Before you click away from the third installment of our 5-part series (in which we examine 100 ways to improve your finances that can be done in 5 minutes or less) under the guise of “I’m broke and can’t possibly spend less than I do”… let’s start with the single greatest equation in personal finance, with a little assistance from our friend Penny.

“Hold on… WHAT!?!?”

You read that correctly. Saving $1 per day (or $30 per month), invested for 30 years at a 7% real rate of return (the market average), will earn you $36,500 in retirement.  Coincidentally, this is about the same amount of money that the average person spends per year here in the U.S.  If you have more than 30 years to go to retirement or if you live in less expensive parts of the country world, the effect is even greater. 

Sure, the effect diminishes if you are closer to retirement, but you can see why Einstein called compound interest the 8^th wonder of the world.

Start saving money today.

Part 1: Budgeting

Part 2: Increasing Income

Part 3: Spending Less

Part 4: Health and Wellness

Part 5: Everything Else!

1) Get 3 quotes before every purchase. No exceptions. I cannot recommend this enough. Holiday shopping? Search Amazon, Google Shopping, Target, and Wal-Mart at a minimum. Financing a home? Get formal quotes from three banks, at least one national and one local. Travel? Kayak, Expedia, airline or hotel directly. New apartment? Internet service? Car dealership? Insurance? Doctor? Get prices from at least three providers. There are no purchases for which this wouldn’t apply, especially in a world where information is available in-store at your fingertips. If the expense is large (house), recurrent (cell phone), or both, I estimate I save 15-25% each time I do this, and in some cases, I’ve saved over 75%.

2) Master the 30-second rule to avoid small impulse purchases. Have you ever been in the supermarket checkout and thought: “Boy, those Skittles look sooooooo good right now!” How about in the mall: “Look at those new shoes!” In your living room: “Oh man, I could really go for a new video game!” Stimulus. Response. Stimulus. Response. The best way to avoid these smaller impulse purchases is via what I and others call the “30-second rule.” Stop and think about the purchase for a full 30 seconds. In that time, ask yourself some questions: Does this purchase provide genuine fulfillment to your life no filled by something you already own? Is there a better more effective alternative? Will I be proud that I spent this money at this time next year? In 30 seconds, your impulse towards less-worthwhile purchases will often vanish.

3) Master the 24-hour rule for larger purchases. Like the 30-second rule, when you’re considering a larger purchase (define your own idea of “large:” $20, $50, $100), wait 24 hours before making the purchase. Doing so will give you time both for the impulse to fade and for you to complete researching alternatives. If 24 hours pass and the need is still there, you’ll be able to make the purchase with more confidence and less regret.

4) Remove a non-essential recurring payment or subscription. Recurring payments are the death of middle-class finances. Did you sign up for magazines years ago that are sitting in unread stacks in the bathroom? Agreed to donate monthly to a charity you’re not passionate about? Haven’t been the gym in weeks? Kept your Hulu subscription even though you only watch it once or twice per month before you’re fed up with the ads? Chances are good that there is at least one non-essential charge to your bank account or credit card that you could easily do without. Take a moment and just cancel it. Remember, you can always add it back if you change your mind.

5) Make “that” phone call. You hate the phone. I hate the phone. And most of the world hates the phone. As a result, we often put off making a phone call to a business or person that could potentially save us money. Stop putting it off and just make the call.
• Call your internet/cable provider to negotiate a lower rate (I just did this and saved $25 per month just by asking).
• Call your bank to see if they are willing to waive a late fee (did this too and was refunded the full $35).
• Call your cell phone company or a new one to improve or change your service (this too… you get my point).
• Call landlord to lower your rent or improve your apartment.
• Call your repair person to fix that inefficient heater.
• Call your credit card to get a lower rate.
• Call your town/county assessor to discuss your tax bill.
• Call the doctor to cut your bill.
• Call to your lender or a new lender to see about a refinance.
• Call the credit bureau to get an error fixed.
• Call your card issuer to report a fraudulent transaction.
Sometimes your efforts won’t work, but keep in mind that if you are giving them money for a service, you hold all the cards (no pun intended).

6) Shop for a new cell phone plan. At least yearly, take the time to shop for a new cell phone plan. Providers are notorious for slowly increasing prices, preying on your complacency while your bill skyrockets. Competitors could offer new customer deals worth exploring. Many smaller providers even use the same towers as the big providers, so you’ll get the same service for less. Paying a termination fee to get out of a contract could be worth it. I’m in the process of switching now and expect to save well over $100 per month!

7) Check your tire pressure. Do this one today. I’m ashamed to admit that I hadn’t done this for almost a year, and I had one tire that was almost 10 PSI lower than recommended. After inflating it, I increased my mileage by 10% and cut my gas bill by $100 per year. Checking and refilling combined took less than 5 minutes. Your car will be safer too. Build a routine by doing it the first day of the month.

8) Compare local gas prices. Once per week or month, check out gas prices near your home, office, or other places you frequent. Compare online using a trusted app or site like GasBuddy. A minute of your time could easily save a dollar or two at the pump. Just be careful if the station charges extra for using your card.

9) Get a new insurance quote. The average person sticks with their insurance company for 10 years. Do not be part of this statistic. Set a reminder to start shopping for insurance 30-60 days before your policy expires every year for every insurance that you carry: auto, home, health, life, etc. Like the commercials say, you can get a new quote in just minutes and potentially save $100’s. Research all options, not just the name-brand ones. I’ve switched my car insurance company 3 times, my health insurance 4 times, and my homeowner’s insurance twice… in the last 6 years alone. The savings have been in the thousands, and making the switch took just minutes each time.

10) Review your insurance coverage. You should also review your coverage to make sure you’re not paying for insurance you don’t need. Are you overinsured (too much insurance)? Underinsured? Have you reviewed all options (high vs low deductible)? Are you paying for junk coverage, like hotel stays or car rentals? Have you been keeping track of your annual medical expenditures so you can do the math on which option is better? As a rule of thumb, you should only purchase insurance for items that you absolutely cannot afford to replace in cash. Medical insurance? Yes. Liability on your car? Yes. Collision on your car? Only if you don’t yet have an emergency fund. Cell phone? Armchair? Your computer mouse? No, no, NO!

11) Go to the grocery store with a list. And… go when you’re not hungry. And… stick to the list religiously to avoid impulses. Shopping lists aren’t just to prevent forgetting something you need; they’re for avoiding things you don’t! You will buy more food and less healthful food if you shop without a list, especially if you’re hungry or make “exceptions” from the list for items marketed well by the store. Science backs me up, as does my own history. Making a list takes no time and can easily shave 10% off your bill in wasted food. This one will even save you time in the store. We keep a list of groceries in the kitchen so we can add what we need as we notice it and just bring that list to the store.

12) Seasonalize/self-insulate your home, and program your thermostat. Whether you’re of House Stark, House Targaryen, or House Centsee, winter is here! You can easily save 10-20% on your heating bill by taking steps like: locking your windows, changing your HVAC filters, scheduling furnace maintenance, covering your windows and doors with plastic sheeting, sealing doorways, insulating your attic or pipes. Each requires no specials skills and can be done quickly. Seasonalizing helps the A/C bill in the summer as well. When you program your thermostat, remember that 68°F during the day and 64°F (18-20°C) is warm enough for the winter, and 76-8°F (25°C) is ideal for the summer. Save another 15% of your bill by programming it up/down 10°F while you’re away at work or school and return to normal when you get home. Many let you control the temperature via an app as well. If you don’t have a programmable thermostat, get one. It might be free (as it was for me), and it pays for itself in a matter of months (free or not).

13) Install a smart switch and/or surge protector to reduce energy use. Phantom energy, or energy that is drawn from devices that are plugged in but not turned on, is a little overhyped by some but is a noteworthy cost (5-10%) of your energy bill. A smart switch or surge protector can be an easy way to truly turn these devices off when they’re not in use.

14) Buy LEDs (or CFLs) and toss out those incandescent light bulbs. Imagine there were a product that lasted 5-20 times longer than a regular light bulb and used 75% less energy (cost) to operate. Imagine no more; these products exist, and they’re called LED (light emitting diode) light bulbs. LED’s are maybe a $1-1.50 per bulb (or, once again, free), but it can save you a fortune in the long-term. Sources confirm that each fixture using incandescent bulbs cost $201 over a 23-year span and LED’s cost just $38 (includes upfront cost and ongoing cost of electricity). Multiply this by the average number of light bulbs per household (about 45), and reap thousands in savings.

15) Make your own coffee. Few things get more hate in the world of personal finance than coffee. But a quick look at Penny’s equation at the start of the article will tell you why. $5 per workday plus tip compared to about $0.25 at home could mean $100,000+ in retirement and/or years off your working life. No, the drive-thru is neither quicker, nor tastier, nor cheaper. Learn how to brew your own high-quality coffee, and save vast amounts of time and money.

16) Do a quick online coupon code or rebate search before your purchase. Coupon codes are a great way to save on a purchase that you would have made anyway. I’ve gotten hundreds back from eBates over the years via a convenience browser plug-in for legitimate essentials that I was already buying from the lowest-cost online retailer (after getting three quotes). Dosh is another option. However, you should never let coupons dictate your spending or cause you to make a purchase you weren’t going to make.

17) Get a quote to refinance any high interest debt.*** Yes, that’s three asterisks, because there are three ways that refinancing debt usually goes:
• The first way is that you refinance your high interest debt (ex. credit card) into a lower interest loan (ex. short term loan with a qualified bank) with a similar repayment length and low closings costs, cut up the credit cards, make tangible changes to your spending habits that got you into debt in the first place, save thousands in interest over the term of the loan, and free yourself from debt.
• The second way is that you refinance your high interest debt into a slightly lower interest loan but with a much longer repayment term (ex. 30 years) and/or high closing costs and/or balance transfer (i.e. robbing Peter to pay… Peter), don’t cut up the credit cards, maintain your poor habits, say to yourself “Whoopie! I now have thousands available on my credit limit! Time for a shopping spree! I promise I’ll be better… tomorrow!”, pay tens of thousands more in interest because you chose to add to your debt load, and perpetuate the debt indefinitely.
• The third way is that you “refinance” your high interest debt into a shady loan with an even shadier lender (ex. payday loan, buy here pay here loan, snowball loan, non-bank financial institution loan) using the shadiest (borderline criminal) credit “recovery” or “counseling” service with outrageous fees. I don’t need to tell you how the rest of this story goes other than that it ends in court and financial desolation. Seriously, if you take away just a few things from this blog, please remember to NEVER use a service like this.
• • • Guess which one of these I recommend!?!? • • •
Refinancing can be a good way to save on interest, but if you don’t change the behavior that got you into debt in the first place, refinancing will just make things worse.

18) Ask for a discount. Retailers and service providers are desperate for your business and often happy to make a deal if you ask. Supermarkets often have coupons under the counter or at customer service if you’re willing to ask. Merchants might be willing to offer a discount if you’re willing to pay in cash, especially for larger purchases. Cash-based service providers are always negotiable. Internationally, haggling is frequently the norm, and tourists miss out on significant savings. I’ve saved hundreds over the years just by asking. Don’t be shy.

19) Research low-cost ways in your neighborhood to have fun. Cities and towns often have free public events every week. Parks, libraries, walking trails, lakes, pools, fairs, markets, events, concerts, and festivals in nearly every nearby municipality. Check out how yours communicates about upcoming events and save money on a date night or a family trip.

20) Start an in-depth price comparison of local grocery stores. There are now over 50,000 items in a grocery store, but most people buy less than 50 of them on a regular basis. With so few items to compare, it’s worth doing a comparison of the items you usually buy at 3-4 grocery stores nearby. Take 5 minutes to do this each of the next 3-4 times you shop, by buying the same items you always do and comparing the results on a spreadsheet. Grocery stores deliberately make their pricing schemes complex, so be objective and follow the numbers. If one store regularly has better prices on 80% of what you buy, there’s your answer. Don’t be lured in by a sale or (God forbid) the brand of the grocery store that appeal to status-seekers. The local discount grocer sells the same products at better prices than the upscale “poshmart” (ahem, “Whole Foods”).