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7 Delayed-Spending Tricks That Help Pay Off Debt

Julie Rains — Mon, 04 Feb 2013 11:24:34 +0000

Although I don't consider myself an impulsive spender, I dislike waiting when I am ready to buy. Still, I have learned that patience is more than a standalone virtue. Delaying a purchase for several weeks or even months can be beneficial to paying off debt. (See also: 9 Simple Ways to Stop Impulse Buying)

How's that?

The less you spend in a given month, the more you have available to pay off loans, whether a mortgage, student loan, consumer loan, or credit card balance. The more money that you can apply to paying off a debt, the faster the principal shrinks. As the principal shrinks, interest charges decrease. The lower the interest charges, the more that payments reduce the principal, accelerating the loan payoff.

So, forgoing smaller expenses for a month and delaying larger purchases for several months can benefit your current budget and also boost your financial well-being for the future — if you apply discretionary income to paying off loans.

Loans with interest rates of 2% or so may not give you the incentive needed to delay spending. But savings of $30-$200 per month on credit card debt (if you carry balances of $5,000 to $15,000 with interest rates of 7.9% to 17.9%, for example) may be much more motivating.

Though you may not be able (or desire) to delay spending indefinitely, you may be able to adopt strategies that allow you to avoid spending as you reduce and eliminate loan balances. Consider these approaches.

1. Wait for a Price Break

Buying an item as soon as you want it may mean that you'll pay top price, even if you shop around. Delaying the purchase can get you a better deal through seasonal sales, special offers, or price reductions associated with fashion or technology changes.

For example, my teenage son has discovered that while release-date prices on his favorite genre of video games are standard, they are often reduced a few to several weeks later. Previously, he had pre-ordered titles to get them on the release date so that he could reap special bonuses, quickly develop game-specific expertise, and play immediately with his buddies on Xbox Live. In January, however, he decided to stretch the value of his holiday gift money by waiting for a certain game to go down in price.

2. Go Old School

Rather than purchase a modern-day item, satisfy your need in the short term using an old school tactic.

For example, I recently delayed the purchase of an automatic dryer despite the ongoing need to clean clothes and linens. Borrowing tactics from my childhood and young adulthood, my family and I washed clothes less frequently, used an indoor drying rack, and took washed-and-rinsed laundry to the laundromat for drying.

Such techniques could be applied to other modern conveniences we take for granted.

Instead of joining a gym or signing up for a weight-loss program, for example, consider what your parents or grandparents may have done in similar situations. You might start an outdoor exercise regimen or modify your diet on your own. During the first several months of your personal wellness initiative, you could simply establish new habits, taking the time to exercise or cook at home. Later, you could pursue personalized, expert advice for fitness and nutrition.

3. Borrow

Just because you have a pressing need for an item doesn’t mean that you have to buy it right now. You may be able to borrow from a friend at no cost or rent from a business for substantially less than an outright purchase. This approach lets you test the product, identify useful features, and, most significantly, decide whether you need to make a purchase at all.

For example, my family needed a tent to go on a Cub Scouts camping trip several years ago. Although my husband and I enjoy the outdoors, we had never camped as a family, weren’t sure whether such events would be commonplace in the future, and had not acquired camping gear. When a friend learned of our plans, he offered to lend us his equipment.

Eventually, we bought a tent. But we were able to delay the purchase for a couple of years.

4. Be Patient

Sometimes, delaying spending involves the simple act of patience. Wait. Then buy.

This approach can work for large and small purchases alike.

For example, my husband and I waited on braces for our sons. Our dentist urged us to put braces on both of our children when they were in elementary school. Although I grasped that braces earlier could mean avoiding more severe problems later, even the orthodontists we consulted thought that we could safely delay treatment. And, I felt that, in our family, a teen would be more compliant with a strict dental regimen required by braces than a ‘tween.

In another situation, I waited to replace some disposal-damaged spoons that are part of my everyday stainless pattern. At first, the holidays seemed like the perfect time to buy new spoons. The utensils would be on hand for parties and I could take advantage of a seasonal sale. Then I realized that I had the essentials and could easily wait until next year’s festivities to make this purchase.

Certainly, some purchases, like home or auto repairs, need to be made sooner rather than later. But many can be put off for a year or more.

5. Substitute

Substituting what you already have for a needed item is another way of delaying a purchase. You may discover that the substitute works fabulously or you may find that it simply offers a stopgap. Substitution lets you delay spending, avoid further temptation, and test whether a modification works just as well as the original.

Ingredients in recipes come to mind as everyday items ideal for substitution. In the past, I have rationalized that since I am already cooking at home to save money, it’s OK to spend at the grocery store to pick up one missing ingredient. For me, the problem with this approach is that I will buy the needed item plus several more.

Here are some of my common substitutes in the kitchen:

Cream for coffee: milk, powered milk, ice cream, yogurt
Sour cream: cream cheese, cream of mushroom soup
Tomato sauce: pasta sauce, diced tomatoes, enchilada sauce, sautéed fresh tomatoes, tomato paste (with water and spices)
Red kidney beans: black beans, cannellini beans

In other areas, consider multiple uses of water bottles, tin foil, bleach, salt, bobby pins, and more to avoid buying a specialty product with just one purpose.

6. Be Creative

You can delay purchases by being creative with what you have or uncovering free resources.

For example, cook with items on hand, as Meg recommends in her post on a month-long spending freeze. Concoct a dish based on your knowledge of cooking (for example, make pasta with roasted vegetables and cheese, stir fry with vegetables and rice, or make homemade soup). Alternatively, use the advanced search function on allrecipes.com or a similar site to locate a recipe that uses the ingredients you have.

Likewise, you might make art for yourself or gifts for a friend with items on hand rather than spending money on supplies or buying a brand new item to give as a present.

Finally, you may be able to access free stuff or services, such as free entertainment, healthcare, or meals.

7. Change Your Mind

Delaying purchases can often do more than defer payments and slow down cash outflows. An occasional outcome of the delay is that you will change your mind and not make a purchase at all.

For example, when the holidays were over, my waiting-for-a-price-break son must have realized that his friends weren't playing the video game that he had planned to buy. Plus, I imagine that he anticipated being busy with his schoolwork, Eagle Scout project, and track practice after the Christmas break and wouldn't have much time to play anyway. So, he decided not to buy the game and save all of his money instead.

When considering whether to buy now (even for a great deal and limited-time offers), count the cost not only of spending but also of continuing to carry loan balances as interest charges can easily cancel out savings.

Even my teenage son, who has grown up with instant downloads and prompt delivery of release-day video games, can wait. That tells me that nearly anyone, including me, can avoid a purchase (at least temporarily) by waiting for a price break or using a combination of delay tactics.

Has delaying purchases helped you to save and pay off debt?

This article is inspired by the Debt Movement. Join the movement to pay down $10 million in 90 days and apply for loan payoff scholarships.

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This article is from Julie Rains of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Market Clones: How to Pay Drastically Less for Pricey Products

Lars Peterson — Thu, 31 Jan 2013 11:24:35 +0000

A recent question posted to “AskMeFi” — the popular crowd sourced question and answer subsite of Metafilter.com — asked users to suggest products that were priced differently, depending on market and intended use. The example offered was food-grade mineral oil, which is costly when marketed and sold as butcher block oil, but inexpensive when marketed and sold as a laxative (as much as $1.74 per ounce versus as little as $.29 per ounce).

Same product, different market, different intended use, different price. The next time I buy a bottle of butcher block oil, I'll visit RiteAid instead of Williams-Sonoma.

How many other bargains like this are out there? (See also: 21 Disposable Products You Can Reuse)

True Market Clones

The community came up with several clear market clones as well as a bunch of money-saving ideas that didn't quite satisfy the rules of the question (buy generics, look for private label alternatives, use men's shaving cream instead of women's, etc.). Here are a few of my favorite bona fide clones from that AskMe.

Super Absorbent Towels

Super absorbent towels marketed to swimmers cost more than super absorbent towels sold to car owners. If you don't mind drying off with a towel sold at the auto parts store, you can save as much as $5 per travel towel.

Sleeping Aids

Diphenhydramine, the stuff that makes you drowsy, costs more in sleeping pills such as Nytol ( $.25 per 25 mg tablet), than it does in antihistamines such as Benadryl ($.21 per 25 mg tablet). Of course, generic versions are even cheaper.

Kitchen Twine

Cotton cord sold as baking twine or kitchen twine at the fancy kitchen supply store costs more than cotton cord sold as regular cotton cord at the hardware store — often two or three times as much per foot. Just make sure you get 100% cotton twine and nothing with wax or artificial colors, and your roast should come out fine.

Headache Medicine

Excedrin Migraine and Excedrin Extra Strength are exactly the same product except that Excedrin Migraine costs a dollar or more per 24 caplet bottle. Again, generics can save you even more.

Market Cousins

While not quite market clones like those above, these products are essentially the same, but are priced differently, depending on where they are sold and who they are sold to.

Gasoline

All the gasoline in your neighborhood — branded and unbranded — most likely comes from the same refinery, and meets the same federal standards for quality. Several major brands tout the efficacy of proprietary detergents they add after the product leaves the refinery, but the reality is that the distribution system inevitably mixes additive and non-additive gasolines alike. It's pretty much all the same gas.

Beauty Products

When I mentioned to my wife what I was working on, and that I needed more ideas, the first thing out of her mouth was "beauty products." Apparently there's a whole cottage industry devoted to this topic. So I'm not going there.

However, these seven natural substitutes for toothpaste and lotion and so on come close to the rules of this game.

And here's something interesting. After Proctor & Gamble bought Clairol a few years ago, the base (but not the fragrance) of P&G's pricey Pantene Ice Shine Conditioner was exported to the cheaper Clairol Herbal Essences Hydration Conditioner. Pantene performance at an Herbal Essences price.

How many other beauty product manufacturers share formulations across product lines, I wonder?

Silver Cleaner

This is more of a DIY substitute, but the chemistry is cool (as is how easy it is), so I've included it in this list. Baking soda, aluminum foil, and water. You can't get more inexpensive than that.

Wraps vs. Tortillas

What's the difference between a wrap and a flour tortilla? Only the price!

This one is old news by now, but it's a good reminder that the ethnic aisle in your grocery store is usually a good place to find spices and seasonings at lower prices than the same or similar products stocked elsewhere in the very same store.

Anything I've missed? What other common products are priced differently depending on market and use?

This article is from Lars Peterson of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How Water Can Save You $977 a Year

Paul Michael — Tue, 29 Mar 2011 11:00:06 +0000

Most of us eat out at least once a week. In fact, renowned culinary experts Zagat recently announced that although we are dining out less as a nation (due to the poor economy) we are still eating out an average of 3.1 times per week. That's the average of course, some of us are eating out daily. (See also: A Cheapskate's Guide to Eating Out)

And when we eat out, be it at a fast food restaurant or something more refined, we drink soda. Oh, how we drink soda. As a nation, we can't get enough of it. According to Dr. Oz:

53 million Americans drink at least one soda a day, and we spent $70 billion last year on soda.

That got me thinking. How much would we save, on average, if we substituted tap water (not bottled, please) for soda every time we ate out. Every restaurant, fast food or otherwise, has given me free water with my meal when I ask for it. And remember, I'm not talking about substituting every single soda we drink — just the ones that accompany the meals we eat away from home.

First, let's review the numbers we're dealing with.

We already know that we eat out 3.1 times per week. Now take the average family size, which according to 2009 US Census data is 3.19 people. And, as we're playing with averages, what's the median cost of a soda?

Well, the cost of soda is obviously going to change depending on where you live and where you eat. A glass of soda at a high end restaurant in New York is not going to be the meager $1 McDonald's charges (although that's still a huge mark-up). I've paid almost $5 for a glass of Coke in a trendy gastro-pub. But I did some digging and found out that there is generally a recommended price for a 20oz soda with free refills. That price is $1.75 plus tax. So, let's round that up to $1.90.

Here's the math:

We eat out 3.1 times per week.
3.19 people make up the average family.
With 52 weeks in a year, that makes roughly 514 glasses of soda every year for an average family.
514 x $1.90 = $977!

What could you do with an extra $977 a year?

Right now, you could buy a really nice laptop, a whole new wardrobe, or it could go towards a vacation for your family. And all for substituting water for soda only when you eat out. It's not like you're giving it up entirely. Think it over.

This article is from Paul Michael of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Borrowing, renting, substituting, and doing without

Philip Brewer — Thu, 19 Mar 2009 20:20:18 +0000

Finding deals is a key topic on Wise Bread, and for good reason--finding a great price may make something you want affordable and make it easier to stretch your resources to cover your needs. There's a lot here about the tactics of finding good prices--knowing where to look, knowing how to negotiate, being willing to wait, and so on. This post, though, is about four other tactics for frugality--tactics that, for me, make a much bigger difference than finding deals.

Personally, I'm a big fan of doing without. I'm with Henry David Thoreau: "A man is rich in proportion to the number of things he can afford to let alone." This is no solution for things that you need, of course, but for things that you merely want, it really is. My own preference is to pick only a few wants, and that satisfy those wants fully and deeply.

Where you can't do without, consider substituting. In particular, consider substituting a cheap thing for an expensive thing, but that's not the only possible substitution. Considering substituting something that you've already got for something that you'd have to buy new. Consider substituting something that you can make for something that you'd otherwise have to buy.

One special category of substituting is renting. For things that you simply want to experience, but that you don't really need to have, this is perfect. Some people look down on renting, especially when it's done in a way that seems intended to give others a false impression--renting expensive jewelry to wear to an event, for example. To my mind, though, it's perfectly reasonable to, for example, rent a powerful sports car for a week, so that you can learn what it's like to drive one. Doing it so people will think you're richer than you are seems kind of lame, but also pretty harmless.

Finally, as what can be viewed as simply a free version of renting, there's borrowing. This covers a wide range of options--borrowing from friends, neighbors, relatives, etc. This is a really important option to consider--nothing will raise the standard of living of the whole group more than sharing. Getting in on the borrowing requires two things--first, you need to show yourself to be the sort of reliable person who returns borrowed things promptly and in good condition. Second, it helps a lot to show yourself as the sort of person who is willing to lend as well as borrow.

One reason that I tend to gravitate to these options rather than "deals" is that so many deals are specifically structured to give you a taste of "the good stuff." Airline upgrades are often cheap, on the theory that once you fly business class you won't willingly go back to coach. Wine stores have regular sales on premium wines, hoping that, after some number of cheap bottles of expensive wine, you'll decide to upgrade your cellar.

With that in mind, it's important to be careful about a special category of borrowing that's distinct from the personal borrowing from friends and neighbors: Borrowing from sellers or producers. Becoming an "opinion leader" of any sort can result in opportunities to borrow new cool stuff, in the hopes that your use of it will influence others to consider buying the item. Sometimes, though, companies will pretend that this is what they're doing, when what they're actually doing is trying to get you to add their item to your list of things you've got to have. It's the same logic as the pusher: the first one's free.

Deals are great, but don't let a search for deals blind you to these other options. And always take care to manage your tastes. It's fine to decide that you only want the best--but only if it means that you'd rather do without than settle for second best.

This article is from Philip Brewer of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: