Think Your Way to Wealth

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A problem I think many people have, and I know I do, is determining what to do next to take care of or improve your personal finances. If you are trying to get out of debt, increase how much you are saving, and spend less, it can be overwhelming to think about all of the things you need to do to get your financial life in order, and sometimes it can be hard to remember and keep up with all of the things you want to do, as well as all of the things that have to be done. Just like in David Allen’s Getting Things Done, I like to make a list of my next actions w/ my personal finances. I either leave it on my desk at home, or write it in the notebook I carry around, or both.

Here is a typical list from several months ago:

1. Review 401k asset allocation
2. Automate 529 account-set up electronic withdrawals
3. Set up separate online savings account for irregular expenses
4. Cancel gym membership
5. Pay all bills as soon as they come in -(recurring)
6. Make weekly payments on credit card-(recurring)
7. Plan next week’s menu-(recurring)

I like to prioritize, and place recurring items on the list at the bottom, which I may forget or put off if I don’t put them on the list. I try to do all of my recurring items on Friday (for example to plan next week’s menu so I can do any shopping over the weekend) so I get everything done before the weekend. Automating your finances can also decrease the number of things you need to remember on a weekly or monthly basis as well.

Filed under: Debt Reduction, Saving Money, Spending Money by RC - No Comments →

Last fall, our old TV finally bit the dust, and I found a great deal on a 27″ LCD TV, and to make it even sweeter a $100 instant rebate if I signed up for a digital HD package with the local cable company. Since I wanted to be able to watch football in high definition, I was going to sign up for the HD package anyway. Well, a couple of months later, while I was perusing the bill, I noticed a “service assurance fee” of $6.99 per month. Curious as to what this was, I called to inquire. I was told by the cable company it covered all of the wiring in my house, and if it ever needed service, someone would come out to fix the problem at no additional charge. Well, although some people may need this type of service, as they may have the cable running through walls, etc., I do not. Why not ? Because shortly after I moved in, I ran all of the cable from where it enters at the house to the two rooms I have a TV in under the house (the house is raised) myself, and up through the floor to where the TV’s are. Any future wiring will be done by myself as well. Apparently, although the customer service agent could not tell me how it was added to my bill, when I upgraded my service this unnamed cable company (rhymes with fox) added this “service” to my monthly bill at the time. I did not notice because I failed to carefully examine the bill. I was expecting it to go up, and actually the first three months of the upgraded package were free, so it did not even go up for a few months. By the time the bill increased, I guess I just assumed it was correct.

Of course, you should always check your monthly bills to make sure they are correct and there are no hidden charges you don’t know about, but be extra careful if you upgrade a service, like cable, satellite, internet, or your cell phone, to make sure they are not tacking on something a little more than you anticipated.

Filed under: Spending Money by RC - No Comments →

 I recently got an email from a co-worker listing the dates of an upcoming tax-free holiday here in Louisiana for the purchase of hurricane preparedness items, and after doing a little research on the internet I came across a list of tax-free holidays in 2008 for quite a few different states. Here is a list of the states, along with the dates, what items are eligible, and the maximum purchase amount for each transaction, I believe.  For additional details, I would recommend visiting each state’s individual tax department website listed, also listed below. I hope this helps you plan ahead for any purchases you may be making this year.

Alabama
3 Days-August 1-3 
http://www.ador.state.al.us/salestax/SalesTaxHol.htm
clothing - $100   
computers - $750    
school supplies - $50    
Books - $30

Connecticut
7 Days- August 17-23
http://www.ct.gov/
clothing and footwear - $300  
    
District of Columbia
9 Days-August 2-10
http://otr.cfo.dc.gov/otr/
clothing - $100   
school supplies -  $100 
17 Days-Nov. 21 - Dec. 7
clothing - $100 

Iowa 
2 Days-August 1-2 
http://www.iowaccess.org/tax/
clothing - $100 
  

Louisiana
2 Days-August 1-2 
all TPP - $2,500   
http://www.rev.state.la.us/
2 Days-May 24-25
hurricane preparedness items - $1,500

  
Missouri 
3 Days- August 1-3 
http://www.dor.mo.gov/tax/
clothing - $100  
computers - $3500    
school supplies - $50 

   
New Mexico
3 Days-August 1-3
http://www.state.nm.us/tax/ 
clothing - $100  
computers - $1,000    
school supplies - $15 
   
North Carolina 
3 Days-August 1-3
http://www.dor.state.nc.us/
clothing - $100  
school supplies - $100    
computers - $3,500    
other comp. - $250    
sports equip - $50
    
Oklahoma
3 Days-August 1-3
http://www.tax.ok.gov/
clothing - $100 
 
South Carolina 
3 Days-August 1-3 
http://www.sctax.org/ 
clothing
school supplies  
 computers    
 other 

 Tennessee
3 Days-April 25-27
http://tn.gov/revenue/
clothing - $100  
school supplies - $100    
computers - $1,500 
3  Days-August 1-3
clothing - $100  
school supplies - $100    
computers - $1,500 
   
Texas 
http://www.window.state.tx.us/
3 Days-August 15-17 
clothing and backpacks - $100  
3 Days-May 24-26  
energy star products   
air conditioners - $6,000; other - $2,000
    
Virginia 
7 Days-May 25-31
hurricane preparedness items - $60
 http://www.tax.virginia.gov/
3 Days-August 1-3
clothing - $100  
school supplies - $20    
4 Days October 10-13 
energy efficient products - $2,500
  
West Virginia 
7 Days-September 1-7
http://www.state.wv.us/taxdiv/
energy efficient products - $2,500  
   

Filed under: Spending Money, Taxes by RC - 1 Comment →

As prices for food, gas, and a multitude of other goods and services continue to rise, I found myself noticing recently how many people I see walking around in the mornings with a cup of coffee in their hands from the local Starbucks or other coffee shop. Occasionally, someone will starting telling my how $3.50/gallon gas is killing them will sipping on a $4 16 oz. latte that cost the equivalent of over $30 per gallon. Bottled water still seems to be quite popular as well, and if a 16 oz. bottle of water costs $1 to $1.50 at a convenience store , the equivalent for a gallon would be $8+. Coffee is one of my favorite drinks, but I usually drink it at at the office, where it is free, or at home. I drink a lot of water as well, but I rarely drink bottled water; my wife on the other hand likes to take a bottle with her whenever she leaves the house. Even buying water by the case form Walmart or Sam’s Club, it still costs more than it does coming out if the tap, which is free. Let’s face it, Americans, as a whole, spend a lot of money on bottled water, as well as in coffee from coffee shops. Here are the numbers from 2006.

• Bottled Water Industry- $15 Billion in 2006. (Source)
• Coffee Shop Industry-appx. $11 billion in 2006. (Source)

So in the U.S., Americans spent about $25 to $26 billion on coffee from coffee shops and bottled water in 2006, or about $85 for every man, woman, and child in the U.S. This number has increased over the last two years, as well. That seems like a huge number to me. Do you think that the economic situation in the U.S., whether it is a recession, stagflation, or just a weak economy will have any effect on people’s purchases such as these? Will people start brewing their own coffee and bringing it with them, or start drinking tap water? Or is a morning Starbucks too important or too difficult for the average American to give up? I know Starbucks recently reported lower than expected earnings, but from what I recall their sales growth was still positive, only lower than expected. So it does not appear, as of yet, that rising gas prices or the weak economy has cause a decrease in these types of purchases. But will it in the future? Are people really embracing frugality, or are some things just untouchable when it comes to cutting back? I am not sure. What do you think?

Image by Bizmac

Filed under: Frugality, Spending Money by RC - 6 Comments →

One of the great things about the internet is that everything is right at your fingertips. Instead of going to a mall or a bunch of different stores and shopping around for hours, you can search the internet, and in a matter of minutes, find a half-dozen places offering what you are looking for and comparison shop to find the best deal. There are several websites, such as the ones listed below, which aggregate the best deals on the net,  have people posting “hot deals”, or specialty sites that offer one really good deal a day. They list good deals at major online merchants from around the web, closeouts, coupon codes, how to stack coupons with sales both online and offline, where to find things the cheapest, and a myriad of tips and techniques on finding the best deals both online and offline.

Slickdeals

A forum type website where people can post their “great deal” finds from around the net. The site even has a “hot deals” section, which is supposedly the best great deals with items at a much lower price than can be found elsewhere, including free.

Fatwallet

Another forum type site, where people post their deal findings from around the net.

Deals of America

An aggregation site, listing the best deals to be found from merchants around the web.

Woot

A “deal of the day” website, one item is offered each day, usually at a good price, until it is sold out. The next item is not available until the next day.

One of the problems I have has in the past with these types of websites is that sometimes the deals seem so good that they are hard to pass up! I have, and I am sure others have as well, purchased things that I never ended up using or really didn’t need. It is very easy, when you see something on the internet at what you consider a ridiculously low price, to pass it up when you know it will sell out in short order. They can be useful, however, when you are looking for something in particular, or shopping for Christmas or other gifts, but you must be careful with the “double-edged sword” of these types of websites. You should also be careful with credit card usage with these types of sites, because even if you are getting a great deal, if you buy too many things your total amount spent can still be quite high-much higher than you realized.

Below are several ways to navigate online purchases to avoid buying things you don’t need, even when they are cheap:

Avoid browsing the websites for fun- Similar to avoiding going to the mall for fun, if you find yourself ordering things you don’t really need, try to avoid these on a regular basis. Recreational shopping, whether online or at a physical store, usually leads to buying unnecessary items.

Make a list- Make a list of things you really need or were planning on purchasing anyway, and don’t buy anything unless it is on the list. If you miss a super deal because that item wasn’t on the list, too bad.

Checkout the freebies section- Both Slickdeals and Fatwallet have freebie sections where you can get items for free, such as free samples or giveaways, both online and offline. Check these out to satisfy your hunger for a great deal. What’s better than free after all?

Wait- If you are unsure about a purchase, wait a few days. You will lose out on some of the deals, but not all of them. It will also help you deterimine if you really want something rather than making spur of the moment purchases.

Filed under: Saving Money, Spending Money by RC - 4 Comments →

 Last summer, I almost bought a new lawnmower.  I was having trouble getting my current one started a few times, and I started thinking to myself how nice a new lawnmower would be.  It would save me time, and would be easier to use, I remember thinking to myself.  But after I thought about it for a while, I realized I should probably keep the lawnmower I have and “run it into the ground”, as they say. It’s easy to justify a purchase in your mind, but when I examined whether I really needed a new one, I came up with the following reasons I don’t need to make this purchase yet.

 I don’t really need a new one because my old one still works- Sometimes, its pretty easy to talk yourself into thinking you need something when in reality it is not a need but a want.

I may save a little time, but it won’t add up to anything significant- Saving five or ten minutes every time I cut my lawn (which is pretty often in the summer) may add up over the course of a year or so, but will I really translate that time I am out doing yard work anyway into something useful or productive on the weekends? Probably not.

I can use the exercise by continuing to use a non self-propelled lawnmower- I am not 100% sure, but i would likely spend a little more money when I do eventually buy one for a self-propelled model.  But in reality, it is probably good for me to “push” my old for as long as possible.

It keeps one more piece of junk out of the landfill a little longer- I have no doubt that when this one gives up it won’t be used by anyone else, so the longer I use it the longer it stays out of the landfill.  However, another positive is that I am not starting to wear out a another (new) lawnmower, which means the one I am not purchasing yet will not be getting worn out and on its way to the landfill faster as well.

Image by Tom Chambers

Filed under: Frugality, Spending Money by RC - 3 Comments →

 Setting up your bills for automatic payment can be great, you don’t have to worry about paying late, late fees, and you can even save yourself postage in some cases. But many people trying to organize and simplify their finances often have a big concern. You do give up some control, so to speak, of your money when you give someone permission to go ahead and take it out at a predetermined time. Many people still aren’t very comfortable with giving up that control, and may also be concerned with providing their financial information over the internet, even if many of the companies seem quite trustworthy, such as utilities, city services, etc. If I set up all my bills for automatic payment, and I am still trying to get my finances under control, will I cause myself more problems by over-drafting my account, or running low on money before I get paid again? Also, many of your bills could be due close to the same time of the month, and you may be worried about paying them all at the same time of the month and how that will effect your available bank balance.

One way to dip your toes in the water and become comfortable with automatic bill payments is to start small. You don’t have to set up all of your bills for auto-pay at once, and if you are still trying to get your finances into shape, you probably shouldn’t do so anyway.  To get started, start by picking your smallest recurring monthly bill, or two, and set them up for auto-pay. After a month or so with no hiccups, go ahead and add another one or two.  Before you know it, you will have the majority of your bills being paid automatically, with little to no stress on your part on whether you you will be able to handle or be comfortable with the payments automatically going through.

Image by r-z

Filed under: Budgeting, Spending Money by RC - 1 Comment →

 With all of the advertising, commericals, and public perception influencing consumer spending these days, its hard to determine what causes us to make certain decisions when it comes to spending money. While many people enter into a money spending situation with the best of intentions, it is very easy for some of us to “rationalize” our purchases to a point at which they are not in line with our original intent. Often, we tell ourselves “little white lies” in the heat of the moment to make ourselves feel better about certain purchases. Some of these rationalizations include the following:

I need this. Besides food shelter, clothing, and heat, there are really not many things that we really need.  While many things are not really extravagant or wasteful, separating your “needs” from your “wants” is an important part of making smart money decisions.

It’s such a good deal, I have to buy it. How many times have you talked yourself into buying something because it was on sale?  Obviously, the merchant is still making money on the deal, so most of the time we probably don’t even know how good of a deal we got. There is also the variation of this one, It was on sale, so I really saved X dollars. Sure you did.

I will cut back on X if I let myself buy Y.  You might tell yourself that you will stop buying coffee on the way to work everyday so you can buy a new pair of shoes. It may work for a day or so, but frequently we fall back to our old habits in a short period of time.

I can afford the payments, I’ll be getting a raise next month, year, etc. This is usually for larger purchase or something with a recurring payment, such as a car payment, cell phone plan, etc. While you may be getting a raise, you probably don’t know what it will be, and if you have to tell yourself this, you probably shouldn’t buy it right now either. 

I deserve it or I need to reward myself. While you do need to reward yourself on occasion, this one can easily be “overused”.

This will make my life easier.  You can often rationalize a purchase because you “just know” this new item will make your life easier and give you more free time, but often that is not the case.

I’ll try it out and cancel it if I don’t like it. It could be a gym membership, or premium cable channels.  Chances are, not only will you not cancel the service, but you may not even ending up using it.

I’ll put this on my credit card but pay it off before the bill is due. I’ve done this one many times in the past. Usually, what would happen to me is I would not pay it off right away, and when the bill came the next month I had forgotten about it, and ended up scrambling to try to pay it off.

This other brand, model, or item is a little more than I planned, but it is worth it.This can be true when buying a better quality item that may have a lower overall cost over its life, but frequently we don’t really take the time to do the research to determine if it is true.

One of the keys to becoming a “saavy” consumer, is to carefully plan your larger purchases, and to avoid getting yourself into situations where you may falter. Waiting a certain period of time, like a week or month, can also give you time to determine if you really “need” something, as opposed to  setting yourself up to make impulse purchases.

Photo by FreaksAnon

Filed under: Spending Money by RC - 5 Comments →

 Best Buy announced yesterday that it was offering a $50 Best Buy Gift card of each HD-DVD player, manufactured by Toshiba, which was purchased before February 23, 2008.  Toshiba recently announced they  would no longer produce HD-DVD players, and movie studios will no longer produce movies in the HD-DVD format. Sony’s Blu-ray will now be the standard for High Definition dvd’s. 

From  Bestbuy.com: 

Most qualifying customers will automatically receive their complimentary gift card by mail in the coming weeks. If you qualify and haven’t received yours by May 1, 2008, please call us at 1-888-BEST-BUY to verify your eligibility (have your receipt handy, if possible).

Filed under: Spending Money by RC - No Comments →

Many people will be getting money from the U.S. Government over the next few months. Some will be getting a tax refund, while others will get the economic stimulus rebate (Remember you need to file your taxes for 2007 1st in order to get the rebate!), or both. While most people get excited at what could be considered a “windfall” of sorts (although the refund is really an interest-free loan you provided the government over the last year), take some time to think before you spend. Below are several ways to “spend” or use your tax refund or economic stimulus rebate wisely.

Start or add to an Emergency Fund-If you don’t have an emergency fund, you need one now.  Start with some amount, $250, $500, $1000, based on whatever you are getting back from Uncle Sam, or a part of it, and park it in a online interest bearing savings account such as ING Direct. (if you use a link from my ING referral page and deposit $250, you will get $25 free, and I will get $10). If you are just starting an emergency fund, continue to add something to it out of every paycheck until you reach an amount that you feel comfortable with.

Pay off Debt-This is a no-brainer. If you are in debt, this is a great way to knock down a significant amount that you may not have been able to do otherwise.  If you have an emergency fund, and are still in debt, especially higher interest debt like credit cards, use your rebate or refund here.

Open or fund a Roth IRA-If you have a tax refund, you can fund a Roth IRA for 2008.  A trick you can use to fund a Roth IRA for 2007 (must be funded before April 15th), if you have a well-funded emergency fund and are getting a tax refund, is to borrow it from your emergency fund after you calculate what your refund will be. You then file electronically, and you will likely get your refund within about 2 weeks, after which you can replenish the amount back to your emergency fund.  (Don’t forget to put it back!)  You could possibly do this with your economic stimulus rebate, but you will have to wait until the check arrives, so you will have to take a little more risk until you can put the money back in your emergency fund.

Open a College Savings Fund- Open or add to a 529 account for your child(ren).

If you do spend it, spend it wisely- Don’t use it to add a recurring expense to your life, especially a depreciating asset. Even if you aren’t in any debt, and want to get into the “boost the economy spirit”, use the money wisely. For example, don’t go out a buy a new car because you now have a down payment. Instead, place it in a high interest savings account and save for a new car. If you buy a new (or used) car and finance the remainder, you are only adding to your monthly expenses over the next few years. You windfall has created a recurring liability that you will have to pay for out of your own money for the length of the financing agreement. In fact, even buying a new LCD TV could add a recurring expense to your bottom line. You may decide to add an HD package to your or additional cable channels to your cable or satellite package, thereby adding $20 or more to your regular monthly expenses.  Whatever you do spend it on, try not to purchase something that will increase your monthly expenses.

Filed under: Spending Money, Taxes by RC - 1 Comment →