January has motivated me to save. I’m not sure why, but I have this sudden urge to revamp my finances. It got me to thinking about how much money we waste on things we don’t need (one look at my children’s forlorn toy box will tell you they play with one-tenth of what they own). It also has prompted me to consider five ways we can discover cash lying around the house (and I don’t mean under the couch cushions, either!) .

How? Look no further than your drawers and closets.

1. Sell your junk. During the winter months, a yard sale is a tough thing to organize, especially if you live in cooler climes. We once hosted a ‘moving sale’ in December. It rained cats and dogs, but we made over $1500. The term “moving sale” draws more people than the phrase “yard sale” as they know you’ll be selling off ‘good stuff’, too. eBay, the premiere online auction portal, offers a great opportunity to sell off some of the stuff you no longer need. Familiarize yourself with the rules, though. As a seller, you are obliged to pay a percentage of the end sale price to eBay itself.

2. Recycle. In some states (and countries), you receive a refund on return bottles and cans. Set up a recycling bin in your pantry or a corner of your kitchen to house the cash-based recyclables. In my car alone I have at least a dollar’s worth of bottles rolling around the back seat.

3. Turn those books into cash. If you have a shelf full of books you’ll never read again, consider selling them used on amazon. All you need is an amazon profile and a bank account. The most current books tend to sell the fastest. Price them competitively, but remember amazon takes a commission from the sale price. Read the terms and conditions to be sure you understand them before offering your wares on the site.

4. Donate items. An alternative to selling them, you can also benefit from a tax deduction when you donate books that are in good condition to your local library, for instance. Goodwill also provides an opportunity to write off household donations, clothing and more so start your spring cleaning early this year!

5. Clip coupons. Not all coupons are a good deal so be mindful when you use them. Only save those coupons that correspond to things you would normally buy. Take advantage of triple coupons where available.

Being mindful about your finances means investing some time to develop a strategy that works for you. You might not get rich recycling those cans, but you’d be surprised at how much cash comes loose when you look around you.

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Simplify Your Finances

January 8, 2010

This blog is about mindful living. When we slow down to see the Big Picture, we realize what’s truly important to us.

Our financial future is one of those things. Yet many of us do not take the time to think about it until it is often too late. Here’s where the Power of Slow can really come in handy.

Bryan Link is the CEO of SimpliFi, a free savings calculation tool that spells out exactly the amount you need to save each month. He suggests the top five things people can do now to simplify their finances this year. The Power of Slow talks a lot about slaying the inner pig dog (inneren Schweinehund) that says now is never a good idea. Procrastination is the best way to kill your financial dreams. (See “The High Cost of Procrastination“)

Bryan writes:

1)      Develop a financial plan that maps out your financial goals.  If you put together a written financial plan, you increase your chances of achieving your goals by 250%, so this is the best place to start. 

Editor’s Note: You can’t get there if you don’t know where you are going. Build a plan, even a small one, to reach some of your financial goals this year. One of our goals is to rebuild our entire wrap-around porch. Surprising sources of income have shown themselves as a result of our intention. Sometimes you have to build it so they will come!

2)  Develop a monthly spending plan that can help you achieve your financial goals–both short and long-term.  Knowing how your going to spend your money before you do it is the key to financial success.

Editor’s Note: This is a hard one for many people. Tracking hidden spending such as that quick coffee or an impulse purchase confronts us with our habits. Be rigorous in your tracking for a month to see where the money flows. It can be fun if you treat it like a treasure hunt. You’ll find all kinds of income that can be redirected if you know where it’s going in the first place.

Once you’ve completed #1 and #2, then:

3)   Set up automatic withdrawals for your savings and investment accounts, and have them hit at the first of the month (or whenever you get paid).  This “pay yourself first” approach is really the only effective way to enforce savings discipline.  If you wait until the end of the month to save, you’ll find there’s never any money left.

Editor’s Note: This one is key. It is amazing how contractable your bank account can be when you have an automatic draft going to your savings account. Consider it your own personal payment to yourself. You aren’t spending it. You’re paying YOU!

4)   Use cash for discretionary purchases like drinks/snacks, entertainment, and low-cost dining.  Studies have shown that we have a harder time parting with cash, so if you force yourself to use cash for these purchases, you will spend less.  EVEN BETTER:  use the envelope method in conjunction with your monthly spending plan for these purchases.  It works like this:  budget a specific weekly amount of cash for these purchases, then each week, withdraw that amount, put it in an envelope, and only use what’s in the envelope for that week.  When the cash is gone, no more spending until the next installment.

Editor’s note: I do this in particular with the children’s items. It helps me have an overview of where the cash is going. A field trip here, a pair of soccer shoes there…

5)   Increase your giving to a charity that helps those less fortunate–and find a way to volunteer there as well.  Both of these actions will increase your happiness and make you feel more grateful for the blessings you have in your life.

Editor’s note:  It not only gives you a great feeling throughout the year, come tax time you’ll get that warm feeling all over again!