One trick we’ve learned that has worked well for us is to “save” the money in a less visible way is by adding an expense that can later be converted to cash.

Many people can do this but they don’t think it through. They buy cars that depreciate faster than they pay them off. It’s common today to find people who are “upside down” in their car loans. They owe more than the car is worth and so cannot sell it without paying money out of their pocket. Some people lease cars that never have any cash value at all. So even though they pay out a lot of money for their transportation, they never have any cash build up.

You can buy pre-owned Japanese and German cars that hold their value very well. I, David, first experienced this when I bought a three-year-old Mercedes in excellent condition, drove it for four years and sold it for $1600 less than I paid for it! It only cost me $400/year to drive a late model luxury car and I built up equity in the process!

There has been a big rush to buy new cars with low-interest financing. The trouble that we see here is that after driving a new car for three years, you haven’t built up much equity because there is so much immediate depreciation the moment you drive it out of the showroom. The good news is that there is a glut of excellent used cars on the market at depressed prices. You can buy a pre-owned Lexus or Mercedes in good condition. They are designed to go about 250,000 miles before you need to replace the engine or transmission and when they have 100,000 miles on them they still drive like a new car.

I, Keith, and a colleague were talking about cars and their valuation a few years back and I pointed out that I drive a 911 Porsche because I like sports cars but also because they are well built and hold their value well. It was a few years old when I purchased it but after driving it for a long time, when I decided to sell it, I got most of the money out that I had put into it. Plus there is the element of driving a Porsche. Not many like it. And the added plus as my friend said in our discussion, “You must be doing well!.” And if you have your own business there are helpful tax deductions if you use your car for business.

We also learned a great trick from a financial planner. Whenever you get a raise, take half the extra money and use it to improve your lifestyle. But take the other half and immediately put it into a savings account so you never get used to living on it.

Another friend furnished his office with antiques instead of going out and buying regular office furniture. If he had bought regular desks ten years ago, they would be worth very little today. But by buying furniture that actually increases in value, he not only has a very nice looking office, he can sell his office furniture at a profit!

Another way to spend money and still have it is to invest in yourself. If you increase your abilities to create products that are needed and wanted, you will be in a position to get more exchange for your efforts. That means you will have more money coming in because you spent money on self- improvement. I have done this for years and have found it to be one of the best investments I’ve made.

Well there we go. Remember to cutback on those expenses and take the percentage off the top and keep that demand real and make it happen so you do achieve the surplus in income that will give you freedom to enjoy your life better with your family and friends.

David Sanders and Keith Legg are National Business Consultants with offices in the Glendale, CA area.

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