For many people, the word "saving" has a negative connotation. It is associated with deprivation, austerity, and negativity. It suggests life on the back foot. But you need to switch this around and see saving as a positive action towards financial freedom. You need to see saving as one of three variables in the financial freedom equation. To become financially free, you need to make money work for you. You need to become an investor. You need to invest your money in strategic assets that can generate a reliable long-term stream of income. That is the goal. So how do you become an investor? You need to have surplus cash. How can you move into a situation where at the end of every month you have surplus (or extra) cash?
You need to earn more than you spend! You need to earn more and you need to spend less. It might take you months, or even years, to get to this surplus, but you need to get there. Today we are going to look at the strategy of spending less or saving. It is a discipline that you need to acquire if you want to be financially free.
Before we get started, you need to understand the cold and hard reality. Based on global statistics, humans are not great savers. It would appear that we are not wired to delay, postpone, or cancel gratification. This could be a function of living in a world of consumerism or a function that household income over the past few decades has not kept up with inflation making it more difficult to make ends meet.
1) The 60/20/20 Goal
Saving money is like going on a diet, and we know that most diets fail. People can lose weight at the beginning but as time progresses, they cannot cope with the deprivation, abandon the diet, and gain all the weight they lost and then some. A savings plan does not mean that you need to live like a monk and this is born out in the 60/20/20 rule. You want to work forwards the following: spending 60% of your income on necessities. Necessities include the following: shelter, food, and toiletries (this includes pet needs), utilities (this includes water, lights, internet, etc.), transport expenses, debt payments, insurances, and medical needs. The remaining forty percent is then divided evenly between non-essential expenses (such as entertainment) and savings. If you can save more and spend less on non-essentials, you will be able to invest more. Regardless of how you mix up the weighting of the forty percent, you must not save less than 20 percent.
2) You Got to Keep it Separated
The death knell to any savings plan is not having a separate savings account and mixing everything onto one single account. The second your income reaches your account; you need to transfer the savings portion into the savings account. This is not negotiable. If you leave the savings portion mingling with the rest of your spending money, there is a very high probability of it being spent on non-essentials. Humans are frail and are easily led to temptation. By removing the temptation immediately, it will be easier to stay on the path of savings righteousness.
3) Build an Emergency Fund
Some experts recommend setting aside six months’ worth of living expenses in case of emergencies. This helps you avoid going into debt if you ever lose your job or have to pay unforeseen medical expenses. The problem with this emergency fund is that it is often held in an account that earns little or no return. These cash savings accounts are chosen because they provide you easy access to the money which makes sense. These accounts are also very low in risk. The problem is that this money is not working for you. Global interest rates are at record lows. I propose investing this cash into a low-cost well-diversified ETF (exchange traded fund). Although riskier than a savings account, you do have direct access to this money in the case you need it and the potential return is considerably higher.
4) Track Your Spending
Most people get to the end of the month and they have only a vague idea as to where their money went. They look at their credit card statement and are completely blindsided. They spent a lot more than they expected and are sent into panic mode. Small purchases add up over time. Popping down to Starbucks for a sexagintuple vanilla bean mocha frappuccino will cost you a couple of bucks. Do that every day and in a month, you could easily have spent a large amount of money. The good news is that it is easier to track your spending today than it was 30 years ago when we lived in a predominantly cash economy. Given that the majority of modern-day spending is done electronically, you have records in the form of bank, credit card, and online payment statements. If you do pay cash for something, keep a slip or receipt. Every month you need to go into your accounts and understand how you spend. You also need to look for bad spending patterns and how they can be altered or completely removed.
5) Avoid Bad Debt
Debt is a controversial one. Financial advisers have done a fantastic job in Satanizing debt. It has become a modern financial antichrist. I like to think of debt from a slightly different perspective. Not all debt is bad and what determines whether a debt is good or bad is not a function of the interest rate. It is a function of how the proceeds of the debt are used. Let’s unpack this. If you borrow money at 10 percent and invest it at a return of 20 percent, that is good debt. You are using other people's money to generate a net return of 10 percent and if you structure the dent properly, you may be able to deduct the 10 percent interest from your taxable income. Let's now look at the other side of the coin. Let’s say you own a credit card that charges interest at 40 percent. You go out and buy a Louis Vuitton bag and an all-inclusive trip to the Bahamas. When the time comes to pay your credit card, you pay the minimum. That is bad debt because you are financing luxury spending. It so happens that the interest rate is high, but the interest rate is not the damning factor. The damning factor is that the debt you have incurred is not being used to generate income.
This does not mean that credit cards are evil per se. If every month you pay the balance to avoid interest charges, you are using the card as a source of free money. This concept is worth explaining in a little more detail. The first thing you learn in financial advisers’ schools is to cut up your credit card. The reasons offered: credit card companies make money out of you, you are setting a bad example for your kids, credit cards are like the apple in the Garden of Eden and you do not need a credit card. Firstly, credit card companies do not always make money from you. There are two payment options on your monthly statement. The first is the minimum payment. Credit card companies pray you to choose this. It allows them to charge usurious interest rates disclosed in small print on page 89 of your contract. There is another option which is the payment to avoid interest. This is a thing of beauty. It will settle the balance at the cutoff date of the card. The cutoff date is normally ten days before the payment date. If your cut of date is the 20th, your payment date will most likely be the 30th. If you buy that Louis Vuitton bag on the 21st, you will only need to pay for that necessity on the 30th of the following month. You are the recipient of 39 days of FREE MONEY. I don’t care where you from, but that is a great deal. The banks make no money out of you in terms of interest. They may charge an annual membership fee but this is all the blood they will be sucking from your veins. The second argument is you are setting a bad example for your kids. Teach them about the 39 days of free money and that bad example turns into a good example. It is your job as a parent to educate your kids financially because they will not get this at school. Buy them a copy of this book. Every member of every family should have their own copy – books are like swimming trunks; they should not be shared. The third point is one of temptation. Credit cards present too much of a temptation. Whatever happened to self-control? At what point did self-control stop differentiating us from the wild animals? If your credit card is your biggest source of temptation, then you may have bigger problems. The final point is that you do not need a credit card. This is just stark raving mad – you do not need two lungs, but you were born with two. You do not need wisdom teeth – they serve no real purpose – but most people are born with them and are a bloody nuisance to remove. I hate going to the shopping mall. My wife could spend an entire day there. After half an hour, I want to rip my eyes out of their sockets. Amazon, on the other hand, is god's gift to men like me and is best done with a credit card – add to this list Netflix, Spotify, and Uber.
6) Set Manageable Goals
How often have you set a big goal – like run a marathon – only to find yourself falling short and then declining into a spiral of self-doubt and loathing. If you want to run a marathon, you need to establish a set of short-term goals that will enable you to reach the big goal. Aim to run a 10k race within the first month, then a half marathon within 3 months, then a 20 miler (32km) within 4 months, and then the marathon within 6 months. Let’s say you get injured after the 20 miler and you need to pull out halfway. How will you loom back at your running season? It was pretty successful. You ran a half marathon. Now you can work on your recovery and take another shot at the marathon goal. Savings is no different. Focus on your non-essential spending.
You may set a 10-year goal of having a certain amount invested but you may be in a negative surplus situation. This means that you are spending more than you are earning and you are funding the gap with your credit card. For example, you earn 100, spend 120. To get through the month, you have to spend 20 on your credit card. Your first goal would be to balance your budget: income = spending. The second goal may be to have more income than spending and use the surplus to pay down your debt. Once you have paid down your debt, you will want to maintain the monthly surplus and now start to invest that surplus in the stock market. Set these smaller intermediate goals and do not forget to celebrate them. As you reach each goal, take time to celebrate and enjoy the achievement. The celebration does not need to be lavish, but it should be of such magnitude that it keeps you motivated.
7) Use the Cooling Off Rule
In consumer rights legislation and practice, a cooling-off period is a period following purchase when the purchaser may choose to cancel a purchase, and return goods which have been supplied, for any reason, and obtain a full refund. I want to apply this rule to savings, but with a slight adjustment in that, it comes in to play BEFORE you make a purchase. Before making a large purchase, take some off to think it through. I suggest a period of a couple of days to a week. For example, your washing machine is starting to get temperamental and you are thinking of buying a new one. This represents a large capital purchase. Instead of rushing in to buy a new machine, you can do the following.
How about changing your paradigms? Instinctively we have been taught that if your washing breaks down, you should buy a new one. But how about using a laundromat. Assume that around the corner to where you live, there is a laundromat with coin slot machines. Calculate how much it will cost every month to use this service. Factor in the cost of inputs like washing powder and softener, and what you will be saving in electricity and water. Compare those monthly costs to the cost of the monthly cost of buying the washing machine. Then factor in how you are contributing to the health of the planet by not bringing into the world another washing machine that will eventually find its way into the landfill.
8) Think Twice About Taking Out a Mortgage
Homeownership enslaves people financially. According to Zillow, one-third of homes in the United States in 2018 were "free and clear" - they were not encumbered by a mortgage loan. Two-thirds were encumbered. There is nothing like a 30-year mortgage bond to tie you down financially. If you have a mortgage and a job, the pressure to stay in that job until that death pledge has been paid off is immense. Mortgages are the single biggest reason standing in the way of financial freedom. To make matters worse, most people believe their home is an asset. Robert Kiyosaki, in his book "Rich Dad, Poor Dad", says the asset/liability test is simple. Assets put money in your pocket. Liabilities take money out of your pocket. If you are living in a house, and it is mortgaged, you are paying rates, taxes, and interest on the loan. It is a liability. If it is "free and clear" it is still a liability. You are paying rates and taxes, not to mention lights, water, and general maintenance. But property prices always go up. That is a fallacy. Americans who bought houses before the financial crisis of 2008 will paint you a different picture. Real estate is like any asset – its price can rise or fall. If you are banking on your house price appreciating in value, then welcome to the world of speculation. Real estate is a very powerful income-generating asset, but it is only an asset when it puts money in your pocket.
9) Rethink Retirement Savings
If financial freedom is obtained through making money work for you, does it make sense to differentiate between normal savings and retirement savings? I do not think so because when you do that, this is the big mistake that people make with retirement savings. They believe that it needs to be down through a retirement institution such as a pension fund, insurance company, or institutional asset manager. The most common retirement vehicle is the retirement annuity – quite possibly the worst investment known to man. Retirement annuity salesmen will tell you that there are five benefits of a retirement annuity. Firstly, the tax benefits. They will tell you that you deduct the contributions, but they will fail to tell you that when you retire and start to receive the benefits of the annuity, that flow of income is fully taxable. Secondly, they will tell you about the power of compound growth – returns on returns. What they fail to tell you is that ALL investments offer compound growth. Thirdly, they will talk about disciplined savings. All investments are discipline savings! Fourthly, they will talk about supporting your dependents. Once again, the reason why you invest is to look after you and your dependents. Finally, they talk about long term stability. The stock market offers long term stability but with far better returns.
Retirement annuities are horrible investments. The only beneficiary is the annuities salesman. According to billionaire investor Ken Fischer, if you invest $1 million in an annuity you will put a kid through private college. The problem is that it is not your kid. It is the kid of the annuity’s salesman. Fisher says you would be better off cutting a check directly to the salesperson and then investing the balance directly in stocks and bonds. Do not be fooled by the sales rhetoric. If you are financially educated and disciplined, you can do better with direct investments. Annuities are black-box investments – there is no transparency and accountability of results. The fees are bordering on criminal. Moreover, when you retire with that annuity, you will get a stream of income akin to a quaint Scottish brook. You deserve the whitewater rapids on the Zambezi River.
10) Do Not Buy a Car
For most people, their two biggest monthly expenses are their mortgage and car payment. I am not a fan of homeownership and I am even less of a fan of car ownership. Automakers are living in a state of denial. They are holding onto the antiquated belief that there is still exists a love of owning a car. There is no love in owning a car – there is love in driving a car. Car ownership opens your life to a world of complications – pushy car salespeople, rapid devaluation, hidden fees, and costs, insurance, taxes, gasoline, maintenance, repairs, fines, and parking. In a world where there is a plethora of renting and sharing options, who in their right mind would you want to buy? I am not saying that you avoid all these complications when you rent or share. You only pay for the time you use the car and not when it is gathering dust in the garage.
11) Is University Compulsory?
Financial advisers will tell you that you need to start saving for university early. Let’s challenge this paradigm of having to go to university at all costs. About 43 million adult Americans—roughly one-sixth of the U.S. population older than age 18—currently carry a federal student loan and owe $1.5 trillion in federal student loan debt, plus an estimated $119 billion in student loans from private sources that are not backed by the government. Thirty years ago, if you said that you had decided not to go to university, your audience would have sucked all the oxygen out of the air in the room. It was unthinkable. Such an action was seen to be a death sentence. In the last three decades, this attitude has changed. Kids are graduating from university, saddled with debt and without the skills to meet the challenges of the modern workforce.
Modern corporations have started to understand the limitations of formal education. In 2018, job-search site Glassdoor compiled a list of top employers who no longer require applicants to have a college degree. Companies like Google, Apple, and IBM are all in this group. In 2017, IBM's vice president of talent Joanna Daley told CNBC that 15 percent of her company's U.S. hires do not have a four-year degree. The message from these companies is that a traditional college degree does not necessarily equip graduates with the requisite skills to operate in their world. Technology companies, however, were not the first to recognize the limitations of a university degree. In May of 2015, Ernst and Young, one of the big four accounting firms, announced something that surprised everyone. It would remove the degree classification from its entry criteria because it found 'no evidence of a positive correlation' between academic success and achievement at the company. This is crazy. Accounting is generally accepted as the most stayed and conservative of all professions. A charismatic accountant is defined as someone who looks at the other person's shoes instead of his own when engaged in a conversation. The market value of a university degree has declined while the cost of that education has increased. In the 1980s, a college degree almost guaranteed a job in the specific field of study. This is no longer the case given the higher number of degrees and the shrinking number of jobs on account of technology and automation.
Maybe we need to rethink the paradigm that a university degree is compulsory and embrace the concept of continuous learning through alternative channels. Learning should become a way of life and not limited to a location. Gone are the days when you study a profession and that is your profession for life. The job market is in flux and workers will need to reinvent themselves multiple times.
12) Fully Utilize Your Employer’s Retirement Match
If your job matches the contributions to your retirement savings up to a certain percentage of your salary, you should consider contributing enough to max out your employer’s matching benefit. Otherwise, you’re just turning down free money. This is not a retirement annuity – this is a retirement fund. I am not a huge fan of formal retirement funds because of their fee structures, but if your employer is matching your contributions, you would be a fool not to fully utilize this benefit.
13) Embrace the Stock Market
The stock market is one of the greatest generators of wealth on the face of the earth and the more you know about it, the better. Having said this, you do not need to be an expert in stocks to become financially free – a basic understanding will suffice.
An exchange-traded fund is a fund of shares that trade on the stock market like a single share. So instead of buying a share in Amazon, you can buy a share in an ETF that invests in technology companies. In this way, you will be investing in Amazon, but also in companies like Microsoft, Apple, Tesla, Google, Facebook, Tesla, and Nvidia. I am talking about the Invesco QQQ ETF. In this way, you can participate in the fortunes of a large number of public companies and avoid the slow death of having your money in a savings account. Also, you do not have a specific risk of investing in one specific stock. Over the long term, the stock market delivers solid predictable returns that are far superior to a traditional savings account.
14) Switch to a Cheaper Cell-Phone Plan
With the prevalence of WIFI hotspots, the standard smartphone owner today only uses on average 1.6 gigabytes of data per month. Interestingly, most service providers’ cheapest data plan provides more than that. Track how much data you’re actually using and stop paying for more than you need.
15) Lower Your Utility Bills
Evaluate whether or not you’re being as conservative as you can with your utilities. Some quick tips to save money on your bills include: Insulating your windows with a simple sheet of bubble wrap, unplugging appliances you’re not using, and turning the faucet off when you brush your teeth. Another more extreme saving which may not appeal to everyone is turning off the boiler that heats up your water. It has been well documented that cold showers boosting your immune system, increasing circulation, reducing muscle soreness post-workout, potentially boosting weight loss, and glowing hair and skin. You start this off gradually. Turn the boiler off for one day, and on one day, then two on and two off, etc. until you are more accustomed to the cold. Watch how your utility bills start to decline. This is good for your health and your bank balance.
16) Time Major Purchases Around Sale Periods
Because demand fluctuates by the season for certain items, you can time your big buys to rake in the savings. Black Monday, post-Christmas sales, and general clearance sales. Retail is for suckers!
17) Cancel Your Gym Membership
Consider the following US stats: About 18% of members actually go to the gym consistently. Out of those who actively use their gym membership, 49.9% get to the gym at least twice a week. Another 24.2% make it to the gym at least once a week. Although about half of Americans have a gym membership, 53.2% of people with gym memberships also own some sort of home exercise equipment.
Many of the exercises you do at the gym can be done at home with a bit of creativity. You can watch YouTube tutorials for ideas about home workouts, go for a run in your neighborhood, or swim laps at your community pool. If the great lockdown of 2020 taught us one thing, it is that you do not need a gym to exercise.
18) Use Coupons
Not just in newspapers and junk ads anymore, coupons are available on company websites, apps like SnipSnap, and online. Before you go out shopping, check your phone or computer and increase your savings. Another option is subscribing to Groupon, although it is only available in 15 countries.
19) Share Entertainment
Share the payments for a joint streaming account. Netflix is not exactly expensive, although you may also have Hulu, Amazon Prime, and HBO. If you can share these costs with your friends, over time you could be setting yourself up for some decent savings.
20) Plan Your Groceries
Make a list of what food you’ll need for the week, keeping in mind what meals can be made from the ingredients, and don’t buy anything that isn’t on your list. It helps not to go to the grocery store hungry or with a picky eater. Meal planning is another great option that can help you save time and money while making it easier for you to eat healthily. Most people go so far as to make a grocery list, but this is not enough. You need to only buy what you need and plan ahead to minimize waste and unnecessary expense.
21) Understand Food Spoilage
Do not be fooled by the expiration date on food items. While it may not be a wise idea to drink from the carton of milk that has been in your fridge since the Nixon impeachment, that bag of lettuce that expired 2 days ago may very well still be good for consumption. Inspect the food to make sure that it has not grown a beard or given birth to offspring. The world throws away far too much food that is still edible. You can also look to a more plant-based diet. According to the website money.com, out skipping animal protein doesn’t just add years to your life: New research suggests vegetarians can save at least $750 more than meat-eaters per year.
22) Carpool to Work or School
Ask around or organize a carpool spreadsheet at work to see if anyone lives near you with who you can swap rides with. For your kids, enlist nearby parents or friends' parents to help lighten the burden of the school drop-off lines. This also leads to less traffic, less pollution, and a healthier planet. Fewer cars on the roads can never be a bad thing.
23) Replace Your Incandescent Light Bulbs
I did this a few years ago and I cut my utility expense by more than 80 percent. I went from hating paying my utility bill to extract a small amount of satisfaction from paying it – comforted also for the fact that I was helping repair some of the damage for all the years using aerosol cans to perfume my smelling armpits.
24) Buck the Trend – Move to Cash
In 2018, only 13 percent of Swedes reported using cash for a recent purchase, according to a nationwide survey, down from around 40 percent in 2010. In the capital, Stockholm, most people can't even remember the last time they had coins jingling in their pockets. Studies have shown that one of the problems with credit cards is that they reduce the pain of purchase. Whipping out a credit card for a pair of Gucci loafers is relatively painless. Having to fork over a wad of bills is considerably more painful. If you move from plastic to paper, be aware of the inherent risks. If you lose your credit card, the company will replace it in a jiffy. Cash on the other hand is harder to replace. The financial coach Dave Ramsey endorses the envelope approach: Every time you purchase “groceries” it must be with money from that envelope and only that envelope. If you go to the grocery store and realize you don't have your envelope, you don't whip out the credit card or debit card for payment. ... Remember, you can ONLY buy groceries with the cash in that envelope.
25) Calculate by Hours
When trying to decide if something is worth buying, try thinking of the cost in terms of how long it takes you to make that money. This can help you get a sense of the true value of your money. For this to work, you need to calculate how much you make per hour. The formula is simple: Net monthly salary divided by (number of workdays in the month (work on 22) x hours worked per day).
26) Used is the New Black
By 2028, 13 percent of the clothes in women's closets are likely to be secondhand, up from 6 percent in 2018 according to ThredUp. The secondhand market, which includes resale, thrift, and donations, has grown 21 times faster than the retail apparel market between 2016 and 2018, to a $28 billion industry in 2018. It is projected to be $51 billion by 2023. The main growth driver is the resale market, which is expected to quadruple between 2018 and 2023. Sales in the apparel rental market have also surged, becoming a $1 billion industry in 2018 that could reach $4.4 billion by 2028, according to GlobalData. By 2028, 4 percent of a women's closet will consist of subscription and rental products. You can get slightly used high-quality items at a fraction of the cost of their newer counterparts. Not only is buying used good for your finances, but it is also good for the planet. Clothes companies are massive polluters and any activity from your part to reduce demand for their polluting products is one step towards healing the planet.
27) “We will be in the library”
Some people don’t realize that their local library is a great resource for free entertainment, especially for kids. Many offer movies and games in addition to books, as well as free events and readings for kids every week. So fire up the SUV, pack it full of kids, and hit the library.
28) Buy Generic
This is a bit of a no brainer to buy generic drugs – although many people believe they are inferior and will not do the job. Generic drugs are not cheaper because they are of inferior quality. They are only cheaper because the manufacturers have not had the expenses of developing and marketing a new drug. When a company brings a new drug onto the market, the firm has already spent substantial money on research, development, marketing, and promotion of the drug. The major reason why doctors may not prescribe unbranded generic medicine is the lack of confidence of physicians and patients in their quality. Aggressive promotion of branded generic medicines by the pharmaceutical companies further aggravates the problem. The bottom line is that there is no difference in quality and you can rest assured that you will not suddenly grow a third nipple if you take them!
29) Eat In
It can be tempting to eat out every night, but this can be a major drain on the finances – especially when you include beverages and the gratuity/tip, parking/taxi, etc. But you can make eating at home more appetizing by making eating at home delicious, fun, and easy. Try to cooking new recipes, setting up a picnic, or simply meal-prepping. Celebrity chefs like Jaime Oliver have over 5 million subscribers on YouTube which means you can find plenty of great video recipes if your kitchen repertoire is limited to scrambled eggs.
30) Use the 24-Hour Rule
We spoke about the cooling-off period on major purchases. It is also a good idea to apply this to minor purchases. Let's set the minimum amount on the local currency equivalent of $100 (US dollars). To avoid the guilt associated with buying yet another leopard skin leotard, how about delaying gratification for 24 hours. Put yourself in the spending cooler and sleep on it. If you wake up and the desire for those pants has not petered out, go for. If not, get back to the task of cutting coupons out of the newspaper!
31) Designate No-Spend on Non-Essentials Days
It should come as no surprise that we tend to overspend over the weekend. To help withstand the pangs of guilt associated with this overindulgence, how about calling a moratorium on non-essential spending on Monday, Tuesday, and Wednesday? If this is a little extreme, cut it down to only Monday and Tuesday, or only Monday. This also takes the pressure a little of the weekend spending knowing that your early week self-flagellation will help in the healing of your finances.
32) Go Outside
I live in one of the most spectacular cities in the world – Cape Town. When you arrive here, you want to spend all your time outside – driving along its impressive coastline, exploring the vineyards, hiking up Table Mountain, surfing, biking, and penguin watching. Most of these activities are free – they require no entrance fee. I know that not everyone is fortunate enough to live in a natural paradise, but many modern cities are promoting outdoor activities. I lived for almost 2 decades in Mexico City and that too has many outdoor activities – although, at 2,500m above sea level, you need to be a little more retrained with your physical effort.
33) Take Public Transportation
In December 2019, I conducted a mobility experiment. In the interest of highlighting the plight of that delicious holiday fowl, I went cold turkey. I parked my car in the garage and committed to only use public transportation. These were the rules of the experiment – Monday to Friday in the commute to and from work, in addition to any business of social meetings from 6 am to 8 pm, I was only allowed to use publically available transport. For Mexico City, that includes the following: metro, buses, bike shares, electric scooters, and public rideshares like Uber/Didi/Cabify. I was unable to mooch off friends or colleagues. I felt free and unfettered. There was no need to worry about psychotic drivers cutting into my lane, no need to stress about parking.
34) Drink Less Bottled Water
If you live in a city with great tap water (like Cape Town), the buying of bottled water is a heinous crime against humanity. Even if you do not have great tap water, buy a filter. Not only will the filter soon pay for itself in not spending on bottled water, but you will do your part in not allowing the plastic islands in the middle of the ocean from increasing in size. In the US, bottled water is almost 300 times the cost of the same amount of tap water and the average American spends about $100 a year on it.
35) Sell Your Extra Stuff
It is a known fact that people generally have too much stuff – the majority of which they do not use. The Pareto principle of 80-20 applies – you use 20 percent of your stuff 80 percent of the time. I would recommend doing the following domestic exercise – go through your closest and notice how you tend to wear some shirts, pants, socks, ties, suits, and shoes far more often than others. You will also notice that there are some items of clothing that you never wear. Use this revelation to sell the stuff you do not use and do not limit this to clothing. The same applies to equipment, appliances, and other household assets. If you really want to feel good about this exercise, GIVE THIS STUFF AWAY!
36) Rent Out Equipment
Why pay for your tools or equipment when they can pay for themselves? Apps like ToolRent or PeerRenters let you get paid for sharing items like drills, whiskers, and cameras with the community. Consider listing anything you have that has a specialty use.
37) Rent Out an Extra Room
Robert Kiyosaki, in his book "Rich Dad, Poor Dad", says the asset/liability test is simple. Assets put money in your pocket. Liabilities take money out of your pocket. If you are living in a house, and it is mortgaged, you are paying rates, taxes, and interest on the loan. It is a liability. If it is "free and clear" it is still a liability. You are paying rates and taxes, not to mention lights, water, and general maintenance. One way to make your home more of an asset is to rent out a room on Airbnb and start getting some money into your pocket to help fund some of the outflows.
38) Rent Your Parking Spot
A stranger walks into a bank in New York and asks the bank manager for a $10,000 loan. The bank manager asks the stranger what he can give him a guarantee for the loan. The stranger says he has a brand-new Rolls Royce parked on the street worth $300,000. He would leave the car in the bank’s underground parking until the loan was repaid. The bank manager happily grants the loan. A month later, the same man walks into the bank and offers to repay the loan. The bank manager calculates the interest at $80 (interest rates in the US are close to zero). The bank manager then tells the stranger that after their first meeting, he had done a background check on him and discovered that he was a billionaire – why was it necessary to borrow $10,000? The stranger replied: “where in New York can you get parking for a month for $80”. Parking is expensive – if you live in a city where there is a high demand for parking, and you have a free spot, rent it out. Be sure to get more than $80 per month!
39) Consider Becoming a Minimalist
Minimalism is a movement that focuses on reducing the clutter in your life both in physical objects and in other distractions. People who embrace it find ways to eliminate the distractions from their lives and it opens up more opportunities for them in other ways and areas. Embracing minimalism does not mean that you stop spending money, but it can mean that you spend it on other things and your focus may change from making money to enjoying life. This may be a little extreme for some people, but if you have an addictive and extreme personality and are not a psychopath, this could be your new religion.
I came across this article on www.millennial.com entitled: Pets vs. Parenthood: Why Millennials Are Owning Pets Instead of Having Kids. Young Americans may be less likely to be homeowners or parents of human children, but they are leading in their rate of pet ownership. The $69 billion pet industry has already grown three times larger than its size in 1996, and Millennials are fueling the increase. With 44 percent of Millennials remaining unsure if they want to start their own family, it makes sense that their Instagram feeds may be more full of fur babies than tiny humans. Make the most of this trend by charging these people to look after their precious pets!
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