Saturday, March 12, 2016

When Discounts Dry Up

Going hand and hand with my last article, I wanted to take a deeper look into what one should be doing when the market isn't showing many deals. In addition to spending that time looking and waiting at new opportunities in the market, one should also bring saving to the forefront of their minds. This ensures that when that deal hits, you'll be prepared for it.

The key thing to remember is that in life, there are always ways to make more and more money. Typically, dividend investors look to make more money by investing in quality dividend growth stocks that will grow and pay more dividends over time and therefore toss more cash into your wallet. When the stock market isn't biting however and you've got no current deals available, it's best to focus most of your attention towards saving more cash so that you'll be prepared when it does.

There are numerous ways to attack your savings. The first of which is to create a solid budget. A budget doesn't have to be something that is a tight rope walk. It also doesn't have to be something that is feared or hated. It can simply be a spread sheet of all the costs that you have to spend each and every month without fail. This ensures that regardless of your mindset, you'll remember what is going to be charged to you every month which leaves you with a great idea as to what is left to spend. If you know how much is already charged and then how much you have left to spend, you can more easily make the decision on what else to spend your money on that month.

For example, the wife and I have a standing budget. We have it separated into two columns - what is charged to our credit card and what is not charged to the credit card. After you subtract what is not charged to the credit card but what comes straight out of the checking account, you are left with only what will hit your credit card each month. This means that a simple review of your credit card statement each week will easily yield you an idea of what your spending is like through the month. If you start to see it creep up, you know you're already spending too much. Pump the brakes and make it a competition to see how little you can spend until the end of the next credit card statement.

The wife and I have really tightened up our savings since we started doing it this way. Simply thinking about what you want and what you actually need will buffer this simply strategy. Since we have applied it, we have been saving hundreds more each month than we used to. Currently, a large chunk of what we save is going to paying off her student loans but once those are taken care of, the investments will have even more freed up cash to be thrown at equity in great companies.

With all this being said, I simply want to remind each and every one of us to remember that even when our normal avenues of income seem to come to a halt, there are always other ways to generate more income. By doing so, we further speed up the clock that gets us closer and closer to an early retirement and ultimately will allow us to enjoy life for more time without the dark shadow of work looming over our shoulders.

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