Some benefits of saving money are not obvious. Saving is important if you want a life of plenty.
Remember, being frugal means getting the very best value for your money. You should even count your change, to make sure that the vendor has got it right.
Credit Card Debt
The average credit card debt in the USA is over ten thousand dollars.
To make the calculation simple, let’s assume that after you’ve paid all the interest, everything costs you twice as much as if you paid by cash. Of course, it could cost you more or less.
To keep the calculation simple, let’s assume that the government is grabbing exactly one-third of what you earn in taxes.
Very Bad Money Management
OK. Let’s assume that you buy something that you don’t truly need for a thousand dollars. It might be nice to have it even though you don’t need it, and it’s easy to increase your credit card debt by another thousand dollars.
Now we start doing the simple arithmetic.
The thousand dollars become two thousand dollars because of the credit card debt.
But the tax man has grabbed one-third of your earnings. That means that you must have earned three thousand dollars to buy this one-thousand dollar toy.
If You Reform
Imagine that you’ve seen the error of your ways. You’re going to live a frugal life and get rid of the card debt of thousands of dollars.
You divide everything into “I want this” and “I need this.” Until you get rid of your debt, you’re not going to buy anything in the “want” category. This procedure is one of the easy ways to save money.
But you’re new to this idea of the benefits of saving money. You’re just learning to be thrifty.
You think up a good logical reason why you could start making money with the new toy, and you decide to go ahead and buy it. But you’ve already got two thousand dollars saved up since you reformed. So you take a thousand dollars in your hot little hand and start searching on Google for local shops that sell what you want.
You write down the price at each shop and visit the cheapest ones. But now you’re in a position of power. You can pay cash. Doesn’t it feel good?
You ask what the price is. They tell you, and you say “Ooooh, that’s a bit pricey.” and turn to walk out.
They call you back. If you enjoy bargaining, you can beat down the cost a long way in half an hour and tell a few lies like “You’re taking the bread out of the mouths of my seventeen wives and 47 children.” If you don’t enjoy bargaining, when they call you back, just ask “What is your best price?”
Write it down and go to the next shop and repeat the bargaining. After visiting several shops, you go to the second cheapest and tell them what the cheapest is charging. They may offer to beat the price.
Now you can use your new Power weapon. You ask “How much will you give me if I pay CASH?” You fan out your money so that they see you mean it.
One day I bought an office chair. They gave me 20% off for cash after I had beaten down the price.
Let’s Do The Maths Again
Your toy costs a thousand dollars at the most expensive shop, but you’ve beaten the cheapest shop down to $500 including the cash discount.
You paid by cash, so you don’t have to double the price for credit card debt. So you have to earn $750 to pay for it after the tax grab.
That is a lot better than the original $3000. That means that you’ll get $2300 more value for your money.
Even Better Self Control
Suppose when you make a decision, you can stick to it. Befrugal. You don’t need your new toy, so you decide not to buy it.
You have just saved $3000 that you don’t have to earn before tax. I would say that is one of the BIG benefits of saving money – wouldn’t you? Consider also the benefits of do it yourself.
P.S. When I get around to writing the article, I can show you how to save even more, by buying it from China. Your toy might only cost $100 postage paid.