Inspired by an episode of The Oprah Winfrey Show on personal finance, the Smart Cookies, five dynamic young women who weren't always so savvy about money, formed a "money club," and together developed strategies for turning their financial lives around - without surrendering their sanity or their social lives. In this guide, the Cookies demonstrate how women of all ages can achieve financial security. They share their own stories, offer easy-to-follow steps, and lay out simple plans for meeting any goal, whether it's eliminating debt, making good investments, becoming a smart spender or saving up for a big-ticket purchase. The Smart Cookies' Guide to Making More Dough invites every reader to become "the sixth cookie," to take control of their financial lives and have fun doing it.
First Chapter or Excerpt
Living Large on Less Saving money for the future you want doesn't mean feeling guilty about every cent you spend on yourself now. Who would want to stick to a plan that entails that much suffering? The Smart Cookies are all about preserving the lifestyle you enjoy - just doing it for less. Each of us managed to find lots of ways we could save extra money, without feeling like we were giving up the things that gave us pleasure. When it comes to deciding what spending strategies work best for you, it's important to come up with some that fit with your lifestyle, not just your goals. We're not asking you to stop visiting the spa or to swap your cashmere sweater for a polyester blend just because it's cheaper. The idea is to figure out what is really important to you and what's not. We learned that we all spent a lot of money on things that didn't provide a great deal in return. And even in those areas that are important to us, there were ways to save money without sacrificing our social lives, stylish wardrobes, or the small luxuries that brighten our days. Some places to look should be obvious to you by now. If you haven't watched the Discovery Channel in more than six weeks, maybe it's time to consider switching to standard cable. If you're spending a disproportionate amount of your paycheck on dinners out, try meeting your friends for brunch or a drink instead. There are lots of easy ways to cut back a little without lowering your standard of living. Here are a few more of our personal favorites: Socializing: • Instead of meeting a girlfriend for dinner, suggest meeting for breakfast, lunch, or even coffee, as we mention above. If you eat out, dinner is always the priciest meal. And you are likely to have just as much fun no matter when or where you meet a friend. If you're dying to check out an expensive new restaurant, why not go early for a drink and split an appetizer? You'll get to sample the ambience and the menu for a fraction of the cost. • Have a Girls' Night In : Rather than going out for dinner with your girlfriends, have $6 Girls' Nights In . Each person can spend $6 on food made for sharing - like pita bread, olives, and a container of hummus, for example, or a small pizza - and bring a regifted wine or combine funds with others to buy a bottle. We estimate that we collectively saved at least $3,600 just by doing this once or twice a week for one year. (How? We figured that we each would have spent at least $20 had we gone out instead. So we took that $14 saved, multiplied it by 52, then by 5, the number of Cookies in our money group.) • Be fashionably late. Eat dinner at home before you go out to meet your friends. Then you can snack on an appetizer or skip the meal altogether and just have a drink or two with your friends. • Eat early. Most restaurants and bars have happy-hour specials between the hours of 5 and 7 p.m. on weekdays, with drinks at half price and a range of menu items for under $10. Why not meet a friend right after work for a half-price drink and appetizer and then head home for dinner? Beauty and Body Maintenance: • Exercise with friends. Health clubs are expensive. Many cost more than $1,000 a year and often require a commitment of a year or more. Gyms count on the likelihood that most members stop going, at least regularly, after a few weeks or months but are still stuck paying monthly dues until their contract runs out. Before you join a gym, consider organizing a group of friends for daily or weekly walks, runs, hikes, or bike rides instead. This way you can be social and be fit - and working out with friends will give you added incentive to stick to your exercise regime. If it's too cold or too hot where you live to exercise outside regularly, consider joining a Y, where the membership rates are often significantly lower than those at a higher-end health club. • Make the most of municipal facilities. Most cities have free or discounted access to tennis courts, swimming pools, and other sports facilities. Check to see where you can play for less. Some cities even offer free use of boats at city-owned lakes and/or free (or discounted) rentals of golf clubs and use of the range or course at city-owned facilities. • Let your hair down. Stretch out the time between haircuts. If you usually get your hair cut once every six weeks, try stretching it to once every eight weeks and save yourself the cost of at least two haircuts plus tips each year. If you color your hair, use a base color but skip highlights, which are costly and more damaging to your hair anyway. • Dye it yourself. Yes, it's best to leave complicated hair-color jobs, like bleaching, to the pros. But if you're just covering gray roots or experimenting with a deeper shade of brown, you can buy good temporary, semipermanent, or permanent hair color at your local drugstore for a fraction of the cost of getting it colored in the salon. • Shop at the drugstore, not the mall, for your beauty products. Some of the most effective and popular products can be found at your local drugstore for a lot less - from Maybelline's Great Lash, which is often cited as a top brand among models and makeup artists, to Oil of Olay's Regenerist, which was ranked as the most effective antiwrinkle cream by Consumer Reports in its January 2007 issue, even though it was the least expensive brand tested. (Of course, the cheapest and safest way to keep wrinkles at bay is to buy sunscreen and to avoid the sun. Consumer Reports found that the top performers reduced the average depth of wrinkles by less than ten percent, on average, after 12 weeks - barely enough to be detected by the naked eye.) • Get made up for less. Take advantage of the free makeovers offered at makeup counters and boutiques before a big night out. And don't feel pressured to buy. If you like the results, you can just make note of the blush, eye shadow, eye liner, and lipstick colors that were used. Then go to your drugstore and look for cheaper makeup brands in the same shades. Or if you have a friend who always looks great, ask if she'd be willing to share her secrets and/or make you over one afternoon. • Paint your own nails between pedicures. We wouldn't recommend that you give up pedicures and manicures altogether. It's nice to be pampered occasionally. But instead of spending $20 to $40 for a new paint job in a salon every time your nail polish chips, buy an extra bottle of the color polish that your salon used and do the touch-ups yourself. This way you can stretch out your time between visits to the salon and still have fabulous nails. Saving at home: • Talk less. If you don't use your cellphone that often, see if there's a cheaper monthly calling plan that allows fewer minutes. Compare rates, not just between packages but between service providers. • Lose the landline. If you use your cellphone a lot, ask yourself if you really need a landline. If you still want phone service at home, consider switching to an Internet Phone Service (or VoIP). These providers route your calls through your high-speed broadband Internet connection, not a phone line. The quality is comparable but the cost is usually much lower than regular phone service. (Check out nextadvisor.com for a comparison of different VoIP services.) • Cut the cable. Do you really need all of those cable channels? You could save a lot of money and maybe free up some time by just using basic cable. By giving up cable, Sandra saved both money - $900 a year! - and time. She used the time she once spent sitting in front of the TV to exercise, read, or hang out with friends, activities that proved to be more fulfilling to her than staring at a screen. • Go paperless. Read your favorite newspaper online instead of subscribing. Or go to aggregate news sites like Google News, where you can read articles from publications all over the globe for free. Many magazines are also starting to post much of their content online for free. • Be energy efficient. Turn off the lights when you leave a room. Turn the thermostat up in the summer or down in the winter when you're not home. Try a fan and open a window before resorting to the air conditioner. Unplug appliances when they're not in use. Switch to energy-efficient bulbs. Not only will you be saving money on your electric bill, but you'll be helping the environment too. • Buy in bulk. Cut down on grocery costs by shopping once a week (where you can load up at a large discount store like Costco) instead of picking up a few items every day at the nearest shop. Always bring a list when you shop so you don't get sucked into making impulse purchases. And try not to shop when you're hungry and may be tempted by every delicious display. • Decorate creatively. You can save money by printing out photos you like from the Internet, or photos you've taken, and having them framed instead of buying prints. Or go to a fabric store and buy a piece you like and have it framed. Pick up candles and knick-knacks from discount stores or flea markets to add a personal touch. Try craigslist.org, the classifieds, or yard sales to find gently used furniture at great discounts. You can always buy a slipcover for the couch if its color doesn't match your decor - and for a lot less than it'd cost to buy a brand-new couch. Shopping: • Check for discounted display items. When we are making a major purchase, we always ask the salesperson if the store has any of last year's items on sale or if there's a display or demo model for sale. This works for cars, appliances, mattresses, furniture, and almost any big-ticket item. You would be surprised at how much you can save. • Shop in-store then buy online. Last summer Sandra wanted two new pairs of high-end jeans. She went to Holt Renfrew and tried on the style and size that she wanted, then she went on to eBay, found exactly what she wanted, and paid $200 for three pairs of jeans that would have cost a lot more at the mall. • Prowl the web for promo codes. Once you've filled your shopping cart at an online retailer, open another window and type the name of the retailer and "coupon" or "promo code" into your favorite search engine. You should be able to find discounts or coupons that you can use when you check out - saving as much as 30 percent or more. • Carry the card. If you regularly shop at a particular store, see if they offer a frequent-shopper card. You can join for free and receive coupons (via mail or e-mail) and qualify for special discounts. Some stores give out coupons worth a specific cash amount off your next purchase once you've spent a certain amount of money there over time (for example: for every $100 you spend, regardless of how many separate trips it takes to reach that amount, you'd get a $5-off coupon to use within a certain period of time). • Sign up for sale updates. Most clothing stores and boutiques now send out regular e-mail alerts to customers on their mailing lists about sales and special events. It takes two minutes to sign up, but the savings can be substantial. Another bonus: You can often plan ahead once you know when your favorite stores' regular sales are, so you can save up your money and then stock up on some of your favorite looks for less. • Buy some time. If you're planning to shop in the same mall or retail area for a while, put the item you're considering on hold for a few hours. Then walk around before you decide whether to go back to the store and buy it. Once you're out of the environment and have had some time to think about your purchase, you may decide you can easily live without it. • Scour secondhand stores. Thrift stores, vintage stores, and other secondhand shops are often treasure troves for the savvy shopper. Sure, you have to do some digging, but you can often find designer clothes and accessories at deeply discounted prices. Better yet, drop off some of your gently worn clothes, and you may get an even trade or come home with some extra money as well as extra clothes. • Go generic. Most grocery stores offer generic or store-brand versions of everything from cocoa to cookies, even diapers and baby wipes. Often the quality is comparable; the generic or store-brand versions are just less expensive because they don't spend much on design or marketing. If you pay out of pocket for medicine, you should also check regularly to see if generic versions of your prescription drugs are available yet. Under law, pharmaceutical companies must allow generic versions of their brand-name drugs to be sold after a certain period of time has elapsed. (Many health insurance companies now routinely require the use of generics, unless otherwise prescribed, in order to cut costs.) Be a Fashionista (for Less) It was essential to each of us that we not sacrifice our style for our savings or vice versa, and we've spent a lot of time brainstorming strategies to keep both our wardrobes and our wallets well stocked. In addition to the general advice listed in the section above, we've outlined our top ten tips below to help you stay fashionable and financially savvy: 1. Take inventory of your closet quarterly: The change in seasons is the perfect time to take stock of what you have in your wardrobe. You're going to be rearranging your closet anyway, so why not assess each item as you do? Is it in good condition? Are you still excited to wear it? Is it still stylish or is it out of date? Does it feel fashionable or frumpy? Your responses will help you decide what to do with it. 2. Clear out the clutter: As you're going through your clothes, shoes, and accessories, organize them into five piles: Save (split into two: As Is and Needs Work), Sell, Dump, or Donate. Hold on to only those items that still make you feel fashionable when you wear them. Some may need mending or updating; those go in the Needs Work pile. (Maybe a button came loose from a favorite blouse, or a heel needs to be replaced on one of your boots. These are easy fixes that don't require a lot of money.) Sell items that are expensive or well made but don't get you excited about wearing them anymore. You can post them on eBay or Craigslist or bring them to a consignment or secondhand shop. Dump those that have large holes or have been worn so much that they're not worth salvaging. If an item of clothing really has sentimental value - like an old concert T-shirt or a sweater that your grandmother made for you - consider saving a patch of it in a jewelry box or scrapbook instead of letting it clutter up your closet. And donate clothing that's out of date but in good condition or doesn't fit you anymore. There are plenty of worthy organizations that accept gently used clothing, shoes, and small household furnishings, like the Salvation Army, Goodwill, and some Big Brother Big Sister facilities. You can also donate gently used business attire to Dress for Success, a non-profit that helps low-income women reentering the workforce. Or go online and look for other charities in your area, some will even come to pick up your donations. You won't get money back, but your donation can help to lower your taxes. Clothing donations are tax deductible. Just don't forget to document your donations carefully. Ask for a receipt from the charity estimating the monetary value of your donation. 3. Evaluate the essentials: There are certain items that every woman needs in her closet, no matter where you live. These include: • a little black dress (simple and stylish) • a classic button-up white shirt • a pair of good jeans • a rainproof coat (trench coats never go out of style) • a pair of dress pants (black is best) • a suit (either pants or a skirt and a matching blazer) • a basic everyday bag (in a neutral color) • a classic sweater (a V-neck, scoop neck, or cardigan that you can throw over your shirt when the temperature dips) • a pair of black pumps • a pair of boots (flat or heeled, dressy or casual, depending on your lifestyle) If you're missing any of these, put them at the top of your shopping list. 4. Build around the basics: Spend your money first on the essential building blocks of your wardrobe, like those listed above. These items should last for years, so it's worth spending a bit more on them. In addition to the fashion fundamentals, there may be some pieces that you decide to buy or replace each season or every few seasons - from a winter coat (unless you live someplace warm) to a pair of boots to a swimsuit. As you shop to expand your inventory, think about additions that will pair well with your essential items (a top to wear under the suit, for example, or a wrap to wear over your black dress). 5. Mix & match: Each new item of clothing or accessory that you purchase should enhance your existing wardrobe. Before you buy anything new, ask yourself how many different outfits you could make by combining this new item with the clothes that are currently in your closet. Unless you're buying something for a special occasion, like a wedding, you should be able to come up with at least four fabulous outfit combinations you could put together immediately after buying this item. 6. Know what's trendy versus timeless: Once you've got lots of basic items that you can mix and match in your closet and hold on to for a while, you can start adding flair: fun clothes, shoes, and accessories that look cool now but may be past their prime by next year. Set aside a little money to spend on those trendier items that can freshen up your closet for the season. There's nothing wrong with following fads. Just remember that they don't last long; that's why they're called fads. So spend accordingly. 7. Don't knock knockoffs: Within weeks of the major fashion shows, stores like H&M and Zara are already selling copies of the latest designer trends for discount prices. Since these styles probably won't last more than a season or two anyway, it's smarter to spend less on them and save more for those classic pieces that you can keep in your closet for years. These stores do a great job of capturing the look of the moment for less. They're also great places to pick up simple T-shirts and trousers and accessories to mix and match with your better-quality basics. 8. Get luxury for less: You don't need to drop a lot of money to own designer brands. Look for discounted merchandise at sample sales or used on eBay. Or see if your favorite designer is offering a less expensive line. Superstore and H&M have both paired with well-known designers, from Joseph Mimrar and Marimekko to Karl Lagerfeld and Stella McCartney. Many upscale retailers also have discount outlets (think Holt Renfrew's Last Call in Toronto) that are often clustered together in outlet shopping centers. You can get some great bargains on luxury brands. 9. Share & swap: If you're sick of your clothes, or you want a new look for a special occasion but don't want to spend a lot, ask your similar-sized friends if you can "shop" in their closets. Or organize a swap. Each person brings a few good items of clothing that they're ready to replace, and then you swap items with one another. Your friends often have a different sense of style, so it's fun to try on the clothes that they brought. You might not have picked them out yourself in a store, but they may look great on you. Plus, this way you know your clothes are in good hands (should you ever decide you miss them), and you've got new clothes to spruce up your style without spending a cent. Sharing clothes with your friends is also an easy way to give your wardrobe a boost without spending money. We do it all the time. In just one year, we saved about $5,000 by swapping outfits instead of shopping for new clothes for dates, weddings, and work functions. 10. Avoid deadline or emotional shopping: If you wait until the night before a big trip to buy last-minute outfits, you're sure to overspend. You've likely convinced yourself you need certain items, and as the clock ticks, you'll become more desperate to have them regardless of the cost. Same goes for dates, weddings, or any special occasion. If you're short on time, consider borrowing a few items from a friend instead. Or wear something you already have in your closet but buy a new wrap or a necklace to update it. Always have a backup plan so you don't get stuck spending too much. Emotional shopping is just as dangerous. How many times have you "treated" yourself to a shopping trip to try to lift your spirits? Though you may feel some elation right after you buy a new outfit, the trip often ends up having the opposite effect once you realize how much money you spent. Plus, you may find when you get home that the great new shirt goes with nothing in your closet. But you weren't thinking about that when you bought it - in fact, you weren't thinking at all. You were fueled by pure emotion. When you have moments like these, it's time to enlist the help of your friends and money-group members. Earn Extra Cash Now that you've maximized your job earnings, it's time to think about boosting your earnings outside the office. There are so many ways to make more money without making a lot more effort, just by thinking creatively. Here are a few Smart Cookie tips to get you started: • Clean out your closets. Rather than throwing your used clothes away, why not find them a new home, where they will continue to be loved? Smart Cookies clear out their closets on a regular basis and often sell the shoes and clothing items at a consignment store, on eBay, or on craigslist.org. One of the Smart Cookies makes about $300 at the end of each season and puts that toward new clothes. Katie sold her wedding dress for $800 on craigslist.org. You can do the same with clothes - or toys - your baby has outgrown. Some grow so fast that they never even get a chance to wear all the outfits that their parents bought or received as gifts, and a toy may hardly be used if the baby isn't interested. Another possibility? Donate the clothes or toys to charity and keep the receipt. You can write off the value of your donation when you do your taxes the next year and feel good about helping out those who are less fortunate. • Clear out the clutter. Here's an incentive to clean up your home: You can get rid of your junk and make money by having a yard (or a garage) sale. Team up with friends, family members, or neighbors and combine your stuff. Then you'll have extra help running the sale and extra inventory to attract more buyers. And who knows? You might end up swapping items with your friends or neighbors. • Sell stock photos. If people regularly ooh and aah over your Flickr pictures, maybe you're destined for photographic greatness - or at least a few extra dollars. It's easier than ever to get your photos out in front of the public. There's a lot of competition, but there's also a lot of demand. Marketing stock photos can be a convenient way for you to build up a secondary income stream. Try Fotolia.com, Dreamstime.com, Shutterstock.com, and bigstockphoto.com to upload and market your photos. • Rent your parking space. If you pay monthly for a space in a lot or garage, but you know your car will be gone during work hours, you can rent out your space during the weekdays to someone who works near your parking spot. Advertise the space on craigslist.org or in your local paper. Robyn rented out her space and earned an additional $50 per month. • Rent your home for use as a location for commercials, TV shows, or movies. You can register your home with film studios, production companies, and advertising firms, which maintain lists of properties available for shooting. Check out eHow.com for tips or flip through Opening Your Door to Hollywood , a 2006 book by producer James Perry, which offers a step-by-step guide to renting out residential or business locations. Daily rates can range from a couple hundred to more than a thousand dollars (even more if your home is used in a movie shoot). Andrea's friend and her husband had just built their dream home and needed to furnish it, but they were short on cash after finishing construction. They decided to register their home with a production company for use in TV and films. After just two commercial shoots, they'd already earned $20,000! Note: Be sure to ask for a written policy on what the company does in case of any damage to your home. • Be an extra. If you've seen the Ricky Gervais show Extras , you know that jobs for extras can range from print modeling ads to movie shoots. You don't need a Screen Actors Guild (SAG) membership or even any acting experience to qualify - just the patience to sit on a set for hours and the flexibility to try out a lot of different costumes and lines. Pay can range from $100 to more than $1,000 a day. Check your local classifieds or contact a casting agency. (For a list of agencies visit www.idocommercials. com/casting/Canada.htm.) • Help friends find better jobs. Internet sites like H3.com connects employers with prospective employees, many of whom are already employed and not actively job-hunting, via networking. The rewards for referring a candidate who gets hired range from a few hundred dollars to as much as $5,000. This is a great way to break into the recruiting business, with no overhead. Andrea connected with a recruiter who specialized in marketing. Since she had a lot of connections in that field, she referred many of them to the recruiter. She earned additional money from the referrals and helped some friends land great new jobs. • Plan that perfect day. If you love weddings, planned your own, and/or have always wanted to plan a friend's wedding, why not do it and get paid for it? Many people would hire a wedding planner in an instant but can't afford the rates that a professional charges. Find out what a beginner planner would charge to get an idea of what is reasonable for someone at your level. Once you've built up some contacts, you might also consider party planning in general - first for friends and then for bigger clients. • Get paid for your opinion. Companies often need focus groups, and market researchers need consumers, to test new items or to share their ideas about new products, shows, or ad campaigns. You can earn $25 or $200, depending on the project and the amount of time required. (Check out research firms in your area for upcoming panels and focus groups. Greenbook.org has a large database of market research firms and focus group facilitators, searchable by area.) • Reap rewards for research and writing. You may have grown up taking the Internet for granted, but there are plenty of people who aren't familiar with it or are too busy to spend time on it. If you're skilled at extracting information through a web search, you can hire yourself out as an Internet researcher for professionals like lawyers and writers. Why not make extra money at something you are already doing? (Check suite101.com, craigslist.org, or the job postings on mediabistro.com, mediajobsearchcanada.com, and jeffgaulin.com.) • Be an undercover consumer. Sign up for a secret-shopper program, where you can eat or drink out for free while rating the restaurant, or shop and rate the retailer. You can often bring a friend as well. Three of the Smart Cookies are secret shoppers and have found it to be a great way to eat and drink at some fabulous restaurants for free! Check out www.sensusshop.com for more information. There are no membership fees. • Consider contract work. If it won't conflict with your full-time job, seek out freelance or contract work in the same field. By networking, Katie was able to get additional contract work providing public relations services for clients outside her full-time job, earning an extra $2,500 a month! (Eventually, as we mentioned earlier, she was getting so many referrals and requests for her services that she left her job to open her own PR agency.) Robyn learned about a project seeking registered social workers through the Board of Social Workers newsletter in her area. She was hired on contract for a project in which she made extra money meeting with and interviewing people who wished to adopt children - on her own time, outside her regular job. Turn Your Pastime or Your Passion into a Paycheck Do you spend most mornings exercising? Take a basic trainer's course and start training friends and family at your local gym or at home, where you can charge hourly. Not only are you keeping fit, but earning extra money while you're at it. Andrea's friend Erin, a preschool teacher struggling on a low salary, turned her passion for fitness into extra earnings by becoming a personal trainer. In a year, she was able to increase her income by 20 percent and stay healthy and fit. Of course, you don't need to be a fitness trainer, but chances are you already participate in some pastimes that could make you money. In your notebook, make a list of at least five activities that you really enjoy doing, like shopping, knitting, walking your dog, or even drinking wine. Now spend some time brainstorming about ways you could make money doing any of these activities. If you like shopping, for example, you could earn extra money working as a secret shopper on the weekends. Or you could take a part-time job at your favorite store - many retail stores hire extra employees to help out during the busy holiday season between Thanksgiving and New Year's. Not only will you earn more money but you'll get employee discounts on items you'd probably buy anyway (and save money on holiday gifts). Like knitting? Why not knit sweaters, scarves, or gloves and sell them to friends or give them as gifts on birthdays to save money. If you enjoy walking your dog, ask around to see if your neighbors need their dogs walked. You can make extra money walking theirs as well. Enjoy wine? Look for part-time work at your local wine store, or sign up for wine-tasting classes and see if the instructor needs an assistant at future classes. Many wine shops offer tastings and classes and might be able to use an extra pair of hands in exchange for free wine or a little money. That's exactly what Andrea did. One of her former colleagues started a business that offered wine tastings at company events. Andrea offered to help out. It was a great opportunity for her to make extra cash, sample some wine, and meet new people. If you enjoy playing basketball or soccer, consider coaching. If you are already taking classes in yoga or Pilates or dancing, consider training to become an instructor yourself. Or see if there are jobs available at the studio on the weekends or evenings - manning the front desk or helping to set up equipment, for example - in exchange for free classes. With a little effort and ingenuity, it's possible to turn almost any pastime into a paycheck. Excerpted from The Smart Cookies' Guide to Making More Dough: How Five Young Women Got Smart, Formed a Money Group, and Took Control of Their Finances by Angela Self, Katie Dunsworth, Robyn Gunn, Sandra Hanna, Andrea Baxter All rights reserved by the original copyright owners. Excerpts are provided for display purposes only and may not be reproduced, reprinted or distributed without the written permission of the publisher.