In the states, we are very quick to throw something away, even when it has years of serviceable life. This can lead us into wasting thousands and thousands of dollars to replace things that in no way need replacement.
Take a look at some things that you should probably hang on to longer and see just how much it can save you.
This has to be the number one money waster and it is easy to see why. We are constantly being bombarded with images of sleek and shiny new cars. Who wouldn’t want one. Who, a frugal person for one.
Resist the urge to buy a new vehicle and save tens and thousands of dollars over time for your retirement.
Let’s say that you usually finance a vehicle for 5 years at $500 a month. When the term is over, yo probably immediately finance another vehicle even though yours is still running fine. Simply keep it for one extra year and save an easy $6000 during that year. Do that consistently over the next 18 years and save $18,000. With compound interest at a marginal return, that is closer to $30,000.
You can still get the new car, you just wait an extra year and pocket tens of thousands. If you trade in your car more often, the savings can be even greater.
Next on the list is that cell phone.
The cell phone companies are constantly cranking out new models with major releases about every 6 months. This is designed to make you think that your phone is several models old after just a year and that you need to upgrade.
With phones costing up to 1000 dollars these days, an annual upgrade is an expensive proposition.
The good thing is that phones are built better than ever these days. It used to be that after a few years, a phone was pretty much worn out. With proper batter maintenance, a phone can now easily last 3 to 4 years or more if you are particularly frugal.
Keeping your phone for 3 years instead of one is a great way to add to that retirement savings. Assuming that you buy a new phone for $800 and get $200 for trade in, that is $600 tat you are spending every year.
Hanging on to your phone means that your phone may be virtually worthless when you go to replace it, but the savings are unmistakable. Spending about $800 on a phone every 3 years is far better than spending $600 each and every year.
In three years, the savings is $1000. That is $10,000 in money over the course of 30 years, not counting compound interest. With nominal return, it is closer to $22,000.
You can spend tens of thousands of dollars for furniture for your home. Consider it an investment in your long term culture.
The problem with furniture is when people decide that they need to replace it every 4 to 5 years. This is a problem that is caused by two things, neglect and poor purchase decisions.
Neglect is the biggest factor with furniture. Fabric furniture needs regular cleaning, maybe not annually, but at least every two years. Without regular cleaning, a couch that could have lasted 20 years, might only last four years. Hiring a cleaning company is the easiest way to accomplish this, but if you want to be even more frugal, a good set of machine washable slip covers can work wonders.
Other types of furniture needs maintenance as well. Leather will need conditioning, painted furniture will need touch ups and wood furniture might need an occasional restain. Doing maintenance on furniture can triple the life of it.
Another factor that can cost you money with furniture is poor buying decisions. Yes, it is nice to be frugal but sometimes buying the cheapest furniture can cost you. It might have poor construction or cheap fabrics that wear out too quickly. Do your research and look for long lasting lines and consider leather furniture in high wear areas. The extra life can make up for the additional initial cost.
Consumer electronics are ever evolving. That television that you buy today will be obsolete in just 3 months.
Of course, that is what the manufacturers would like to tell you. The truth is that most of the changes made to electronics, while nice, are not game changers. The game changers come every so often, like the change from tube televisions to flat screens.
Don’t fall for the hype and instead, keep your electronics until they are not making you happy.
Take 4K for example. If you made the move to 4K, you could have spent thousands of dollars upgrading. While nice, programming choices are still limited for this technology years later. For most of us, it is just not worth it and the money is better spent on savings.
Save thousands of dollars and keep those electronics until they become truly obsolete.
Being frugal is not just about being cheap, it is also about making the most of what you have. Do not throw away things that are still of value and do not “upgrade” simply for the fact that something is new. This is how you can build wealth, even on a modest income.