I aggressively search for the best credit card rebate deals. When I don’t get them, I look for a new card and I can usually find somebody ready to offer me a better deal because my ever-comely mujer and I today have an excellent credit rating. We didn’t always have a sterling credit rating. For example, when we were married, we had little in savings and assets as well as sometimes carrying credit card balances from month, our rating was low, probably in the 600s or maybe the 500s. Today it is in the 800s.

So now we get the best deals. I would estimate that today I am getting about $50 a month back in rebates. Why shouldn’t the card companies give it to you too? You’re giving them your business and you pay on time because you believe in MoneySense principles.

When you shop do you go to a supermarket chain that provides you with a chip card that guarantees you will always get the store discount on an item and cumulatively records your savings through the year? I do. And so far this year I am on course to save some $400.

Besides that, I often use coupons that can save me another $200 or more a year. Grand total of my shopping strategy: $600 a year in savings. Again, there’s your $50 a month.

Need an extra $50 or $100 a month? Do you like dogs? Many people in my city have started dog walking businesses or just pick up a buck here and there walking our four-legged friends. Here in New York, you can sometimes earn about $6 per half hour doing it. Do three hours of work a week and you have $36 or possibly more. In a good month, you’ll have $200 to invest.

Obviously, this idea works well with almost any part-time job, which are increasingly available in an economy that, until recently, had unemployment rates at record lows. That’s because two hundred dollars a month invested over 40 years and earning nine percent makes you almost a millionaire. It gives you $943,286.

By the way, it doesn’t have to be dog walking. Many people have various skills that they could turn into a home business. I’m thinking of talented people in my neighborhood, or almost any place, who have foreign language and music skills that could be turned into some extra income. Anyone needing help to write a book please contact GregoryBresiger.com.

This extra income could be used to fund a saving and investing program. But, while looking for more income, also remember to play defense: Look at ways you can cut out or reduce needless spending.

Why Not Eat En Casa?

Do you eat out a lot?

I know some people with good incomes who eat at top restaurants three or four times a week and some of them tell me they have difficulty finding money to invest. I’m not surprised. Why not, I tell these people, eat out two or three times a week—cut back at least once a week. Projected savings of two people dining out one less time a week in New York at a good eatery: About $100 a week or more or some $400 a month that can be devoted to investing.

However, let’s only use $300 of that a month and only do it for 30 years, earning nine percent a year. What happens? Focus on the word compounding. You have $553,342 before taxes. By the way, add another ten years to that investing program and you have almost $900,000 extra or close to 200 percent more—$1,414, 929.

Mein Gott! Some of these smart people could end up owning a restaurant. It’s all because they spent and invested wisely. They had MoneySense.

But let’s look at the big stuff.

I go into my local bodega and a guy ahead of me hands over a $20 bill. He asks for his favorite brand of butts. He ends up with his smokes and the clerk returns just $8 bucks. Twelve dollars a pack!!! Mon Dieu! I’m shocked every time I see it.

Were you thinking of giving up smoking? Well, there’s your investment money. Twelve bucks a day comes to $360 a month. Combine that economy with a small part-time job that yields $140 a month and you now have two things: Much better health and $500 a month in additional income. And what does $500 a month over 40 years, earning nine percent a year give you? A small fortune. You end up with $2,358,215.

Santa Maria, you’re going to be rich and live much longer!

But, as they say on those irritating overnight tube infomercials, “But wait. We’re still not done.”

The MoneySense Bad Dream

My bête noire of overspending is the cost of owning a car in a big, outrageously expensive, city like New York, the land of high taxes and pols with itchy fingers. [There have been limitless state and city political scandals in New York City and State over the past few years. I’d need an entire book—a big fat book—just to discuss them].

Years ago, when I lived in a rural area, made a modest income and needed a car for my job, I noticed something: The persistent, endless costs of keeping the car on the road prevented me from accumulating a significant amount of saving or investment. When I came back to New York City, I tried holding on to the car for a couple of years and regretted it.

Here in New York City we have extensive mass transit. Granted, the mass transit here is a shabby state system. It is run by a non-accountable public authority, the MTA. The latter has its headquarters in the most expensive part of town and passes on its incredible bills to the overburdened taxpayers. Its lousy, often ancient, trains frequently shake. The signaling system is egregious. It goes back to the 1930s. (For those who want more on this subject, please see my “Generations of Transit Disaster: The New York City Subways,” which is at the Journal of Private Enterprise.).

The infamous, partially finished (three stops out of 18) Second Avenue subway is about 80 years late and yet it has been paid for several times by the perpetually overburdened New York taxpayers. When the city took over the subway system from a private management company in the 1940s, it took down the Third and Second Avenue Els.

Back then, our rulers promised a brand-new subway line. Its promises were backed by three separate bond issues over 60 years but the bond issue money was primarily spent, not on building the new line, but closing the never-ending subway deficits. No one complains about the bond issue money being misspent, but they should. Pols often depend on voters having short term memories.

Still, the decision to use mass transit and avoid the costs of running a car might be the most important move a middle-class person makes in building or not building wealth. When my wife and I came to our apartment in Kew Gardens in 1989, we sold our car so we could afford the purchase of our first apartment. I would estimate that, over decades of living here without a car, we have saved on the order of $300,000 or more. And that’s even including the costs of renting a car from time to time.

Santa Maria, $300,000! That’s a lot of dinero.

And that doesn’t even tell you the true value of what we did. If we tried to bring home an additional $300,000 in cash, we probably would have needed to earn $450,000 before taxes. That’s a hell of a lot of E-train rides going to and back from work. In New York City work usually means going to Manhattan.

So that $300,000, or really $450,000, has made a big difference in our lives. That’s because a lot of it went into savings and investments. Some of it went into luxuries we enjoyed and paid for with real, not plastic, money. That meant more big savings in not paying credit card interest charges and also getting rebate points.

Oh, and because we haven’t been hard up for money for years now, we have had the money to rent cars or, if we wanted, to buy one with cash if I someday temporarily took leave of my senses and swallowed some car buy pitch (Fill in the name of a car company and let them do a truth in advertising spot, “Car Company X. Let’s owe money!”).

First, I acknowledge that some people can’t follow this tip; that many must have a car such as yours truly when he lived in small towns in the 1970s and 1980s. The best reason to own a car is for business. You can deduct some of the costs from your taxes. But, if you don’t need a car, just consider the savings and the investment opportunity of not owning one.

They are huge.

Here in New York City, the city and state governments have practically declared war on the motorist. They levy incredible taxes, fees, fines, tolls and God knows what other costs. It isn’t much different in most other big cities. What if one could find a way to do without a car, or maybe live with one instead of two or three cars? The opportunities for investing would increase dramatically. I estimate it can take $10,000 to $12,000 a year to run a car in New York. That includes car payments, maintenance, insurance, repairs, fines, towing etc. Some people here actually pay $1,000 a month for a car.

Is it worth it? Each person must decide, but I believe it depends on your work and where you live. But examine the alternatives.

What happens if you used that money for something other than making Toyota or GM stockholders richer? Let’s look at what economists call the opportunity cost—one buys one thing at the expense of buying something else.

Turn Your Car into Millions of Dollars

Take a thousand dollars a month you spend on a car and instead put it into a mutual fund that earns nine percent a year. What do you have before taxes in 30 years? You have $1,340,933. O.K., once again we’ll play our do it for another ten years game. Then, you have $3,428,845!

Do you think an extra $3.4 million will make a difference over the course of your life? Most Americans won’t make three and a half million dollars over the course of their lives.

I believe the savings from ditching my car has made a big difference in my life. I doubt with all the full-time and part-time jobs I have had, or will have—I continue to work part-time because I like to work at certain things; things that I now choose to do, not things I must do—that I will end up making $3.4 million.

Thank God that in roughly the middle of my life I learned how to play much more effective money defense. I avoided many needless costs. That’s why my wife and I won the game even though we didn’t score a lot of runs/points.
So what a difference millions of dollars have made in my life and could make to you and your family. What a difference it made to my wife and I when decades ago we agreed to ditch our old clunker and walk some more.

By the way, today my wife, the ever-comely Suzanne Hall who also walks a lot, and I, starting with virtually nothing at the end of 1987, have more than enough money to buy a car with cash. We could avoid the financing charges that drive up the costs of so many cars.

And you know what? I don’t want one. I prefer walking and I do so a lot; about 10 miles a day. I do a lot of shopping on foot. And I am in my late 60s and my long-time doctor, who has hundreds of pages on my medical history, says I “have an athlete’s heart.”

It seems to me that the source of a lot of Americans’ health and financial problems is too many car rides.

I still think the costs of a car in a place like New York City are impossible and I can’t bring myself to throw away money on a superfluous thing. And besides, I am addicted to walking as much as possible. So what do I do when I need a car?

From time to time, I rent one for a few days. Then I hand the 2,000-pound monster back to the rental company and it becomes its headache, not mine. Here’s my counter to the persistent car company television ad: “MoneySense, let’s save money and become financially independent.”

Certainly, the thrift techniques that I have outlined here aren’t easy. But what is the alternative? Spending almost all or all of your income can mean a life of constantly worrying about finances. It is one of having to rely on others who may or may not be helpful in your time of financial need. These people who rely on others are hurting themselves, as Samuel Smiles, the Victorian philosopher of self-improvement, warned. [Once again, see “Thrift,” along forgotten book of timeless wisdom. You can find it online].

It’s About More Than You

And the thrift techniques I advocate while, at times a bit difficult, are by no means impossible for most people with middle-class incomes. Indeed, one can even become so used to them that, after a while, one takes them for granted, especially if you’re investing on an automatic basis. They call for a bit of discipline and the will to improve one’s self.

Yet these techniques may require a little more work and more intelligent spending. But look at the result—a much more comfortable life in which you can achieve your financial goals and possibly a much healthier life. Then you can buy things with real money, not plastic money and credit card debt.

And remember, achieving wealth doesn’t have to be all about you. It can also mean that, because you have managed your finances so well, you are now able to help others. You can give more to charity. That’s because you have accumulated considerable assets.

Think about setting up a charitable donor trust. And don’t forget to take maximum tax breaks.

But before one can do things for others, the MoneySense follower will gradually improve his or her standard of living, ultimately achieving financial independence.

To do that, says the poet Robert Burns, means “To catch Dame Fortune‘s golden smile. Assiduous wait upon her. And gather gear by ev’ry wile. That justify‘s by Honour. Not for to hide in a hedge. Not for a train attendant. But for the glorious privilege of being Independent.”

Now, we’re ready for the next step on our road to independence. We have now established that most people have some potential sources of income and savings that they didn’t know were around them. And these are only a few of the ones I found. If the average person looks closely at his or her own life, I believe more can be found. You’re now ready to commit to putting money into investments. Fine, what kind of investments should one use? That will be the subject of our next chapter.

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Gregory Bresiger
Gregory Bresiger

Gregory Bresiger is an independent financial journalist from Queens, New York. His articles have appeared in publications such as Financial Planner Magazine and The New York Post.

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