Review: Save Big

Every Sunday, The Simple Dollar reviews a personal finance or other book of interest. Also available is a complete list of the hundreds of book reviews that have appeared on The Simple Dollar over the years.

Save BigSo, let’s be clear right off the bat. When I picked up this book, I had no idea who Elisabeth Leamy was. She is apparently the “consumer correspondent” on Good Morning America, ABC’s morning television program.

I’ll be honest: I haven’t seen Good Morning America since I was in junior high and it was on television in the morning as I waited for the school bus to arrive.

The idea behind the book is that the most efficient way to save is to focus on the biggest areas of spending in your life and make giant cuts in those areas. Leamy identifies five areas: housing, automobiles, credit, groceries, and health care.

The book is organized much like a magazine. The material is broken down into short sections with lots of little “bubble” sidebars (sometimes multiple sidebars per page). It’s one of those that you can read for a minute or an hour. Of course, at the same time, it also means that no issue is covered in intense depth.

Houses: Home of Savings
Leamy is a big advocate of buying a home as quickly as possible, even with a tiny down payment. Her argument mostly revolves around the fact that there are many more ways to save money and get return value out of a house than there is out of a rental situation, particularly when interest rates are this low.

The rest of the section focuses on ways to do just that and squeeze more value out of your home purchase. She suggests things like having your home re-appraised for tax purposes, being diligent about closing costs, paying down your mortgage early, and selling your home yourself when it comes time to sell.

Cars: The Cheaper Road
Leamy’s advice on cars is similarly straightforward. Start off by buying a car you can easily afford and pay it off as soon as you can. Of course, here the road diverges a bit. A big part of that car purchase, in her eyes, involves buying a car that is reliable and following that up by keeping the maintenance package up on the car.

The idea here is to make sure the car has a long life span for you so that you buy cars less frequently and have longer periods without required car payments. If you do that, then you can get away with just banking a little bit each month for your next car and be just fine.

Credit: Loans for Less
The advice Leamy offers on credit is pretty straightforward. One of the best things you can do for yourself is have a good credit score – and not so that you have easy access to credit. A good credit score lowers your insurance rates and makes you appear more reputable during various background checks.

How do you get there? Pay off your debts, particularly your high interest ones, and avoid racking up new ones. Make sure your credit report is clean and doesn’t have any false information on it. These tactics will put you in a better place.

Groceries: Guerilla Grocery Shopping
Most families have significant food and household costs, and some simple techniques for cutting them go a long way. I can certainly say that reducing food costs was a big part of our financial turnaround.

Again, Leamy sticks with the big tactics that work. Stockpiling (and buying in bulk). Being clever with coupons (in other words, only using coupons for stuff you already use). Using price-matching to your advantage. Identifying stores with lower prices and shopping there. Buying real foods, not processed foods. All of these tactics work for shaving dollars from your food bill.

Healthcare: Curing High Costs
The impact of health care on a person’s budget varies a lot from situation to situation. Some people have only a small health care cost, while others see it eating a significant chunk of their income. Because of the variable nature of it, Leamy’s advice is often conditional. Some ideas work in some situations, while others work in other situations.

For example, if you’re an infrequent health care user, your best bet is to simply raise your deductible, which will drop the premiums you pay on your insurance. If you’re a frequent user, there are a plethora of tactics available to you, the biggest of which is simple negotiation. Negotiate with your doctor. Negotiate with hospitals.

Is Save Big Worth Reading?
This book pretty much delivers exactly what it promises. Leamy sticks to the biggest personal finance matters and really focuses on how to cut them.

This book is great for someone who is a beginner at thinking about personal finance issues and is mostly only interested in shaving a bit of money from their current lifestyle. Leamy hits that area like a hammer.

However, if you’re looking for novel tactics or a completely new approach, you won’t find it here.

Check out additional reviews and notes of Save Big on Amazon.com.

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  1. Great ideas! If you can’t decide if it’s better to rent or buy, here’s a good rule of thumb, called the Rule of 15: take a comparable apartment and house in the same neighborhood (same size, number of bedrooms, etc.); annualize the rent on the apartment (multiply by 12), then multiply that by 15; if that number is more than the price of the house, then the house purchase is a good value.

  2. Pat S says:

    Seems like the author advocates somewhat of a debt treadmill… Though I haven’t read the book, I’d prefer to see a more cash based perspective on pursuing the American dream.

    Pat

  3. Johanna says:

    I took a look at some of the preview pages on Amazon, and it looks like this is another one of those books built around the gimmick that you can “save” huge amounts of money by avoiding expenses that you never would have had in the first place. The author seems to think I can “save” something like $700,000 on my housing costs by following her tips – but $700,000 (in 2011 dollars) is approximately the total amount I’ll be spending on housing for the entire rest of my life (and my housing costs as they are are not ridiculously cheap). If the author has some ideas for how I can reduce my housing costs to zero, I suppose I might be interested in that. But to be honest, I’m skeptical.

    So maybe buying a house offers more ways to “save money and get return value” than renting does, but on the flip side of that, there are also more ways to *waste* money and *not* get anything in return. With my rented apartment, I know exactly what my housing cost will be each month (until August 2012, anyway, and since my landlord has a history of not sticking his tenants with huge rent increases, I have a pretty good idea of what it will be after that). And if I ever decide to move, I know exactly when I’ll be able to do so (my lease is up at the same time every year, and getting a new resident for the apartment is my landlord’s problem, not mine), and I know almost exactly what impact that will have on my financial situation (the difference between forfeiting my entire security deposit and getting all of it back is about the equivalent of a rounding error in the selling price of a house). So if I’m giving up the chance to “save” money by not wasting it, that’s fine with me.

  4. valleycat1 says:

    The biggest way we save on our food bill is by not eating out very often. Also,we live in an agricultural area, so we get a lot of free stuff from friends & farm neighbors, & the produce prices in the local stores are pretty low compared to places where everything has to be trucked in over long distances.

    Johanna – although we own our current house, we’re leaning toward renting as we grow older. We’ve been looking into what the crossover point would be (our age & estimated continued lifespan) where it would be to our benefit to sell whatever house we’re in at that time & keep the proceeds, paying our rent out of that $ & investing the rest to be available if needed for other expenses.

  5. Sara says:

    I have always wondered how the numbers would work out if as a renter, you kept your housing as minimal as your needs would allow for a lifetime. So as a young adult, rent a room in a house where you had kitchen and other priveleges then renting a very small place when newly married and with young children (who really don’t need the space). You might desire a larger house for while the kids were maybe age 7 or so until they were ready to fly the coop, then you could basically get back to a very small place again, maybe with one guest roon for the kids and grandkids – if you needed to entertain, you could rent a party room. Americans tend to buy big houses for families, but our real need for that house might only be for 10 years or so. And once you hit a certain age, all of that house maintenance and yard maintenance can really become an unwanted expense and burden. Maybe we should build in modular units: houses that can be easily split in two later on with one side for aging parents and the other for the the growing family or a rental income.

  6. Johanna says:

    @Sara: Well, in my case, I don’t have kids and don’t intend to have them anytime soon (and if that means I don’t have them ever, I’m fine with that), so that’s one factor out of the equation. And the living room of my 1BR apartment is plenty big for any entertaining I’d be realistically interested in doing (I’ve had 10 people over for a party with no problem; I’ve never had more than one overnight guest at a time, but I could probably accommodate 3 or 4 if I really had to). If, as my parents age, there comes a time when we mutually agree that they should come and live with me, we’ll cross that bridge when we come to it (which probably won’t be for at least another 10-15 years). So I’d say that my current housing meets all my needs, and then some, for the foreseeable future.

    I notice that a lot of people tend to assume that renting = tiny, tiny apartment, whereas owning = big, big house. I suppose that must be true in some areas, but in various parts of the DC metro area (where I live), you find tiny, tiny condos for sale, big, big houses for rent, and all manner of things in between. So just because you don’t need or want much space, doesn’t mean you *have* to rent, if you don’t want to. But to do as you suggest – and have housing that just meets your needs your whole life long – it’s probably more convenient to be a lifelong renter.

    I am a big fan of the “rent versus buy” calculators that account for what would happen if you take the money you would have used as a down payment and invest it instead. Suddenly owning becomes much less advantageous in a lot of situations.

    Really, though, a big part of my reason for renting rather than owning is that there’s a very specific location (we’re talking a few square blocks) where I want to live, and apartments for rent are what happen to be here. If there’d been condos for sale instead, I’d probably be living in one of those.

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