Your Private Cash Machine
AARP the Magazine, May 2007
These days the personal computer is as universal a home appliance as the microwave. Two out of three American homes have a computer, and, yes, they’re great for deleting e-mails about mortgage offers and sex enhancers. But they’re also powerful tools for saving money.
To show you how powerful, we set ourselves a task: to make a computer pay for itself in a year. In our case that meant saving enough online to cover a desktop model with printer ($1,187), a high-speed DSL connection ($40 a month), and the $50 we threw in to cover electricity and paper. Total outlay: $1,717. (And you could lower the break-even point. The average computer buyer aged 50 to 59 spent about $624 last year, 10 percent less than in 2005, according to the market researchers at Synovate’s DuraTrend.)
Safety First
To help keep identity thieves at bay, get a free e-mail account from Hotmail or Yahoo! for all commercial dealings and don’t include your name in the address. For any online credit card transaction, be sure the lock icon, often found in the lower right corner of your browser window frame, is closed, not open. This means you are on a secure page for sending personal information.
How much did we save in a year? A triumphant $2,302, putting us $585 ahead. It wasn’t as if we did anything fancy or complicated, either, though it did require creating a few file folders to manage all the coupons we collected. Mostly we simply took advantage of a variety of websites and saved not only money but something just as precious—time. Here’s what worked for us.
1. Compare and save
Remember when driving from mall to mall or studying sales circulars was the only way to compare prices on everyday items such as clothes, linens, or kitchenware? Now online comparison-shopping sites—Shopzilla, PriceGrabber, and Sortprice, among them—do the work for you by showing current prices on virtually any product at thousands of online stores. We found a pair of athletic shoes, $90 at retail, for $58 at sierratradingpost.com, tax-free and shipping included. Savings on two pair: $64.
2. Clip cyber coupons
Sites like CouponCabin.com and eDeals.com collect and gather coupon codes (sometimes called promotional codes) that e-tailers (electronic retailers) release to their best customers or place on other Web sites to attract new customers. The coupons run the gamut of goods and services redeemable at Web sites, from Weight Watchers to Target to FTD. A recent code took $10 off any purchase of $50 or more for any Acehardware.com order. It’s easy to do that three times a year. Savings: $30.
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3. Win the grocery game
Here’s the big one. U.S. households on average spend $5,781 a year for groceries. CouponMom.com claims it can cut those bills by 40 to 50 percent if you do your part by stockpiling newspaper circulars full of coupons. CouponMom sorts these to help you maximize savings. For instance, Kroger often doubles the value of manufacturers’ coupons, up to a $1 limit. Say the store runs a sale on Lay’s potato chips for $1.50 a bag. Checking CouponMom, you find a circular from two weeks ago that included a Lay’s coupon worth 55 cents. Doubled, you get the maximum $1 off the already discounted $1.50 bag, so the chips end up costing you 50 cents. Even a not-entirely-diligent coupon clipper chopped 15 percent—nearly $17—from the weekly grocery bill this way. Savings in a year: $867.
4. Find local deals
SalesCircular.com knows that many of us still like to see, touch, or test a higher-end product before buying. The site sorts through newspaper inserts, weekly circulars, and even junk mail to create a master list of advertised sale items. Just choose the state, pick the product category, and bingo!—you can pinpoint the local retailer with the best deal. We found a $249.95 digital camera (manufacturer’s suggested retail price at the time) available at Texas CompUSA stores for $159.99, and they even threw in a free camera case. Savings: $90.
5. Fill up for less
GasBuddy.com lets you comparison-shop for gasoline in your neighborhood or city. A test drive for Denver lists the 15 highest and 15 lowest prices (a span of nearly 40 cents at last check) within the past 48 hours for the city and its suburbs. Over the course of a year of 12-gallon weekly fill-ups, a 20-cents-a-gallon advantage looms large. Savings: $125.
6. Save postage—bank online
The average household receives about 15 bills a month. With stamps at 39 cents, you pay about $70 a year just on postage. Instead, use your bank website’s free online checking, easily accessed from any computer. (Bonus: If you set your payments to “automatic” you’ll never again pay a late fee because you were on vacation or just forgot.) Savings: $70.
7. Say goodbye to greeting cards
Another tree- and postage-sparing service: egreeting cards. Hallmark, American Greetings, and Jacquie Lawson are among the online entities offering personalized virtual cards. While some services are free, it’s easy to pay as little as $8 a year for unlimited e-mailings, or about the cost of a box of holiday cards. And with three dozen households on our card list, and quite a few birthdays and anniversaries to observe, we come out way ahead. Yearly savings: $44.
8. Read for cheap
MagazinePriceSearch.com monitors subscription rates for more than 2,500 magazines sold through two dozen online merchants. We found substantial savings on both new subscriptions and renewals. Golf World, for example, regularly sells 22 issues for $17.77. MagazinePriceSearch points you to a service that sells you 46 issues for $12.77. Similar savings were found for everything from Cooking Light to Vogue to Popular Mechanics. Savings: $19.
9. Cut phone bills
A typical telephone bill runs almost $80. Using Vonage or a similar Voice over Internet Protocol service (such as AT&T CallVantage, SunRocket, or VoIP.com) to talk by computer gives you unlimited calls throughout the United States and Canada—plus caller ID, call waiting, and, most important, 911 service— for $25 or less a month. (A caveat: Your location may not be apparent to the 911 operator in some areas.) Savings: $660.
10. Snag more interest
Compare the measly 0.54 percent earned on the average statement savings account with rates of 4 and 5 percent offered by FDIC-insured online banks that don’t have expenses such as branch offices. Last time we looked, Bankrate.com showed six banks offering 4.5 percent or more on savings accounts with minimum balances of no more than $1. But say you started with $5,000. Savings gained in a year: $203.
11. Buy bonds direct
We’re not talking about U.S. savings bonds here. Those are widely available at no extra charge at almost any financial institution. But brokerage services and banks may charge $55 or more to help bond investors purchase short-term T-bills, Treasury Notes maturing in 2 to 10 years, Treasury Inflation-Protected Securities (TIPS), or 30-year Treasury Bonds. TreasuryDirect.gov lets you buy in multiples of $1,000 at no charge. Savings: $55.
12. Ax tax preparation
A tax preparer can cost $150 to $400, depending on the complexity of your return. Do-it-yourself software such as TurboTax, TaxCut, or TaxACT runs $10 to $75. Or for even greater savings, file your taxes online. Taxpayers with adjusted gross incomes of $52,000 or less—and that’s seven in ten households—can use Free File at www.irs.gov, where they’ll pay nothing if they choose carefully among several software providers. (AARP’s Tax Aide program also gives free assistance in filling out tax forms to low- and middle-income households.) Those with higher incomes can go straight to taxact.com, where a basic package of online forms is free to everyone. Savings: $75 or more.
Contributing editor Laura Daily just purchased a new flat-screen monitor. By her calculations it will pay for itself by August of this year.