money saving tips

9 Money Lessons to Take From the Great Depression

Paul Michael — Wed, 25 May 2016 10:30:05 +0000

Lasting from 1929 until 1939, the Great Depression was the deepest and longest-lasting economic downturn of the 20th Century. Unemployment went as high as 25% in the U.S., over 5,000 banks failed, and hundreds of thousands of Americans became homeless. Extreme situations call for extreme measures, and that's when everyone looked at ways to cut back, save money, and survive. Here are nine tips from that era that are still just as relevant today, and can save your household a lot of money.

1. Waste Not, Want Not

The definition of that proverb is, "if you use a commodity or resource carefully and without extravagance, you will never be in need." In other words, don't waste anything and you'll always have enough. That was something people from the Depression lived and breathed daily, and yet in today's throwaway society, we are often guilty of ignoring it. How often do we all throw away leftovers, or even dump the chicken carcass once the meal is over? Get into the habit of using every part of everything that you can. A great stock can be made from chicken bones. If you use a juicer, put the pulp left behind into muffins and breads. And when your t-shirts are ready for the trash, cut them up and use them as rags.

2. Pad Your Ground Beef Meals

The cost of one pound of ground beef is currently hovering around $4, with grades like 93/7 (which means 93% lean, 7% fat) running $5-$6 per pound. However, the cost of a pound of lentils is significantly less, with most grocery stores having one-pound bags for under $2.

During the Depression, it was common practice to pad out ground beef meals with filler, like lentils or oatmeal, and if done correctly, the taste difference is subtle. If you're making meatballs, add more breadcrumbs. Interestingly enough, the humble British Yorkshire Pudding was used as a substitute for meat during the wars, when rationing made meat very hard to come by (and costly when available).

3. Stop Replacing, Start Fixing

It would have been unthinkable in the 1930s to replace a broken or malfunctioning item without first trying to fix it. But these days, with the price of so many items being very affordable, it's easy to just throw the broken thing away and buy a new one. Well, stop. You happen to have the greatest possible resource at your disposal: the Internet. Whatever is broken, from a toaster to a laptop, there are hundreds of online tutorials available in both written and video form. Some of them go step-by-step with photos, through every single part of the process.

If your lawn mower refuses to start after the winter, don't just throw it away and buy a new one. A simple tune-up kit costs $20 and could get it back on its feet. An ice maker in the fridge can be replaced by you, with parts available online for a lot less than a plumber would charge. Get into the habit of fixing things first. Then, if you can't do it, hire someone who can (if it's cheaper than replacing it). Only buy a replacement if all other options fail.

4. Grow Your Own Food

Sure, the grocery store is nice and convenient, but you can easily grow a lot of fresh fruit and vegetables yourself at a fraction of the cost. There is even a "grow your own food" movement, with thousands of people converting some, or all, of their backyards into fruit and vegetable gardens. Self-sustainability is not only cheaper, but important, should anything ever happen to the foods you take for granted.

Start simple with potatoes, tomatoes, peppers, herbs, and blueberries. When you get confident, and have a great crop, expand to beets, lettuce, cucumbers, cabbages, rhubarb, and strawberries. Of course, where you live in the world will dictate the kind of success you have, and what you can grow well, but there are also products that can help. A greenhouse can help you weatherproof your crops, and you can also grow inside with the help of indoor cultivators. (See also: 7 Fresh Veggies You Can Grow From Kitchen Scraps)

5. Don't Buy Anything You Can Make Yourself

There are plenty of items you can make at home, using raw materials and a little skill. For instance, several cheeses (including cottage cheese and fresh mozzarella) are very quick and easy to make at home, and cost far less than they do in the store. They're also fun to make. Yogurt is also very simple and easy to make. Then there are breads, cakes, pastas, and even beers and wines you can make yourself. Back in the Depression, it often wasn't an option to go to the store and buy whatever you needed. It's all too easy to pop to the store, but you will save a lot of money doing it all yourself.

6. Layer Your Clothing

It's not always an option with small children in the house, but if you do have the opportunity to do it, layering is far cheaper than heating the whole house. Wear several layers in cold weather, and set the thermostat between 50-60ºF during the hours you sleep. Put extra blankets on the beds, too. If you're watching a movie with someone, huddle up together in a blanket together. Do whatever you can to warm your own body without paying to warm every room in the home. You can also invest in a small heater that you can take from room to room. Use a hot water bottle, or an electric blanket. It may seem very frugal, but when money is tight, it can vastly reduce the heating bill.

7. Buy Used, or Even Get Things Free

There are so many avenues open to you to save money on used items. From clothing and furniture, to electronics and accessories, you can get excellent used goods from thrift stores, Craigslist, local classified ads, eBay, Amazon (look for the "used" option), and even friends and neighbors. It's often great to host a get-together and bring clothing that you can swap, either for yourselves or the kids. And don't be ashamed to seek free items. Dumpster diving, also known as freeganism, can bag you an incredible amount of perfectly good food, clothing, and furniture without spending a cent.

8. Buy Essentials in Bulk

It is much cheaper in the long run to buy the things you use week in, week out, in bulk. Stores like Sam's Club and Costco make it very easy for you to load up on soap, flour, toilet paper, canned goods, coffee, diapers, cleaning supplies, and pet food. This dramatically reduces the "unit cost" of the items, saving you money over time.

However, there are a few warnings that come with bulk buying. First, when you initially bring home some of these things, it's very easy to dig right into them. You must have willpower and proper rationing to make it work. And second, don't be tempted to buy bulk items that are not going to be used often. Remember Kramer in Seinfeld, buying industrial-sized cans of beefarino? Not a good idea.

9. Learn to Go Without

What do you want, and what do you need? The two are very different. With the availability of credit cards and loans, it's easy enough to get the things we want and pay for them later (at additional cost). But before bringing out the plastic, or diving into savings, consider the want vs. need argument. Do you really need that new watch or pair of shoes? Do you need all the channels on cable TV? Do you need a new car? Do you need 14 different flavors of soda in the pantry? What can you do without, and still live a life you consider happy and comfortable?

What other Depression-era hacks can we still use today? Share with us in the comments!

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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:

Here's How Rich You'd Be if You Stopped Drinking Expensive Coffee

Alaina Tweddale — Tue, 07 Apr 2015 09:00:10 +0000

Last week I was in Starbucks, and found they now have a list of enticing new lattes. One was tiramisu! Starbucks will be glad to know that the tiramisu latte did not disappoint. On taste, that is. The price tag for a tall tiramisu latte with coconut milk in my area is a staggering $5. That's right: five dollars. For what ultimately amounts to a small coffee with some flavors and milk substitute thrown in. Oh my.

Fortunately for my pocketbook, I usually home brew. I have a very nice coffee maker that had an upfront cost the equivalent of 40 tall tiramisu lattes with coconut milk (after my 20% Bed Bath and Beyond coupon). Sure, it was expensive, but like I said; I'm a coffee lover, and the coffee it auto-grinds and brews is so delicious that I'm often disappointed when I'm out and have to buy from a coffee shop. (See also: 12 Ways to Make Better Coffee at Home)

Before I get all annoying and tell you how much your five-dollar-a-day coffee habit is costing you, I want you to know that I'm not picking on Starbucks. You can run the same numbers by picking your favorite brew from Peet's or Caribou or Costa, or wherever you happen to frequent. Heck, skip the coffee analogy altogether and substitute cigarettes, a microbrew at your local hang-out, cable TV, or whatever daily vice you think is harmless to your pocketbook.

What's most important is that, before you make even the smallest of financial decisions, you understand the big picture effect. Maybe you'll decide your daily latte is worth the long-term price. But, before you decide, you should understand the variables. (See also: 73 Easy Ways to Save Money Today)

$5 a Day for 40 Years Could Buy a House (in Today's Dollars)

If you took $5 a day and put it in an 8% investment like a low-cost, well diversified index fund (I love Vanguard, if you're looking for one!) for 40 years, that daily foregone latte could compound to a staggering $510,600.40. Don't want to wait 40 years? The daily tiramisu latte habit adds up to $1,971 over a year, $11,563,07 over five, and $28,553.01 over 10. Just think about all the vacations you could take with that extra dough, or all the kids' college accounts you could fund, or all the debts you could pay off (and save yourself the interest payments!). The possibilities are endless. (See also: This is How Rich You'd Be if You'd Saved All the Money You Earned in High School)

But I Don't Want to Give Up That Much Coffee

I love coffee, even the five dollar variety, even though I know how much it costs to my long-term bottom line.

Drop just one froufrou cuppa from your weekly routine and you'll still see great investment results. Assume again you take that $5 per week and invest it in that low-cost index fund (which we'll assume returns 8% per year) and you'll earn $280.80 per year, $4,067.83 in 10, and $72,743.07 after 40 years. It's no McMansion in the burbs but $70k is still enough for a double wide in the country or a condo in the city. (See also: How to Save $26,000 in 5 Years or Less)

No, Really, I Just Can't Give up My Coffee

I get it. Really, I do. Sometimes a daily habit means more than what we have to gain by giving it up. So, in my last ditch effort to show you that little changes lead to big results, let's see how much you have to gain by giving up just one fancy coffee per month.

In one year (assuming an 8% annual return): $64.80. In 10: $938.73. In 40: $16,786.86. Even giving up just one $5 coffee per month can make a sizable difference over time. (See also: 16 Easy Ways to Save $100 This Month)

Just for fun, here's an expanded version of the numbers so you can choose your own timeframe and dollar savings.

The next time you find yourself pulling a fiver out of your wallet for a seemingly inconsequential expense, I hope you'll think twice and consider the long-term cost of that impulse buy. Just plug the cost of that impulse buy into a compound savings calculator and see how much you'll save — and earn. Over time, the decision could just fund your next home, vacation, or child's college tuition. Or, Howard Schultz's pocketbook. The choice is yours.

What daily expense would you be willing to give up for a house in 40 years?

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

3 Invisible Savings Tips That Work

Darwins Money — Thu, 18 Nov 2010 13:00:06 +0000

With money tight these days for so many people, it's worthwhile considering some subtle "invisible" savings tips to ensure you're meeting your financial goals. When money was tight as a fresh college grad, I had devised a few different ways to set aside money without really noticing it. This both removed the temptation to spend it and the deterrent to give up when I was having a tight month, since these methods were virtually invisible! (See also: 5 Ways to Save Money on Everyday Expenses)

1. Checkbook Roundup

Before the advent of online banking, I was writing 15-20 checks per month. No matter what the payment amount was, I would always round up to the next full dollar amount and record that in my ledger. When something was $1.20, a $2 entry went in and so on. After a couple years, my checking account balance was several hundred dollars greater than what was showing in my checkbook ledger. This served two purposes: First, I'd be hard pressed to bounce a check with a buffer that large, even if I accidentally forgot to record a check or ATM withdrawal. Second, after a few years of this, it was a nice unplanned couple hundred dollars I could draw down to rebalance and start over again once I had accounted for all recent outstanding checks that hadn't been processed yet. These days, if you write very few checks, the system may not generate much in the way of invisible savings, but I still practice it to this day. I like the idea of the cash buffer in there. With interest rates close to zero, the opportunity cost on a few hundred dollars is inconsequential, and it's reassuring to know that if my wife or I forget to record an entry, it's covered.

2. Save Every $5 Bill

The neat thing about $5 bills is they are somewhat rare, yet not so painful to part with for an invisible saving method. I used to pay for almost everything in cash, and I tended to deal with 20s and singles quite a bit. On the occasions where I was handed a $5 bill for change, it went right in my invisible savings jar that night. See, the $5 bill is small enough and rare enough that I didn't really miss having it, yet after a year or so of a five per week, I'd saved around $250.

3. Never Use Change

Aside from the fact that watching the customer in front of me dig around and count out pennies to pay the cashier drives me batty, I've derived more pleasure from saving and investing my change than carrying it around and counting it out. I've always just dumped all my change in a can and then counted it out and savored the pleasant surprise. I used to do it the hard way with coin rolls, but now many banks have automatic change counters for free.

Each of these methods might realistically only yield a few hundred dollars per year, but that's a few hundred dollars you probably wouldn't have saved otherwise. And it's practically invisible!

Important: Have a Strategy for Deployment of Your Invisible Savings

Saving this money is only half the battle. If it's holiday time, you've saved $700, and you go blow it on an impulse purchase, that probably wasn't your initial intent at the beginning of the year. What I used to do with these savings was to deposit the money every quarter or so, even if it was just $100, and write a check for an equivalent amount to a dividend reinvestment program (DRIP). Essentially, these programs allow you to buy partial shares of common stock from publicly traded companies at any time, often for free or a very low fee. By forcing myself to divert these funds to a pre-determined objective, over several years, I was able to amass a nice portfolio of large blue-chip companies simply from invisible savings. Perhaps your objective might be a 529 plan contribution for the year (see 529 pre-paid vs. tuition strategies), Christmas shopping money, next year's travel fund, or simply building up your emergency fund.

Do you have other "invisible" savings methods to share?

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

Finding Money: 11 Ways to Save Money you are Spending Without Sacrificing Anything

Nora Dunn — Fri, 29 Feb 2008 21:59:27 +0000

There are a number of ways to find money by rearranging your finances, stretching your shopping dollar, and spending wisely. Here is a collection of 11 Tips to help you find some money of your own.

Change your Witholding Tax

If you typically receive a tax refund each year, you can actually ask your employer to reduce the amount of tax withheld off your paychecks. I know I know – you like getting those fat checks at tax time each year, but in reality it’s like an interest-free loan to the government. Your money is much better in your own pocket, thank you very much.

Reduce Interest Rates on your Debt

As cited in a previous article, more than half the time if you ask for a discount by calling your credit card company, you will receive one!

This also applies to your other loans. If you happen to be drowning in your own finances, you can call any creditors you owe, explain your situation, and they can make concessions for you. If the agent you are talking to on the phone can't do it, politely ask for their manager; they have more clout for granting rate discounts.

Refinance your Car Loan

If your car is still less than five years old, and you got your loan through the dealer, you may be able to do better. Using a website like bankrate.com will help you find the best loan rates in your area, and Kelley Blue Book will tell you the blue book value of your car.

Assuming your credit hasn’t worsened since you bought the car, and assuming the car is in good condition, you will likely be able to refinance your loan for minimal fees.

Just make sure you don’t extend the term of your loan. The idea here is to refinance at a lower interest rate, not reduce your expenses by extending your liability periods.

Consolidate Student Loans

Wouldn’t one nice monthly payment be nice? You can save up to $150/month by consolidating your student loans.

The aim here is not to reduce your interest rates overall, since most student lenders will offer the same rates. Instead call each lender you have a student loan with and explain your situation and desire to consolidate. Some will offer you rate discounts after making payments for a certain period of time, or discounts for paying with pre-authorized debiting from your bank account.

Get Rid of Mortgage Life Insurance and replace it With an Individual Policy

You will find that more often than not, replacing your mortgage life insurance policy acquired through the bank with an individual term life insurance policy will save you at least a few bucks each month. Not to mention a myriad of other benefits that make this decision a no-brainer.

Eliminate Mortgage Insurance (PMI)

Not to be confused with Mortgage Life Insurance, mortgage insurance is required by the bank if you made a down payment of less than 20% of the value of your home. Once you have achieved more than 20% equity, this insurance drops off.

You may not be close to having made enough payments to accrue 20% equity, but your home may have appreciated, and all the appreciation belongs to you.

You will have to pay for an appraisal of the property, which can run in the neighborhood of $350, so it would be best to analyze how much you are paying in mortgage insurance before running out to pay for an appraisal for minimal savings.

Save on Utilities

A few techniques used in this department will not only help you to save some money, but you’ll also be friendly to the environment in the meantime.

Wash your air filters for your heater or furnace regularly. Doing this can save you up to $50/year in heating expenses.
Install a thermostat that adjusts automatically at night (since you’ll be wrapped up in blankets, you probably don’t need the place to be as warm). This can knock an additional 10% off your bill.
Seal your windows to eliminate draft, by installing weather stripping or adding caulk to the weak spots.
Call your utility company to see if they have any programs in place for you to earn discounts. Sometimes use of certain appliances or techniques will allow you to save money off your bills.
Xin has a few other tips worth checking out to reduce your heating expenses.

Child Care

Although this expense in and of itself can rarely change, you can change how you pay for it. Many employers have a dependent care spending account, which will allow you to pay for your child care with pre-tax dollars. This is another way to get your tax refund up front, so if you are also employing step one from this article, be sure not to reduce your withholding too much or you may end up owing when you file.

Home and Auto Insurance

Have you shopped around lately? If you haven’t, you may find that rates have changed and you can replace your policy while saving money.

You can also consider increasing the deductible (the amount you have to pay out of pocket if you make a claim), which will reduce your premiums. Just make sure you maintain a deductible that your wallet or emergency fund can handle at claim time.

Term Life Insurance

Again, you may find that the rates have changed since you took out your policy. With people living longer, the cost of life insurance is actually going down! A term policy is easily replaced by applying for a new policy with a different company, then canceling your old policy once accepted at the new rates. It is very important that you get your new policy in hand before canceling the old one, just in case they discover something in your medical records that lead to higher rates or a flat out refusal to offer coverage.

Permanent Life Insurance

Do you have a whole life or universal life insurance policy that is sucking you dry? Chances are that if you need to find money, you can find it here. Call your insurance agent (or the company directly) and look into your options for reducing your premiums. Oftentimes part of your premiums go to the cost of insurance, and the rest go into an investment account of sorts. You will likely have the ability to reduce the amount going into the investment account. You also might be able to take out a loan against the cash value of the policy if you need a chunk of money right now, but be sure to consult a professional about all the ramifications before choosing this option.

The trick with all this money you have now found is to use it constructively. In some cases you have taken on more risk in reducing your expenses (for example by increasing your insurance deductibles or reducing your withholding tax), leaving you vulnerable to possible financial hits later on. Be sure that you document your money saved, and apply it directly to other areas of your finances that need it: debt reduction, savings, or an emergency fund.

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