budgeting is essential to monitor how your much you have spent during the Christmas period. When used correctly, a budget can be one of the most effective financial tools Take your time and basically create a giant Christmas list, write down everything that you will spend money on in the months to come, including the obvious presents, decorations and food.
• Never spend more than you can afford – This is probably the cardinal sin that many people will admit to doing at one time or another, but at Christmas it can be incredibly damaging. Remember it’s not how much you spend on presents that matters, it’s the thought behind the presents that counts. If you do spend more than you can afford to, you will regret doing so in the long run when you have a backlog of bills to deal with.
• Stay away from credit and store cards – Following on my previous point, over the Christmas months, many people choose to fund their purchases on credit or store cards because they can’t afford them. At the time this might seem like a feasible option, however depending on how much you spend, you may be paying the amount back for months to come. Don’t just think about the present but think about the future.
• Compare prices this year – When you identify what present you want and for whom; don’t just buy the item the first place that you find it. Take your time and search online to try and find the best possible prices. You could also use price comparison sites like MoneySupermarket to help you to find the cheapest price available online.
• Save money for next Christmas – I know this isn’t strictly for this Christmas, but it’s good to think ahead! Hopefully you already did this for this year but to make sure you have enough funds to cover Christmas, you should really be thinking ahead and saving well in advance. I save well in advance by setting up automatic payments; a small amount leaves my bank account each month and goes into a savings account that I have set up especially for special occasions.

The first stop on your holiday shopping list should be your computer. That’s right – your computer. Not only can shopping from the comfort of your own home save on time and gas, it can save you a considerable amount of money. Most retailers offer far better deals online than they do in brick and mortar stores, which can go a long way in reducing how much you spend this holiday season. Black Friday, the Friday after Thanksgiving, officially kicks off the holiday shopping season. Here are three ways that you can cut your holiday spending while taking advantage of the Black Friday promotional offers.

1. Do your research.

Many retailers’ Black Friday ads are “leaked” ahead of time, offering shoppers a sneak peek at the deals that will soon be up for grabs. If you skim and scan these ads before the sales start and familiarize yourself with the items, you can use this information to compare with other merchants’ ads to ensure you get the best deal. Further, you can find which stores won’t be offering anything on your list so that you can avoid them, thereby saving precious shopping time.

2. Beware of shipping charges.

Due to recent postal increases, shipping charges are at an all-time high. These charges can add a considerable amount of money to an online shopper’s budget. If you find an item being offered at a price you think truly is unbeatable, factor in the cost of shipping the item to you to see if it’s still worth the price. Shipping charges, once added, can easily raise the price of an item back to normal retail, which defeats the purpose of a “sale”. During the holiday season, some

merchants will also offer deals on shipping at a fraction of the normal rates. Some even offer free shipping on certain items. Try and shop the sales of these merchants as much as possible, to ensure that you are saving the most money all around.

3. Wait until Monday.

Cyber Monday, the Monday after Thanksgiving, is prime time for online shoppers. Retailers have consistently reported this being the busiest shopping day of the year for those making purchases online. For that reason, many retailers offer special promotions targeted at online shoppers. Shoppers should remember, though, that it is still prudent to do their research and compare prices and shipping charges just like they would for Black Friday. Otherwise, they might get “click happy” with all the deals being offered and end up spending more money, rather than saving money.

There are no short cuts to a hassle free holiday, but when you start early and shop smart you can avoid unnecessary expenses. With a little patience and smart strategizing, it may just be a Merry Christmas after all.

Jane is a writer for Dealio.com an online coupon code site specializing in Cyber Monday offers. She has always considered herself a bargain shopper who always searches clearance racks first and never makes an online purchase without a discount code.

During my time blogging and writing financial articles I’ve come across many financial tips, but for me, most of the simple tips prove to be the most effective. Here I will detail 5 tips that I think are the most important to ensure financial freedom.

Always monitor what you spend

My first key money saving tips is to always monitor what you spend. The best way to monitor what you spend is to set up a budge; in my opinion a budget is an essential financial tool. A quick and simple budget can be set up and by sticking to it, you can monitor your income and your expenditure. To set up your budget, be honest and thorough and write down everything you spend and everything you make, the most important thing here is to never spend more than you earn.

Always Look Forward

When you want to save money, you should always, number 1, be positive and number 2, plan ahead. You should set yourself some small financial saving aims, that lead to an ultimate goal. The feeling you get when you hit one of your aims is incredible, and having something to aim for keeps you motivated.

Spend Wisely

If you want to save money, you of course have to spend your money wisely. The best way I’ve found to do this is when shopping to take a list with you and you have to try and avoid any impulse purchases. Sticking to a list to the best of your ability will hopefully mean you stay away from any unnecessary purchases.

Loyalty and Credit Cards

If you often shop in the same stores, either for clothes or food, have you ever checked if the store has a loyalty or store card? These cards are great for building points and for gaining rewards in specific stores, they are fantastic for saving money. I know that a lot of people say credit cards are bad for personal finance but that’s simply not always the case. If used in the right way rewards credit cards are fantastic for rewarding yourself for your spending.

Use Price Comparison Sites

One of my favourite ways to save money is by using price comparison sites. Whether I’m searching for a specific product price, or I’m looking to save money on my home or auto insurance, I always use price comparison sites. They do all of the searching for you and it can save you a lot of time and money. Using a price comparison site also gives you a great view of the options available to you, it’s a simple but effective way of saving money.

If you have a frugal lifestyle, you are able to eliminate debt faster and find pleasure in living within or well below your means. In fact, living frugally can be quite addictive that you may want to find more and more tips that can help to lower your waste and cost of living.

Here are some tips that will help you to live a frugal lifestyle without cramping it at the same time.

• Stay out of debt – If you are already in debt then you should work really hard to get out of it. You can use the following steps to help to save the money you already have in order to put it towards the debt you are trying to eliminate. Paying interest is a killer to living frugally so getting out of and staying out of debt should be priority number one.
• Do it yourself – Take the time to look at your monthly budget. Where are you spending money the most? Are you someone who likes to get manicures and pedicures regularly? Do you pay to have someone mow your lawn? Cut it out and do it yourself! Sure, it may take a little extra time but you may be surprised how much you can save over time if you choose to do something yourself.
• Find the best deals possible – With many sites such as Freecycle, Craigslist and Ebay, you can find just about anything you need for really low prices if you are willing to take the time to look. Craigslist often has items for free and all the items on Freecycle are FREE! You can save a lot of money by searching there first before paying full price.
• Free or almost free activities – If you look in the local paper, there are almost always local activities that are available for little to no money. You can also use your local library to check out movies and books for free. You do not have to spend a lot on entertainment if you are willing to get a little creative.
• Plan ahead – Living frugally does not mean you have to live like a monk and have no fun. You can have fun but you should plan for it. If you are dying to take that vacation to the Caribbean then do it! But, plan for it first and save the money so you don’t have to go into debt to enjoy yourself.
• Have a goal – One of the most effective ways to live frugally and make it a lifestyle is to have goals set for yourself and to work regularly to meet those goals. And, once you have reached one goal, you can set another one. You can continue to move forward in your frugal habits to build a life that is prosperous and in line with your values.
• Be honest with yourself – One of the best ways to live outside of your means is to not be aware of what you have and what you spend. Once you are living in the present and are conscious about what you are doing with your money you are better able to manage it.

Living frugally is not something that has to be arduous or painful. There is freedom in living within your means. When you have control of your finances you will find it can have a ripple effect throughout the rest of your life.

This article was written by Timothy Ng. You can read more of his work a Credit Card Comparison, where he has a number of comprehensive guides to all types of credit cards.

1) Find and fall in love with free. Libraries offer free books and DVDs; stores offer free samples and other deals; craigslist users offer free furniture and other goods, as long as you cart it away; these places and more offer the smart user a way to get many goods that would cost hundreds of dollars for free (or at least very cheap). The internet is a great source for this; sites like craigslist, freecycle, and others have a lot of quality goods available. You can also get huge discounts off new merchandise from many sites on the internet, especially if you buy in bulk.

2) Look to save little slices here, there, and everywhere. This is one of the best ways to save money, but also one of the most underrated. Cutting your drink from a large to a small could save you 50 cents; cutting out the drink altogether could save you $1.50! Learn to live with less, and you’ll end up with more in the end.

3) Get the most out of whatever your purchase. Whether it’s food, clothing, cars, games, entertainment, whatever – squeeze every drop of value, and more, from that good before you discard it or resell it. This, coupled with the above hint, will help you make the most out of each dollar you spend, maximizing your personal economic efficiency.

4) Get some (inexpensive) hobbies. Many people dump thousands of dollars into useless gadgets that only provide the temporary joy of novelty, but quickly fade, making you look for the next big thing. Instead, get on the path of mastery and find something you truly love to do. In this way, you’ll leverage your resources in the most dramatic ways to improve your life. Whether it’s a sport, reading, writing, music – find something you can pour your time and attention into. In addition, you can use your money you’ve saved in other areas to invest in something that you’ll truly love and cherish, so don’t feel bad about using money on this special activity. That’s the whole point of your money saving endeavors in the first place!

Nowadays so much commerce occurs online, simply because we spend so much time on the Internet, and also because we can very easily comparison shop between retailers that we might never even be a aware of without their online presence. Online comparison shopping is a wonderful new way for consumers to save money more aggressively, but there is another way to save money online beyond simply getting the best price. If you haven’t heard about money-saving coupons online, you’re in for a pleasant surprise, especially in these difficult economic times

The idea is very simple–retailers of every kind will put coupon offers out there on the Net; you can find them easily by doing a search for websites that gather all of these great coupon deals for you in one place. The mechanics of saving this way are simple. You’ll see a coupon code that you in turn enter into a field on the ‘Buy Now’ page of the retailer’s site. Maybe as you have purchased items in the past and seen a box labeled ‘enter coupon code’ and wondered how one would get a coupon code relevant to the item for which you’re about to pay full price: well now you know!

I never buy anything anymore without first going to a search engine and typing in the name of the item as well as the name of the retailer, to see if there is a coupon code available for me to save 10%-20% or even more on the item. It only takes a few seconds, and I’m online anyway so it’s no problem at all to do this.

To further expedite the process I would suggest bookmarking several of these online coupon sites so that, especially when you’re about to purchase a big-ticket item, you can very quickly check for coupon codes. I don’t know how much money I’ve saved over the years, but I do know that whenever I rent a car or purchase a new domain name I save money every single time. Give it a shot: if you enjoy saving money you’ll be hooked.