MAKING BREAD’s EGG-CELLENT ADVENTURE

Hunting—High and Low—for Savings

to Feather Your Nest Egg 

By Gail Harlow

ne recent study sponsored by the Oppenheimer Funds found that  54 percent of single women interviewed said they were more likely to have 30 pairs of shoes in their closet than $30,000 in their retirement savings. I don’t know about you, but my shoe collection came out of the closet years ago. I have so many that most of them live under my bed—with the dust bunnies.  And I usually wear the same two or three pairs every week.

     Another clue that a lot of us are savings-impaired: When we asked in our MAKING BREAD Quick Poll, “How much do you have saved up for the proverbial ‘rainy day’?”, 47 percent of our readers who responded admitted to having  “$100 or less” stashed away. “Not good!” as a friend of mine likes to say. At least, it’s good to know that we’re not alone.

     Those figures are especially troubling in this economy, where layoffs are epidemic. Experts say that you should have three to six months’ salary saved up to tide you over in the event that you lose your job. Those same experts say you’ll need 70 to 80 percent of your current income to maintain your current lifestyle in retirement—and that’s assuming you’re satisfied with your “current lifestyle.”

     That’s why I say leave the Easter Egg hunts to the kids!  They’re only a once-a-year good time anyway. We adults get to have fun every day of the year, hunting for “nest eggs.” Like Easter Eggs cleverly hidden in plain sight, opportunities for savings are everywhere, hidden in the myriad details of our lives. We’re just too close to see them clearly. Once you find those savings, of course, the trick is to avoid spending them elsewhere: Put them in your savings “baskets.”

     Here’s your invitation to join MAKING BREAD’s Nest Egg Hunt. Below are a few hints, ranging from the sublime to the ridiculously simple, to get you started. E-mail me at gail@makingbreadmagazine.com with ways you’ve found to feather your nest egg in your daily life, and we’ll share them with others on the site. Happy hunting!

LITTLE EGGS

1. Get with the Picture: Return your VCR rentals on time. Blockbuster’s $3.99 five-day rental fee is half as cheap as your average movie ticket, but if you keep that video an extra day you immediately forfeit the savings to your entertainment budget. Better yet, says reader Julie Sealey, "Don't rent videos at all—go to the library and borrow them like a book, free of charge.

2.  Buy Regular, Save Regularly: Gas prices rose 23 cents in the last month. Reportedly, that’s the most dramatic rise in more than a decade, and experts predict prices could climb five to 15 cents more this spring. By choosing to feed my car regular instead of “Only-the-Best-for-My-Baby-Super-Duper-High -Test,” at my local pump, I save $3.60 every 20 gallons I put in the tank. My car doesn’t know the difference. If you’re concerned about how it will affect your car’s performance, compromise and select Plus, instead of Super.

3.  Discover the Dollar Store: Aiming to beat Wal-Mart, Target and other discount retailers at their own game, several chains of “dollar stores” or “99 cents” stores have sprung up around the country in recent years. Try them. You’ll be surprised by what you can buy there. You can easily save $25 or more on your grocery bills every week by shopping there for such staples as cleaning products, soap, garbage bags, artificial sweeteners, even food items. How can they afford to sell this stuff at such a cheap price? They keep their overhead low, have streamlined distribution systems and buy merchandise in large lots, among other reasons.  Perhaps we should ask why the other stores are charging so much.

4.  Sample the Goods at Goodwill: True story: A friend of mine recently found a designer suit, easily worth more than a thousand dollars, for four…dollars that is.  Admittedly, such finds aren’t to be had every week. But at larger Goodwill stores, the inventory does change dramatically every week, so it pays to visit often. Just as with the Dollar Stores, word is getting out about how good these second-hand shops run for charity are. I’m always amazed at the number of BMW’s that drive in and out of the parking lot at my local Goodwill—I don’t think their owners are all just dropping things off.

If you’re just starting out after college, or setting up house on your own again after a divorce, Goodwill is great place to quickly and cheaply stock your kitchen with dishes, glasses, pots and pans. Children’s books and clothes can be had for a quarter here. And if you’re into 1950s’ motel décor—kitschy lamps, lampshades, bedside stands, terry cloth recliners and more—Goodwill is the place to go. Seriously, if you’re starting your own business and are looking for cheap office furniture, you might find some good buys here.

What else? Ever wonder where all those old Montovani, Johnny Mathis, Engelbert Humperdinck, and Simon & Garfunkel LPs got to? You’ll find them in the record bins at Goodwill. Some of them might actually be worth some money as collectibles now.  For sheer amusement value alone, a weekly trip is worth it. Another tip: when you’re doing your spring cleaning, take the contents of your closets to Goodwill and ask for a receipt. The value of your goods will be tax-deductible next year.

5. Exchange Your Loose Change: Why is it that four quarters never seem as valuable as a dollar bill? What odd principle of mathematics is that? We all have vases or coffee cans where we throw the loose change that collects in our purses and pockets every day. With change machines in many supermarkets and banks nowadays, it’s easier than ever to take those pennies, dimes, nickels and quarters in and have them converted to paper currency. (A tip: use your bank’s change counter; those supermarket machines charge a percentage of the total.) After you’ve converted your change, deposit it directly into your savings account where it will earn interest. Do not detour to the mall. You’ll be surprised how much money you’re already saving this way, without even knowing it, every month.

 
BIG EGGS

1. The Best Nest Egg of All Is a Nest: Though it’s not good to put all your eggs in one basket, and you should invest a portion of your salary in mutual funds, CD’s, and other savings instruments, real estate serves as both an investment in your future and a roof over your head right now. It’s a tangible asset that you can use as collateral for a small-business loan, or as the basis of a home-equity loan to give you a cushion in the event of emergencies. So, If you don’t already own a house, start saving for a down payment now. Whether your savings goal is a house fund, a college fund, a vacation fund, or all three, compete with yourself to see how much more you can contribute to each each month.

2. Invest in Yourself: Whatever your profession, keep abreast of it by attending seminars and conventions, going to night school to complete a degree, subscribing to professional journals and joining professional associations. These things boost your value to your employer and give you ammunition when you ask for your next raise. The more money you earn, the more you can save. They’ll also help you make contacts and give you an opportunity to network with people who might be able to help you when you are ready to make your next career move or are laid off and looking for a job in the future.

3. Take it to the Max: Take advantage of your employer’s matching contributions by contributing the maximum amount allowed to your 401(k) at work. If you don’t, you’re turning down free money. If you use an IRA account for savings, max it out. And be sure that your emergency savings—the cash that you keep in an account that you can withdraw from easily—is in a savings account that pays the highest interest rate possible. These days, you’ll find some of the best rates around at Internet savings banks.

4. Married. Saving Singly: Virginia Woolf said every woman needs $500 and a room of her own. That was in 1928. Today, she would agree that every woman needs a room and a nest egg of her own. If you’re married, your husband could die or leave you—or you might decide you want to leave him.  Even if you remain happily married, a private stash, or savings account with your name on it, will help you pay the bills while the will is in probate should your husband die. Life is full of surprises—many of them unpleasant and very expensive. Protect yourself! Stash away five to 50 dollars or more a week in an account with just your name on it.

5. Insure Yourself: In an attempt to save money, too often couples only buy life insurance for the major breadwinner in the family. If you are the major caregiver in the family, and don’t work outside the home, you still need life insurance coverage so that if something happens to you, your husband will be able to afford to pay for the best care for your children. 

      It’s a good idea to review your insurance coverage once a year, anyway. Do you have enough so that, if the major breadwinner (either you or your husband) dies, the death benefit can be invested and will earn enough interest to replace the missing spouse’s current and future monthly income?  Chances are the insurance coverage you or your husband get on the job isn’t going to do the job. Compare prices of term insurance and cash-value policies; a cheaper term policy may give you the extra protection you need at a price you can afford, even though it won’t earn interest and accrue in value.

     Finally, take our Nest Test: Ask yourself, are you overlooking ‘the bird’ in your hand? While collecting nest eggs and saving and planning for the future, don’t take what you already have for granted. Every moment is rich with possibilities, and no matter who you are, chances are you’ve probably already got more eggs in your nest than you think. If the eggs are broken, make omelets!

 ________________________________________

Gail Harlow is the Founding Editor of MAKING BREAD Magazine. E-mail your comments to gail@makingbreadmagazine.com.