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September 22, 2019

DAILYKENN.com -- "Households with incomes of $100,000 or more are twice as likely to coupon as those who earn less than $35,000," according to new data from Coupons.org.

What does that have to do with earning high yields on micro investments? Read on. 

Let's engage our brains and ask, "Does wealth make us frugal? Or does frugality make us wealthy?"

The answer is [ding]: Frugality makes us wealthy. That's not to say all frugal people will inevitably become rich. Rather, it underscores a mindset common among those who created wealth and kept it as opposed to those who inherited wealth and ended up losing it.  (Or, won a lottery and ended up losing it.)

This principle is timeless. Even Jesus weighed in on it 2,000 years ago. See Luke 16:10

The Scrooge stereotype is accurate. 

Warren Buffet (net worth about $83 billion) notoriously stops at a MacDonald's drive-thru on his way to work. He lives in a house purchased decades ago; a home that can hardly be called a mansion.  

Mark Zuckerberg reportedly drives a $30,000 Acura. Jeff Bezos notoriously drives around in a used Honda Accord. Chinese billionaire Jack Ma drives a $25,000 Roewe RX5. Granted, these guys may just be keeping a low profile, but truth is they could afford high-price rides and a security details to keep the bad guys at bay. 

It turns out that people acquire wealth though the application of habits and natural abilities, some of which we can adopt. A common denominator seems to be a penchant for frugality. Self-made millionaires seem to have a mindset that compels them to find the best deal. 

You can develop that mindset simply by looking for opportunities to earn high yields on tiny, micro investments. The investments may not add much to your nest egg, but the mindset you develop could help you climb the ladder to financial success. 

Here are my top ten micro-investment ideas. 

1. Buy discounted gift cards (and give them to yourself).

I recently purchased two gift cards from Sam's Club. The cards will purchase $100 of food at two of my favorite restaurants. They were discounted at 25 percent and, as a bonus, were shipped to me for free. That's $100 I would have spent anyway. But I invested only $75. The net return will be $25 or about 25 percent on this micro investment. 

2. Use cash-back credit cards (and pay off the balance every month).

Earning over $500 per year using credit cards is not uncommon. Use the cards rather than cash if they pay one to five percent for every purchase. 

Pay off the credit cards every week. There are several reasons: First, it makes one mindful of purchases so you don't waste money. Second, it may enhance your credit score. Third, you must pay them off eventually anyhow, so there is no advantage in putting it off.

If one of your cards offers 5 percent at restaurants, that's the card to chose when dining out. Remember those two gift cards that "earned" 25 percent at two restaurants? I earned another 5 percent more by paying the tab with my credit card!

And here's an added bonus: My accountant informs me the cash back from credit cards is not taxable. Depending on your tax bracket, you just "earned" another ten to 24 percent on tax savings.

I once bought a gift card at a restaurant, then ordered dinner. I paid with the gift card, instantly "earning" 25 percent on the spot. What's more, I used the same gift card a few months later upon dining at the same restaurant.  

Remember: It's no more difficult to pull a gift card out of your wallet than a credit card.

3. Use coupons (but only for items you would buy anyhow).

I don't buy items because they are inexpensive. I buy them because I have a use for them. When I see a coupon that fits that profile, I use it. If a coupon saves me as little as one dollar, I figure that's like adding one dollar to my hourly wages. 

Do I spend hours and hours clipping, sorting, and filing coupons? Absolutely not. The meager savings simply isn't worth the time investment. Again, I only use coupons for products I would have purchased anyhow.

4. Invest in high-yield stocks (talk to a broker)

Dividend.com is a good place to start. The site ranks the best dividend stocks. Got an extra $10,000? A consistent yield of 8 percent per year will earn $800 annually for the rest of your life. What would $100,000 earn? $8,000. What would one-million dollars earn? A comfortable retirement. (And that doesn't include compounding.)

5. Use loyalty cards (sometimes called reward or discount cards)

My Kroger loyalty card is attached to my key chain. I use it every time I do grocery shopping. It not only slashes into my weekly grocery bill (money saved is money earned), but also rewards me with discount on fuel. It's a habit. 

Yesterday I "earned" $8.66 on my $88.30 grocery bill. That's a 9.8 percent return simply by scanning my loyalty card. Balance due? $79.64. Add another 1 percent for using my credit card. Total "earnings"? $9.45 or 10.70 percent. (Imagine earning 10.70 percent weekly in the stock market!) No, I can't retire by "earning" $9.45 per week in this micro investment. That's not the point. I'm not trying to get rich. I'm constantly honing my aptitude for investing. 

(Tip/hint: Where do you regularly shop? Ask if they offer free loyalty cards. If they do, consider signing up. You may be able to do this online.)

6. Ask for discounts 

After two surgeries I found my mailbox filled with medical bills that I had to pay out of pocket. Before paying the bills, I would routinely calls the health care providers and ask for a discount in exchange for paying the bill in full. With only one exception, all agreed to award a discount. Sometimes the discount was substantial.

(Tip/hint: Pay these bills with checks and write "paid in full" on each check.)

7. Look for open box products

When shopping for lawn supplies, I always ask if there are 'open box' specials. It turns out that Lowes, for example, has an place in its garden department where they sometimes sell torn bags of fertilizer and potting soil for $1. The return would be as high as 1,000 percent if you find a ten-dollar product for $1. 

You may also find deep discounted open-box electronics products, such as televisions, computers, cell phones, and earphones. When buying open box electronics, be sure the device is covered by a warranty and that the store will allow you to return the product if it doesn't meet your expectations. 

(Tip/hint: You may add to your investment by selling your open-box electronics equipment online at a higher price than you paid for it. Potential buyers will appreciate the warranty that comes with their purchase.)

8. Buy in the off season

Late fall is a great time to purchase lawn care products at Menards. You will find many products marked down to make room for new inventory. This is your chance to stock up for next spring and to possibly "earn" 25 percent on some products. 'After holiday' sales are great times to stock up on next year's decorations; but only if you really need them. 

9. Take advantage of sales

This is a no brainer. Savvy shoppers love discounts. Granted, some stores jack up prices then offer them at a "discount" that, in reality, is the normal price. What to do? Check prices online before you go shopping. 

(Tip/hint:  Use a price-comparison app that does the search for you. You may find a list of those apps at pcmag.com.) 

Menard's recurring store-wide sales offer 11 percent off on everything in the store. That's my signal to stock up on items I actually need and expect to purchase in the near future. Menard's will send you a voucher that you can only use at their stores. That is no problem for loyal Menard's shoppers. The dollars saved are dollars earned. 

Amazon.com allows you to return items at Kohl's department store. When my wife returned a shirt, the store handed her a 25-percent discount voucher for anything in the store. What to do? Get out your price-comparison app and scan items you would purchase anyhow and "earn" 25 percent on your micro investment.

10. Day before expiration discounts

Carnivores will love this idea. At the end of every day — midnight to be precise — the local Kroger meat department slashes the prices on meat that will expire that day. This deep-discounted meat is placed in a special section. 

Every time I visit Kroger, I stop by the deep discounted meat counter. If I see something I would normally buy — such as ribeye, sirloin, t-bone, or ground beef — I snatch it up, take it home, and place it in the freezer. Even as I write my freezer is stocked with deep-discounted meat waiting to be fried, grilled, and cooked in my hot-air oven. 

The savings from buying "day-before-expiration" meat is money in my bank account. Those are real dollars that I've "earned" by investing a few seconds checking out the meat department's discount section.

Bonus: Buy new vehicles

Yeah, I know this defies conventional wisdom: "A new car loses 25 percent of its value when you drive it off the parking lot." Sorry. That's just plain insane. Who sells a new car immediately after driving away from the dealership? Answer: No one! The value of the car matters when you sell it, not when you drive it off the dealer's parking lot. 

Joe bought a new car for $25,000. After driving 100,000 miles, Joe had invested 25 cents per mile. 

John bought a used car for $12,500. It had 50,000 miles on the odometer when he purchased it. When the odometer turned 100,000, John had invested 25 cents per mile. He could have owned a brand new car for the same cost per mile. So what did Joe do? He bought another used car for another $12,500 and continued paying 25 cents per mile.

Granted, those examples are a bit exaggerated, but the cost difference between new and used cars is often an exaggeration as well. That illusion becomes obvious when you calculate the cost per mile. 

Joe paid a bit more for insurance and taxes than John. John, on the other hand, paid more for auto repairs and tires, than Joe. (Ever seen a used car with brand-new tires?)

The truth is, you will likely pay a few more pennies per mile if you purchase a new car. That's a small investment that will likely earn a 30,000-mile (or more) warranty, safer and more dependable ride, and lower repair bills.



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