Finance Gets Personal

In the past two weeks, have you made an “emergency” trip to the store because you were out of something you need, like toothpaste, paper towels or shampoo?

When visiting, did you only purchase the item you ran out of?

On Thursday, I made a Target run for Q-Tips (which I’ve been out of for a few weeks). I also bought cotton balls (something I ran out of a few months ago), a new soap-dispensing brush for the kitchen sink (the old one broke and I threw it away last week) and pencil lead for our mechanical pencils (my stepson has been complaining that none of our mechanical pencils work because we don’t have lead).

So, my trip to buy generic $1 Q-Tips cost over $11. Of course, this example isn’t the best because I only purchased things I actually needed, but if it hadn’t been my lunch hour and I had time to browse, I’m sure I could have found a few other things to spend money on.

Following this logic, the more visits you make to a store, the more you end up spending in the long run.

Soooo, to save money, reduce your trips.

Here’s how:

• The next time you go to Target or Walmart for household items, buy two of each item on your list that you use regularly. For example, if deodorant is on your list, buy two sticks.
• Start a list of items you buy regularly in Word or Excel. My list includes things like shaving cream, trash bags, toilet bowl cleaner, light bulbs, computer paper, etc. Each time you go to the store, add any items that aren’t already listed (and that you plan to buy again).
• Once you’ve accumulated two of everything, you’re ready to reduce your store visits to once per month (or less). Whenever your first stick of deodorant runs out and you open the second one, circle “deodorant” on your printed Word/Excel list. Once you have a lot of items circled on your list, make one trip to the store and get everything.

This method is great because it not only saves you money by reducing impulse purchases and gas usage, it also allows you to stock up on items when they’re on sale (even if you haven’t circled that item on your list).

It does cost you some money up front, but is well worth it in the long-run. And, if you are ever in dire financial straights, you can rest easy knowing you can skip your trips to the store for a month or two without running out of anything.

(This post was included in the Festival of Frugality, hosted by Sound Money Matters.)

Photo Credit: Under the Bathroom Sink by Jill - Glossy Veneer, used under Creative Commons licensing

 
This afternoon, an unexpected hail storm blew through town. Seeing as how I was at work and we have uncovered parking, there was little I could do to protect my car (except run through the parking lot in high heels while dodging ice pellets and move my car into the underground parking garage across the street - which I watched others do to my great amusement).

So, I’m standing at the window in my boss’ office, listening to the hail pound against the building and thinking, “How much is my deductible again? How large does hail have to be to damage a car? Approximately what coin-size is the hail accumulating on the window sill? Dime? Nickel? Why are coins the standard measurement of hail anyway? My husband parks in a garage at work right? Because $500 plus $500 is $1,000. Thank God I didn’t raise my deductible to $1,000 - that would be $2,000!”

At that point, a coworker joined us and exclaimed that she was so glad she’d kept her deductible at $250 instead of raising it to $500, because that would have been $1,000 for both her and her husband’s cars.

This got me thinking some more. “Am I making a mistake by not having a $250 deductible? How many times have I had to pay my deductible - let’s see, once when that rock off a trucker’s tire broke my windshield (actually, I think I paid out of pocket for that one), once when my husband hit that car at a red light, once when I smashed my car into a pole during a snowstorm…”

However, after examining my car and finding no dents (hooray!), I’ve come to the conclusion that $500 is the perfect deductible for me.

Think about it: With a $250 deductible, you’re going to claim any little thing that happens to your car, which will drive up the price of your premium. By choosing a $500 deductible, you won’t be tempted to claim small amounts of damage (in fact, I would probably pay up to $800 out-of-pocket before making a claim to avoid the years of higher premiums). After all, car insurance is meant to cover catastrophic financial events, not a little dent in your hood.

So why not raise my deductible to $1,000, you ask? Well, for one, $1,000 is typically all of the money I have in my emergency savings since I’m working on getting out of debt. Two, I inquired about the price and it would only save me about $30 every six months. Perhaps when I’m well-off, I’ll self-insure for amounts less than a couple grand.

So there you have it: My virtually math-free way to determine which deductible is right for you.

(This post was included in the Money Hacks Carnival, hosted at Be Thrifty Like Us)

Photo Credit: Hail in Vancouver by Andriy Mishchenko, used under Creative Commons licensing