Saving Money

Before you sell that car or hold your yard sale or place your listing in Craigslist, you need to understand the anchoring effect. It's been used against you with great success, but now you can turn the tables and benefit from it.

You've seen the anchoring effect in action a million times, usually in the form of a suggested retail price. When you see a purse with a price tag that claims it normally sells for $400, but is marked down to $200, that little "yippee!" you feel inside at the prospect of getting a bargain? The anchoring effect. The seller simply told you that the purse was worth $400, and we tend to accept this line of bull because we are basically a trusting people and trained to use price as our gauge of value.

From running your dog at a city dog park and parking your car, to visiting the local community center, the use of government services can be like feeding a vending machine as residents find themselves nickel and dimed for services that once cost little or nothing. Here are 10 places where you will now have to pay up. Call it a symptom of the Great Recession, as governments struggle to reconcile budget shortfalls in creative if unpopular ways.

When summers get as hot as this one, it's difficult to imagine what people did before air conditioning existed. Swimming holes, hand-held fans and ice cubes down your back will only go so far when sooner or later, you have to return to the confines of some stifling domicile that badly needs frosty air.


And while we may take air conditioning for granted, it wasn't that long ago -- 1881, to be precise -- when a team of naval engineers built a cooling contraption to comfort a dying President James Garfield. While the device -- which blew hot air upwards and employed rags soaked in freezing water -- could lower room temperatures by 20 degrees, it also ate up a quarter-million pounds of ice a month. (Think of all the Pina Coladas they could've made instead.)

Modern air conditioners wouldn't become commonplace until the 1920s, yet one enigma remains: figuring out how to most efficiently cool a room or a home. Window units or central air? Do ceiling fans really help? Are there other novel ways to make sure my living space stays cool, so I can use air conditioners less? One thing's for sure: Savings are always chill, so let's crank up some righteous coolness with this latest installment of the Savings Experiment.

Bartering for goods is as old as commerce itself, but the ingenuity and resourcefulness of a teen from California, who traded an old cell phone all the way up to a Porsche is a testament to the power of trade. And also possibly, to the current economy.

Starting two years ago, Steven Ortiz took an old cell phone he had been given by a friend and traded it on Craigslist.org for a better phone; and thus kicked off a cycle of trades that landed him an iPod Touch, dirt bikes, a MacBook Pro, a Toyota 4Runner and a tricked out off-road golf cart. That was all before he turned 16.

After these initial trades Ortiz found himself in possession of several more dirt bikes, street bikes and a '75 Ford Bronco, which, as luck would have it, was a collectible worth approximately $15,000.

It was this Bronco that, according to the San Gabriel Valley Tribune, sealed the deal on a 2000 Porsche Boxster Convertible, which was actually worth less then the Bronco on paper, but not to the Young Ortiz.

This isn't the first time someone has traded an item of insignificant value for a highly-prized possession. In 2005 a Canadian man famously traded a red paperclip for a house in a series of interesting trades.

Forget the coupon clipping. A straightforward, realistic budget is the best deal you'll ever find.

Why is a budget the best deal? Because, just like your childhood puppy your budget will always be there for you, no expiration dates, no fine print to yank away the savings after you've already been whipped into a furry of consumerism. If you care for your budget it will take care of you so that "saving" isn't just not unnecessarily spending an extra $5 at the grocery store this week; but actually saving money in a high yield savings account. Another great thing about a budget is that, again like your puppy, it will take you back even if you screw up.

Think outside the sale. For years I chased after deals and discounts like they were the oxygen keeping me alive. It didn't matter if I needed an item or not -- if there was a sticker advertising 60, 70, 80 or 90% off a gadget, I wanted to buy it. How could I pass up the savings?

It wasn't until recently that I realized a budget is the best deal you can find. After taking a few minutes to look at how to put together a budget I realized that it takes less time to set up and follow a budget than it does to look for deals every day of the week.

Thanks to great free personal finance management (PFM) tools from sites such as like Mint.com, Rudder and others you can easily create a budget and track how well you are following it each day. These tools will even send you a notification when you go outside of your budget so you aren't shocked at the end of the month. If you don't already have a successful budget don't start creating one yet. First go read these tips for setting realistic budget.

Advice on Budgeting

• Reverse Budget - A savings first solution from FiveCentNickel
• Budgeting basics - a Budget primer from Consumerism Commentary including suggestions on how to get started.

My personal favorite and current method of budgeting isn't so much a budget as it is smart spending. Ramit Sethi explains the model in his book I Will Teach You to Be Rich, calling it, "Conscious Spending." Instead of focusing on the minutia Sethi concedes that it is in fact OK to, "Spend extravagantly on the things you love, and cut costs mercilessly on the things you don't."

A budget may be the best deal, but that doesn't mean you need to give up on coupon clipping and bargain hunting; just make these tools that support your plan instead of the main focus. If you plan for your purchases, by saving up at SmartyPig or setting a goal in Rudder, you can still go looking for a deal on your next purchase and pay in cash. Trust me, there's something really incredible about paying in cash for the new camera that you've researched and found the best deal on.

Saving food isn't just efficient use of resources. It's an efficient use of your money. So what's the best way to keep your leftovers for later?


The USDA and the Census Bureau discovered that American retailers and consumers throw away about 96.4 billion pounds of perfectly good food each year. That comes out to about 122 pounds of wasted food a month by the average family, or about $600. In theory, if we were to preserve all of the edible leftovers we've got, we could cut more than a quarter of our waste.

One benefit of food preservation is that it enables you to buy in bulk, which provides a cost benefit all its own.

Freezing
The FDA and the USDA say that any food kept at zero degrees Fahrenheit can be kept safe indefinitely. Whether its flavor will keep, and for how long, is a matter of taste. Many find that the flavor of potatoes, rice, pasta, raw veggies, cream sauces and cheeses will deteriorate over time, but if you eat them quickly enough, and don't let them frost over in the back of your freezer, the change in flavor may not be discernible.

Kitchen cabinets endure more abuse than most any other item in your household, going from gleaming to grimy in no time. So WalletPop asked some experts how to tell when your cabinets need a facelift and which of the many options to choose.

Brian Kelsey, host of "HGTV Creative Edge with Brian," took among the most conservative approaches:

"As long as the cabinet structure is sound and in good shape, you really don't need to replace your cabinets," he tells WalletPop. "You could freshen them with a new coat of paint, and/or hardware -- easy and inexpensive DIY fixes."

But even the most optimistic know that sometimes you have to cry uncle.

What started as an experiment in 2002 is now an annual ritual. In states across the country, parents wait anxiously, school supply list in hand, for a "sales tax holiday" to make the cost of back-to-school shopping a little more bearable. This year, however, some shoppers are finding out that a declining economy means that returning to school will be more expensive.

Georgia has become the first (and so far, only) state in the country to announce that the popular tax break won't be available in 2010. The looming $2 billion hole in the state's budget was the primary factor in the decision not to offer the holiday in 2010. The holiday, usually held over the last weekend in July, has generated a loss for the state in terms of revenue dollars each year, according to legislators.

Many major companies -- Safeway, Trader Joe's and Target, among them -- sell generic, or what they prefer to call "private label," products that are typically cheaper than the brand name products they aim to replace. If ketchup is ketchup to you and your family, then the cheaper generic brand is a good buy. But if Heinz is your favorite and you don't mind paying for it, the generic versions aren't going to do the job at your dinner table.

That's the trouble with some generic products, as I pointed out in an earlier WalletPop post -- taste can make or break a generic product. And while personal taste will always factor into whether you buy a generic product, here are 10 products that we think you should never buy generic. The branded products are much better.

Virgin Mobile has launched another prepaid cell phone plan, selling minutes for 5 cents each under its payLo plan.

The plan, unveiled Thursday, is the lowest price I've seen for a prepaid phone, and beats what Boost Mobile, Assurance Wireless, Net10 and others sell for 10 cents a minute, including plans for people below the poverty rate. Common Cents Mobile has tried to stand out from the prepaid phone crowd by rounding down calls and charging 7 cents a minute.

My daughter is only five years old, but I'm already worried she isn't learning money management skills early enough.

We haven't started her on an allowance yet, and every time my wife and I vow to start another "chore sheet" on the side of the refrigerator, we don't always follow through on it and the chores don't get done and our daughter loses interest in whatever gift we've promised for reaching a goal.

I've held off giving her an allowance, figuring she wasn't ready for it yet. But with kindergarten behind her and first grade looming, I think we're getting close to starting it so she can learn some good habits early. I've always been a fan of intrinsic value, and try to teach her that everyone in the family has to do chores, whether paid or not, and that getting good grades is a sign that she's learning and doesn't have to be rewarded with money.

If you've always wanted to try shopping at a membership club, but don't want to pay the fee take note: Sam's Club is letting non-members shop the store for three days in early August.

The program hasn't been announced to the public yet, but Sam's Club spokeswoman Susan Koehler tells WalletPop that stores will host an open house August 6,7 and 8 and "basically try us for free."

Of course membership is guaranteed, so anyone could essentially buy a membership, shop and then request a refund. But for those shoppers less interested in subterfuge, the open house provides an opportunity to stock up on small business supplies, household staples, electronics, food items, and school supplies. "The last time we did that was for Sam's 25th anniversary in 2008," Koehler says.

Memberships start at $35, but free is even better. If only for a few days.
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With newspapers across the country struggling to pay expenses, pay-walls are going up at more and more of their web sites. These pay-walls require users to pay for online content that they've become accustomed to getting for free. As old institutions buckle down and attempt to restrict access, new organizations are bringing together human edited news pages to deliver free news stories to casual news consumers.

This past week Time magazine became the latest news source to add a pay-wall to its content, joining The Wall Street Journal (though it's pay-wall is fairly easy to circumvent) and London's Times and Sunday Times. The New York Times plans to add a pay-wall next year. Clearly, many traditional news organizations have concluded they can no longer afford to give away their content, which is costly to produce.

The new discount at Restaurant.com is for 70% off gift certificates to hundreds - pardon me, thousands - of restaurants across the country. A $25 gift certificate starts at $10. Use coupon code FRESH to get the discount. Expires Thursday July 15, 2010.

Restaurant.com claims to have added new inventory to their site, but I don't see a specific link to recently added restaurants or existing restaurants that have more certificates for sale, which is a little frustrating.

If you're new to Restaurant.com make sure to read the fine print as it varies by restaurant. Expect that alcohol, tax and tip will be excluded from the discount and that you'll have to spend above and beyond the certificate amount. So you can't saunter in, order $25 worth of food, and use your cert. Spending $35-$50 is typical to use one cert. Some may limit the days and times you can use the certificate, like not on a busy Saturday night.

Buying a certificate supports WalletPop.