Category Archives: Saving - Page 3

Quick saving tips to go

Posted by on February 13, 2007 4 comments

Although I enjoy reading a nice long article, I know sometimes I just want to get straight to the point.  So here I devised a quick “on the go” list for those who are trying to save on the daily basis about some daily stuff. Thinking to save is a good habit to get into so lets get to it.

  • Avoid ATM machines that charge fees. Those $2.00 fees will hit you like a ton of bricks when you do your end of the month net worth calculations.
  • Avoid eating out all the time. Learn to cook. I can cook ramen noodles and they save me tons of money.
  • Go cellular. I don’t even have a house phone, I just use my cell phone for everything. It’s more simple that way and saves me money.
  • Write letters or use e-mails instead of calling long distance. On second though, scratch out the letter, 37 cents can go a long way. Just write emails.
  • Resist peer pressure. If you have friends who like to go out to the movies or anywhere else, learn to say NO if you can’t afford it.
  • Learn to reduce your heating and cooling costs. Make your home more energy-efficient.
  • Try to buy things on sale. Don’t buy until you look around other stores and you’ve compared prices.
  • Use coupons, cut expenses. They’re everywhere, you just have to look.
  • Keep track of your spending. The more you know where you stand with your finances, the better your off.

If you have a tip or two you want to share, don’t hesitate to leave a comment. I would love to hear from ya.

8 Reasons Why I prefer credit cards over Cash

Posted by on February 8, 2007 4 comments

vida_master.bmpI know most pf bloggers would disagree with me on this one but I actually think that carrying credit cards instead of cash will save you more money. I actually have been experimenting over the past few month on what I prefer over carrying over the two.

For one period of time, I went living only on cash and cash only. So that means no credit cards, no debit cards, no plastic. I would go to the ATM once a week, to my own bank to avoid the ATM fees, and take out 40 bucks and that would be it for that week.

After trying the cash method, I then went on to try carrying only credit cards and debit cards. I found this method to be a lot more effective, not only in saving money but also keeping my self organized.

Here is a list I gathered from my experiment which gives all the reasons why credit cards are better to carry then cash.

  • I don’t know if it’s just me but when I see cash in my wallet, it’s more appealing to spend it. I would make a decision on what to buy based on how many ones I had.
  • When you use your credit card, you don’t have to worry about getting change, you get charged for the exact amount and you don’t have to worry about what to do with the “leftover” cash.
  • If you like to hold on to your receipts to keep track of your finances, it is a lot easier to keep them organized when you have everything listed online from the use of credit/debt cards. This was a huge factor for me.
  • When you carry cash, you’ll end up getting a lot of lose change and for the most part, people don’t save them. They scatter and gets lost.
  • Carrying lose change is easy to lose track of and hard to manage. Especially when you’re on the go.
  • As lazy as it may sound, when using your card you don’t have to worry about counting your money, just pick and swipe. :)
  • With all the rewards and promotions credit cards companies have to offer these days you can get great deals on flyer miles and even redeem points for household appliances.
  • When using your credit card, you can also be improving your credit score at the same time.

 So there you have it. I gave you 8 reasons why credit cards are better than cash. It’s true that there are also reasons for why cash is better than credit cards also but overall I still think that credit cards is the way to shop. GO PLASTIC!

Roth IRA

Posted by on February 7, 2007 No comments

investmentpic.jpgSo my last post from yesterday covered the basic fundamentals of what a Traditional IRA was. Today I want to cover Roth IRA and just like last post I want to keep it sweet and simple. So lets get started.

A Roth IRA’s main advantage is its tax structure. The contributions made to this account is only from earned income that has already been taxed, therefore it is not tax deductible. The total contribution for all IRA’s are limited and changes from year to year. This year the limit is at $4,000.00 for people 49 and under and $5,000.00 for people 50 and over. And starting in 2008, the contribution will increase to $5,000.00 for people 49 and under and $6,000.00 for people 50 and over. Here is a simple chart to see the previous and the future limits.

contribution-limit.JPG

Here are some Advantages and disadvantages:

Advantage:

  • At any time, the IRA owner may withdraw up to the total of his contributions without getting a penalty fee.
  • When a Roth IRA owner dies, and the spouse is the sole beneficiary of that Roth IRA and he or she also owns one, the surviving spouse may combine the two Roth IRAs into a single account without penalty.
  • If you are a first time home-buyer or paying qualified educational expenses, you are able to take out not only your contributions but also your earnings without a penalty( up to $10,000.00 in earning).
  • Lack of forced distributions based on age. All other tax-deferred retirement plans, including the Roth 401(k), require withdrawals to begin at age 70½, and impose an annual minimum distribution once withdrawals begin at any age beyond 59½. The Roth IRA is completely free of these mandates.

Disadvantages:

  • Contributions are not tax-deductible. This can be a disadvantage in the long run if you are making a decent amount of income. I suggest Roth IRA for people who are just started out and Traditional IRA for those who are making well over 80k.
  • With a Roth IRA, there are heavy penalties for early withdrawals of earnings. An unqualified withdrawal of earnings will result in federal income tax plus a ten-percent penalty on the amount.
  • Just a rumor but there is the risk that Congress over the next few years may decide to tax earnings on Roth IRAs.

So in general, Roth IRA has these following characteristics:

1.) Unlike Traditional IRA, contributions are not tax-deductible.

2.) Withdrawals are usually tax-free.

3.) At any given time, the Roth IRA owner may withdraw up to the total amount of his contributions.

General Overview of Traditional IRA

Posted by on February 6, 2007 No comments

investing.jpgSo I’m in the process of researching what investment funds to choose from for my first contribution. Since I’ve been reading a lot about IRA accounts I decided to share some useful information that I gathered.

The traditional and the Roth IRA, also known as Individual Retirement Account, is a retirement plan account that offers some tax advantages  for retirement savings .They are usually invested in stocks or mutual funds( there also other methods such as Certificate of Deposits, notes, and derivatives). There were 5 different kinds of IRA that I came across.

  1. Traditional IRA
  2. Roth IRA
  3. SEP IRA
  4. SIMPLE IRA
  5. Self-Directed IRA

Out of these 5 I’m going to concentrate on the two most popular the traditional and the Roth. Today I will cover just the Traditional  IRA and tomorrow I will go over Roth IRA.

I think the easiest way to understand what Traditional IRA is is to develop a list to differentiate between the goods and the bads. So heres a list of 4 advantages and disadvatages of Traditional IRA:

Advatages:

  • The main advantage of a Traditional IRA, is that contributions are often tax deductable. If a taxpayer contributes the maximum amount of $4,000 to a traditional IRA and is in the twenty-five percent marginal tax bracket, then a $1,000 benefit ($1,000 reduced tax liability) will be realized for the year.
  • If a taxpayer expects to be in a lower tax bracket when the person is close to his retirement than during the working years, then a traditional IRA offers an increased incentive over the Roth IRA.
  • The taxpayer gets the tax benefit immediately
  • This is just a rumor but With the Roth IRA, there may be a risk that over the next several decades Congress will decide to tax Roth IRA distributions.

Disadvantages:

  • There are the eligibility requirements for the tax-deductibility.
  • All withdrawals from a Traditional IRA are included in gross income and subject to federal income tax.
  • If one has a lot of disposable income, (total amount of income an individual makes after taxes), a Roth IRA in effect shelters more assets from taxes on gains than a Traditional IRA does.
  • The greatest disadvantage of the Traditional IRA is its forced distributions based on age.

So in general, Tradiontal IRA have these following characteristics:

1.) Contributions are often tax-deductible

2.) All transactions and earnings within the IRA have no tax impact

3.) Withdrawals at retirement are taxed as income

Tomorrow I will be covering Roth IRA so stay tuned.

Start saving for retirement asap, compound interest says so.

Posted by on February 5, 2007 2 comments

So here is the scenario:

Person A is 20 years old and has nothing start off with since he’s fresh out of school. But he has a decent job and he able to invest 100 dollars a week. He does this til the age 60.

  • Starts with $0.00
  • Invest $100.00 a week ($4,800.00 a year)
  • Interest rate going at 10%
  • 40 years to invest

Person B is 40 years old and has waited this long to wait to start saving for his retirement. He has some money saved up and is able to put down 15,000.00 dollars to start off with. Also, since hes much older, he makes more than person A and is able to put 200 a week. He does this til the age 60.

  • Starts with $15,000.00
  • Invests $200.00 a week ($9,600.00 a year)
  • Interest rate going at 10%
  • 20 years to invest

Lets put these numbers in the compound interest calculator I found in MoneyChimp.com and see how we do. 

So here are the charts.

Person A: 20yearoldinterest.JPG

 

 

 

 

 

 

 

 

Person B:40yearoldinterest.JPG

 

 

 

 

 

 

 

 

As you can see, although person B invested 15,000.00 more than person A, he still has no where near as much as person A when it comes time for retirement. The difference comes to a total of $1,631,152.20! This is all because person A decided to start 20 years before person B. Now that’s the power of compound interest baby!

I don’t think there is a “right” age to start saving for retirement but I do know that there’s no such things as starting too early. Most people think to themselves, “Retirement is long ways from now and I can afford to wait another year…”. Well if you keep thinking in that mentality, you’ll find yourself in person B’s shoes and miss out on millions of dollars.

As for myself, I don’t have a retirement savings account yet but if everything goes according to plan, I will by the end of this month. :) We’ll see.

Links around the corner

Posted by on February 3, 2007 1 comment

newspaper.jpgWhat better way to start the weekend then by reading some great articles to motive us to start our next week. Here are some money articles that caught my eye. Enjoy!

One frugal girl gives us Simple ways to save money while saving the world.

Jim writes up a nice piece called Understanding your Financial Fortress.

For all the vegetarians, JD gives us How to eat vegetarian on the cheap.

Golbguru explains The cost of higher education.

A Penny Saved shows how to Split your tax refund up into 3 ways

Digerati posts a nice article called Taxes-Personal Finance Tips.

Feeling of being debt free

Posted by on January 30, 2007 2 comments

money.gifI just can’t wait until I become debt free. Once I get out of debt, I will be so happy and relieved. I don’t think you can ever know what the stress feels like of being in debt, worrying day and night over how much you can payoff that week, until you actually experience it.

In the world of finance, I think the power of feeling debt free is one of the strongest because once you get to that point, your attitude towards saving and being frugal is perfectly in tuned. When you get in the habit of saving and pinching every nickle to pay off that credit card, it’s hard to quite, kinda like an addiction. Saving and being frugal is all about the attitude in my book. If you got the attitude, it no longer feels like an obligation but rather the feeling becomes natural to live frugally and in turn becomes easier to manage as a hobby. 

Things are looking good though, I should be able to beat my clock counter. According to my deadline, which was April 26th, but I believe looking at my current situation that I can probably get out of debt by mid February. I’ll keep you up dated.

Carnivals for the week

Posted by on January 28, 2007 No comments

This week, I was featured in two carnivals.

One was other at Money, Matter and More Musing. Golbguru hosted the 15th edition of The Festival of Under 30 Finances.

Joe other at workingathomeinternet hosted the 17th edition of Working at Home Blog Carnival.

There were many great entries for both carnivals, thanks for hosting guys!If you haven’t checked em out yet, I suggestyou head over and start reading.

Key tips on how to save money

Posted by on January 25, 2007 1 comment
saveyourmoney2.jpgIs better money management one of your New Year’s resolutions? If not, it’s still not too late to make it one of your resolutions. You ask, why should you Save Your Money? A good reason is for a family or household emergency.
What if you or a member of your household lost your job? What if the wage earner in your family got hurt on the job or had a traffic accident and are unable to work for a month, six months, a year or longer!

What will you do if you have not saved any money? You will probably over extend yourself by charging or borrowing what you do not have to handle these types of emergencies 

Here’s 7 tips on how to save money, read on.
  1. Keep a record of your expenses. Write down everything you spend your money on for a couple weeks or a month. Be as detailed as possible, and try not to leave out small purchases.
  2. Make a budget. Once you’ve managed to balance your earnings with your savings goals and spending, write down a budget so you’ll know each month or each paycheck how much you can spend on any given thing or category of things. Try to leave a little room for minor unexpected expenses.
  3. Stick to your budget. A budget won’t do you any good if you don’t follow it religiously. Build some self-discipline, and remember why you’re on a budget in the first place.
  4. Don’t buy things you do not need. Sure, it’s easier said than done, but sometimes you might want to forgo that extra bottle of soda or bag of candy at the supermarket exit, or anything else that won’t benefit you in the long run.
  5. Figure out what you need to save for and how much you need to save. For short-term goals, this is easy. If you want to buy a new book, find out how much it costs. If you want to buy a house, determine how much of a down payment you’ll need. For long-term goals, such as retirement, you’ll need to do a lot more planning, and you’ll also need to figure out how investments will help you achieve your goals.
  6. Set savings goals. Once you determine how much you need to save, establish a time frame. Set a particular date for accomplishing shorter-term goals, and make sure the goal is attainable within that time period. If it’s not attainable, you’ll just get discouraged.
  7. Kill your debt. Simply calculating how much you spend each month on your debts will illustrate that eliminating debt is the fastest way to free up money. Once the money is freed from debt payment, it can be easily re-purposed to savings.

That about sums it up. I know all these tips are pretty general and you’re probably saying to your self,” I already knew all this stuff.” But sometimes it’s good to remind ourselves the basic and general tips on saving money. The way I see it is, the more you see these kinds of tips, the more it will stick in your head. Happy savings!

3 small tips to save you BIG

Posted by on January 24, 2007 No comments

save_money.pngThere are plenty of reasons why we save, whether it be because to go on a vacation, buy a house, or enjoy a comfortable retirement, you’ve got to learn to save that money first. Unfortunately, many of us tend to spend whatever we earn if not more. We know savings are important for things like unexpected emergencies or major life changes, but we just can’t seem to put some cash away for a rainy day. Want to stop living from paycheck to paycheck? Here are 3 tips that can put you on track.

  1. Distinguish between your wants and needs. You will save a ton of money if you don’t mistake wants for needs. Needs are pretty simple to identify. Those items that are necessary to sustain;shelter, food, clothing, transportation. Wants are those things that enhance or possibly improve our life. A car is a need, however, unless necessary for your business, a $40,000 Sport Utility Vehicle is a want, even if a lot of people don’t see it that way. Have you ever heard (or said) “I absolutely need” when the actual meaning was “I absolutely want?” This is not to suggest that you shouldn’t be able to have the things you want but only that to delude yourself into believing that a want is a need and busting your budget in the process is a recipe for financial disaster.
  2. Is less better? Perhaps it is due to the booming economy, perhaps “keeping up with the Jonesism”, maybe its ego, but for many of us, we often seem to insist on the biggest and the best, no matter what the cost. When a $15,000 new car may be more than acceptable, we stretch the seams of our budget to afford a $25,000 vehicle. We buy $25 shirts with $35 designer labels attached. We opt for the $100 dinner at the trendy restaurant when a $20 meal would have been just as delicious. Think about where you are spending the family money and how to see if there couldn’t be savings found with minor changes in habits.
  3. Try before you Buy. This goes a long way in helping to avoid the silly purchases of things you rarely or never use. Before you buy something, especially items with big price tags, borrow one, rent one or try one out before you plunk down the cash. If you are bored with it, or determine that it truly is not something you need before you buy it (and you will be on a certain percentage of items) you will definitely be bored with it, or find it not that necessary, afterwards. For example: You feel that you absolutely must have a new Jet-Ski, which costs $4500. You go to the lake, rent one, and 45 minutes into a one hour rental you catch your self saying, “geez, this is a long hour.”  you just saved $4500 ;)