Moneywise24 Personal Finance

The economic times we live in put many individuals under pressure; the recession, unemployment, more competition. But also inflation, and rising prices in general make the need to save more money where possible essential. Yet many people are literally throwing away their money, by using their homes or living environments very inefficiently.

There are, however, some very small things you can do in order to save money. In most cases, these may require a small investment at first, but they will be paid back quite soon considering the savings. Let’s get started.

Energy efficient lamps

Regular light bulbs may be cheap to buy, but they are also very inefficient. The majority of its energy is transformed into heat, and only a fraction is actually used to produce light. Additionally, a regular light bulb will need replacement after approximately 1,000 hours of operation.

Energy efficient lamps may be a bit more expensive, but they use 70%-85% less energy than regular light bulbs, and they last much longer, depending on the quality and manufacturer. Energy efficient lamps may be a bit more expensive to buy, but they use less energy and last longer, thus in the long run they will pay out. Especially with increasing energy prices, this is a potential which lures in each and every home.

Door and window sealings

Especially older apartments and homes have the problem, that the doors and windows are not sealed properly, or not up to standard. The result is that in winter warm air escapes and cold air comes in, whereas in summer the cold air from the air conditioning is not kept within the home properly. Depending on your situation, many gaps in doors and windows can be easily closed using cheap materials, which you can buy at any hardware store. Simply ask the hardware store specialist for advice and the best possible solution.

Blocked radiators

In order for a home to stay warm and cozy, the warm air it produces needs to flow freely throughout the home. However, many people block their radiators with closets or couches, causing the hot air to get caught. The result is usually, that the rooms stay cooler, and the radiator needs to work more. This drives the price up. Therefore, it is a wise decision to keep your radiator or heater free where possible.

Avoid taking baths

Many people love taking bath, or the jacuzzi. However, the water consumption is also very high. One short shower would more than suffice for your daily needs, and keeping taking a bath to a minimum can help save you real cash on the long run.

If you don’t use it, turn it off!

Probably the most important thing: if you don’t use something, turn it off. This means, don’t let the water running while you are brushing your teeth, don’t let the lights on in a room while you’re not there, don’t let the television run while you are not watching, don’t turn up the heating or air conditioner while you are not at home. It requires quite some discipline in order to do this consequently, but in terms of money it will surely pay out.

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We are so proud of the fact, that we are so international and the world is at our feet; the world has become so small, we can travel to anywhere in the world within 24 hours, live a few years in Asia, make a career in Europe, and then settle down perhaps in Brazil at the age of 55. Or are we?

A discussion I had with a friend of mine yesterday, actually demonstrates that we are proud of something that does not really exist. My friend comes from an Eastern European country, is well educated, and has worked for my company here in Germany for over a year as an intern. She has paid her taxes and her social security fees to the government. She is now almost graduated and looking for a full-time job, for which of course she would be more than happy to apply at the company I work for. However, the company is not showing the big enthousiasm to hire her.

The problem? She is not German. If the company has a vacancy, and a non-EU citizen applies for that position, the company has a legal obligation to keep the vacancy public for another 2 months, and then provide proof that no German candidate has applied for that position who could do the job (read: fulfills the absolute minimum requirements). As a result, corporations are very reluctant in hiring people, who would need a work permit, since the procedures are too long and too costly. This is not only a trend within the EU, but similairly it would just as well apply for a foreigner wanting to work in the U.S., Canada, Hong Kong, Japan, Singapore, Australia, or any country aiming at protecting its domestic labour force.

With my friend, we had come up with a perfect expression that explains this phenomenon:

The reason for countries to limit the domestic labour market to nationals of that country is a desparate attempt of the government to save the existing working conditions, knowing that they are not competitive on the international market place.

I think we still have a long way to go until we truly live in an international, bounderless world. And why shouldn’t we? If a person can contribute to a country or government, in a way that it pays taxes and fulfills its obligations, what should be the problem for that person to start working in a foreign country? Opening boundaries would mean a free flow of labour, but addionally it would also mean that enormous gap between countries will start to narrow down. In the long-run, this is a great benefit, but I believe that it is the transition period that everyone is affraid of.

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I stumbled upon an article the other day, unfortunately I only quickly browsed the site and completely failed to write down the URL. Nevertheless, the article was an interesting one; it described how a woman from Latin America paid back her 25,000 USD loan within a couple of years, by taking on two jobs, letting her children live with her parents, and moving into a 100 USD per month apartment.

Although when I read the article, I felt great empathy and respect for the woman paying off a huge debt within such a short time, I felt somewhat confused when I started thinking it over. The article implied, that the woman had achieved something amazing, which she did in a sense. But:

• I live in Western Europe, it is impossible for me to find a place which would cost me only 100 USD per month.
• If I had children, would I really give them to live with my parents for as long as a couple of years?
• Would my parents approve of me giving them my kids to take care of?
• What is the use of paying off a debt, if it means living in absolute poverty for a few years?

Especially the last bullet point, whether I would sacrifice my life in order to pay off debt quickly, set me to think. Yes, living on the verge of poverty would let me pay off my debts much sooner. However, at the same time my life would come at a full stop; I would not be able to develop myself in any sense, since I would not have the financial means.

Usually, it is recommended (and many banks and land lords apply this rule also) to spend about one-third of one’s net income on rent or mortgage; in the more expensive metropoles, it could also be as much as half of one’s net income. This does not mean, that exepenses can not be reduced. Many people spend only 25% of 20% of their net salary on rent, meaning they are theoretically spending less than average on rent. The money that is saved could be spent on paying off the debt in addition to what is spent on paying off debt already. This way, debt can be repaid more quickly while a certain living standard is maintained.

I am big fan of finding the right balance between living standards, personal development, income and expenses. Sure, some people simply do not have this choice. But sometimes, people do have a choice and still they opt for the hard way. In many cases, this applies to income the same way; people choose a job or a profession which will reduce their social lives to virtually zero, yet offering them a great salary with a company car and bonuses. Five years later, some get a burn out… was it really worth it?

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