Financial Tips #6: Half Portions Are Your Friend

Usually when you’re on a budget crunch one of the first things you cut back on is eating out. It’s definitely a great way to spend less money. However, there are times that you do have to go out to eat whether it be for a special occasion or to reward yourself for a big milestone in your life. One easy way to stretch your dollar further is to either order just a half portion or box up half of the order.

Most restaurants serve a pretty big portion whenever you order a Steak, Seafood, or Pasta dish. I’ve gone to Olive Garden, Logan’s Roadhouse and other places that have huge portions. Considering most meals at these places cost around $10-$15 + tips + a drink, you can quickly see that it’s a pretty pricey ordeal to eat out. Why not box up half your meal and save it for another time? In this way you can at least get 2 meals out of the $10-$15 you spent, making the investment in eating out a more justifiable one. Another added benefit is the fact that half a portion is a lot healthier for you and prevents you from stuffing down a big meal.

So next time you’re eating out and you want to save a bit of money and watch your calorie count.. try boxing up half your meal or ordering a half portion. Your wallet and stomach will both thank you.

-The Lermz

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penny

Adventures Into the World of Penny Auctions

So this isn’t exactly an inspiring story but it’s an interesting one for those who have always been curious about penny auctions. I decided that one day I should investigate and see what it was all about and if you could really get some prizes.

For those of you who are not familiar with the concept of penny auctions, basically you have a site that has 15-20 live auctions going on. Each thing being auctioned off starts at $0 and goes up a penny whenever someone bids on the item. Every bid in the last 20 or so seconds will add time back to the timer. The last person that bids wins. Here’s the kicker. You have to pay to be able to bid. Each of these sites sells bid packs for around $.50 to $1 a bid and you use these bids for each of the auctions. Once you use a bid, it’s gone and you’ve effectively paid 75 cents for the right to bid on an item.

Now what usually happens at these sites is that if you win, you’ll get a really good item for a very low price. So you might be thinking to yourself, how exactly does the website benefit from this? It would seem that they’re not making any money since they sell items for really drastically low prices. Well, the truth is, you have to look at it from the perspective of bidding. For example, I saw an iPad sell for around $89. That’s a pretty good price for the person that won the iPad but let’s look at it deeper… $89 means that 8900 people bid on the item. If the bids are bought at a rate of $0.75 each, that means that the total amount that all people spent on the item is 8900 x 0.75 = $6600.

$6600! This is for one iPad who’s retail value is around $700. That’s almost $6000 of pure profit for the site. Whenever these big items come out, people go absolutely nuts because they think oh I have a chance at the big one, I’m going to go all out for it. That’s how they make the money.

Now that you’ve gotten the basic gist of how it works, I’m going to tell you about my experience. Now I spent the first couple of days just observing how the bidding process worked and how people behaved. What I quickly learned were the following:

1. Everyone goes for the big items. It’s almost impossible to get it unless you dropped a lot of money into it.
2. There are certain auctions that a certain person claims and will keep countering your bids almost automatically.
3. There are certain auctions that people don’t pay too much attention too and get sold for ridiculously cheap prices.
4. Too many people go for the bid packs usually.
5. There are not as many people on the bid sites really early in the morning when people are asleep or getting ready for work.

With these basic facts in mind, I bought a simple 30-bidpack and chose a time in the evening when at least 7 auctions were ending. While everyone was in a frenzy over the iPad and other bigger gift certificates I took a look at what else there was and found a JC Penny gift card that didn’t have too many people bidding on. I quickly went to that one and put a bid in. Time ticked down to 3..2..1 oh and someone else bid. I immediately put another bid in. This went on for a few rounds but I continually kept putting my bid in. At 11 cents, I was declared the winner! WOW!

My first reaction was, I can’t believe I actually won on this thing. I kept thinking to myself, alright well if I apply this same strategy and maybe try my luck in the morning, maybe good things will happen.

The next morning I got up at 5:45am and took a look at what was out there. I noticed that things were going for an average of $0.20. So I decided alright I’ll try for a $25 iTunes gift card/25 bidpack combo. There had only been one bid on it so far. Low and behold, no one else bid and I got it for 2 cents! The next item I tried for also didn’t have many bidders and was a beginner’s auction (this means only players under 5 auction wins could participate). I decided to go for it and use the tactic from before. Bam! I got a Barnes and Noble giftcard for $0.12!

The subsequent days, I also ended up winning a 50 bidpack though I used a considerable amount to get that and then another $50 giftcard to Bed Bath and Beyond. So in total this is what I spent:

30 Bidpack – $22.50
30 Bidpack – $22.50
Shipping and Handling for 4 gift cards ($4.90 each) – $19.60
Amounts on the Winnings for those items – $1.91
TOTAL EXPENSES – $66.51

JC Penny Gift Card – $50
iTunes Gift Card – $25
Barnes And Noble Gift Card – $50
Bed Bath and Beyond Gift Card – $50
50 BidPack (valued at like $37.50 but I won’t count it in the earnings here)
TOTAL EARNINGS – $175

Profit ~$105

It’s not a bad haul don’t you think?

Now before everyone runs and goes to these auction sites, I will warn you of a couple of things.

1. If you don’t like risks, don’t do this. This is a risky thing and you have to be ok with losing the money you initially invest.
2. If you’re not a patient person, don’t do this. You have to stick with an item even in the face of losing your bids. If you can’t do that, you won’t win.
3. Don’t expect to win every single time you try. More often than not, you can make a better approach to winning but sometimes you just won’t win.
4. If there’s a person that almost automatically outbids you, you’re better off giving it to that person. You’re always in a better position if you’re the one outbidding and everyone ends up waiting till the timer is almost over to bid again.
5. Don’t get addicted. Know your limits.

With that, those are my adventures into penny auctions. I don’t think it’s something I will be consistently doing mainly because in reality it’s a game. But with careful strategy, you can come out on top and get some decently priced things. Hope this has been eye opening and interesting for everyone!

-The Lermz

Financial Tip #5: Do you really need a large drink?

I try to stay away from fast food whenever I can but sometimes when you’re coming home late from work and you don’t want to cook for yourself, you just inevitably end up going for fast food. One of the problems with fast food is that it’s really not healthy for you. The problem gets compounded when you think about the combo meals and upsizing or supersizing your meal. However, have you really stopped to consider whether you need a large drink or a drink at all when you buy a meal?

Consider not getting a drink at all if you are just heading back home with your meal. You can easily have something that’s cheaper at home, perhaps water or a juice of some sort instead of dishing out $1.75+ for a drink. In the long run, if you can eliminate the drink portion from your drive thru visits, you can save a pretty hefty amount of money. The same concept can apply to when you are actually in restaurant. Ask for a cup for water. It costs you nothing, quenches your thirst, has 0 calories and it won’t make you feel guilty about your meal (the burger already does that work for you :).

While I’m on the subject, take a look at the value meals that restaurants have. Perhaps downsize your meal to just a couple of $1 burgers and value size fries. You’ll see that you spend $3+ less than if you get a combo. Feeling healthier about your choice and spending less. That sounds like a winning combination to me!

-The Lermz

Financial Tip #4 – Strategies to Paying Down Credit Card Debt

In my own experience there’s three perspectives that I take on in order to pay down credit card debt:

    1. Pay the account that has the largest interest rate

This one is a simple concept. The account that has the largest interest will continue to pull the most interest from you percentage wise. Most of the time the smartest idea is to get rid of this account to ensure that the interest you pay in the long run will be smaller.

    2. Pay the account with the smallest balance

This is a more interesting concept. Sometimes when you’re paying down a lot of debt, you need to have a few moral wins first to get you started. In business we would call these the “low hanging fruits”. The theory behind this strategy is that you can gain some confidence in yourself by saying, hey i paid off a credit card. It can be a good psychological victory for you to go this way.

    3. Set up your pay schedule where you eliminate all your debt at the same time

Using this method you will have a set milestone that you can work towards and look forward to. This can really set yourself up for success as that one date is the magical date that you can finally be free. However, with this method, you have the potential of dragging out the amount of time it would take to clear all of your cards. This would mean that there aren’t small wins and you would have to stay strong and keep to your payment schedule in order to knock your debt out in this method.

With any of these methods, you’re going to achieve success if you stick with them. There’s no one way in my opinion that’s the best and that you should definitely go for. It really depends on your situation, what your financial goals are and how you want to go about achieving your level of success. Maybe the best way is to mix and match these methods. The point is though, you need to apply a clear strategy, stick with it and be aggressive in getting that debt down.

Hope this tip helped!
-The Lermz

Financial Tip #3: Never pay just the minimum balance

It’s a trap!

If you ever have a credit card balance and are in the process of paying it off, never pay just the minimum balance. Keep in mind that with credit cards comes interest on the balance that you keep. Paying the minimum balance ensures that you pay the most interest on your balance and is exactly what the credit card companies want. Another thing that is considered is when looking at credit, if you consistently report that you paid above your minimum balance, you look like a more responsible person and might even get a bit of a bump on your credit score.

If you pay even $10-$20 more than your minimum balance, it’s very likely you can shave months to a year off of interest you would’ve had to pay for. You can afford to pay $10-$20 extra, bring a lunch to work or cook when you get home to save that money. Your pocketbook will thank you.

-The Lermz

Financial Tip #2: Do not spend over what you have

So this tip seems like a no brainer tip as well. It’s a simple concept really.. If you don’t have the money for something, don’t go and buy it. As simple as it is, this could be one of the hardest concepts for people to grasp, especially if you don’t have a budget set (see tip #1).

So what’s the worst that can happen if you just happen to splurge a bit one month on a pair of shoes and then maybe decide to get a fancy new iPad from your local Apple store the next month. With each item that you purchase that is above your means, you’re putting yourself at risk to get crunched on other bills. This can be a slippery slope because sometimes you allow yourself to spend one month and then psychologically, you think ok maybe I can do the same next month. What most people find is that they start paying things with credit cards. This opens you up to interest charges. These will continue to pile up and all of the sudden you find yourself in a deep hole.

I can tell you that a really good way to combat this temptation is to have a clear budget in mind. You have to have clear goals on what you want to accomplish financially and march in that direction. If you know that you have x amount left to spend on discretionary spending, then you’re more likely to question do I really need this item and you have a better chance of not getting tempted into purchasing the item.

I think that college grads have to be especially aware of this trap since a lot of us go into a new job and all of the sudden there’s an instant cash flow. We think to ourselves, oh I can go get this, this and this and end up not saving money for a rainy day. If you live by the rule of not spending over what you really have, you’ll do yourself a big favor in the end.

– The Lermz

Financial Tip #1: Keep a budget

I’ve decided that I’m going to start bucketing some of the advice into different categories. I’ve got a lot of insight from my own life and from things I’ve discovered on the internet that I really want to share with others. This section will cover some pieces of financial advice that could be helpful for you!

    Financial Tip #1: Make a Budget.

Alright so this one isn’t really rocket science and it’s kind of simplistic and a bit of common sense. However! You would be surprised how many people don’t plan out a budget and thus get behind on bills and let debt creep up on them. The biggest thing that you can do for yourself is map out a budget whether it be electronically through a spreadsheet or a budgeting program, or in paper. Take a look at all your expenses that come in bills, utilities, loans, food.

Typical monthly expenses: Cell phone bills, electricity, rent, water, trash, car payments, loan payments, credit card payments, pet related expenses

Once you have the monthly expenses down, think about how much you usually use for food, entertainment, clothes, whatever they may be and allocate the rest of the money you have appropriately between these items. Also, it’s a good idea to set aside a portion of your income towards a savings account. You can do this by having your bank set up an automatic deposit whenever you get a paycheck. In this way, you can set aside some savings and not touch (or at least try not to).

By at least setting up a budget, you will quickly see how you’ve been tracking and see just how much you spend on things. The first time I sat down and did a budget, it really made me realize just how much I spend on eating out and extra stuff that I don’t need. Since then, I’ve been able to always reference the budget each month and make sure I’m on track with paying the bills on time, etc.

The next few tips, I’ll share more tips around savings that I found to be extremely useful.

-The Lermz