Readers' Tips for Financial Renewal, Part 2: How to Spend Wisely

A few weeks ago, we asked our DailyFinance readers for their best advice on how to get your financial house in order. As many noted, part of living well is spending wisely -- after all, while saving money is vital for your long-term security, there are times when, like it or not, you'll need to part with a pile of cash. With that in mind, here are some great tips for making your money stretch further -- and fighting the urge to spend at all.

Many readers offered simple, no-nonsense advice. "DocDearth," for example, suggested that readers keep their cash in the bank -- and out of their wallets. After all, "if you don't have it in your pocket, you're much less likely to spend it." Similarly, "Joe the Tightwad" reduced intelligent spending to a simple equation: "Make two cents spend one, result: prosperity. Make two cents spend three, result: misery." Admittedly, as "Joe" noted, this wasn't his own quote -- it was adapted from David Copperfield.

Motivate Yourself!

Just saving money, though, isn't usually so simple, especially given the complex emotions that often underlie spending. "Frank S." suggests that readers have to "Stop the 'live up to the Jones's' syndrome."

But while it's easy to chalk up some purchases to a combination of envy and competition, the simple fact is that living within one's means -- or, as "Daniel W." suggests, living "BELOW your means" -- can often be difficult. The simplest advice, as "Donut999" notes, is to always ask yourself "Is this something I WANT or something I need?"

One big key is motivating yourself to save. "Whitney G." suggests that developing a long-term plan can help with short-term motivation: "Each year, make up a personal financial statement to see how much you have gained in net worth. If you spend one penny more than you take in, you're going backward!" For that matter, it also helps to have clear-cut goals: In Whitney's case, this was a brand-new car: "I drove second-hand cars until I was 50 and invested the couple thousand dollars I saved each year into land. Now I can afford to drive a new F-150 XLT!!"

"J.H." suggests working on the emotional spending problem from the other side of equation: Only desire things that you can afford. Channeling a hint of Buddhism's Four Noble Truths, he observes that "Cruises, skiing, and driving BMWs are all fun, but so are crossword puzzles. If you don't already have them, find things you enjoy doing that cost little or no money."

Pay Yourself ... Not the Bank

Another way to make your money stretch further is to avoid paying interest; after all, every penny that goes to your credit card company is a penny that doesn't go into your bank account. With that in mind, several readers suggested staying out of debt. "David A," "Fercoop" and "Donut999" all took this to a logical conclusion and decided to pay off their mortgages ahead of time.

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That runs counter to what most financial planners suggest -- keeping your mortgage, as the tax deduction combined with low interest rates can often translate into a hefty benefit. However, as "David A" wrote, the lack of a mortgage payment "allowed us to weather a bad job move and steep drop in pay a few years ago." Similarly, "Fercoop," who has made extra mortgage payments to pay the loan off faster, notes that "I can begin to consider taking jobs that truly interest me, instead of worrying about how much money I'll make."

Speaking of lifestyle decisions, several readers noted that the condition of one's finances makes a big difference when it comes to the choices that one can make. "Bob S" offered a particularly clear-eyed and unsentimental view of financial responsibility: "No children until you can pay for them." Also, he suggested: "Get rid of bad debts. It may require a divorce."

Get Out of Town ... or Out of the Country

Some readers took the "modifying your lifestyle to improve your finances" path to an extreme. "Joel B" said that he and his spouse moved to Puerto Vallarta, Mexico, "where the cost of living is much less than in Los Angeles, our previous home." The L.A. equivalent for his $200,000 Mexican home, he says, "would easily have topped $1 million." As for health care, he noted that a recent root canal and crown implantation cost him $425. In L.A., he says, "the total would have been $2,700."

But even if you don't move to another country, you can still save by taking advantage of less expensive economies. As "Susan S" notes, vacationers can save a lot of money by "visiting countries where the dollar is strong." She and her family went to Peru, which she describes as "an amazing country with majestic mountains, ancient ruins, and a world-renowned culinary scene." Best of all, "The dollar is very strong, making travel more affordable."

As many readers noted, saving money is all well and good, but ultimately, financial security may lie with spending well and wisely. What's more, they pointed out, the possessions that you think about the most carefully -- and the gratification that you delay the longest -- often become the most rewarding. In the end, perhaps one secret to a life well lived is a budget carefully considered.


Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971.