Making Money Is Also About Cost Cutting and Not Losing It

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The “Great Recession” may go down in history as a curse on current generations, but the opportunities to get ahead of the game are still ever present, if only a little more challenging and difficult to monetize.  In times like these, making money is not just about working more than one job or seizing upon some weird idea at the moment.  It can more importantly be all about understanding how to cut costs and how to preserve the value in what savings you may already have.

Looking outward for rare opportunities can be all consuming, but common sense tells us that during a down business cycle it is always best to take stock of your present situation and search for ways to be more cost efficient.  The “mantra” becomes the same as with corporations – “Eliminate, Reduce, Rearrange, and Create”.  If you would prefer to try your luck with weird investments, then that is fine, too, but at least take a moment to look below the surface of your current financial situation and determine what cost drivers are at play with your personal finances.

So let’s take a look at the “Big Four” – Home, Business, Debt and Assets:

    • Home:  First, analyze your cash payments for the past four to six months.  Aside from rent, utilities, and insurance, the “black hole” in most family budgets is the amount spent on food and entertainment, which includes eating out, alcohol, and whatever else curries your favor.  Credit counselors also look here first for targets for improvement.  There is a reason why people like Sam’s Club and other discounters – cheaper prices for bulk purchases.  It is also cheaper and more nutritional to eat at home on a more regular basis, too;
    • Business:  Do you own your own business and bill for personal services at different addresses?  Unless you like building up a large amount of accounts receivable, the better way is to acquire a “wireless” merchant account.  If you have a “Smart Phone”, there are a number of simple devices that can attach to your phone to facilitate a credit card swipe and a remote payment transaction.  The merchant discount fees are also at their lowest values, since the card and cardholder can be verified “face-to-face”;
    • Debt:  Do you have credit card debt?  Interest rates tend to be high these days for no reason, but many card issuers will gladly pay off your existing balances by transferring the debt with a “no-fee” cash advance.  Interest will typically be deferred, another enticement that puts money in your pocket.  If you own your home, be sure to refinance if possible.  Mortgage interest rates may never be this low again once the economy regains stability;
    • Assets:  To begin with, you should have an emergency fund of 3-6 months of net income to prevent having to liquidate investments at the wrong time. Secondly, Exchange-Traded Funds (“ETF’s”) are the best bet out there for diversifying your risk and reducing account management fees.

Guest Post by Tom Cleveland from

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