How to save

2023 Author: Jeremiah Simon | [email protected]. Last modified: 2023-05-21 07:08

It's easy to decide to save money, but making it happen is often difficult. Everyone is in favor of saving in the long run. However, most find it difficult to do this. In order to save, you have to go beyond cutting your expenses, although this can be problematic. A skilful saver needs to know how to consider the structure of his budget and how to maximize his income. In fact, in order to save, you will need to set realistic goals, control your spending, and maximize your long-term holdings.

Steps

Part 1 of 3: Save Money Responsibly

Step 1. Make arrangements to save money

The easiest way to save money is to systematically eliminate all opportunities to spend it. Arrange to systematically transfer part of your salary to a savings or retirement account. This measure frees you from the stress and tedium of dividing your salary between your savings and your expenses. In other words, you automatically save a certain amount of your income, knowing that you can spend the rest as you wish. In the long run, even if this amount is not large, the result will be good, especially if you factor in interest. So start as soon as possible to get the most out of it.

To set up a direct deposit, talk to your company's accountant or third-party payroll, if your employer uses one. It is better to have a savings account different from your usual account. Usually, setting up a direct deposit is not a problem.
If, for some reason, you are unable to systematically transfer part of your salary to your savings account, for example if you are self-employed or if you are paid in cash, consider making a monthly deposit yourself. in a savings account. It is important to do this operation regularly.

Step 2. Avoid taking on new debt

Often times, getting into debt is inevitable. Only the very wealthy have enough money to buy a house by paying the price all at once. Yet thousands of people are able to buy a home by borrowing and gradually paying off their loan. However, avoid going into debt if possible. Paying in advance is always more beneficial in the long term than paying off an equivalent debt, but which carries interest, because interest accumulates over time.

If you are forced to borrow, try to make as large a down payment as possible. This will pay off your loan faster and pay less interest.
Everyone has their own financial situation. However, the majority of banks recommend keeping your debt repayment at around 10% of your gross income. A refund of less than 20% is considered acceptable. If it amounts to 36%, it is at a reasonable upper limit not to be exceeded.

Step 3. Set reasonable goals

Saving is so much easier if you choose an achievable goal. This will give you a rationale for the necessary and difficult financial decisions you will need to make to save in a responsible manner. Realize that it takes years or even decades to achieve serious goals like buying a house or retiring. In such a case, it is essential to regularly monitor your progress. By taking a step back and analyzing the big picture, you will be able to properly assess your progress and measure how far you have to go to reach your goals.

It takes time to achieve big goals, like funding your retirement. During the execution period, the financial market will probably have evolved from the initial situation. Before setting your goal, you may need to do some research to determine the forecast for how the market will move. For example, if you are at the peak of your career, most analysts believe that in order to maintain your lifestyle during a year of retirement, you will need about 60-85% of your current annual income

Step 4. Set a timeline for achieving your goals

Your motivations would gain in strength if you set ambitious and reasonable deadlines for your projects. For example, suppose you want to buy a home within two years. In this case, you will first need to know the average price of a house in the area where you want to live. Then you have to save to pay a deposit on the price of your new home. As a rule, this deposit is equal to at least 20% of the purchase price of the accommodation.

So, in our example, if the price of houses in the chosen region is around $ 300,000, you will need to save at least 300,000 × 20% = $ 60,000 in two years. Achieving this goal will depend on the size of your income.
Defining lead times is particularly important for achieving important short-term goals. For example, if it is necessary to replace the transmission in your car, but you do not have enough money to do the work, you will need to save money to complete this replacement as quickly as possible, so that you do not have to go without. means of transport to get to work. An ambitious and reasonable deadline will help you achieve your goal.

Step 5. Control your budget

It's easy to want to achieve lofty savings goals, but you'll find it hard to reach them if you don't know how to control your spending. To make sure you're on the right track, try to budget at the start of each month. By setting aside a portion of your income to pay for your major expenses, you will be able to avoid waste, especially if you immediately divide your salary according to your budget.

For example, suppose your monthly income is $ 3,000, you can budget it like this:
- housing and services: € 1,000
- student loans: € 300
- food: 500 €
- Internet: 70 €
- gasoline: 150 €
- savings: 500 €
- various.: 200 €
- luxury expenses: 280 €

Step 6. Write down your expenses

If you are looking to save money, you should strictly enforce your budget, but if you don't watch your spending, you will probably have a hard time getting there. By keeping a statement of your monthly expenses, you will be able to more easily identify problem areas and adjust your expenses to fit your budget. However, this action requires meticulousness. Usually everyone keeps track of major expenses like housing and debt repayment. On the other hand, the attention devoted to minor expenses usually increases with the precariousness of the financial situation of the person concerned.

Remember to carry a notebook with you all the time. Get in the habit of writing down every expense and keeping your receipts, especially for large purchases. When you have time, record your expenses or use a computer program for your long-term statements.
Note that today you can keep track of your spending by downloading one of the many applications available on the market to your phone, some of which are free.
If you can't control your spending effectively, don't hesitate to keep your receipts. At the end of the month, sort them into categories, then add up the amounts in each category. You will be amazed at the amount of unnecessary expenses you have made.

Step 7. Check all your payments

When shopping, always ask for the sales receipt or receipt and always print a copy of all purchases you make online. Make sure that you don't pay more than you need to and that you aren't charged for items you don't want, it does happen from time to time.

When you go out with friends and someone orders a round of margaritas, make sure they are not added to your bill. This kind of favor can create a hole in your budget and sometimes a very deep hole!
Do not share a bill to facilitate the accounts. If the dish you ordered costs less than that of the other people at the table, you should not split the bill equally.
You can download an app to your phone to help you manage your budget.

Step 8. Start saving ASAP

Money in a savings account earns interest at a set rate, which accrues over time. So, it pays to start saving as early as possible. Don't hesitate to start at the age of twenty, if only by setting aside a modest amount each month. Relatively small amounts end up reaching several times their original value if they are deposited in interest-bearing accounts for long periods of time.

For example, suppose that during your twenties, you had a low-paying job. You managed to save the sum of € 10,000, which you placed in a high yield account with an annual interest rate of 4%. After five years, you will earn the sum of € 2,166.53. However, if this money had been invested a year earlier, you would have earned around $ 500 more for the same period without putting in any extra effort. This is a small bonus that is important

Step 9. Consider opening a retirement account

When you're young, vibrant and healthy, retirement seems so far away that you don't even think about it. As you get older, your view of the world changes and retirement becomes one of your main concerns. Now is the time to think about saving for your retirement years, unless you are one of those privileged people who will benefit from a significant inheritance. Start as early as possible, even before your professional situation has stabilized. As it was said before, the situations differ according to the people. However, it is prudent to set aside 60-85% of your annual income to maintain your standard of living during your retirement.

If necessary, you can ask your employer to contribute to a retirement plan, such as the 401 (k) plan in the United States. Such an account allows you to regularly deposit a fixed amount deducted from your salary. Thus, you will have the possibility to save money easily. In most cases, the money you deposit into a 401 (k) account will not be subject to the same taxes as the rest of your paycheck. Ultimately, many employers offer supplemental plans in parallel with the main plan, which results in the deduction of a certain additional percentage of your salary.
In 2014, a maximum annual amount of $ 17,500 could be placed in a 401 (k) account. In France, the popular retirement savings plan (Perp) is a long-term savings product that provides regular additional income from retirement age.

Step 10. Be careful investing in the stock market

If you've saved well and have extra funds, it may be worth investing in the stock market to make some extra money. However, be aware that this is a risky transaction, as you risk losing all the money you invest in the transaction irretrievably, especially if you do not have the necessary experience. Therefore, avoid resorting to stock market trading to save for the long term. It's best to consider that you can't afford to lose the money you invest in the stock market, even if the deal looks promising. Generally, most responsible people do not need to invest in the stock market to save for retirement.

For more information on smart stock market investment decisions, check out this article

Step 11. Don't be discouraged

If you are having trouble saving money, it will be easier for you to lose patience because you will think your situation is dire. It may seem almost impossible to save the amount you need to achieve your long-term goal. However, be aware that it is always possible to save money, regardless of the size of the initial sum. The sooner you start, the sooner you will achieve financial security.

If your financial situation is discouraging you, consider consulting a financial consulting firm. Often times, firms of this kind offer services free of charge or at a greatly reduced price. They can help you develop a savings plan to meet your financial goals. You can also check with your bank. If you are interested in the question, we recommend that you visit this site

Part 2 of 3: Cut down on spending

Step 1. Eliminate luxury expenses

Don't hesitate to do this, especially if you're having trouble saving money. Many expenses are far from essential, even if they seem normal to you. Cutting out luxury spending is a great way to start improving your financial situation. This is because this removal will not affect the quality of your life or your ability to work properly. Probably, you can hardly imagine existence without a gas-guzzling car and cable TV. However, you will be surprised at how easily you get used to your new lifestyle. Here are some ways that will help you cut down on your luxury spending.

Do not renew your optional TV and Internet subscriptions.
Switch to more economical phone service.
Replace your car with another vehicle that uses less fuel and is easier to maintain.
Sell all your unnecessary electronic gadgets.
Buy your clothes and furniture from inexpensive suppliers.

Step 2. Find more affordable housing

It is widely accepted that housing expenses are the most important. As a result, saving on the cost of housing can help you deal with important issues, such as saving for retirement. It is not always easy to change your lifestyle. However, don't hesitate to carefully re-examine your housing expenses if you are having trouble balancing your budget.

If you are a tenant, try to get a cheaper rent by negotiating with your landlord. They will probably want to avoid looking for a new tenant. Therefore, you will be able to get better terms if you are on very good terms with him. In return for a cheaper rent, you can offer to do some small jobs, such as gardening or house maintenance.
If you're paying off a mortgage, talk to your lender about refinancing your loan. If you are in good standing, you will have the opportunity to get better terms. In the case of refinancing, try to have the shortest possible repayment schedule.
Also think about the usefulness of moving to a more advantageous location. According to a recent study, in France the lowest rents are practiced in the following regions: Limousin, Franche-Comté and Auvergne. On the other hand, the top of the list is held by Ile-de-France, the Provence-Alpes-Côte d'Azur region and Nord-Pas-de-Calais.

Step 3. Buy food at a good price

Many people spend excessively on their food. It's easy to succumb to the temptation to go to a restaurant for your favorite meal. However, the expenses related to the restoration risk reaching large sums if they get out of control. In general, buying groceries at wholesale is cheaper in the long run than buying at retail. If your food expenses are high, try sourcing from a major retailer like "Costco". The least economical choice is to eat in a restaurant. So make an effort to eat at home as often as possible. Thus, you will be able to make substantial savings.

Choose healthy, inexpensive foods. Instead of buying ready-to-eat meals, take a look at the fresh produce displayed on the shelves of the local convenience store. You may be surprised to find that eating a healthy diet is beneficial! For example, brown rice, a garnish, or nutritious foods can be sold in a large 10kg bag for less than $ 1 per pound.
Take advantage of discounts. Many grocery stores, especially those run by large chains, offer coupons and discounts at checkout. Don't waste these golden opportunities.
If you go to a restaurant often, you should change your habit. Generally, it is much more economical to prepare a meal at home than to place an order for an equivalent dish at a caterer. Prepare your own meals regularly. You will also learn an art which will be useful to you during your receptions, to satisfy your family and even to facilitate your relations with your better half.
If your situation is serious, do not hesitate to take advantage of the local free food. Food banks, soup kitchens and shelters provide free meals to the poor. If you are in need, contact the local social service department for more information.

Step 4. Decrease your energy consumption

Most people just pay their monthly electricity bill without arguing. In fact, by taking a few simple steps, you can significantly reduce your energy consumption and therefore your monthly bills. These tips are so easy to apply that there is hardly any reason not to use them if you want to save money. Better yet, by reducing your energy consumption, you will succeed in reducing the pollution that you create indirectly and thus minimize your impact on the planet's environment.

Turn off the lights when you are not around. There is no reason to leave your lamps on in an empty room or house. Therefore, turn off when leaving. If you might forget, hang a reminder note near the front door.
Avoid using heating and air conditioning when you don't need it. To have a little freshness, open your windows or use a small fan. To stay warm, dress appropriately, use a blanket or space heater.
Install good insulation. If you can invest in upgrading your home, consider replacing old inefficient insulation on your walls with modern, high-efficiency insulation. This will save you money in the long run by keeping your home at the right temperature for the season.
If you can, install solar panels. This is a great investment for your own future and that of the planet. It is truly the best choice to make when it comes to saving energy. The costs can be very high, but solar technology is becoming more and more affordable over the years.

Step 5. Use public transportation

Most likely, you will need to set aside a large portion of your income to acquire, maintain, and use a car. Depending on the mileage driven, fuel can cost you hundreds of dollars per month. In addition, your car will also cost you license and maintenance fees. Instead of driving a car, use other inexpensive or free ways. By doing this, not only will you save money, but also you will have more opportunities to exercise and reduce your daily stress.

Find out about the means of public transport near you. Your community probably offers several means of public transportation. The majority of large cities are equipped with a metro or tram lines which serve the entire metropolitan area. Medium-sized cities offer buses and trains that you can use for your travels.
Consider walking or cycling to work. If your home is close enough to your workplace, these two methods will allow you to move around for free, while breathing fresh air and exercising.
If you have to take the car, consider carpooling. Thus, you will share the maintenance and fuel costs with your fellow travelers. Plus, you'll be able to talk to someone during your daily commute.

Step 6. Have fun for free or for a low price

By reducing your lifestyle, you will probably have to give up luxury expenses. However, even if you need to save money, it doesn't necessarily mean you have to end your distractions. By replacing your leisure and recreational habits with ones that are more affordable, you will be able to satisfy your pleasures while being reasonable. If you are resourceful, you will be amazed at how many opportunities you have to have fun for less!

Stay informed about local events. Nowadays, the majority of cities publish the calendar of local events online. Often, the authorities or associations in the region organize events which can be attended for free or with a small amount of money. So, in an average city, it is often possible to visit art exhibitions, see films or attend charity gatherings for free.
Read. Compared to movies and video games, books cost less, especially if you buy them second-hand. Good books can be really captivating. They allow you to broaden your experience by following the adventures of exciting characters or improving your knowledge.
Enjoy the activities with your friends. In this area there are practically no limits. Generally, these activities are free or inexpensive. For example, try going for a hike, playing cards, watching an old movie in a neighborhood cinema, exploring an unfamiliar part of town, or participating in sporting activities.

Step 7. Avoid Costly Addictions

Bad habits can seriously undermine your efforts to save money. In addition, they will create serious addictions that are virtually impossible to overcome without help. Worse yet, many of these addictions can be extremely dangerous for your long-term health. Stay away from these bad habits to protect your wallet and stay healthy.

Avoid smoking. Nowadays, the harmful effects of tobacco are well known. Indeed, smoking is the cause of several ailments including diseases and cardiac arrests. In addition, cigarettes are expensive. Depending on where you are, the price of the package can reach or exceed 8 €.
Do not drink alcohol excessively. Having a drink or two with your friends doesn't hurt. However, excessive and regular consumption of alcohol is very dangerous for your health. This behavior can lead to serious problems, such as liver disease, impaired mental functions, obesity, delirium and even death. In addition, a drug treatment is usually very expensive.
Do not use addictive drugs. Substances like heroin, cocaine and methamphetamines are extremely addictive. Their effects are exceedingly dangerous, even fatal. Their health consequences can be much more expensive than those of alcohol and tobacco. For example, musician Waylon Jennings happened to spend over $ 1,500 a day (€ 1,370) to meet his cocaine needs.
If you need help overcoming a drug addiction problem, don't hesitate above all not to contact a support line. Consult the list of crisis lines and support available in your area. For those in the United States, several emergency numbers are available here. If you are in France, you can visit the website of the National Institute for Prevention and Health Education by clicking on this link.

Part 3 of 3: Spend Money Wisely

Step 1. Meet your basic needs first

When it comes to spending money, you need to acquire the essentials first. More specifically, it is about food, water, shelter and clothing. These elements have absolute priority. Obviously, if you lose your home or go without food, you will have insurmountable difficulties in achieving your financial goals. So, be serious about having enough money to cover your basic needs.

However, while food, water, and shelter are important, that doesn't necessarily mean you have to spend a fortune to enjoy them. For example, you can reduce your food expenses by reducing the number of your restaurant meals. Likewise, if you move to an area where rents or house prices are lower, you will also lower your housing costs.
Depending on where you live, housing expenses can take up a good chunk of your income. According to experts in the field, it is best to refuse any housing proposal that costs more than a third of your income.

Step 2. Save in an emergency fund

If necessary, create one immediately with enough money to survive in the event that your source of income is lost. Have a reasonable amount in a reliable savings account to deal with a possible loss of your job. Once you've covered your basic needs, consider putting a portion of your income in such an account to cover around three to six months of living expenses.

Be aware that these fees may vary depending on local financial conditions. If you can live on € 1,500 in Limousin or Brittany, remember that this amount will not be enough to pay a month's rent in an upscale district of Paris. So, if the cost of living in your community is high, your emergency fund will naturally need to be larger.
In addition to the peace of mind that you will have knowing that you will be safe in times of professional hardship, an emergency fund can also save you money in the long run. If you lose your job without having such a fund, you risk being forced to take the first job you find, even if the salary offered is not enough. On the other hand, if you can survive for a while while being unemployed, you will have the possibility of being more demanding and waiting for a better paying job.

Step 3. Pay off your debts

If you don't do it on time, you will have serious difficulty in saving money. On the other hand, if you settle for only making minimum repayments, the total amount you will pay over the life of the loan will be much larger than what corresponds to a shorter repayment period. Save money in the long run by setting aside a good portion of your income to pay off your debts, so you can get rid of them as quickly as possible. As a general rule, to make good use of your resources, pay off high-interest loans first.

As soon as you have covered your basic needs and built up a sufficient emergency fund, you can safely devote most of the rest of your income to paying off your debts. On the other hand, if you don't have an emergency fund, you may have to divide your income to pay off your debts and create such a fund.
If you have several crushing debts, consider consolidating them. You will likely have the option of doing this as part of a loan at a lower interest rate. However, be aware that the repayment schedule for consolidated loans may be longer than that for the initial debt.
Also, consider negotiating with your lender to get a lower interest rate. Your lender may not collect your debts if you go bankrupt. Therefore, he or she will probably be willing to agree to reduce the interest rate on your loan so that you can pay it back.
For more information, read this article.

Step 4. Set some money aside

If you have an emergency fund and have paid off all or most of your debt, you will probably be tempted to put your savings in a savings account. This account will be different from your emergency fund. You will avoid dipping into your fund unless absolutely necessary. However, you can use the money in your savings account to fund major purchases, such as repairs to the car you use to get to work. However, if you are looking to accumulate enough money, avoid dipping into your savings account. If possible, try to save at least 10-15% of your monthly income by the time you turn 20. The majority of experts agree on the correctness of this objective.

By touching your salary, you will be tempted to immediately make an impulse purchase. To avoid this, deposit your savings in a savings account as soon as you receive your payroll. For example, suppose you have a monthly salary of $ 710.68 and have decided to save 10% of your salary. The sum that you will have to deposit in your account will have to amount to 71,07 €. This amount is easy to find because you only need to move the decimal point to the left one notch. By doing so, you will more easily avoid unnecessary expenses and save more money.
A better idea is to systematize the operation to remove any risk of temptation. For example, ask your employer to make an automatic deposit to your savings account. It is also possible to use an online application. In this way, you can very easily transfer a fixed sum or a percentage of your salary to a savings account or a regular account.

Step 5. Choose your non-life expenses wisely

If, after depositing your savings amount, you still have money left over, you may want to consider making some non-essential purchases that can improve your productivity, earnings potential, and the quality of your lifestyle in the long run. term. These expenses aren't life-saving like food, water, and shelter, but you'll have to make smart choices to save money in the long run.

For example, it is not absolutely essential to buy an ergonomic chair for working, but it is a wise choice in the long term because it allows you to improve your performance, while minimizing back pain, that are at risk of developing into a disease that is expensive to treat. Another example is replacing the annoying old water heater in your home. The old one would have sufficed in the short term. However, buying a new water heater will save you the cost of repairs and save you money in the long run.
Other examples include purchases that save you money to get to work, like monthly or annual transit passes, tools to improve your efficiency, like a headset if you're doing manual labor. Include in this category those purchases that make your life easier, such as gel-foam interior linings for your shoes.

Step 6. Choose your luxury expenses

Saving money does not mean living an ascetic life. After paying off your debt, creating your emergency fund, and spending in items that pay off in the long run, you can finally spend some money on yourself. Reasonable expenses keep you in shape and work hard. So, don't hesitate to buy a luxury item at an affordable price to celebrate your financial success.

By definition, luxury goods or services are not life-saving and offer no long-term benefit. This broad category includes trendy travel and dining, vacations, a new car, cable TV, fancy gadgets, and more

Advice

Make a habit of overestimating your expenses and underestimating your income.
Pay for your purchases with banknotes and save the change you get back. Use a piggy bank or jar to keep your coins. Coins may seem insignificant, but when they accumulate, they can significantly increase your savings. Now, some banks allow free use of coin counting and sorting machines. When you exchange your coins, ask to be paid by check to avoid the temptation to spend the cash you receive.
Take care of your personal belongings. This way you will replace less stuff. Also, only change an item when needed. For example, if your electric toothbrush motor breaks down, don't throw it away, because it can still be used. Keep using it and when you're ready to replace it, buy a new one or check the warranty for validity.
Most of the time, you will avoid a new purchase, if you think about the use you plan to do with your savings and determine the percentage of the price of your purchase over your savings.
If you receive your salary on a fixed date, you will be able to establish your budget more easily. If your income is variable, you will have more difficulty anticipating your expenses because you do not know the date of your next payday. Prioritize your spending and settle the most important items first. Be careful. Always assume that the date of your next cash receipt is undetermined.
Proceed by affirmations. For example, repeat this statement to yourself until you are convinced: "I must avoid debt at all costs".
If you receive money by surprise, deposit all or a good portion of the amount received into your savings account while continuing to save as usual. This will help you achieve your savings goals faster.
Even if you really want to buy something, think twice before you make your decision. In most cases, your conclusion will be negative.
Most people can save a certain amount, regardless of the amount of their income. As you start to save, you will get used to doing it. Even saving as little as five dollars a month, you'll know you don't need all the money you want.
If you can't destroy your credit cards, at least avoid using them. Place them in a container, fill the container with water and put it in the freezer. So, if you feel like using your credit cards, you'll have to wait until the next ice melts. In the meantime, you may come to your senses and find that you don't really need to make the so-called dream purchase of your dreams.
Are you looking for a hobby? Think about your savings first. Here is a method that will help you improve your savings. Suppose you have a hobby, such as building model airplanes, putting together scrapbooks, off-road motorcycling, scuba diving, etc. Follow a hard rule of thumb to save an amount equal to what you spend on your hobby. For example, if you spend $ 45 to buy driving gloves, deposit another $ 45 into your savings account.
Enjoy the simple pleasures of life. During the Great Depression, people continued to have fun by doing very simple activities. The children were playing with soap boxes. The teenagers took part in dance competitions. Everyone played "Monopoly" or puzzles, read and listened to the radio. People met with friends to discuss philosophy, pray, play poker, make quilts and pillows, play musical instruments and dance. Back then it took a bit of imagination and ingenuity, however people were having a good time and so can you.
Try to find at least a dollar on the floor each day. Put the found coins in a jar and you will see how quickly your jar will fill up.
If possible, try to share your personal belongings, food, accommodation, and devices with your friends. It is possible to afford a lot of things with very close friends. You will see that they will return the favor to you quickly and thus everyone will be happy.
Seriously, are you still interested in saving? Try to double your matching amounts! These savings plans will allow you to achieve two goals. First, you'll save money steadily and quickly. Then, you will more easily control the cost of your leisure activities and you will quickly see when they cost you twice as much.

Warnings

Don't worry if you don't understand it. Just try to do better the next time you get your paycheck.
Avoid window shopping with cash on you. You will be tempted to spend money that you desperately need. Make a list of your items first before shopping.
After a long week of trying, you'll probably want to do something amazing, thinking 'I deserve it'. Remember that the items you buy are not just gifts you give yourself. It is also about trade, products and money. You certainly think you are worthy of your gift. However, before you buy it, ask yourself if you can afford it. Even if you don't, you still deserve to make your savings plan a success!
Don't try to save on health costs unless your financial situation is dire, like ten seconds away from eviction with your three hungry children on your hands. Basic preventative care can be quite expensive, whether it's for yourself, your family, or your pets. Today, the price of a medical visit is around € 60 and the price of a box of heartworm tablets can reach € 30. However, if you neglect to take care of yourself, you may end up spending a lot of money on health care and suffering a lot of pain.
If your friends are spendthrifts, you will be forced to come up with a number of excuses to explain to them the reasons that prevent you from accompanying them on their frequent outings.

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