Power Shop Your Way to Financial Independence: Eleven Strategies for Success
Love to shop? Just can’t stop? A slight shift in your paradigm and perspective could lead you out of debt . . . and straight to the bank.
Shopping is something we all need to do. There’s no way around it. We shop for food, clothing, vehicles, home repair supplies, gas, credit card rates, long distance plans, school supplies and more. How can this be turned from financial drain to financial gain? The key lies in changing shopping from a hobby into a job. This is critically important, so let me rephrase and repeat. Shopping, from a financial independence standpoint, is not a hobby. It is a job . . . and a responsibility to be taken seriously. Following are some power shopping strategies to put you in the driver’s seat.
1. Shop Your Service Plans and Other Accounts.
Service plans, account packages and card rates change all the time. Companies are rarely, if ever, going to track you down and let you know that they have a better plan or package for you. In my entire adult life, I’ve had that happen maybe twice. Calling a card company to negotiate a lower interest rate (if you carry a balance), asking what new plans are out there to save you money, or evaluating your changing usage of a particular plan to select a new one (cell phones are a good example of when this is necessary) are all ways to carve out extra cash. If you spend an afternoon evaluating and researching new account options, including those you may no longer even need, and find an extra 50 bucks a month, you are actually finding an extra 600 dollars annually.
2. Maintain Lists for Home Information Management.
What items do the kids need for school? What grocery items (including semi-annual bulk purchases) are you running low on or out of? What are the sizes and measurements of each family member? What types of light bulbs, air filters, etc do your home systems and vehicles take? This is all critical information to have if you want to shop sales effectively.
3. Know the Sale Trends.
Certain things traditionally go on sale at particular times of the year such as August for camping equipment, July for picnic condiments and January for gift wraps and holiday items. If you have something you know you want, can be disciplined enough to save ahead, and are able to wait for the sales, you can save major money.
4. Celebrate Clearance Sales.
No, this does not mean you get to max out your credit card every time there’s a seasonal shoe sale. It does mean that there are big savings to be had, particularly on classic items of good quality. This is an excellent strategy to partner up with the second suggestion on the list. Having your lists current enables you to pick up those items you and your family need if you run into a slamming sale on fly.
5. Treat it Like the Job it Is.
Once you’ve established the mindset that shopping is a responsibility and a job, start considering what someone who has this type of job would need to do to pull it off successfully. Establishment of line items, awareness of whether your budget has been over or under for a particular line item each month, workable filing system for bills . . . these are all areas you need to be aware of and have the tools to implement properly.
6. Develop a Knowledge of Liquidation Value.
Those of you who read Linsey Knerl’s recent article on the acquisition and sale of home schooling curriculum will have an excellent background for this strategy. The strategy she applied to educational materials can also be applied to vehicle purchases and other critical items in your life. One area it might not occur to everyone is with antique shopping. I’m not talking about the ultra high end antiques necessarily, although this applies to them too. I have repeatedly seen antique bureaus, tables and chairs for the same price (and in some cases less than) as some of the newer furniture items in popular stores and galleries. Some items are even equivalent to lower end assemble yourself particle board items from department stores. Why is this important? Antiques hold their value and in many cases increase in value. If you are going to spend 180 bucks on a particle board book case or kitchen table, consider hitting a roadside antique shop. You’ll at least be able to get your money out of it later if necessary, and you know it has a better likelihood of standing the test of time.
7. Be Aware of Regular and Exceptional Market Prices.
Some of the prices on items you regularly purchase you may be able to keep in your head. For others, you may want to implement a price book. The point is, if you are informed, you never have to pay full market value again. Ever. No more getting sucked into a bogus buy one get one free special at the grocery store that has actually upped your per pound rate by 70 cents. No more inflated so called “discounts”. You will know an excellent deal when you see one.
8. Develop a Regular Shopping Circuit.
By this, I mean those favorite few stores that are on your regular path for errand running, as well as the occasional stop at a mega savings store that is worth your while to hit once every 4-6 weeks. It’s a good idea if your shopping circuit includes a few thrift and second hand stores as well as discount retailers and grocery warehouses. If you have a few extra minutes anyway, stopping by a place that’s on your way to check out a seasonal pocketbook or blazer doesn’t cost you a ton of extra gas or time. It doesn’t mean you should stop in and shop just for the sake of shopping. But if you know you’ll have a need for a particular little something in the next few months, it pays to start casually shopping in advance for a great price. This will also give you a sense of what the regular prices are, how often a particular hard to find used items comes available and when you’ve found a deal you are not likely to see again.
9. Calculate Your R.O.I.
Your R.O.I. is your return on investment. This can apply to larger retirement investments as well as money saving items you are considering as purchases. For example, if you think a food processor is going to save you money, figure out how much money you can easily save each month through its use and divide that into the full price of the item. After that return is reached, you are looking at pure extra cash on a regular basis. This extra cash can be used for fun, travel, savings, investing or anything else you feel fits into your “living large” goals.
10. Get Excited About Percentage Rate Savings.
When I see someone who regularly turns their nose up at 10 percent savings opportunities, I know I am really seeing someone who could probably retire much earlier than they actually will. Why? They are avoiding a savings percentage rate that they would most likely be thrilled to receive on a liquid savings account or CD. When you decide you need a brand name of a particular item like a baking spice and it costs $1.20 versus $1.00 for the store brand equivalent, you are choosing a fairly large percentage difference over all. The fact is, these smaller types of decisions add up, especially on items we buy regularly. The example I used is a small one. Let’s go a bit higher and apply it to something like new blinds for the house. If you could pay $1,000 versus $1,200 for a new set of window coverings, which would you choose? What is your cut off amount for a savings to be worth your while? For me, anything I would be thrilled to receive as a percentage rate on a savings or investment account has my full attention.
11. Accept the Power of Second Hand Shopping.
If you can incorporate second hand purchases into your lifestyle even minimally, it will make an enormous difference to your overall financial picture. Personally, I’ve gone for more than five years without paying over $10.00 for any single outfit. Many cost far less than that. It isn’t necessarily fun, easy or even something most people would feel comfortable with. It was something extreme that I felt was worth it for early retirement. If second hand clothing is not something you are willing to explore, consider some other possible items that may be in your comfort zone: power tools, automobiles, non-upholstered furniture, a home, appliances . . . starting to get the picture? Larger ticket items can make a huge difference when purchased second hand. The savings amounts can add up to a staggering amount in a hurry.
The bottom line is that by treating shopping as a job and responsibility instead of a recreational activity, we all have the power to take more control over our financial futures. Have any power shopping strategies of your own? Feel free to post.