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A couple observations…

First, people love to save money. They like a deal. If they can get something for $50, that’s better than paying $75. Paying $30 is even better.

Second, people don’t like to be told how to save money. Especially when those suggestions deal with strongly held personal preferences.

It’s also well-established that people hate having to change their habits to help themselves out financially. You can see scores of evidence that backs this up — massive credit card debt, extremely low retirement savings, a good percentage having low to no savings, and so on.

This leaves many in a quandary when they hear a great money saving tip that is too awesome to pass up, but requires them to change their habits. Should they love it because it saves them a bundle? Or should they hate it because it forces them to do something not in their nature?

I think you know the answer…they hate the idea. Yes, despite it being able to save them a boatload of money, they hate it.

Today I’m going to share five great money saving tips that people hate.

I know people hate these ideas since I’ve been writing about money saving tips for over two decades now (it’s where I got my start writing).

But that doesn’t bother me. In fact, I enjoy stirring the pot a bit now and then. 😉

So here are five great money saving tips that people hate…

1. Move

Hated saving tip: Move to a lower cost-of-living location.

This tip recognizes that there are different costs to living in various parts of the world.

In New York City an annual living budget might cost $XX while in St. Louis it may cost 60% of that.

A foreign country may cost even less than that.

How Much It Can Save You

This tip can save you hundreds of thousands of dollars over a lifetime — maybe a million.

Here’s an example: This calculator will reveal that if you make $100,000 in Cincinnati, you need to make $208,667 to have the same lifestyle in San Francisco. In reverse, if you make $100k in San Francisco, you can live the same lifestyle in Cincinnati for $47,923.

Take an extra $52,077 each year for 20 or 30 years and see what that adds up to!

Better yet, invest that amount each year and you’ll see the difference is millions of dollars!!!!

Why People Hate This Advice

Generally, people like where they live and they don’t want to move.

So suggesting they should move is heresy.

Excuses Used to Refute This Advice

There are various excuses people use for why this tip is not true (or at least not worthwhile). The most popular are:

There are higher salaries in higher cost of living locations which more than offset the higher costs

There’s a quality of life issue to living in one city very another — usually expressed in terms of “this city has so much to do”

They have family in the city and want to be near them

Any excuse is just that, an excuse. Obviously people can live wherever they like. They just need to realize they are paying through the nose to live in some areas of the country. If that’s their choice, that’s their choice.

The excuse shows up when they try to deny the cost of living differences and claim they aren’t spending more in an expensive city. They are living in denial.

The “higher salary” argument is dubious at best. There are differing points of view on this one but more often than not the data falls into the lower cost market being a better option financially.

The “quality of life” argument always seems to focus on the positives but leaves out the negatives. Yes, NYC has great museums which you may use once or twice a year. But do you want an hour-long, one-way commute (if you’re lucky) each day to work? Is that a great quality of life choice?

Oh, and is “I can get any type of food at 3 am” really worth $20k in extra expenses a year? Probably not since those 3 am food runs often disappear once a couple settles down and has kids.

But there’s “culture” in this city? And there’s not in other cities? And you can’t live one place and visit a different city now and then? Come on!

I will admit that the “living near family” reason is valid for many. Again, if people recognize the cost and willingly take it on to be near family, fine. But most don’t. Instead they claim that the costs are the same so they can feel good about living next to family.

When It Gets Worse

This idea receives even more hatred when moving to a foreign country is suggested.

No one wants to hear that they can cut their living costs in half by moving to Mexico or Thailand. It just seems too crazy!

But there are huge savings moving to a foreign country even compared to “cheap” U.S. cities like Pittsburgh or Oklahoma City. In fact, if you pick the right cities you can cut the cost of retirement in half. This should be great news for Americans who, on average, haven’t saved much for retirement.

The key objections to this idea are that a foreign country is unsafe and has terrible health care. Yes, there are some unsafe countries and areas but you can avoid them (just like there are places in the U.S. you want to avoid).

And here’s a news flash, the U.S. is way down the line in world rankings of best health care countries (currently #37). You can actually get BETTER care for LESS money in many foreign countries.

The Optimal Financial Solution

The best option to maximize net worth is to have a high income while living in a low cost city. If you do this, you can save a fortune and hopefully retire early.

If you choose otherwise and want to live in an expensive city, then that’s ok. Just recognize that it’s costing you a massive amount of money and will delay retirement a decade or two.

If you hated this tip, you’ll really despise the next one where we take on man’s best friend…

2. Resist Pets

Hated saving tip: Don’t get a pet.

Just like the others on my list, I really don’t mind if people spend on pets as long as they recognize the costs and make the decision to have a pet intentionally. But this doesn’t happen in many cases.

Most of the time pet owners live in denial of the high expenses associated with pet ownership. They look at the average costs (as we’re about to do) and say something like, “My dog doesn’t cost that much.” Ok, well I guess it’s other people’s dogs that cost a ton of money since yours costs zero, huh? Yeah, right.

Anyway, I’m getting ahead of myself. Let’s begin with some facts.

How Much Pets Cost

Some of you might accuse me of being a pet hater. I am not a pet hater. But you may try to discredit my numbers because you think I don’t like pets.

For this reason let’s begin our look at pet costs by using numbers provided by an organizations that LOVE pets. If anything, they have the incentive to low-ball the cost of pets, so if their numbers are high, then they must be correct, right?

The ASPCA is quoted on numerous sites including this piece from Forbes. They list the cost of pets as follows:

Over 15 years, total costs for a small dog could run from $17,560 to upward of $93,520.

Over a 12-year lifetime, the costs of a large dog range from $22,025 to upwards of $82,929 for folks using dog walkers.

All told, cost of cats will be at least $780 a year and $16,800 over its possible 15-year existence.

I’m skipping birds, hamsters, fish, and the like but all of their costs are listed. Hint: Horses are absolute financial killers!!!

But let’s not stop there. Here are a few other sources talking about the cost of pets (we’ll focus on dogs and cats as they are the most popular pets):

American Kennel Club — “The average lifetime cost of raising a dog is $23,410.”

US News — “RaisingSpot.com, which provides tips on raising a dog, suggests a dog that lives 12 years might cost you anywhere between $4,620 and $32,990.”

Pet Place — “An indoor cat’s total estimated lifetime cost is $8,620 to $11,275.” Note: Outdoor cats live much shorter lives and thus cost less.

There’s even a pet cost calculator if you want to find the cost of your pet.

To summarize, a dog is going to cost roughly $20k while cats will be closer to $10k.

Now, if you own multiple animals at the same time, not to mention several over the course of your adult lifetime, we’re talking a massive amount of money. I’ll get to that in a moment.

Why People Hate This Advice

If you’re reading this, you already hate the advice and we’re not even really into it. You may hate me as well. That’s ok. I’m a blogger, so I’m used to being hated by anonymous people on the web.

Overall people dislike this advice because they LOVE their pets. Some even compare them to children.

So they hate the advice because having a pet is in most cases not a financial decision, it’s more of an emotional/lifestyle one.

Which, as I said earlier, I’m fine with. It’s your money, do what you want with it. I’m only here to bring light to the fact that pets are very expensive and if you ever want to achieve financial independence you may want to consider just how much Fido is setting you back.

Excuses Used to Refute This Advice

Here’s where the excuses begin. But there’s one that leads the pack by far: “My dog/cat doesn’t cost anywhere near that much! I pay $30 a month to feed him and that’s it!”

Uh, no it’s not. Here’s a list of expenses you just left out:

Vaccines

Flea/tick control

Heartworm prevention

Ear and dental care

Grooming

Food (Premium?)

Toys

House (fenced back yard? cleaning? etc.)

Crate

Bowls, collar, leash/harness

Cost of pet (if from breeder)

Boarding

Training

Walking (yes, some people pay walkers)

And then there’s the big one: medical costs. This is where things get really pricey, especially towards the end of a pet’s life.

In addition you can spend on a whole host of things including pet massages, acupuncture, and psychiatrists. You think I’m kidding…

The Costs Add Up to Seven Figures

As I said earlier, how you spend your money is your choice. You simply need to realize that two dogs throughout your 50-year adulthood will run you somewhere around $150k. That’s $3,000 a year.

$3,000 a year saved and invested at 8% for 50 years equals $1.7 million.

Even if you spend “only” half that amount, it’s still costing you a fortune.

Now that you understand how much your pets cost you, you can make an informed decision about where to spend and where to save.

Well, things are rocking now! Have I offended everyone yet?

Let’s move on and I’ll begin to nickel and dime you to wealth…

3. Pay Attention to Small Expenses

Hated saving tip: Reduce small spending.

For this one we need to begin with a definition. What exactly is “small spending”?

Small spending is little, inexpensive purchases here and there that accumulate during a day. Think a candy bar at a vending machine, muffin at a bakery, or soda at a convenience store. It’s usually minimal (under $5) and often goes unnoticed.

David Bach brought small spending to the big time in his book The Automatic Millionaire . He coined the phrase “the latte factor” to represent and highlight “those small expenses many of us don’t even think much about spending—whether it’s a cup of coffee, fast food, or ATM fees”.

There’s now even a book out titled The Latte Factor .

Why Small Spending is Bad for Your Finances

The problem with small spending is that it adds up — and it adds up big. Just $5 a day spent here and there is worth well over $1 million when invested over the course of a person’s working lifetime. If that money is put into a work 401k and matched, it doubles.

Imagine you have a bucket full of water (representing your income). Now make a tiny hole in the bottom, one so small and obscure that few would notice it. Then wait a while. It doesn’t take long for the water to drain out completely and you’re left with nothing. This is exactly the issue with small spending — it can drain your finances quickly and secretly.

Why People Hate the Idea

Most dislike this tip because they say it takes the fun out of life. People work hard and want to spend on things that give them a bit of joy — like a cup of coffee on the way to work.

If they make a conscious decision to spend $1,300 on coffee a year ($5 coffee, 5 days a week for 52 weeks), that’s their decision. The problem is that so much small spending is like that hole in the bucket. It’s not noticed because it’s so small. It happens here and there and doesn’t seem to add up to much. And then all your money is gone.

The impact can be significant. That $5 coffee is costing you $1 million. Is it worth it?

How to Manage Small Spending

Now obviously people can’t and shouldn’t eliminate all small spending because it does take some joy out of life. But we can look for alternatives that allow us to enjoy life while also saving money.

For instance:

Instead if a $5 cup of coffee from Starbucks, how about making your own at home for pennies a cup? This is what I do most of the time (Costco whole beans FTW!)

Instead of $1 snacks from the vending machine a few times every day, how about bringing your own healthy snacks to work for $5 a week?

Instead of eating $10 lunches out every day, how about bringing your lunch made from leftovers?

Instead of paying bank fees of all kinds for this and that, how about being just a bit more diligent with your money so you avoid all fees?

Just by making a few, simple changes you can save several dollars a day. Invest that money wisely and you’ll be handsomely rewarded at retirement.

Two Vital Steps

There are two steps we all need to take to as we work to recognize and limit small spending:

Develop a cash flow plan and track all spending. Then review the plan regularly to see what’s being spent and where. Once you know this, you can then control and small spending that gets out of hand.

Pay yourself first. A great way to make sure your money doesn’t get eaten up by small spending is to save and invest first. Have money transferred automatically from your check each week into savings and investment accounts. Then it will begin working for you immediately and, better yet, be out of your hands and unavailable for small spending.

Ok, let’s now take on home sweet home…

4. Purchase a Smaller House

Hated saving tip: Buy less of a house than you can afford.

How Much It Can Save You

Most people decide how much house they can afford simply by looking at the monthly mortgage payment — stretching their budget to its limit or beyond!

Let’s look at it from a different perspective. How much are you giving to the bank to live in their house while you make 360 consecutive monthly payments? An amortization schedule will help show us how much you can save by living in a more modest home. Let’s compare buying a $200,000 home to buying a $125,000 one.

$200,000 = Monthly Payment $1,074 = Interest Paid $186,512

$125,000 = Monthly Payment $671 = Interest Paid $116,570

That’s a savings of nearly $70,000 that can be invested over a 30 year period!

Why People Hate It

You’ve decided you want the American Dream! A little house to call your own and a mortgage to boot. For most people this will be the single largest purchase in their lifetime. It is also the most they will ever pay in interest and we know that debt costs a fortune.

Here’s how the deal usually goes down. You contact that person you went to high school with who is now a real estate agent. They are so excited to help you! And also to make a quick buck off of your purchase.

Your new best friend says you need to get pre-qualified by a bank to find out how much you can afford. They know just the person you should talk to as well! The banker and your realtor want you to spend at the max of your budget, because the more you spend the more they both make off of your purchase.

If you get approved for $200,000, your realtor will start by showing you homes priced at $219,900. Most people have eyes bigger than their wallets, so they will reach for the stars when purchasing their “Dream Home”, not considering how to furnish it, pay its utilities, maintain its structure, etc.

Research detailed in Stop Acting Rich: …And Start Living Like A Real Millionaire proves that the more house you buy, the higher your costs will be in many other areas.

The Excuses They Use to Refute It

Here are a few of the top excuses people use to combat this money saving suggestion:

I am just out of college. I will make more money as I gain experience.

I have been with my employer for X years. I always get a bonus and X% raise each year.

The housing market increases in value every year by X%.

Why the Excuses are Invalid

No one plans on having a financial crisis in life, but rest assured that everyone will feel a financial pinch. A change in jobs, a loss of a job, daycare costs, illness or injury to you or a family member, home maintenance and car repair costs. The pitfalls of life are plentiful and unpredictable.

Mr. Just-out-of-college, may make more money in the future. Then he will find a way to spend it. He will find a significant other to spend it on, buy a nicer car, bigger TV, get married and then take vacations. How much more does that next promotion pay? He needs it!

Mrs. Long-term-employee goes to work every day doing her job, never thinking that her position may be outsourced, replaced by a computer or that she needs to get continuing education to keep the job.

The company that gives annual raises and bonuses will hit a rocky financial stretch too, but they watch their finances closer than you or I. If they cannot afford to give you a raise this year, they won’t, even if they have the past 10 years. No bonuses this year either, the sales team didn’t hit their numbers.

In 2008, the housing market crashed and many found themselves upside-down on their home loans. Those with popular adjustable-rate mortgages may have even seen their payments spike at the same time the home’s value bottomed out. The value of many homes were affected by mass foreclosures. If you went with the biggest mortgage you could find, this period of uncertainty may be all it takes to ruin your personal finances. The housing market’s averages are not guaranteed.

The more house you buy, the higher your costs and the lower (on average) your net worth. It’s true that the house you buy determines your wealth (inversely).

The reason why so many homeowners today are having a difficult time making ends meet goes way beyond mortgage payments. When you trade up to a more expensive home, there is a new pressure for you to spend more on every conceivable product and service.

Nothing has a greater impact on your wealth and your consumption than your choice of house and neighborhood. If you live in a pricey home in an exclusive community, you will spend more. Your ability to save and build wealth will be compromised.

What we don’t realize is that the true cost of living in certain homes and neighborhoods is unseen but truly devastating. The greatest detriment to building wealth is our environment. Human beings have an innate tendency to act and be like those around them — to fit in — and even compete. If you live in a pricey neighborhood, you will act and buy like your neighbors.

Affluent neighborhoods are a vortex of sociological forces. It is a marketing fact that residents of more affluent neighborhoods spend more on just about everything. From cars to haircuts and from wine to watches — they spend more. We take consumption cues from those around us.

Research has shown that most people who live in million-dollar homes are not millionaires. They may be high-income producers, but they are living a treadmill existence. In the United States, there are three millionaires living in homes with value of under $300,000 for every one living in home valued at $1 million or more.

The Optimal Financial Solution

No one wants to do it, that’s why we hate these money saving tips! But here is what you should do instead. Buy a house you can afford.

Your monthly mortgage payment should not exceed 28 percent of your gross monthly income (your income before taxes are taken out). Even better, consider going lower than 28 percent.

If you do it the right way, you can buy a great house and have it paid off in 10 years! Imagine the money you’ll save and can now invest — propelling your net worth higher over the decades to come.

And as an alternate suggestion, consider foregoing a house purchase for yourself and instead invest that money in a rental unit (or do house hacking). Then your money doesn’t cost you but actually works for you to help grow a solid net worth. (One great idea is to buy a multi-unit place, live in one apartment, and rent out the others.)

Let go of the dream home mirage and have the Dream Life!

One more to go…the favorite of many Americans…

5. Avoid Debt

Hated saving tip: Limit debt.

America’s Debt Problem

Americans are in love with debt. According to NerdWallet, “the average household with any kind of debt owes $134,643, including mortgages.” Mortgages, auto loans, student loans, and credit cards are the main contributors to this debt load.

Why do we love debt? Because we love stuff! We need big houses since that’s what makes us happy. Then we need new cars for the garage. And of course furniture, appliances, electronics, and everything else to fill the house — so get out the credit cards. Oh, and of course we still have debt from that college degree that was just too expensive for the job we got at graduation.

Add it all up and it’s a nightmare costing us a fortune — several hundreds of thousands of dollars in interest over the course of our lives.

The Excuses People Use to Get into Debt

But Americans don’t part with their debt easily. No, we have lots of excuses why debt is good. Here are a few:

“The only house that met our needs was at this (very high) price so we needed to borrow the maximum amount. It’s not that expensive anyway because we get a tax deduction for the interest.”

“We have to furnish the house, right? We just can’t leave it empty. Oh, and we need to go to the Caribbean. Oh, and I need a weekly manicure. Credit cards help tide us over until our next paycheck.” (Reality: the credit cards never get fully paid off.)

“I like to drive new cars. So what if it’s a BMW?”

“I thought that as long as I got a college degree that things would work out fine no matter how much I borrowed.”

Ugh. What a financial disaster! People are actually rationalizing the debt that’s working to keep them broke.

Better Ways to Deal with the Big Four

Don’t get me wrong. I’m not against spending, but it has to be done in moderation and in proportion to income. For most people this means carrying much lower levels of debt (or even none at all).

Here are some suggestions for dealing with debt in these areas:

And for all of these, an old tried and true money principle works like a charm: save in advance and pay cash for as much as you can.

Wrap Up

Implement these simple tips, even if you hate them, and you’ll save yourself AT LEAST a few hundred thousand dollars.

You can then invest these savings to grow your net worth.

Are we still friends? 😉

This content was originally a series of guest posts I wrote for Equities.com.