This is a guest post by Jim Wang. Jim shares his best strategies and tactics for getting ahead financially and in life at Wallet Hacks, you can get his email newsletter absolutely free plus learn the money power tools he uses to gain an edge.
We can all agree that building a dividend portfolio is a smart long-term strategy for wealth building. If you have positive cash flow and significant savings, building a dividend portfolio is a matter of picking the stocks or funds to invest in. (personally, I would start with the Dividend Aristocrats and work from there)
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If you don’t have the cash flow cushion to immediately start investing, you can still find money to invest if you cut back on your spending. It won’t be easy and will take some sacrifice, but we all have things we’re paying for that we don’t need.
Cutting back will only get you so far but it will get you there quickly. Here are many ways you can save money so you can give your dividend portfolio a boost.
1. Hold a Garage Sale
We have friends who hold a garage sale once a year and they collect between $150 to $200 per sale. This gives you the opportunity to clean out your basement, your garage, and your closets, and see what you have. Anything that’s in decent shape can be sold for a few dollars and be of more use in its new home. You’ll not only have a chance to raise some extra cash, but you’ll also be on your way to decluttering your home.
2. Ditch Your Fee-Hungry Bank
Traditional brick and mortar banks usually have high fees and low interest rates. If your bank falls into this category, leave them.
There are a ton of options out there, from online banks to credit unions. Online banks have lower overhead and credit unions are member-owned organizations, so both are able to offer accounts with low or no minimum balances and reduced fees. They also offer better interest rates.
Plus, you’ll need a place to put all these savings money while you wait for the right opportunities, you should consider opening a good savings account with a competitive interest rate.
3. Brown Bag Lunch Once a Week
A typical lunch at a fast food restaurant will cost at least $6. If you buy lunch out during the work week, try bringing lunch from home one day a week. It will not only save you $300 over the course of a year but it’s likely to be healthier too. And the more often you brown bag it during the week, the more money you will save.
If you get into the habit of saving leftovers from dinner, you can have a nice hot lunch at the office (and nothing beats a hot lunch). And since leftovers are something that you might ordinarily throw away, taking them for lunch the next day will virtually be a free lunch.
4. Sell Major Items on Craigslist
If you are in the habit of throwing away items like furniture and appliances after buying new ones, don’t. By selling your used items you can raise some cash to help offset the cost of the new item that you just purchased. (and they haul it away!)
It’s pretty easy to sell used merchandise on Craigslist. We sold an old kitchen table and four chair set on Craigslist for $120, and a 12-year old dryer for $125. What you think of as junk, may be exactly what somebody else is looking for. Heck, you can even sell remotes for broken TVs for $10-15 because people lose remotes all the time!
5. Cut the Cable
Even a standard cable TV package can cost $70 or $80 per month. But if you cut the cable, you can switch over to Netflix at less than $10 per month. That will save you $60-$70 per month, close to $800 per year! There are a lot of alternatives to cable these days beyond even Netflix!
This is a particularly good move to make if you don’t watch a lot of TV anyway. A lot of people have cable TV simply because it seems to be the thing to do. There’s no point paying for full-service if you don’t use it that much. As well, it makes little sense to pay for 100 channels if you only watch 10 of them.
6. Cut Out One Latte Per Week and Brew Your Own Coffee at Home
It’s become practically the American way to purchase a cup of designer coffee on the way to work each day. But lattes don’t come cheap. They usually cost at least $4. By bringing a container of coffee from home one day a week, you’ll save $200 over the course of a year.
This is the cornerstone example of my Upgrade and Save Strategy. You can buy yourself a fancy coffee machine, brew your own premium coffee that beats the socks off the coffeehouse, and save time and money in the process.
7. Ditch the Gym Membership & Go Outside
A lot of people have gym memberships, but seldom or even never go to the gym.
Unless you’re committed to working out at the gym, you can get the same benefit by exercising from home, walking, jogging or biking around your neighborhood. Even a cheap gym membership costs at least $10 per month, so if you cancel your membership, you’ll save at least $120 per year.
8. Shop With Cash
When you shop using a credit card, the potential exists to spend more than you have. But with cash, you can never spend more than what you have in your wallet or bank account.
That imposes the kind of financial discipline that credit cards can’t. It’s a good bet that you’ll save a few hundred dollars per year if you shop on a cash only basis.
9. Skip Dry Cleaning Once a Month
Bringing your clothing to a drycleaners is very convenient. There’s something about how they press shirts, you just can’t get the same lines at home!
But it’s also very expensive, particularly if you do it on a regular basis. But given that professional drycleaners can easily charge $10 per article, it’s easy to see where you could save a lot of money by blocking out some extra time each month to wash and iron your own clothing. The potential here is real to save at least $100 per month.
10. Comparison Shop Auto Insurance Discounts
At the advice of a friend, I once called my auto insurer to find out if there were any discounts I could qualify for but didn’t. By joining the National Military Families Association, open to everyone willing to pay a nominal membership fee, I was able to get a sizable percentage discount from GEICO.
Contact your auto insurance company, and request a list of the discounts that they offer. Identify as many that you qualify for as possible, what you need to do to get it, and let your insurance company know.
11. Buy Second-Hand Whenever Possible
Need a couple of end tables for your living room, or an entertainment center for your family room? Instead of paying hundreds (or thousands) of dollars at a furniture store, check the classified ads on Craigslist and your local newspaper and see what’s available first. Also, don’t avoid those flyers hanging in the company cafeteria or at the grocery store. You might find exactly what you’re looking for, and for only a fraction of what you would pay if you were to buy brand-new.
12. Keep a Time Journal
This last one is more of a general idea rather than a specific cost-cutting move. All too often we subscribe to services that we love, our usage habits change, but we still pay the same amount.
To discover if you’re doing this, keep a log of the services you use and how often you use them. Anything you subscribe to on a regular basis should be tracked in a journal.
For example, and this was one of the cost-cutting measures mentioned earlier, but do you have a gym membership? How often do you go per month? If you pay $150 a month and visit the gym just five times, that’s $30 a visit. Is the gym worth $30 a visit to you or could you pay less going a la carte.
Let this journal be an accurate reflection of your usage and help you cancel services you don’t use absolutely guilt free. Some services are fraught with emotion and guilt, like the gym you need to go to more often, but it’s worse to spend money on things you aren’t using!
Take these ideas as a starting point and find ways to cut back on spending so you can put it where it matters, your dividend portfolio!
Article by Sure Dividend