As a dividend growth investor, my main purpose is to buy stocks paying growing dividends year after year. I want to retire by 45 years old. I’m 32 so I still have 13 years to reach my goal.
Most dividend growth investors out there have these 3 principles :
1. Live frugally
2. Save a lot (more than 50% of their income)
3. Invest with intelligence in dividend stocks
While I agree on the last two, I have a hard time living frugally. I just can’t live in a rat hole with my guy friends to split the rent. I want to raise my family in a single family house, have a yard, cats to feed and a spa to relax with my wife. So, I prefer increasing my personal earnings to save more than to cut my expenses to the point I would live like a monk.
This doesn’t mean that I don’t seek for ways to save.
Since we pay taxes, to have 1$ to spend we normally have to make 1,50$ to 2$ (my case) before taxes.
This means that if I spend 20$ after taxes, I really have spent 40$ before income taxes.
So, if you follow my logic, 1$ saved is 2$ saved! Now if you save 10,000$ per year in expenses you have really saved 15000$ to 20000$ in income depending on your personal tax rate.
With that knowledge in mind, I know that increasing my income is not the solution. It’s just part of it. Decreasing my spending can help a lot. That’s why I do both!
Here is my monster list about ways to save money by just changing some habits :
1. Borrow books from the library instead of buying them
I love reading. I used to read between one and three books per week at one point. No, I’m not kidding! I’m obsessed with learning new stuff and my main focus is “How to”. I read books on how to do anything just to better understand the world around me.
I used to buy these books back in the days. “How to”books are pretty expensive…
Amazon Kindle now offer an online library where you can borrow electronic books. I never tried it myself but I know people who did and really enjoyed it.
2. Millions of books older than 50 years old can be downloaded for free!
Interested in reading Jules Vernes, Plato or Shakespeare?
Many websites out there permits you to download tons of free ebooks from the past. Why pay when its free?
3. Shop insurance rates!
When they insure something, either a car or a house, most people now pay per month and allow their insurer to withdraw the money directly in their account.
Automatic withdrawals are very useful but insurers know that we tend to forget them and not pay attention a lot to these payments.
At your renewal, they give you small but sustained increases. Most of the time, we don’t bother calling them because we “don’t have time”!
Trust me, if you shop for your insurance costs once in a while, you’ll be glad you did. Many people could save half their premiums just by switching insurers while keeping the same protections.
So go and save! I know it’s a pain in the ass but it’s worth it.
4. Buy used gift cards at a discount
www.Giftcardrescue.com or www.cardpool.com are nice websites where you can get a gift card from great retailers like Wal Mart at a discount.
Since you’re gonna buy there anyways, why not save more?
5. Sell your clutter
We all have things lying around that we don’t use anymore. Sell them or give them to charities. You might get some of your hard-earned money back and you will have more room in your place.
6. Sell your big house
Tired of paying a huge mortgage eating all your hard-earned money.
Do you really need that much space?
A big house is often a bad choice. It costs too much to acquire, you then pay more taxes and when it’s time to renovate it costs you a lot.
We typically spend less than 12 hours per day in our houses and 8 of them are for sleeping. So does it really worth it to work all your life to pay for such a big house?
7. Get rid of your landline
Do you have a cell phone and a land line?
What’s the point? You want to talk with both phones at the same time?
Just get rid of it and save 30$ per month to invest in your freedom!
8. Make your own pizza
Pizza is good! I used to spend a lot of money on pizza! We all love it. But ordering a pizza has become very expensive these days unless you don’t care about quality.
It took me quite some time to create a pizza recipe that I love but now, I don’t see the necessity to order pizza anymore!
Here’s my recipe. Miam!
9. Stop wasting energy!
Energy is a commodity that costs a lot. Its rates are often increasing at a pace higher than inflation.
We are more and more on this planet and I’m pretty sure that energy costs are going to skyrocket over the years.
Just shut the lights when you are not in the room, don’t let your computer on if you don’t use it, lower your home temperature by one or two degrees during winter and wear a wool sweater. Change your light bulbs for energy efficient ones.
These simple things can lower your costs a lot.
10. Cancel all the automatic membership renewals
You are a member at the gym. You are a member at the pool. You have a membership with your local newspaper and with some magazines that you barely read.
Take the time to analyse the situation. Do you really need all of this? Do you really go to the gym 3 times a week? Do you really read all of these magazines?
When it’s automatic we tend to forget them… But they still add up at the end of the month. Don’t be a cash cow for someone else’s profit.
11. Call you bank and negotiate your monthly fees
Most banks are charging you fees every months just to “maintain” your account. Your account is really maintained by a computer but anyways…
Don’t let banks ruin you. Don’t pay 15$, 20$ or even 30$ a month just to have a bank account. It’s ridiculous.
I miss the old days when banks used to pay you 10% or even 20% interests just have the honor to keep your money. You had to wait a little in line but only to deal with a human.
Nowadays we just deal with cold machines taking their cut on every transactions we make.
12. Don’t use a realtor to sell your house
Internet’ era has created disintermediation. Nowadays, great websites exist to sell your house.
A realtor would usually cost you 5% of the selling price. So for a 300,000$ house, he would keep 15,000$. You might also have a mortgage penalty which can be pretty expensive plus the legal fees…
All these people could make more money than you… Is it fair? No! Not at all!
Just learn how to do it, use a professional website to market it. And get a lawyer to revise the paperwork. Cut the middleman!
13. Learn how to repair stuff by yourself
Fifty years ago, people used to repair their house, their cars, their furnitures. They were proud to be able to work with their hands.
Nowadays, people hire other people to do all the maintenance and repairs.
I changed the shingles on my house last year. I costed me 3500$, beer and pizza included. It was a tough job. But you know what? I saved 5000$. It took us 3 days.
I don’t know about you but I don’t make 5000$ for 3 days of work very often!!!
I’ve also repaired my dishwasher, my fridge, my washing machine.
I have built a nice kitchen table. I switched my winter tires for summer tires recently… I built a shed in my yard…
You think I’m a handy man? Well I work in an office behind a computer…
If you really want to learn something I’m sure you can. Knowledge is money. If you don’t have the knowledge it might cost you a lot of money to hire someone having that knowledge.
But, if you know how to get to the library and read books, trust me there are great books and tutorials out there. You could also use google to find what you’re looking for for free.
14. Buy used stuff
When you buy new, you usually pay a premium. Buy used and you get to save that premium.
It is also easier to negotiate the price.
I bought my first new car in 2011. Now, 3 years down the road, my car just look like a normal used car. People have scratched it. Kids have thrown balls on it while playing in the street, I have received road gravel in my windshield…
But I still have to pay a lot every month to refund my loan… Bad move!
I should have just bought a 4 years old car in good condition and paid it cash… It just doesn’t worth it in my own opinion.
15. Shop after the season
This one is a tough one…
You know you will need a synthetic Christmas tree next year. If you buy it next december it’s going to cost you a lot of money. But if you had bought it in january you would have saved a lot.
Buy your next year winter coat in march. Buy Christmas gifts during the year when things are at a discount.
I know it’s difficult to do that, but once you’ll get started, it will become easy and you’ll wonder why you never did that before.
16. Pay cash
Credit cards and debit cards give us the impression that we have access to infinite money.
Lets say you are at a restaurant. You only have 20$ in your wallet and no credit card. Will you order a 30$ wine bottle with the fillet mignon at 34$?
No! You will order the 9,99$ burger and the 3,40$ beer and have as much fun! Unless you want to wash the dishes!!!
17. If you use credit cards then get a cash back
When you use your credit card, the retailer must pay a fee, usually around 3%. Most credit card can refund you at least one percent of these fees if you shop well. Why would you let that go?
18. Groupon and other websites like that
If you are going to spend anyway on vacations and restaurants then why not save on these spending?
These sites can make you save money but just be careful. Some people become obsessive with saving money and they start purchasing things they would have never purchased just because they are sold at a discount.
If you spend 50$ on something usually sold 100$ you didn’t save money unless you were about to buy it at 100$.
I had a girlfriend like that. She was buying restaurants coupons all the time just because they were st a discount. But in the end we had to go to the restaurant and spend money we wouldn’t have if we would have eaten home.
19. Cut the cable
Hook-up your internet connected computer to your big screen television an listen a lot of legal free streaming tv shows and movies online.
Anyway, on the cable it’s always the same tv shows passing in loop.
20. Ride your bicycle instead of driving your car
It’s going to keep you in good shape, keep the planet in good health and keep your wallet happy!
21. Bring your lunch at work
This is a major one. I work downtown. It’s almost impossible to eat something decent without paying at least 10$ to 15$. Multiply that by 5 days a week and by 50 weeks and then by 30 years. You will end up with paying more than 100,000$ just to eat out for lunch… It’s crazy when you think about it.
22. Make your own coffee with a 10$ coffee machine that you can plug at your office desk
If your boss allows it, it’s going to make you save at least 2$ per day. I know it’s not much, but add them up and add all of these savings and it makes big money in the end.
23. Don’t go to the grocery store when you’re hungry
Ah ah!! When I’m hungry I could buy the whole supermarket! I try to avoid buying grocery when I’m starving. I always end up with a huge bill.
24. Make ingredients lists and only buy what you need at the grocery
My ex-girlfriend used to throw at least for 50$ worth of food every week… I was paying… And I was mad every weeks. So I stop paying! Ah ah!
Most americans spill food. I’m sure you can do better!
25. Ask your pharmacist for generic drugs
You can save up to 40% by taking generic drugs. Don’t pay that much just for a fancy container.
26. Shop your pharmacist or negotiate drug price with him. Yes you can!
Pharmacists charges you fees. You can negotiate these fees if you wish. If you plan on buying drugs every months, then please negotiate. You’ll save a lot over the long-term.
27. Make sure you’ll never bounce a check by keeping at least one months of expenses in your bank account
It costs approximately 40$ to bounce a check. Don’t bounce checks! When I was tight on my budget, I had decided to force myself to save anyway. So I set up an automatic withdrawal in my bank account for 20$ per week. On my first withdrawal, I was missing a little more than a dollar in my account because of a miscalculation I had made. It bounced and costed me 40$… Plus, I didn’t save my 20$ that week and I had to pay interests because my account was in the red…
28. Fully reimburse your credit card at the end of the month and avoid paying high interest
Paying 20% interest on your credit card is probably the worst thing you can do… Try to just calculate the amount in interests that it represents per year… It’s insane!
29. Don’t use other banks ATMs.
I don’t like paying 3$ or even 5$ to withdraw 20$. Do you? Ahhh banks… They should be nationalized. I don’t understand why they can make profit. It should be a public service nowadays.
30. Put your loose change in a piggy bank. You’ll be surprised at the end of the year.
I always loved piggy banks. I have a nice one and I like to feed it with my loose change. At the end of the year I usually have a couple of hundreds in that bank…
31. Avoid impulsive purchase. They can put your financial security at risk.
Did you ever buy something very expensive that ended up in your basement? I bought a lot of these stupid things… Impulsive purchases cost a lot. Try to wait 48h before buying anything worth more than 50$. If you still think you really need it, than go… You’ll see that most of the times, it was unnecessary.
32. If your employer offers to match your retirement contribution, invest the maximum to get the maximum of free money. It’s part of your salary.
When someone wants to give you money for free… Take it! It’s not going to happen very often. I really don’t understand why people turn their back to these incentives given by employers… You would be surprise to know how many people don’t claim that money because they are unable to match their employer maximal contribution…
I usually tell them “look buddy, not taking that money is like saying to your employer who’s willing to pay you 50k that you prefer being paid 45k…”
33. Buy household items like toilet paper, soap and detergent in bulk.
Costco! I was a proud member until recently… I didn’t renew my membership. I don’t like to pay to be a member of something. Too bad… I now go at Wal Mart instead. Not as fun, but prices are similar.
34. Raise your deductible on your car and house insurance.
Make quotes! If you can afford it in case of emergency, try raising your dividend to 500$ or 1000$. By sharing part of the risk with your insurer you can often save a lot.
35. Review your insurance needs. Are you insured too much?
You are probably ensured twice for the same insurance need… Make sure you review everything!
36. Consider dropping credit insurance on your loan instalments if you have enough assets to cover your liabilities.
If your assets covers your debts and you don’t care about leaving something to your family, then maybe that’s something you can avoid to pay.
37. When driving, avoid fast starting, they burn a lot of gas.
Driving fast, starting fast, breaking at the last minutes… This destroys your car and your wallet.
38. Use public transportation instead of cabs
Cabs are very expensive. I don’t take cabs.
39. Live near your workplace
Transportation costs are high… Traffic is annoying. Living by your workplace can improve your life and increase your savings.
40. Research free entertainment events
If you own a property, you pay taxes. With your taxes, cities usually pay to organise events. You have already paid for them, why not attend? Plus, while you’re there, you’re not spending money somewhere else!
41. Instead of inviting everyone to eat at your place and on your bill, organize potlucks.
Are you obsessed with savings? Want to share some tips?
42. Save on daycare costs
We all know it! Daycare cost a lot! I have written a full post about the subject to you tips and tricks to save more on daycare cost. Take a look at it and save on daycare cost!
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