Saving Money By Spending Wisely
Why is it that the older and richer people become, the more conservative they are with their money? Have you ever done or know someone who has made an investment that promised a 10% interest or profit per month? Everyone wants to make above average profits. It is amazing how many people will send their very hard earned money across the world to Nigeria or to Boca Rattan, Florida on the promise of a telephone acquaintance to make them much richer. People give their money to complete strangers in hopes of making more money. All good investment advisers will tell their clients “If a deal is too good to be true, it probably is.” Professionals only make very high returns in areas they personally know very well. This, for them, is a business investment, not a passive investment like stocks, bonds or mutual funds.
Real estate and business investments are considered active investments. People who are employed by others do not usually make active investments, because they just do not have the time to watch a business investment, where big profits are always possible (as well as big losses.) People with small amounts of money come to me all the time and ask: “What can I do with $1,000 that will give me a big return?” Here is the answer. When I was a 21-year-old lad working for my father, I had money in the bank, I owed securities (stocks) and my income was a fixed salary. I saw many opportunities to make money all around me, in the business.
My father, like so many employers, wasn’t interested. Besides I was trying to figure out how I could make money for me. At the time, 1971, we had high inflation and prices were going up on many things. My father used metal rings to seal containers, nuts and bolts, paint, and other industrial supplies. I watched prices starting to go up and it appeared that they might even double on finished products that were made from steel. Since the company used these products all the time, buying bigger orders meant buying much more then you needed and having to store it so it didn’t get stolen. I used to buy 2 years supply of bolts at a time. Knowing the price was going up, I bought a 4-year supply. Rings took a lot of space so we would buy 3 months at a time. The problem with new rings, being bought and laying around, in storage, was that the workers, taking the easy way out, would take new rings out of the warehouse, instead of cleaning the old rings, which saved the company a lot of money.
My father didn’t want to have a years worth of rings around, even though we both knew the price was going to continue going up. We came up with an idea. I would buy, with my own money, the extra inventory, the amount above the companies normal order size. My investment inventory would be stored in a separate locked area in the warehouse. When the company needed more rings or bolts, it would buy them from me at the then current market price. I made $1,500 on my $5,000 investment in just six months. That was a 30%, no risk profit in just half a year. Now I was hot. When I got married, and I used more toilet paper and toothpaste than I did before, I decided that I should repeat the process that I learned as a boy. When I was a boy toilet paper was 10 cents a role.
If you do not know what it is now, take a look. I bought 5 cases of toilet paper and put it in the garage. I knew that paper prices were going up. I not only got the increase in price, I got close out quantity discounts by the case. Do you know that dog and cat food by the case is 10% off? Then if you wait for when Friskies has a sale or close out, then buy large cases; you cannot believe what you will save. If you can get a distributor or wholesaler to sell direct to you, another 20-33% is possible. You might check the price at Costco. It may be cheaper than what the wholesaler will sell it to you for. You only buy items that you know you will use yourself, personally. You are not buying for resale.
You are buying a two-year supply of things you know you will use, for sure. Toilet paper is one of them. (Make sure you try the brand out, to see that you will like it.) Smart and Final has many things in bulk. Compare prices at Costco, Smart and Final, the 99-cent store, and if you can find the distributor that the 99-cent store buys from in Downtown LA, you will really be buying cheap. First step. Make a list of everything you buy on a regular bases. List non-food items, bathroom items and dry or canned food items. Do not buy food the rats can get into.
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