Here's a rundown of the Tips of the Day from this month. Please keep your ideas and comments coming. I love hearing from you!
lazypmusic@hotmail.com
Keep your ac running smoothly. Replace filters monthly to ensure your ac unit operates at peak efficiency.
Repurpose grocery bags. Use them as trash bags and you will save money. Some grocery stores offer you money for bringing them back (just not with trash in them). At the very least find a place to recycle them so they're not filling up a landfill.
If you find a penny and it is heads up, that's good luck. Pick it up. I say if you find any amount of money it's good luck no matter which way it's facing!
Use the "no heat" setting on your dishwasher. - Heat drying is not necessary after a hot-wash cycle. By keeping it off, you save energy.
Consolidate your errands into one trip. By not running out and back multiple times you'll save gas and save money. The Green folks ought to like this one too!
Go paperless. Just about everyone offers online bill payment now. At 44 cents a pop mailing checks can be expensive. Also, you won't have to reorder checks for a longer time. Many banks are offering cash rewards to sign up for paperless statements and online bill payment. Check it out!
Think long term. Ask yourself what is the cost of the credit and make a small sacrifice now. You'll thank yourself later.
Store brands. They are the exact same thing as the name brand foods you buy in most cases. Don't believe me? Look at the labels and compare.
Set a savings goal, something to work toward such as a trip to Europe. You may not even want to go to Europe but once you have banked enough cash at least you know that you can. Put that money in a cd and start saving for the next vacation!
Unplug your unused appliances. Also your phone chargers. While not supplying power to your cell phone a charger still draws an electrical current and runs up your electric bill.
Declutter your life. When you do your spring cleaning this year go through your closets and box up what you don't need anymore. Have a yard sale or donate what is still usable to the Salvation Army or charity of your choice. Your donation is tax deductible and the free space you now have will free up your mind and improve your quality of life.
Stupidebt does not endorse any of the products advertised on this site. Ironically, most of the current ads are offering help filing your taxes online. Visit their sites. See what each is offering and then go to www.irs.gov and file for free!
Plan ahead! Plan out your meals for the week. Check the weekly flyers (It’s not always junk mail) and see what is on sale this week. You may not get to have steak this Tuesday, but maybe steaks will be the deal next week.
Don’t forget home mortgage interest and PMI are tax deductible on Schedule A. BUT, you may be better off using the Standard Deduction in the margin to the left of 1040 line 40. It’s $11,400 for joint returns. Weigh the options…
It’s YOUR money you’re getting in the refund check from the U.S. Treasury. If you had less taken out throughout the year that money could be sitting in a savings account or a CD! When you get this year's refund will be a perfect time to start.
If you are filing a simple individual return there is no need to pay someone to do it for you. Get out last year’s return and if you have all the same types of income and write-offs, use the old return as a guide. File online for free @ http://www.irs.gov .
Saturday, February 27, 2010
Friday, February 26, 2010
It's Your Money!
Just a quick thought for today concerning your income tax return. Many of you are already receiving your annual refund check from the government for the amount they overcharged you last year. About this time every year you see the ads pop up everywhere. Spend your tax return here! Now you can afford this!
In many people's minds their tax returns are a once a year free spending voucher. It's money they don't usually have so why not splurge? I heard a lady the other day talking about what she was going to buy when she "got her income tax." It was well over a thousand dollars she was getting back. And she already has it spent.
I have a news flash for those of you who have big plans to run out and spend your "income tax." ... It's your money! This is not some gift from the government and it's not patriotic to just go out and blow it (obviously the stimulus theory did not work). You are getting a refund from the Treasury Department because they took too much from you all year long! Chances are you bought some things last year you couldn't quite pay for. You are making payments on a credit card (with interest) and not putting anything else on it. That's good. But why not use your refund to eliminate that bill altogether? Instead of making monthly payments to the credit card company make monthly contributions to your savings. Next year if you want to spoil yourself, go ahead. Just don't do it on borrowed money...
Next week I'm taking you back to school with the Three "R"s. Enjoy your weekend!
In many people's minds their tax returns are a once a year free spending voucher. It's money they don't usually have so why not splurge? I heard a lady the other day talking about what she was going to buy when she "got her income tax." It was well over a thousand dollars she was getting back. And she already has it spent.
I have a news flash for those of you who have big plans to run out and spend your "income tax." ... It's your money! This is not some gift from the government and it's not patriotic to just go out and blow it (obviously the stimulus theory did not work). You are getting a refund from the Treasury Department because they took too much from you all year long! Chances are you bought some things last year you couldn't quite pay for. You are making payments on a credit card (with interest) and not putting anything else on it. That's good. But why not use your refund to eliminate that bill altogether? Instead of making monthly payments to the credit card company make monthly contributions to your savings. Next year if you want to spoil yourself, go ahead. Just don't do it on borrowed money...
Next week I'm taking you back to school with the Three "R"s. Enjoy your weekend!
Thursday, February 25, 2010
Paper or Plastic?
Thought for the day: Why is common sense so uncommon?
Last week I threw out some examples of what your credit can cost you in the long run. This week I've been talking about the advantages of paying in cash. Let me give you another scenario.
If you are carrying a balance on your credit card and you buy a cheeseburger with that card you are in essence financing that cheeseburger. I like to use round numbers so let's say you get the meal deal and it's only five bucks. There was a ten dollar bill in your wallet but you went for the plastic automatically. How much will borrowing the five dollars from the credit card company cost you?
Your card's APR is 20% and you only make minimum payments of 2% of your principal balance each month. Your cheeseburger will cost you $1 every year you are carrying a balance and it will take 26 years and 4 months to pay it off. That better have been one good burger!
Savings tip of the day: Keep your ac running smoothly. Replace filters monthly to ensure your ac unit operates at peak efficiency.
Last week I threw out some examples of what your credit can cost you in the long run. This week I've been talking about the advantages of paying in cash. Let me give you another scenario.
If you are carrying a balance on your credit card and you buy a cheeseburger with that card you are in essence financing that cheeseburger. I like to use round numbers so let's say you get the meal deal and it's only five bucks. There was a ten dollar bill in your wallet but you went for the plastic automatically. How much will borrowing the five dollars from the credit card company cost you?
Your card's APR is 20% and you only make minimum payments of 2% of your principal balance each month. Your cheeseburger will cost you $1 every year you are carrying a balance and it will take 26 years and 4 months to pay it off. That better have been one good burger!
Savings tip of the day: Keep your ac running smoothly. Replace filters monthly to ensure your ac unit operates at peak efficiency.
Wednesday, February 24, 2010
Monopoly Money
Thought for the day: It’s what you do when no one is looking that matters most.
The past couple days I have looked at the advantages of paying for things in cash. Today I'll play Devil's advocate and look at some problems with my own theory.
Know anyone who can't keep cash in his pocket? I used to work with a guy who would cash his check on Friday afternoon. By Monday morning he was crying about having no money. This blows my pay with cash theory right out of the water! Except that I am not writing to the guy who has no idea about being responsible. If you're reading these posts you are probably already making an effort to manage your money responsibly.
Not everyone understands why you can't just throw cash away. I have a theory on why some people behave this way. For generations now we have been buying on credit, writing checks, borrowing and paying back. Few people deal in cash and those who do are thought to be shady (some with cause). As one who deals a large part in cash transactions I will say that we're not all working under the table or under the radar.
Ever meet someone with this philosophy? "Spend it now. Tomorrow it might not be there." Duh! It won't be there because you just spent it...
For a lot of folks cash is seen as something that is disposable, not real, like play money in Monopoly. Hopefully if you have been treating cash in this way you will begin to pay bills with cash as I have suggested. It's not so much fun spending it then!
Tip of the day: Repurpose grocery bags. Use them as trash bags and you will save money. Some grocery stores offer you money for bringing them back (just not with trash in them). At the very least find a place to recycle them so they're not filling up a landfill.
The past couple days I have looked at the advantages of paying for things in cash. Today I'll play Devil's advocate and look at some problems with my own theory.
Know anyone who can't keep cash in his pocket? I used to work with a guy who would cash his check on Friday afternoon. By Monday morning he was crying about having no money. This blows my pay with cash theory right out of the water! Except that I am not writing to the guy who has no idea about being responsible. If you're reading these posts you are probably already making an effort to manage your money responsibly.
Not everyone understands why you can't just throw cash away. I have a theory on why some people behave this way. For generations now we have been buying on credit, writing checks, borrowing and paying back. Few people deal in cash and those who do are thought to be shady (some with cause). As one who deals a large part in cash transactions I will say that we're not all working under the table or under the radar.
Ever meet someone with this philosophy? "Spend it now. Tomorrow it might not be there." Duh! It won't be there because you just spent it...
For a lot of folks cash is seen as something that is disposable, not real, like play money in Monopoly. Hopefully if you have been treating cash in this way you will begin to pay bills with cash as I have suggested. It's not so much fun spending it then!
Tip of the day: Repurpose grocery bags. Use them as trash bags and you will save money. Some grocery stores offer you money for bringing them back (just not with trash in them). At the very least find a place to recycle them so they're not filling up a landfill.
Tuesday, February 23, 2010
Rolling Pennies
Jeff Foxworthy made a joke about being broke years ago. He called this extreme state of having nothing "rolling pennies for gas broke." You may have been there before- rolling up your change to see how much you have accumulated. Maybe you have one of those giant Coke bottles with years worth of pennies in it. It's change. It's not even a dollar and a dollar won't buy you anything anymore. So why keep track of it? It's the last thing you think about using to pay for things but maybe the coins should be spent first.
I got a coin bank for Christmas that counts the change as you drop it in. I'm going to keep funding it until I have twenty dollars or so just to see how long it takes. It's a fun thing to have, but hanging onto your change won't bring you any great return.
More than likely your change is spread out throughout the house and the car. When was the last time you checked the seat cushions in the couch? How about the console in your car? Chances are you have several dollars worth of change in places that you may never find.
You know those annoying ladies in the checkout line who dig through their purses to find the exact change to give to the cashier while you wait patiently? Well, that's me. No, I have not become a little old lady. But I spend the change in my pocket and here's why.
Spending change keeps dollars in my pocket.
Dollar bills are easier to keep track of so I don't misplace my money (usually).
Dollar bills are harder to spend so I think harder about breaking that dollar.
My pockets are a whole lot lighter withour all that change going jing-a-ling-a-ling.
It's all part of the psychology of spending your money. I also spend smaller bills first. Again, the larger bills are harder to let go of. The smaller the amount of the currency the easier it is to let it go.
And one more thing: If you find a penny and it is heads up, that's good luck. Pick it up. I say if you find any amount of money it's good luck no matter which way it's facing! I dropped some money in the Lowe's Foods parking lot not long ago. I went back to find the twenty five dollars but it was long gone. It must have landed heads up and made someone's lucky night!
I got a coin bank for Christmas that counts the change as you drop it in. I'm going to keep funding it until I have twenty dollars or so just to see how long it takes. It's a fun thing to have, but hanging onto your change won't bring you any great return.
More than likely your change is spread out throughout the house and the car. When was the last time you checked the seat cushions in the couch? How about the console in your car? Chances are you have several dollars worth of change in places that you may never find.
You know those annoying ladies in the checkout line who dig through their purses to find the exact change to give to the cashier while you wait patiently? Well, that's me. No, I have not become a little old lady. But I spend the change in my pocket and here's why.
Spending change keeps dollars in my pocket.
Dollar bills are easier to keep track of so I don't misplace my money (usually).
Dollar bills are harder to spend so I think harder about breaking that dollar.
My pockets are a whole lot lighter withour all that change going jing-a-ling-a-ling.
It's all part of the psychology of spending your money. I also spend smaller bills first. Again, the larger bills are harder to let go of. The smaller the amount of the currency the easier it is to let it go.
And one more thing: If you find a penny and it is heads up, that's good luck. Pick it up. I say if you find any amount of money it's good luck no matter which way it's facing! I dropped some money in the Lowe's Foods parking lot not long ago. I went back to find the twenty five dollars but it was long gone. It must have landed heads up and made someone's lucky night!
Monday, February 22, 2010
Cash Psych 101
Quote of the day: "You can observe a lot by just watching" - Yogi Berra
So what happens psychologically when you pay for something with cash?
You give something of your own, something of value to another person or a store and they give you a service or product in return. You know that you have paid for the thing because you saw the money leaving your hand. You worked hard to earn that money and it's hard to watch it go.
When you swipe a credit or debit card you really don't feel anything. You didn't have to forfeit any material possession to obtain what you wanted. You didn't see money leaving your bank account. That's why paying with plastic is so easy and so dangerous. The money can be gone and you're still swiping. The bank loves you because now they get to charge fees, penalties, and interest...
Next month try paying for everything in cash (except where you are receiving a discount for paying online), all your bills, gas, groceries. If your mortgage is through a bank with a local branch pay in cash at the bank. Hide your debit and credit cards in a safe place on the first of the month. Withdraw only enough cash to pay specific bills as needed. Eat at home every night. Carry your lunch to work with you every day. One month, cash only, no extras. Just be sure and keep your receipts for everything. At the end of the month see how much cash you have left. If it's $0.00 then figure out where you need to cut back. If there is a positive balance add it to your growing emergency fund.
Savings tip: Use the "no heat" setting on your dishwasher. - Heat drying is not necessary after a hot-wash cycle. By keeping it off, you save energy.
So what happens psychologically when you pay for something with cash?
You give something of your own, something of value to another person or a store and they give you a service or product in return. You know that you have paid for the thing because you saw the money leaving your hand. You worked hard to earn that money and it's hard to watch it go.
When you swipe a credit or debit card you really don't feel anything. You didn't have to forfeit any material possession to obtain what you wanted. You didn't see money leaving your bank account. That's why paying with plastic is so easy and so dangerous. The money can be gone and you're still swiping. The bank loves you because now they get to charge fees, penalties, and interest...
Next month try paying for everything in cash (except where you are receiving a discount for paying online), all your bills, gas, groceries. If your mortgage is through a bank with a local branch pay in cash at the bank. Hide your debit and credit cards in a safe place on the first of the month. Withdraw only enough cash to pay specific bills as needed. Eat at home every night. Carry your lunch to work with you every day. One month, cash only, no extras. Just be sure and keep your receipts for everything. At the end of the month see how much cash you have left. If it's $0.00 then figure out where you need to cut back. If there is a positive balance add it to your growing emergency fund.
Savings tip: Use the "no heat" setting on your dishwasher. - Heat drying is not necessary after a hot-wash cycle. By keeping it off, you save energy.
Sunday, February 21, 2010
Pay in Cash
"I'll tell you how to save money. Don't spend it!" - S.W. Laye
There are a number of reasons why it's better to pay with cash. There are arguments against carrying wads of bills around as well. I understand that, but this week I want to look at the cash advantage.
The first good thing about using cash is that there is a limit to what you can spend. Once the cash is gone you won't buy things you don't need. You can't! But isn't the ability to buy whatever you want a good thing? Not when you end up paying for it for the rest of your life. With high limit credit cards one can rack up thousands of dollars in debt and not feel a thing.
Using cash is psychological as much as practical. You are more attached to real money. Merely swiping a card doesn't hurt as badly as letting go of hard-earned greenbacks. You will control what is being spent because once it's gone it's gone.
*Another perk to paying with cash is that many places offer a cash discount. There is a gas station not far from where I live that has cheaper gas than most already. You will notice some gas pumps have a "cash price." This particular station posts the credit price and when you pay with cash the gas is about 5 cents per gallon cheaper. Last week we saved $50 on a carpet cleaning by asking for a cash discount!
Savings Tip of the Day: Consolidate your errands into one trip. By not running out and back multiple times you'll save gas and save money. The Green folks ought to like this one too!
There are a number of reasons why it's better to pay with cash. There are arguments against carrying wads of bills around as well. I understand that, but this week I want to look at the cash advantage.
The first good thing about using cash is that there is a limit to what you can spend. Once the cash is gone you won't buy things you don't need. You can't! But isn't the ability to buy whatever you want a good thing? Not when you end up paying for it for the rest of your life. With high limit credit cards one can rack up thousands of dollars in debt and not feel a thing.
Using cash is psychological as much as practical. You are more attached to real money. Merely swiping a card doesn't hurt as badly as letting go of hard-earned greenbacks. You will control what is being spent because once it's gone it's gone.
*Another perk to paying with cash is that many places offer a cash discount. There is a gas station not far from where I live that has cheaper gas than most already. You will notice some gas pumps have a "cash price." This particular station posts the credit price and when you pay with cash the gas is about 5 cents per gallon cheaper. Last week we saved $50 on a carpet cleaning by asking for a cash discount!
Savings Tip of the Day: Consolidate your errands into one trip. By not running out and back multiple times you'll save gas and save money. The Green folks ought to like this one too!
Thursday, February 18, 2010
Payday Loan
Thought for the day: Can you ever be just whelmed?
Today I called one of those cash advance places. They had sent me a postcard with a coupon for a $25 cash bonus for using their service. Wow! What a deal. That was worth a phone call and so I called. A young lady answered the phone and I told her I had gotten their mailer. I asked what interest rates they were offering on cash loans and she said,
“There is no interest. It’s just $15 for every $100.”
Me: “So the interest rate is 15%?”
Girl: “No, sir it’s just $15 for every $100 that you need. Like, you get one hundred and when you come back you pay one hundred fifteen.”
Me: “Then there is a 15% fee at the time of the cash advance?”
Girl: “It’s not a fee. That’s just what you pay when you pay the money back.”
Me: “So I can take as long as I want to pay it back and still only pay $15 per hundred?”
Girl: “No, it’s only until the next payday, whether it’s two weeks or one month or however you get paid.”
*What if I get paid by the year?*
Me: “Okay, suppose I get a cash advance and do not pay it back when I get paid. You said there’s no interest, is that right?”
Girl: “There’s no interest but you will be charged three nine one point oh seven. That’s an APR.”
Me: “You are charging people three hundred ninety one point oh seven, almost four hundred per cent interest?”
Girl: “There is no interest. That is the APR. You pay the money back on your next pay day. That’s what this is.”
That forty one per-cent interest at the People’s Finance is starting to sound pretty good! Let’s do some math. According to my new friend at the cash advance store they charge $15 for every $100. I went to a small country school but I’m pretty sure $15 is 15% of $100 even in the big city. It’s not a fee or interest. “It’s just what you pay.” Okay, then she told me about the APR which was also not an interest rate and that was 391.07 % APR. Say I get a cash advance from them and pay it back when I get paid in two weeks. They like to deal in APRs, so what is the equivalent APR for $15/100 in two weeks? It’s 390%. At least the rate will stay consistent if I decide not to pay them back at my next payday.
I thanked the young lady for her time and ended the call. But I did call back to find out if I could get the $25 cash bonus if I only advance $100. I wonder how many of these coupons they mailed out. If everyone who received one across America went in with their coupon, advanced $100, received their $25 cash bonus and immediately paid back the $115 they owed, that company would lose a lot of money.
Savings Tip: Go paperless. Just about everyone offers online bill payment now. At 44 cents a pop mailing checks can be expensive. Also, you won't have to reorder checks for a longer time. Many banks are offering cash rewards to sign up for paperless statements and online bill payment. Check it out!
Today I called one of those cash advance places. They had sent me a postcard with a coupon for a $25 cash bonus for using their service. Wow! What a deal. That was worth a phone call and so I called. A young lady answered the phone and I told her I had gotten their mailer. I asked what interest rates they were offering on cash loans and she said,
“There is no interest. It’s just $15 for every $100.”
Me: “So the interest rate is 15%?”
Girl: “No, sir it’s just $15 for every $100 that you need. Like, you get one hundred and when you come back you pay one hundred fifteen.”
Me: “Then there is a 15% fee at the time of the cash advance?”
Girl: “It’s not a fee. That’s just what you pay when you pay the money back.”
Me: “So I can take as long as I want to pay it back and still only pay $15 per hundred?”
Girl: “No, it’s only until the next payday, whether it’s two weeks or one month or however you get paid.”
*What if I get paid by the year?*
Me: “Okay, suppose I get a cash advance and do not pay it back when I get paid. You said there’s no interest, is that right?”
Girl: “There’s no interest but you will be charged three nine one point oh seven. That’s an APR.”
Me: “You are charging people three hundred ninety one point oh seven, almost four hundred per cent interest?”
Girl: “There is no interest. That is the APR. You pay the money back on your next pay day. That’s what this is.”
That forty one per-cent interest at the People’s Finance is starting to sound pretty good! Let’s do some math. According to my new friend at the cash advance store they charge $15 for every $100. I went to a small country school but I’m pretty sure $15 is 15% of $100 even in the big city. It’s not a fee or interest. “It’s just what you pay.” Okay, then she told me about the APR which was also not an interest rate and that was 391.07 % APR. Say I get a cash advance from them and pay it back when I get paid in two weeks. They like to deal in APRs, so what is the equivalent APR for $15/100 in two weeks? It’s 390%. At least the rate will stay consistent if I decide not to pay them back at my next payday.
I thanked the young lady for her time and ended the call. But I did call back to find out if I could get the $25 cash bonus if I only advance $100. I wonder how many of these coupons they mailed out. If everyone who received one across America went in with their coupon, advanced $100, received their $25 cash bonus and immediately paid back the $115 they owed, that company would lose a lot of money.
Savings Tip: Go paperless. Just about everyone offers online bill payment now. At 44 cents a pop mailing checks can be expensive. Also, you won't have to reorder checks for a longer time. Many banks are offering cash rewards to sign up for paperless statements and online bill payment. Check it out!
Wednesday, February 17, 2010
The Cost Of Credit
Thought for the day: Money and the appearance of money are two completely different things.
Ever know anyone who always has the nicest, newest things and you wonder where they got the money? You know the guy is not making that much money managing a Wal-Mart, but he's driving a relatively new Lexus.
We'll call him Joe. Joe bought his Lexus two years ago for $30,000.00 on a five year loan. He got a good deal at only 4% and his payments are $552.50 per month. In five years Joe will have only paid $3,150.00 in interest, not bad for such a nice car.
BUT, Joe has been shelling out over Five hundred dollars a month to drive to his job at Wal-Mart for five years! Wally World pays him $30,000.00/ year which means that each month he is bringing home about $2,000.00. His mortgage payment is $850.00. His utilities run on average $150.00/month. He spends about $250.00/month on gas and groceries (Joe is single and doesn't go anywhere but to work). Joe is also trying to pay off a credit card that has a minimum payment of $265.00.
Even if he doesn't ever eat out or spend any money on entertainment, Joe is coming up well short every month. So he picks up some overtime hours at the 24-hour superstore and starts making an extra $500.00 a month. That's what he uses as his "fun money." Unfortunately, if Joe wants to have any fun in the future he can't afford to spend that extra money now. He is still paying just the minimum on the credit card and let's look at what that is costing him.
This example is from Math.com...
"Credit card minimum payments may seem convenient on the surface, but only making the minimum payment each month can be quite costly – and, it can take you several years to finally get your credit card paid off.
"Let’s say you have a $7,000.00 balance on a credit card with a 24.500% APR. If your minimum payment is $265.00 and that is all you pay each month, it will take you 15 year(s) and 6 month(s) to finally get that card paid off (assuming you don’t add anymore debt to the balance). You will have also paid $14,814.72 in interest alone."
Maybe Joe should have bought a used Honda. Gas mileage is great and he had the cash at the time to pay the full price. He would have gotten a better deal because he had cash and for $552.50/month Joe would have never had to carry a balance on his credit card. The Honda may have died after fifteen years of use, but Joe would have had $18,000.00 IN the bank drawing interest instead of having paid $18,000 TO the bank in interest. Eighteen grand will still buy a reliable ride.
Referring back to an old post - Think long term. Ask yourself what is the cost of the credit and make a small sacrifice now. You'll thank yourself later.
Ever know anyone who always has the nicest, newest things and you wonder where they got the money? You know the guy is not making that much money managing a Wal-Mart, but he's driving a relatively new Lexus.
We'll call him Joe. Joe bought his Lexus two years ago for $30,000.00 on a five year loan. He got a good deal at only 4% and his payments are $552.50 per month. In five years Joe will have only paid $3,150.00 in interest, not bad for such a nice car.
BUT, Joe has been shelling out over Five hundred dollars a month to drive to his job at Wal-Mart for five years! Wally World pays him $30,000.00/ year which means that each month he is bringing home about $2,000.00. His mortgage payment is $850.00. His utilities run on average $150.00/month. He spends about $250.00/month on gas and groceries (Joe is single and doesn't go anywhere but to work). Joe is also trying to pay off a credit card that has a minimum payment of $265.00.
Even if he doesn't ever eat out or spend any money on entertainment, Joe is coming up well short every month. So he picks up some overtime hours at the 24-hour superstore and starts making an extra $500.00 a month. That's what he uses as his "fun money." Unfortunately, if Joe wants to have any fun in the future he can't afford to spend that extra money now. He is still paying just the minimum on the credit card and let's look at what that is costing him.
This example is from Math.com...
"Credit card minimum payments may seem convenient on the surface, but only making the minimum payment each month can be quite costly – and, it can take you several years to finally get your credit card paid off.
"Let’s say you have a $7,000.00 balance on a credit card with a 24.500% APR. If your minimum payment is $265.00 and that is all you pay each month, it will take you 15 year(s) and 6 month(s) to finally get that card paid off (assuming you don’t add anymore debt to the balance). You will have also paid $14,814.72 in interest alone."
Maybe Joe should have bought a used Honda. Gas mileage is great and he had the cash at the time to pay the full price. He would have gotten a better deal because he had cash and for $552.50/month Joe would have never had to carry a balance on his credit card. The Honda may have died after fifteen years of use, but Joe would have had $18,000.00 IN the bank drawing interest instead of having paid $18,000 TO the bank in interest. Eighteen grand will still buy a reliable ride.
Referring back to an old post - Think long term. Ask yourself what is the cost of the credit and make a small sacrifice now. You'll thank yourself later.
Tuesday, February 16, 2010
The Savings Snowball
Thought for the day: If what you did was so great it will stand on its own merit. There’s no need for you to talk about it.
I hope you all had a nice, long holiday weekend. If you did not get yesterday off for Presidents Day (formerly known as Lincoln's birthday) then I hope you had a wonderful Valentine's Day. Saturday morning we actually had snow on the ground in Myrtle Beach! Look for pictures coming soon to www.jasonandkarenparchert.blogspot.com .
I built a snowman at six in the morning. By ten he was three clumps of melting snow. Now might be a good time to use the snowball analogy to talk about money. It might be another twenty years before we have more measurable snow here. The phrase most used regarding snow when it comes to your money is the "debt snowball." If you have ever rolled a snowball to make a snowman you know how the ball just grows bigger and bigger without any effort. It just collects and all sticks together. Just like the snowball, if not nipped in the bud, debt will grow and grow until it's out of your control- interest on top of interest on top of fees...
Today I want to coin a new phrase and look at "the savings snowball." It's the same theory, just in reverse. We'll look at eliminating debt another time. For the moment assume you have no debt. When you begin to put a little bit of money away each month into an account that is drawing interest you start a snowball effect that will continue to grow your savings as long as you want.
Say you put $100 into a savings account each month. Imagine (this is only an example, not currently realistic) you have a savings account that draws 4% and is compounded monthly. At the end of one year you would have $1,226.32. In the last month you made $4.07 in interest. It doesn't seem like much but you can see the snowball effect happening. In the first month you only made 33 cents in interest. You see how the amount of the monthly interest has grown to twelve times what it was at the beginning. And so has your contribution, I know. Follow me. The second year your interest earned will be $76.28. After three years you have $3,830.88 saved up. If you stop contributing there, left alone for eighteen years at the same interest rate that $3,830.88 will become $7,661.76. Keep making the $100 monthly contributions and in eighteen years the account balance will be around $32,500. Your monthly interest yield will be over $100 at that point.
But eighteen years is a long time from now! Well, what if you had started eighteen years ago? But there are no savings accounts with 4% interest. Okay, start with a $1,000 cd. You won't be able to touch the money for 6-14 months and you won't be able to contribute each month. Still make monthly contributions to your savings and add that to your cd at renewal.
If you are a little more daring now is the perfect time to invest in some stocks. If you have time to wait for ROI (return on investment) a good solid mutual fund is always a good bet. Look into a Roth IRA. A fair long term investment could bring you an average of 12% annually. At that rate your money will double every six years. So, if your initial investment is $10,000.00, in eighteen years you will have $80,000.00. Even at a 6% return your money will double in twelve years.
It's the snowball effect. Let it work for you as opposed to against you. Eliminate the debt and start the ball rolling toward a secure future!
Savings tip of the day: Store brands. They are the exact same thing as the name brand foods you buy in most cases. Don't believe me? Look at the labels and compare.
I hope you all had a nice, long holiday weekend. If you did not get yesterday off for Presidents Day (formerly known as Lincoln's birthday) then I hope you had a wonderful Valentine's Day. Saturday morning we actually had snow on the ground in Myrtle Beach! Look for pictures coming soon to www.jasonandkarenparchert.blogspot.com .
I built a snowman at six in the morning. By ten he was three clumps of melting snow. Now might be a good time to use the snowball analogy to talk about money. It might be another twenty years before we have more measurable snow here. The phrase most used regarding snow when it comes to your money is the "debt snowball." If you have ever rolled a snowball to make a snowman you know how the ball just grows bigger and bigger without any effort. It just collects and all sticks together. Just like the snowball, if not nipped in the bud, debt will grow and grow until it's out of your control- interest on top of interest on top of fees...
Today I want to coin a new phrase and look at "the savings snowball." It's the same theory, just in reverse. We'll look at eliminating debt another time. For the moment assume you have no debt. When you begin to put a little bit of money away each month into an account that is drawing interest you start a snowball effect that will continue to grow your savings as long as you want.
Say you put $100 into a savings account each month. Imagine (this is only an example, not currently realistic) you have a savings account that draws 4% and is compounded monthly. At the end of one year you would have $1,226.32. In the last month you made $4.07 in interest. It doesn't seem like much but you can see the snowball effect happening. In the first month you only made 33 cents in interest. You see how the amount of the monthly interest has grown to twelve times what it was at the beginning. And so has your contribution, I know. Follow me. The second year your interest earned will be $76.28. After three years you have $3,830.88 saved up. If you stop contributing there, left alone for eighteen years at the same interest rate that $3,830.88 will become $7,661.76. Keep making the $100 monthly contributions and in eighteen years the account balance will be around $32,500. Your monthly interest yield will be over $100 at that point.
But eighteen years is a long time from now! Well, what if you had started eighteen years ago? But there are no savings accounts with 4% interest. Okay, start with a $1,000 cd. You won't be able to touch the money for 6-14 months and you won't be able to contribute each month. Still make monthly contributions to your savings and add that to your cd at renewal.
If you are a little more daring now is the perfect time to invest in some stocks. If you have time to wait for ROI (return on investment) a good solid mutual fund is always a good bet. Look into a Roth IRA. A fair long term investment could bring you an average of 12% annually. At that rate your money will double every six years. So, if your initial investment is $10,000.00, in eighteen years you will have $80,000.00. Even at a 6% return your money will double in twelve years.
It's the snowball effect. Let it work for you as opposed to against you. Eliminate the debt and start the ball rolling toward a secure future!
Savings tip of the day: Store brands. They are the exact same thing as the name brand foods you buy in most cases. Don't believe me? Look at the labels and compare.
Friday, February 12, 2010
Don't worry about tomorrow. Plan for it and you won't have to worry.
A few more energy saving tips...
Replace outdoor lights with motion-detector lighting. - Lights that are not being used will stay off and save energy.
Run your dishwasher only when it's full. - Reduced usage will save energy and keeps your energy costs down.
Keep your freezer stocked (with all the food you bought on sale!). - It's more energy-efficient when full.
And this from recent experience...Don't leave your back door open all night like I did Tuesday! I walked downstairs Wednesday morning and it was freezing cold in the living room. I had taken the garbage out and forgot to check the door before I went to bed. Oops!
A few more energy saving tips...
Replace outdoor lights with motion-detector lighting. - Lights that are not being used will stay off and save energy.
Run your dishwasher only when it's full. - Reduced usage will save energy and keeps your energy costs down.
Keep your freezer stocked (with all the food you bought on sale!). - It's more energy-efficient when full.
And this from recent experience...Don't leave your back door open all night like I did Tuesday! I walked downstairs Wednesday morning and it was freezing cold in the living room. I had taken the garbage out and forgot to check the door before I went to bed. Oops!
Thursday, February 11, 2010
Reduce The Use
*Special Announcement!* Due to the severe winter weather and record snows the meeting of the Council on Global Warming in Washington D.C. has been cancelled for today.
In light of the current weather situation on the East Coast I thought I'd pass along some energy saving tips for the cold winter months. I borrowed these ideas from Santee Cooper's reducetheuse.com...
Take advantage of the sun's warmth. - Open curtains and shades when the sun is shining to help keep your house naturally warm. By keeping the heater off, you save energy.
When you're away for the winter Holidays, set your thermostat to 55. - This will save energy while preventing your pipes from freezing.
Seal off unused rooms in your house (yeah, we don't have any of those). - Turn off thermostat and close vents in these rooms to save energy.
Turn off the oven 10 to 15 minutes before cooking time runs out. - Food will continue to cook without the extra energy.
Always measure detergent when doing laundry. - Too many suds will make the washer work harder than it should. Make sure you use the correct amount and save energy.
Tip of the day: Set a savings goal, something to work toward such as a trip to Europe. You may not even want to go to Europe but once you have banked enough cash at least you know that you can. Put that money in a cd and start saving for the next vacation!
In light of the current weather situation on the East Coast I thought I'd pass along some energy saving tips for the cold winter months. I borrowed these ideas from Santee Cooper's reducetheuse.com...
Take advantage of the sun's warmth. - Open curtains and shades when the sun is shining to help keep your house naturally warm. By keeping the heater off, you save energy.
When you're away for the winter Holidays, set your thermostat to 55. - This will save energy while preventing your pipes from freezing.
Seal off unused rooms in your house (yeah, we don't have any of those). - Turn off thermostat and close vents in these rooms to save energy.
Turn off the oven 10 to 15 minutes before cooking time runs out. - Food will continue to cook without the extra energy.
Always measure detergent when doing laundry. - Too many suds will make the washer work harder than it should. Make sure you use the correct amount and save energy.
Tip of the day: Set a savings goal, something to work toward such as a trip to Europe. You may not even want to go to Europe but once you have banked enough cash at least you know that you can. Put that money in a cd and start saving for the next vacation!
Wednesday, February 10, 2010
Live Paycheck To Paycheck
Thought for the day: "A nickel ain't worth a dime anymore." - Yogi Berra
It's the most repeated sign of hardship. "They were living paycheck to paycheck." The saying implies that someone (usually a family) has hit such financial hard times that they can barely make it to the next payday making sure all the bills are paid. I have another phrase I use for this situation. It's called LIVING WITHIN ONE'S MEANS.
What are one's means? For starters, you should never be spending more in one month than you have coming in in that month. That includes not putting anything on the credit card you don't have the cash to cover when the bill is due.
Next, you do not NEED cable. There are many other extras that have become a part of everyone's monthly expenses, but I want to pick on cable for a minute. Cable is an extra expense, not a utility. I grew up with three channels plus PBS on the TV. If you wanted to change the channel you got up, walked across the room and turned the dial on the TV set. Shocking, I know. I didn't miss out on anything in my childhood, however, and we didn't miss all the extra channels in the least.
When I discovered most of the rest of the world had cable TV I thought, "What a waste of money. People actually pay for something they could get for free?" I know, I know. It's not the same thing. Just like satellite radio offers much more than free antenna radio. It's an extra expense and if you can afford it, good for you. But if you can't pay the balance on your credit card you can't afford any extras. Period.
Here's what got under my skin on the cable issue. When I got out in the real world (where everybody had it) I met people who would complain about having no money. They were late paying rent every month. They were worried about getting the electic bill paid. Yet they had SEVENTY FIVE CHANNELS on their TV! And usually it was a big screen.
So if you are living "paycheck to paycheck" my first bit of advice is CUT THE CABLE! Next, when you start to get ahead in the slightest amount don't stop living this way. It's called living within your means. Unless you are bringing home twice what you spend every month and have an emergency cash savings of 6 months of expenses you don't have the means to spend any extra money. There will be emergencies and you will need that cash someday. Live paycheck to paycheck and stick the extra moolah in the bank.
Savings Tip of the Day: Unplug your unused appliances. Also your phone chargers. While not supplying power to your cell phone a charger still draws an electrical current and runs up your electric bill.
It's the most repeated sign of hardship. "They were living paycheck to paycheck." The saying implies that someone (usually a family) has hit such financial hard times that they can barely make it to the next payday making sure all the bills are paid. I have another phrase I use for this situation. It's called LIVING WITHIN ONE'S MEANS.
What are one's means? For starters, you should never be spending more in one month than you have coming in in that month. That includes not putting anything on the credit card you don't have the cash to cover when the bill is due.
Next, you do not NEED cable. There are many other extras that have become a part of everyone's monthly expenses, but I want to pick on cable for a minute. Cable is an extra expense, not a utility. I grew up with three channels plus PBS on the TV. If you wanted to change the channel you got up, walked across the room and turned the dial on the TV set. Shocking, I know. I didn't miss out on anything in my childhood, however, and we didn't miss all the extra channels in the least.
When I discovered most of the rest of the world had cable TV I thought, "What a waste of money. People actually pay for something they could get for free?" I know, I know. It's not the same thing. Just like satellite radio offers much more than free antenna radio. It's an extra expense and if you can afford it, good for you. But if you can't pay the balance on your credit card you can't afford any extras. Period.
Here's what got under my skin on the cable issue. When I got out in the real world (where everybody had it) I met people who would complain about having no money. They were late paying rent every month. They were worried about getting the electic bill paid. Yet they had SEVENTY FIVE CHANNELS on their TV! And usually it was a big screen.
So if you are living "paycheck to paycheck" my first bit of advice is CUT THE CABLE! Next, when you start to get ahead in the slightest amount don't stop living this way. It's called living within your means. Unless you are bringing home twice what you spend every month and have an emergency cash savings of 6 months of expenses you don't have the means to spend any extra money. There will be emergencies and you will need that cash someday. Live paycheck to paycheck and stick the extra moolah in the bank.
Savings Tip of the Day: Unplug your unused appliances. Also your phone chargers. While not supplying power to your cell phone a charger still draws an electrical current and runs up your electric bill.
Tuesday, February 9, 2010
Simplify
Everything should be made as simple as possible, but not simpler.
-- Albert Einstein
Henry David Thoreau went out to "live deliberately" by a pond. I'm not going to suggest that we all do that, but we could all simplify our lives a great deal by cutting back in a few places. While Thoreau was at Walden Pond he kept track of all of his expenses as well as income from selling what he grew and found in the wild. Try writing down every penny you spend. Soon you'll realize the unecessary expenses you're racking up and be able to see where you can trim the spending and start saving.
Saving tip of the day: Declutter your life. When you do your spring cleaning this year go through your closets and box up what you don't need anymore. Have a yard sale or donate what is still usable to the Salvation Army or charity of your choice. Your donation is tax deductible and the free space you now have will free up your mind and improve your quality of life.
-- Albert Einstein
Henry David Thoreau went out to "live deliberately" by a pond. I'm not going to suggest that we all do that, but we could all simplify our lives a great deal by cutting back in a few places. While Thoreau was at Walden Pond he kept track of all of his expenses as well as income from selling what he grew and found in the wild. Try writing down every penny you spend. Soon you'll realize the unecessary expenses you're racking up and be able to see where you can trim the spending and start saving.
Saving tip of the day: Declutter your life. When you do your spring cleaning this year go through your closets and box up what you don't need anymore. Have a yard sale or donate what is still usable to the Salvation Army or charity of your choice. Your donation is tax deductible and the free space you now have will free up your mind and improve your quality of life.
Monday, February 8, 2010
Don't Be Afraid To Ask
Quote of the day: Just because it’s the way you know, does not mean it’s the best way.
Analyze the offer
Seek counsel
Keep your guard up
How many times have you gotten into something before you realized what it really was- a purchase, a contract, a relationship- only to wish you had made a better informed decision? The problem is that too many times we are afraid to ask too many questions. We don't want to offend anyone or hurt anyone's feelings so we go with the flow.
"But the salesman was so nice and his wife just lost her job and their kids are trying to go to Bible Camp." That doesn't mean you need to sign your life away to secure his financial future. Salesmen can be very pursuasive. That's what they do.
A lot of pain and heartache (and stupid debt!) can be avoided if you simply take the time to ask a few questions. We have all heard, "If it sounds too good to be true..." so many times that the saying has become cliche. Still true. It never hurts to consider an offer you receive or hear about, but ask before you sign.
First, Analyze
Is this a legititmate offer?
Is this something I really need?
Can I afford this right now?
Then, Seek the advice and counsel of family and friends.
Have you heard about this deal?
I'm thinking about getting involved with this company. What do you know about them?
Don't you have one of these? How do you like it?
Always, Keep your guard up.
The easiest time to get suckered is when you want something the most or when you're the brokest (really, that's a word).
You'll never know if you don't ask.
I'll be glad to answer any questions you might have and I'd love to hear your saving secrets! Write me anytime @ lazypmusic@hotmail.com
When opening a new bank account do you just take the banker at his word or do you ask to see everything in writing. Again, you may feel like you are being distrustful. Good. Even if this is a family member or a close friend you have no reason to sign the bottom line without reading. Every bank offers "free checking." Sometimes that free checking account comes with a nominal monthly fee.
"But when I opened this account the woman said it was a free account."
"Yes, but you signed this paper right here satating that you agree to pay the monthly fee. The first ten checks are free, sir."
Remember, the banks are our friends. They are here to serve our banking needs. 99% of the extra fees can be avoided by reading the paperwork and knowing the rules.
Disclaimer: Stupidebt does not endorse any of the products advertised on this site. Ironically, most of the current ads are offering help filing your taxes online. Visit their sites. See what each is offering and then go to www.irs.gov and file for free!
Analyze the offer
Seek counsel
Keep your guard up
How many times have you gotten into something before you realized what it really was- a purchase, a contract, a relationship- only to wish you had made a better informed decision? The problem is that too many times we are afraid to ask too many questions. We don't want to offend anyone or hurt anyone's feelings so we go with the flow.
"But the salesman was so nice and his wife just lost her job and their kids are trying to go to Bible Camp." That doesn't mean you need to sign your life away to secure his financial future. Salesmen can be very pursuasive. That's what they do.
A lot of pain and heartache (and stupid debt!) can be avoided if you simply take the time to ask a few questions. We have all heard, "If it sounds too good to be true..." so many times that the saying has become cliche. Still true. It never hurts to consider an offer you receive or hear about, but ask before you sign.
First, Analyze
Is this a legititmate offer?
Is this something I really need?
Can I afford this right now?
Then, Seek the advice and counsel of family and friends.
Have you heard about this deal?
I'm thinking about getting involved with this company. What do you know about them?
Don't you have one of these? How do you like it?
Always, Keep your guard up.
The easiest time to get suckered is when you want something the most or when you're the brokest (really, that's a word).
You'll never know if you don't ask.
I'll be glad to answer any questions you might have and I'd love to hear your saving secrets! Write me anytime @ lazypmusic@hotmail.com
When opening a new bank account do you just take the banker at his word or do you ask to see everything in writing. Again, you may feel like you are being distrustful. Good. Even if this is a family member or a close friend you have no reason to sign the bottom line without reading. Every bank offers "free checking." Sometimes that free checking account comes with a nominal monthly fee.
"But when I opened this account the woman said it was a free account."
"Yes, but you signed this paper right here satating that you agree to pay the monthly fee. The first ten checks are free, sir."
Remember, the banks are our friends. They are here to serve our banking needs. 99% of the extra fees can be avoided by reading the paperwork and knowing the rules.
Disclaimer: Stupidebt does not endorse any of the products advertised on this site. Ironically, most of the current ads are offering help filing your taxes online. Visit their sites. See what each is offering and then go to www.irs.gov and file for free!
Saturday, February 6, 2010
Quote of the day: Your spending money frivolously is not going to save the economy.
It’s Super Bowl weekend. You’re probably getting ready for the big party. If you have not already bought all of the chips, dips and soft drinks you’re taking with you consider this. Become a member at your local supermarket if you are not already. Nearly all of the major grocery stores now offer free memberships that offer great bargains. Even when the items are on sale for everyone members often save even more. It takes no time to sign up and they can do it for you right at the register when you check out.
If you want to save even more you may have to pay a small annual fee to join one of the big discount warehouses: Sam’s Club and Costco. The Sam’s Club membership is $40/year and we save at least that at their gas pumps. In the store you will probably have to buy at least twice as many of something as what you need right now, so stock up. You will end up paying less and making fewer trips to the grocery store.
To best utilize your membership rewards become a member at as many places as possible. Check the weekly ads to see who has what on sale. Don’t just automatically run to the place that’s nearest your home. Drive a couple miles out of your way. Make a few stops at a few different stores and buy just the sale items. You’ll probably find everything on your list on sale somewhere! And as long as you’re stopping at each place take a notepad and compare prices. Your local grocer may have a better deal than the jumbo discount store this week…
Saving tip of the day: Plan ahead! Plan out your meals for the week. Check the weekly flyers (It’s not always junk mail) and see what is on sale this week. You may not get to have steak this Tuesday, but maybe steaks will be the deal next week.
It’s Super Bowl weekend. You’re probably getting ready for the big party. If you have not already bought all of the chips, dips and soft drinks you’re taking with you consider this. Become a member at your local supermarket if you are not already. Nearly all of the major grocery stores now offer free memberships that offer great bargains. Even when the items are on sale for everyone members often save even more. It takes no time to sign up and they can do it for you right at the register when you check out.
If you want to save even more you may have to pay a small annual fee to join one of the big discount warehouses: Sam’s Club and Costco. The Sam’s Club membership is $40/year and we save at least that at their gas pumps. In the store you will probably have to buy at least twice as many of something as what you need right now, so stock up. You will end up paying less and making fewer trips to the grocery store.
To best utilize your membership rewards become a member at as many places as possible. Check the weekly ads to see who has what on sale. Don’t just automatically run to the place that’s nearest your home. Drive a couple miles out of your way. Make a few stops at a few different stores and buy just the sale items. You’ll probably find everything on your list on sale somewhere! And as long as you’re stopping at each place take a notepad and compare prices. Your local grocer may have a better deal than the jumbo discount store this week…
Saving tip of the day: Plan ahead! Plan out your meals for the week. Check the weekly flyers (It’s not always junk mail) and see what is on sale this week. You may not get to have steak this Tuesday, but maybe steaks will be the deal next week.
Friday, February 5, 2010
Consider The Squirrels
Quote of the day: Cheat the government out of a few hundred dollars and the IRS will spend thousands of dollars in resources to hunt you down and make sure you pay. Cheat them out of tens of thousands in taxes and you may end up with a cabinet level position at the White House.
One of my favorite scenes from the movie Life Of Brian is when a crowd has gathered to hear Brian speak. They think he’s the Messiah and he tries to come up with something prophetic to quiet them. After not being able to offer any further explanation on “Consider the lilies…in the field” he tries to quote Jesus again, “Uh, well, the birds then…have they got jobs?”
Confusion ensues and the crowd wonders why he is making the birds out to be freeloaders. You probably recognize the paraphrase of the passage from the Sermon on the Mount Brian was quoting. “Behold the fowls of the air: for they sow not, neither do they reap…” The point that Jesus made was that the Father takes care of the birds and the lilies, so he’s much more likely to see to our needs. Not that God wants us to be a society of parasites. He has just given us the tools we need to provide for our own needs.
Today I want to consider the squirrels. Growing up in the country I was taught a lot about plants and trees and animals, how they behave and why. Much can be learned by watching nature. Squirrels have quite a system of saving that gets them through the cold winter months when the trees are not producing the nuts they need to survive. Squirrels in our yard survived on the acorns that fell from the oak tree. Instinctually they stockpiled enough acorns in the hollow of the oak tree during the summer to have plenty to eat in the winter. That means in the summertime they didn’t overindulge, leaving them to starve in January. The squirrels may have invented living within one’s means. It’s a great system and it works for humans too.
Not coincidentally, the savings account we recently opened for Jackson is called a “Squirrels Club Account” at our bank. Sure, they have a cute squirrel on the cover of the passbook clinging to an acorn. But the squirrel is not just an adorable mascot. It’s a good role model when it comes to saving. Squirrels don’t have proper jobs or pay taxes but they use what God gave them to ensure their survival.
Tip of the day: Don’t forget home mortgage interest and PMI are tax deductible on Schedule A. BUT, you may be better off using the Standard Deduction in the margin to the left of 1040 line 40. It’s $11,400 for joint returns. Weigh the options…
One of my favorite scenes from the movie Life Of Brian is when a crowd has gathered to hear Brian speak. They think he’s the Messiah and he tries to come up with something prophetic to quiet them. After not being able to offer any further explanation on “Consider the lilies…in the field” he tries to quote Jesus again, “Uh, well, the birds then…have they got jobs?”
Confusion ensues and the crowd wonders why he is making the birds out to be freeloaders. You probably recognize the paraphrase of the passage from the Sermon on the Mount Brian was quoting. “Behold the fowls of the air: for they sow not, neither do they reap…” The point that Jesus made was that the Father takes care of the birds and the lilies, so he’s much more likely to see to our needs. Not that God wants us to be a society of parasites. He has just given us the tools we need to provide for our own needs.
Today I want to consider the squirrels. Growing up in the country I was taught a lot about plants and trees and animals, how they behave and why. Much can be learned by watching nature. Squirrels have quite a system of saving that gets them through the cold winter months when the trees are not producing the nuts they need to survive. Squirrels in our yard survived on the acorns that fell from the oak tree. Instinctually they stockpiled enough acorns in the hollow of the oak tree during the summer to have plenty to eat in the winter. That means in the summertime they didn’t overindulge, leaving them to starve in January. The squirrels may have invented living within one’s means. It’s a great system and it works for humans too.
Not coincidentally, the savings account we recently opened for Jackson is called a “Squirrels Club Account” at our bank. Sure, they have a cute squirrel on the cover of the passbook clinging to an acorn. But the squirrel is not just an adorable mascot. It’s a good role model when it comes to saving. Squirrels don’t have proper jobs or pay taxes but they use what God gave them to ensure their survival.
Tip of the day: Don’t forget home mortgage interest and PMI are tax deductible on Schedule A. BUT, you may be better off using the Standard Deduction in the margin to the left of 1040 line 40. It’s $11,400 for joint returns. Weigh the options…
Thursday, February 4, 2010
Form 1040: Do It Yourself
Thought for the day:
It’s what you do with your money when you don’t have any money that really counts.
The three letters that strike fear in people’s hearts the most: I R S. It’s that time of year again and we are all faced with that dreaded task of figuring a tax return. If you get money back from the government this year then you may have already filed. If you’re like me and pay after all the year’s figures are in, then you may be putting off filing for another couple months. As long as you’re settled up with Uncle Sam by the 15th of April you’re in good shape.
Remember, Sam is your Uncle. He’s not some big, bad scary villain that’s out to get you. As long as you report all of your income and pay the proper amount of taxes on it he’s going to leave you alone. The Treasury Department will not send you a Thank You card, but you’re not going to get audited unless the numbers don’t add up. Still, a lot of people pay a lot of money to have someone do their taxes for them. Just the other day I heard about a lady paying almost $300 to a certain company (we’ll call them “I & S Brick”) to do a pretty basic tax return! I have not heard of anyone paying much less than a hundred dollars to this same company for a simple filing. This is highway robbery!
One reason folks have a “professional” prepare their taxes is that it gives them peace of mind that the taxes were done right and that the IRS will not come calling. Another is some people may even think they can get more money back by using one of these tax services. There’s an outfit currently advertising in the Myrtle Beach area that boasts, “Nine out of ten of our customers get a refund check.” I’ll bet if we pulled up the numbers nine out of ten Americans get a refund check come tax time. That’s not due to some secret way of filing that the crack staff at I & S Brick knows about. It just means that for ninety per cent of Americans the government is taking TOO MUCH of their hard earned money throughout the year.
So, here are the reasons for having someone else do your tax return:
“At least I know it was done right.”
“I can get more money back and they will have it direct deposited, so I get it faster.”
“Tax law is so confusing. I’m not going to begin to try doing it myself!”
Here’s what you’re paying for:
You take all of your income information to I & S Brick. They type whatever figures you give them directly onto a form 1040. This is the exact same form that was mailed to your house if you paid taxes last year. So, instead of transferring the figures from your W-2 onto the 1040 in the confines of your own home you have driven down the road to have someone else do it for you. And that’s convenient?
The guy at I & S Brick knows how to get your money to you faster via direct deposit. Line 73b & d on form 1040 are blanks in which to write your bank account and routing number. You have to take this information to the “accountant” who then fills it in for you.
Finally, you are paying these people because they know what their doing. That guy at I & S Brick? He’s been doing tax returns for probably about three weeks. He may be able to catch a write-off you overlooked that will get you an extra $50 back, yet you're paying him $100. This guy (or girl) took a two week course which is probably done online in a day now in order to be educated about taxes. The book the IRS sent to your house, the same book you can pick up at the library for free if you did not get one, is written at about a fifth grade reading level. Have you ever actually opened the book? There are line by line instructions and an index in the back.
Do yourself a favor this year. Use the book. Fill out the form(s) yourself. Use last year's return as a guide. If you are still not confident in your ability to do simple math or you feel you are not smarter than a fifth grader, go pay somebody $100to fill in the blanks for you.
Savings tip of the day: It’s YOUR money you’re getting in the refund check from the U.S. Treasury. If you had less taken out throughout the year that money could be sitting in a savings account or a CD! When you get this year's refund will be a perfect time to start.
It’s what you do with your money when you don’t have any money that really counts.
The three letters that strike fear in people’s hearts the most: I R S. It’s that time of year again and we are all faced with that dreaded task of figuring a tax return. If you get money back from the government this year then you may have already filed. If you’re like me and pay after all the year’s figures are in, then you may be putting off filing for another couple months. As long as you’re settled up with Uncle Sam by the 15th of April you’re in good shape.
Remember, Sam is your Uncle. He’s not some big, bad scary villain that’s out to get you. As long as you report all of your income and pay the proper amount of taxes on it he’s going to leave you alone. The Treasury Department will not send you a Thank You card, but you’re not going to get audited unless the numbers don’t add up. Still, a lot of people pay a lot of money to have someone do their taxes for them. Just the other day I heard about a lady paying almost $300 to a certain company (we’ll call them “I & S Brick”) to do a pretty basic tax return! I have not heard of anyone paying much less than a hundred dollars to this same company for a simple filing. This is highway robbery!
One reason folks have a “professional” prepare their taxes is that it gives them peace of mind that the taxes were done right and that the IRS will not come calling. Another is some people may even think they can get more money back by using one of these tax services. There’s an outfit currently advertising in the Myrtle Beach area that boasts, “Nine out of ten of our customers get a refund check.” I’ll bet if we pulled up the numbers nine out of ten Americans get a refund check come tax time. That’s not due to some secret way of filing that the crack staff at I & S Brick knows about. It just means that for ninety per cent of Americans the government is taking TOO MUCH of their hard earned money throughout the year.
So, here are the reasons for having someone else do your tax return:
“At least I know it was done right.”
“I can get more money back and they will have it direct deposited, so I get it faster.”
“Tax law is so confusing. I’m not going to begin to try doing it myself!”
Here’s what you’re paying for:
You take all of your income information to I & S Brick. They type whatever figures you give them directly onto a form 1040. This is the exact same form that was mailed to your house if you paid taxes last year. So, instead of transferring the figures from your W-2 onto the 1040 in the confines of your own home you have driven down the road to have someone else do it for you. And that’s convenient?
The guy at I & S Brick knows how to get your money to you faster via direct deposit. Line 73b & d on form 1040 are blanks in which to write your bank account and routing number. You have to take this information to the “accountant” who then fills it in for you.
Finally, you are paying these people because they know what their doing. That guy at I & S Brick? He’s been doing tax returns for probably about three weeks. He may be able to catch a write-off you overlooked that will get you an extra $50 back, yet you're paying him $100. This guy (or girl) took a two week course which is probably done online in a day now in order to be educated about taxes. The book the IRS sent to your house, the same book you can pick up at the library for free if you did not get one, is written at about a fifth grade reading level. Have you ever actually opened the book? There are line by line instructions and an index in the back.
Do yourself a favor this year. Use the book. Fill out the form(s) yourself. Use last year's return as a guide. If you are still not confident in your ability to do simple math or you feel you are not smarter than a fifth grader, go pay somebody $100to fill in the blanks for you.
Savings tip of the day: It’s YOUR money you’re getting in the refund check from the U.S. Treasury. If you had less taken out throughout the year that money could be sitting in a savings account or a CD! When you get this year's refund will be a perfect time to start.
Wednesday, February 3, 2010
Think Long Term
When you hear “Think long term,” what comes to mind? Probably investing and retirement, right? Good examples of when to have a long term mindset. If you want to get the best return from your retirement account just leave it alone when it takes a dip. It will come back over time. But there is more you can do to secure your financial future than just letting your IRA ride out the ups and downs of the stock market. But you must start now!
First, let’s look at how you pay for things such as car insurance and credit cards (I could do a whole separate blog on credit cards!). You would be surprised how many people think all they owe on their credit card is the line that says Payment Due. Wrong! Most times if you’re making only minimum payments you are barely paying the interest and the principal balance is not going down. It is easy to pay as little as possible now, but you end up paying five times the price for whatever it is you put on the credit card in the first place. You probably already knew this.
So, you’re a wise consumer and you pay the total balance on your credit card every month. Better yet, you are using only a debit card and you have an account with no overdraft. But how do you pay for your car insurance? Probably monthly, right? If so, you are paying anywhere from $3-$10 extra each time you make a payment. Insurance salesmen are smart and when they quote you rates they give you a nice low, monthly rate. This works for two reasons. First, if they give you the whole six month figure you are more likely to be scared away. “Only $100 per month” sounds much more affordable than “a low six month premium of $540.” And second, the insurance company makes more money when you pay monthly. Suppose the figures I just gave you are actual car insurance rates. Here’s the math:
Monthly payment = $90 premium + $10 convenience charge
Six month premium = $540
Extra cost annually = $120
Extra you pay after ten years of paying monthly = $1,200!
“Yes, but ten years is a long time,” you say. And I will tell you that $1,200 is still a good bit of money. Let’s assume you’ll be driving for several more decades. Multiply that twelve hundred by four or five and that could be a nice little chunk of change with which to spoil the grandkids!
I could go into many more examples of how paying more now will save you long term, but I’ll stop there for the time being. Plan ahead. Think long term. Start now!
Today’s tip:
File your taxes yourself this year. If you are filing a simple individual return there is no need to pay someone to do it for you. Get out last year’s return and if you have all the same types of income and write-offs, use the old return as a guide. File online for free @ http://www.irs.gov .
First, let’s look at how you pay for things such as car insurance and credit cards (I could do a whole separate blog on credit cards!). You would be surprised how many people think all they owe on their credit card is the line that says Payment Due. Wrong! Most times if you’re making only minimum payments you are barely paying the interest and the principal balance is not going down. It is easy to pay as little as possible now, but you end up paying five times the price for whatever it is you put on the credit card in the first place. You probably already knew this.
So, you’re a wise consumer and you pay the total balance on your credit card every month. Better yet, you are using only a debit card and you have an account with no overdraft. But how do you pay for your car insurance? Probably monthly, right? If so, you are paying anywhere from $3-$10 extra each time you make a payment. Insurance salesmen are smart and when they quote you rates they give you a nice low, monthly rate. This works for two reasons. First, if they give you the whole six month figure you are more likely to be scared away. “Only $100 per month” sounds much more affordable than “a low six month premium of $540.” And second, the insurance company makes more money when you pay monthly. Suppose the figures I just gave you are actual car insurance rates. Here’s the math:
Monthly payment = $90 premium + $10 convenience charge
Six month premium = $540
Extra cost annually = $120
Extra you pay after ten years of paying monthly = $1,200!
“Yes, but ten years is a long time,” you say. And I will tell you that $1,200 is still a good bit of money. Let’s assume you’ll be driving for several more decades. Multiply that twelve hundred by four or five and that could be a nice little chunk of change with which to spoil the grandkids!
I could go into many more examples of how paying more now will save you long term, but I’ll stop there for the time being. Plan ahead. Think long term. Start now!
Today’s tip:
File your taxes yourself this year. If you are filing a simple individual return there is no need to pay someone to do it for you. Get out last year’s return and if you have all the same types of income and write-offs, use the old return as a guide. File online for free @ http://www.irs.gov .
Tuesday, February 2, 2010
Ground Hog Day
Thought for the day: “The definition of insanity is doing the same thing over and over again and expecting different results.” - Albert Einstein
I had been toying with the idea of starting a blog to share money-saving tips with people. I know there are already hundreds if not thousands of websites and newspaper/ magazine columns dedicated to this very thing already out there. But the more I heard experts giving advice on how to save money, the more I realized they were telling folks how handle their money pretty much as I do. As I am already working on a book about eliminating debt it seemed like the perfect time to begin helping folks to save their money. You won’t get rid of your debt until you learn how to save.
I wanted the blog to look polished and sound professional, so I began putting thoughts down on paper and planned to have a year’s worth of posts gathered before I even went live. Then I made a recent trip to a “finance” company just around the corner from my house. I had gotten a flyer in the mail advertising cash loans up to $2,500. Curiosity got the best of me and I grabbed the baby and rode over to see what this operation was all about. The name included “People” and “Finance” implying that they were the finance company “of the people.” I wanted to know what kind of financing options the people have these days.
When I arrived at the “finance” company address I found it to be in a shopping strip location. I expected to see huge dollar signs on the store front and signs advertising Pay Day Loans! and Car Title Loans! There was nothing of the sort and when I walked inside the front office looked just like a bank lobby with all of the desks lined up on either side of the room. The young man behind the desk to my right was the first to speak, “Yes, how can I help you?”
“I’m here to inquire about a cash loan.”
“Do you have your account number?”
(No, moron I’m “inquiring about a loan”)
“No.”
“Okay, what’s the last name?”
“Parchert (no danger in him being able to spell that), why do you need that?”
“I’m sorry. Are you making a payment today?”
So now I break it down into very simple English. “I received a flyer in the mail from your company. It said you do cash loans. I need to speak with someone about that.”
“Yes, I can help you with that. First, let me get some information from you.”
I remained polite the whole time I was there. I just didn’t offer any information and explained to the young man that I just needed some information from him. I said, “Well, before we get started I’d just like to know what kind of rates you’re offering.”
“That depends on how much you’re borrowing.”
The flyer had said “up to $2,500” so I went with that figure. The “banking professional” turned to a chart on the wall and found that amount of money. He slid his finger down to the corresponding interest rate and said, “That would be 42%.” (Holy %#&?!) I rose from my chair, picked up my baby, said, “Thank you. I’m sorry for taking your time. I thought this was a legitimate finance company” and left.
Okay, so I fibbed a little when I told the guy I thought they were a real financial institution. But I had hoped they were offering “the people” a little better deal when interest rates are at an all time low. Unfortunately, with low rates and high unemployment it is a time when these types of companies are thriving! People are starving for cash and will destroy their financial future just to get through this month. The hounds are out there offering quick cash and preying on the desperate.
That’s when I realized “The People” need this blog now. I don’t want to just help you save money when you go to the grocery store (but I will incorporate some shopping secrets along the way). I want to share with you the philosophy on handling your money that I learned growing up. I took for granted that we were all pretty much raised the same way and viewed spending and saving in a similar fashion. Then I got out in the real world and found I have a very unique idea of how to conserve that which I have without depriving myself. I'll be sharing this philosophy with you one post at a time.
Another reason for starting this blog today is that it’s Ground Hog Day. If you have seen the movie you know where I’m going with this. Bill Murray is a weatherman doing a report on Ground Hog Day. He keeps waking up on the same day, doing the same thing, running into the same people in the same places and having the same conversations. Day after day his alarm goes off with the same song playing and once again it's Ground Hog Day. Maybe you are in a financial tailspin. You keep trying over and over to get out of debt but can’t seem to make any headway. Chances are you are repeating the same mistakes that got you into a bind in the first place. Don’t worry, there’s a light at the end of the tunnel.
Your money saving tip for today: Think long term. Be patient and good things will come your way. More on this tomorrow.
Jason
I had been toying with the idea of starting a blog to share money-saving tips with people. I know there are already hundreds if not thousands of websites and newspaper/ magazine columns dedicated to this very thing already out there. But the more I heard experts giving advice on how to save money, the more I realized they were telling folks how handle their money pretty much as I do. As I am already working on a book about eliminating debt it seemed like the perfect time to begin helping folks to save their money. You won’t get rid of your debt until you learn how to save.
I wanted the blog to look polished and sound professional, so I began putting thoughts down on paper and planned to have a year’s worth of posts gathered before I even went live. Then I made a recent trip to a “finance” company just around the corner from my house. I had gotten a flyer in the mail advertising cash loans up to $2,500. Curiosity got the best of me and I grabbed the baby and rode over to see what this operation was all about. The name included “People” and “Finance” implying that they were the finance company “of the people.” I wanted to know what kind of financing options the people have these days.
When I arrived at the “finance” company address I found it to be in a shopping strip location. I expected to see huge dollar signs on the store front and signs advertising Pay Day Loans! and Car Title Loans! There was nothing of the sort and when I walked inside the front office looked just like a bank lobby with all of the desks lined up on either side of the room. The young man behind the desk to my right was the first to speak, “Yes, how can I help you?”
“I’m here to inquire about a cash loan.”
“Do you have your account number?”
(No, moron I’m “inquiring about a loan”)
“No.”
“Okay, what’s the last name?”
“Parchert (no danger in him being able to spell that), why do you need that?”
“I’m sorry. Are you making a payment today?”
So now I break it down into very simple English. “I received a flyer in the mail from your company. It said you do cash loans. I need to speak with someone about that.”
“Yes, I can help you with that. First, let me get some information from you.”
I remained polite the whole time I was there. I just didn’t offer any information and explained to the young man that I just needed some information from him. I said, “Well, before we get started I’d just like to know what kind of rates you’re offering.”
“That depends on how much you’re borrowing.”
The flyer had said “up to $2,500” so I went with that figure. The “banking professional” turned to a chart on the wall and found that amount of money. He slid his finger down to the corresponding interest rate and said, “That would be 42%.” (Holy %#&?!) I rose from my chair, picked up my baby, said, “Thank you. I’m sorry for taking your time. I thought this was a legitimate finance company” and left.
Okay, so I fibbed a little when I told the guy I thought they were a real financial institution. But I had hoped they were offering “the people” a little better deal when interest rates are at an all time low. Unfortunately, with low rates and high unemployment it is a time when these types of companies are thriving! People are starving for cash and will destroy their financial future just to get through this month. The hounds are out there offering quick cash and preying on the desperate.
That’s when I realized “The People” need this blog now. I don’t want to just help you save money when you go to the grocery store (but I will incorporate some shopping secrets along the way). I want to share with you the philosophy on handling your money that I learned growing up. I took for granted that we were all pretty much raised the same way and viewed spending and saving in a similar fashion. Then I got out in the real world and found I have a very unique idea of how to conserve that which I have without depriving myself. I'll be sharing this philosophy with you one post at a time.
Another reason for starting this blog today is that it’s Ground Hog Day. If you have seen the movie you know where I’m going with this. Bill Murray is a weatherman doing a report on Ground Hog Day. He keeps waking up on the same day, doing the same thing, running into the same people in the same places and having the same conversations. Day after day his alarm goes off with the same song playing and once again it's Ground Hog Day. Maybe you are in a financial tailspin. You keep trying over and over to get out of debt but can’t seem to make any headway. Chances are you are repeating the same mistakes that got you into a bind in the first place. Don’t worry, there’s a light at the end of the tunnel.
Your money saving tip for today: Think long term. Be patient and good things will come your way. More on this tomorrow.
Jason
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