Go Get Your New Car!

Your neighbor just bought the brand spanking latest car of his “dreams”.  How long did he dream of it, the thing just came out?   He will probably trade it in within three years for his upgraded “dream” ride.

You don’t need to do him one better. Forget about keeping up with the Joneses. They don’t pay your mortgage, car note or any other bill for that matter. Forget about impressing them because that is the real reason for keeping up.

Not saying you should trade-in your car for a bike, or drive your car until it becomes a rust bucket, but a new car every two or three years is a terrible financial move.

Buy certified pre-owned with factory backed warranty. This is like buying new, with the added benefit of saving thousands of dollars and ride it until you can ride it no more.  No plug here, just a little smarts!  .

Go ahead and buy that car.   Every summer while you are stuck in rush-hour traffic in your new car, dreaming about lounging in paradise; St Lucia, Cancun or Tenerife. I am there toes in the sand, refreshing beverage in hand, while you wish you could. It’s OK you are sitting in your NEW car.

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The Pennies Do Count

Over the last several weeks I have been listening to personal finance podcasts and reading many other personal finance blogs.  All offer suggestions on how to save money and what to do so that it grows.  They all extol the benefits of 401K, IRAs, and other traditional methods to save for retirement.

That is where the likeness ends for many.  Same endgame, different routes.

Some believe that being frugal is the path. That having 25 pairs of shoes, or a closet full of dresses, suits or jeans is unnecessary as we can do with less than that.  Many go to extremes with this.  Eating boiled noodles every day because they only cost $2. One buys two-ply toilet tissue and separates them into two and cuts open the toothpaste tube to get the last bit. Wearing faded, full-of-hole t-shirts are the norm.

Many use The Latte Factor, how small daily expenditures add up, as an example of how small savings over time add up. Those that disagree with this say that saving such a small amount does nothing and you should focus on the bigger gains.  like getting a high paying job and only focus on big wins. Want that large $7 cup of coffee, go ahead.  it only costs $7.

My thinking, take the what works best for you and disregard what does not. some of the things I started with:

• I did not cut the cable, but got rid of every channel we did not watch.

• Still buy the latte, just not every day.

• I de-cluttered my house one room at a time and stopped wasting money on stuff that just cluttered my life.

• I don’t buy bottled water; a reusable bottle that has a carbon filter does the trick.

Remember these three simple rules:

1. Spend less than you earn.

2. Eliminate debt.

3. Save, save, save…

No one wants to end up poor and in debt, do your part and help yourself. There are many ways to cut out unnecessary expenses. Please share any that have worked for you.

Life Experiences Rule

“Focus on making yourself better, not on thinking that you are better.”

― Bohdi Sanders

Our consumer oriented culture has always told us that owning more will make us happy. The big house, a closet full of designer labels, will possessing more make us exponentially happier?  We cannot buy our way there.

There is a rapidly expanding belief that life experiences mean more than possessions.  The happiness found in making purchases fades away like empty calories that leave a need for more,  but experiences; no matter how small, will last forever.

I wanted to see if this was really true.

Last summer I went on a cruise with my sons.  I bought them some t-shirts and shorts for the trip.  When I asked them about these items they could not tell me brand or color. These were purchased just few months ago.Next

I asked them about an amusement park we went to more than three years ago.  Last minute thing as our original plans fell thru.  The smiles came along with the memories. They remembered how good that wood-fired pizza was, the rides, what they liked and what they didn’t.  They even remembered the smallest most insignificant details like the tan line on my collar bone and the bird that took some fries from us.

Ask yourself similar questions, I bet you will get the same answers I did.  Guess the experiences add more value.  Pay for experiences, not for junk.

I am not a financial advisor. I hold no fancy degree and as such this is not financial advice.  This is simply what I have done and recommended my children do when the time comes.

Source: Life Experiences Rule

Where Did My $20 Go?

One night not to long ago I arrived home from work and emptied out my pockets. Keys, wallet, two bucks and change and some pocket lint was all I found.I left with $20 that morning and got home with nothing to show for it.

I decided to find out where my hard earned money was going. This is what I found: A coffee when I arrived in the morning, lunch, another coffee in the afternoon and a snack somewhere along the way.  That was it, there was my money.

No grand scheme, or plan to make millions, I just thought I could save some money here.

 I started by getting three things: an envelope, a travel mug and a food container.  Took a twenty to work every day, but I also took my morning coffee with me and lunch on alternating days.  Nothing extra, just last night’s leftovers.

Whatever cash was in my pocket went into the envelope.  I work a six-day on, three day-off rotation.  After one cycle I had $61.  Not break the bank money, but substantial savings nonetheless.  Approximately $2475 in a year.

That money is going to work for me! In my opinion IRAs are the safest , most effective tool available for retirement savings.  Due diligence here. Some studies report a 10% yearly growth, while others report that due to inflation the growth is “only” 7%.

If were to contribute into an IRA, that $2475 could grow into $107, 940 in twenty years. Not bat  for a total investment of $47,000.  More than doubled my potential investment.  See the calculator for yourself.

To me, all things being equal, frugality is the easiest way to save.

I am not a financial advisor. I hold no fancy degree and as such this is not financial advice.  This is simply what I have done and recommend my children do when the time comes.

Stop Throwing Away Your Money

There are many ways we needlessly throw away our hard earned money. Sometimes we don’t even realize it. There are quite a few steps we can be taken to avoid this.

They may not seem like much, and are fairly simple, but over time you will see how the savings add up.

Forget the corner coffee shop with the expensive concoction you drink every morning, drop it. That one cup of coffee can set you back $4 If you buy one every weekday, you spend about $1,000 a year.

Make your own instead and add flavored creamer if you must.

Replace single-serve plastic water bottles with a reusable water bottle and eliminate unnecessary waste. A little earth friendly to boot.

Brown bag your lunch to work. Have home cooked meals more often and take leftovers the next day. I am not saying that you can’t eat out. I connect with my sons when we eat out but we can’t do it all the time.

I am all for using credit cards; the rewards often add up, but these need to be used wisely. Pay the bill in full when it is due. Never, ever carry a balance.

Find a card with a low interest rate and a good rewards program. Bottom line, you need to stop wasting money on credit card interest.

Use an ATM not belonging to your bank or in its network, you may be charged fees by both banks. This adds up to several dollars per transaction. Banks in my area charge $5 per transaction. My bank tacks on $2 to that; $7 for the convenience of using the closest one? Convenient for whom? Not worth the expense. Your bank is not close; Use your debit/check card instead.

There is a big movement to cut the cable. Me, I enjoy watching TV and will be not be joining the movement. I eliminated the premium channels, the ones that show you the same movie countless times a month. Stick to basic cable and if you don’t have to see tonight’s episode as it premieres, then you are a candidate for a streaming service.

The bad habits: the pack-a-day smoker, the 6 pack of beer every night. I am not the morality police but you should kick those unhealthy habits, your wallet and your health will both thank you.

Enjoy your beverage of choice, just do so in moderation. You are not going to strike it rich by following these steps but you can save a substantial amount. Can’t do them all? Start with one. The first step is usually the hardest.

Before you know it you will new ways to save. Do something productive with the money you just saved. Pay off your credit card, get an IRA, and pare down a loan.

Anything to be better off today than you was yesterday.There are many other steps that can be taken. These are but a few. Please share with others who may benefit.

I am not a financial advisor. I hold no fancy degree and as such this is not financial advice.  This is simply what I have done and recommended my children do when the time comes.

Source: Stop Throwing Away Your Money

My Aha Moment, I Finally Saw The Retirement Light

The conversation that set me on the right path to retirement savings

One day I was talking with a co-worker about our upcoming family vacation plans. He boasted that his tax-refund would pay for his.  I wondered how, and cornered him into telling me how he managed to do it.

He went on to tell me about the “new” saving for retirement tool he found, the 401K.  Not new, but I wanted to know more, so I kept the insult to myself and allowed him to continue.

His tax burden the previous years had been huge so he adjusted his withholding tax to more closely mirror his total payment.

The key to his large refund was the fact that he maximized his contribution to his 401K thus lowering his taxable income.  I also contributed to mine but until that day, I contributed just enough to get the company match.

I instantly saw my mistake.  All that money went in the trash. Nothing to show for it, not experiences…nothing.  Made the necessary corrections.

Many people do not see the advantages a 401K presents both now and in the future. Hopefully you just did.  Know someone who can be helped. Get this to them.

I am not a financial advisor.  I hold no fancy degree and as such this is not financial advice.  This is simply what I have done and recommended my children do when the time comes.

EMBRACING FRUGALITY FOR EASY RETIREMENT SAVINGS

 

People usually see frugality as a negative. That is because when we think of frugality, spending countless hours clipping coupons or some other mind numbing task is what comes to mind.   Not true.  Frugality is all about being economical, maximizing your dollars and finding less expensive ways to have the things you want without being wasteful and avoiding extravagance.

You don’t have to become a cheapskate. Not the same as being frugal.  Eating canned soup for dinner every night because you get them for less than two dollars is just cheap and unhealthy, not frugal.

I like to think of myself as frugal, but if I had to give up things that I enjoyed or cared about, I could not be.

I don’t clip coupons, use homemade cleaning products or cut open the tube to get to the last bit of toothpaste. There is money to be saved that way.  I prefer one-time actions that will continue to save time and time again. I replaced my regular light bulbs with more cost efficient LEDs.  I just lowered my utility bill.  The best frugal actions don’t add extra work.

First blog I ever wrote grew from a note to my kids about how easily we could save $25 a week. I used the morning cup of “coffee” their uncle buys as an example and suggested he make his at home.  Easy math when one cup equals $5.

Thing is he looks forward to that cup, needs it to get going and is not willing to give it up.  I used that cup of coffee as an example.  In reality if it is that important to you, keep it.

Eat a home cooked meal tonight and make enough to brown bag your lunch tomorrow.  Save on take-out tonight and tomorrow’s lunch. This action should save another $25.

Two simple actions, that if done only once a week, can save close to $1,500 a year. That is a decent individual retirement account (IRA).  After 30 years your IRA should be worth more than $163,000.  Not a bad return on a $45,000 investment spread out over 30 years.  What We Can All Learn From The Financial Independence Movement

Two easy frugal changes to get started saving or increasing your nest egg regardless of you plans.

I am not a financial advisor. I hold no fancy degree and as such this is not financial advice.  This is simply what I have done and recommend my children do when the time comes.