While I’d like to think I’m safe from gimmicks, my shopping cart may tell a different story (Charcoal toothpaste? Where did that come from?!). However, with such sophisticated and ubiquitous marketing, sometimes it’s hard not to fall prey. As my subconscious absorbs all these messages, my conscious mind occasionally selects a few jewels. For example, I like Wal-Mart’s slogan “Save more, live better”. Even if it’s not exactly eye-catching, it sums up savvy shopping. Where some see only a flurry of cash-saving coupon slashing, the reality is that smart shopping is a proven way to live better and achieve your dreams. Here’s why:
∙ The Challenge: Although we live in the land of the free, you wouldn’t know it from the suffocating level of debt many are carrying. Aside from mortgages and student loans, about half of American households have credit card debt to the tune of $16,000. When you consider that these bonds earn interest at double-digit rates, the burden is overwhelming. At the same time, how many dreams are possible with such a load? In other words, it’s safe to say that a down payment on a dream home, vacation, or reliable transportation is out of the question. Fortunately, there is a way out and savvy shopping leads the way.
∙ Get out of debt: With credit card debt of $16,000 and an interest rate of 20%, monthly payments of $600 will eliminate this obligation in less than 3 years. For someone in the hole, the big question is how to find the money. A great way is to shop wisely! According to the US Census, a typical Lubbock household has an income of around $51,000 per year. Considering that smart shopping has potential savings of 50% and that the average family spends 14% of their budget on food, it is possible to free up more than $3,500 a year on the grocery bill. In other words, profiting from sales can provide about half the money needed to get out of debt in a timely manner.
∙ Reliable Transport: Once you’re out of credit card debt, what do you do? A burden that many carry is the monthly car payment. Typically, many people are so strapped for cash that buying a vehicle still requires taking out a loan. With an average price for a used car nearing $35,000, it’s easy to see why! However, in about 5 years, savvy shopping can free up more than half of the money needed to pay cash for a car. Even better, buying your vehicle up front frees up the car payment to spend on other things like a house.
∙ Down payment: Although home ownership is a common dream, a major challenge is getting the down payment. Although there are minimum upfront payment options, the fact is that this leads to higher interest rates as well as additional monthly costs. In other words, a new foundation is being laid to re-enter the spiral of indebtedness. By contrast, offering a 20% down payment improves loan quality, reduces principal payments, and eliminates monthly costs such as mortgage insurance. With a median housing price of $245,000 in Lubbock, a down payment of nearly $50,000 is required. For most, this figure is disheartening. However, annual savings of over $3,500 can quickly shrink this behemoth. In seven years, savvy shopping can provide almost half the money needed for a down payment! If you apply your released car payment, you’ll get there even faster!
∙ Vacation: Now that you’re debt-free, you’re out of car payments, and you’re well on your way to becoming a homeowner, what’s next? After all that hard work, maybe a dream vacation is in order. To do this, there are two challenges. First, you have to find the time. With the United States being one of the stingiest countries in the world when it comes to vacation days (we have fewer than Afghanistan!), getting time off can be a challenge. While smart shopping can’t keep you from working, it can go a long way toward paying for vacations. Since the average vacation spend is $4,580 for a family of four, taking advantage of grocery deals can pay for your trip in less than 2 years.
∙ Getting Started: By reading this article, you are on the right track. To take advantage of this, be sure to follow the wise buying principles. For starters, you can also check the summaries of offers online to get an idea of what is possible. When you do, you’ll find an easy-to-follow overview of promotions, their quality, and coupon matches to boost savings. If you follow the principles illustrated in the transaction summaries, you will be well on your way to a better financial future.
Since I used average numbers for my examples and no one is average, your numbers will vary. However, more than $3,500 per year is useful regardless of the situation! You should take advantage. Of course, there are many paths to financial freedom and the Savvy Shopping community would love to hear your ideas.
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SEAN FIELDS is AJ’s savvy client. Read his columns on Sundays and Wednesdays. Email him at [email protected], like his Facebook page at Facebook.com/LubbockSavvyShopper, or check out previous columns and offers at lubbockonline.com/savvy-shopper.