Money Reasons

Smart Reasons to Save, Use and Invest Money

Archive for March, 2010

Wealth Tip #5: Increasing Your Financial Savings Delta

March 19th, 2010

The following is based on my observations and common sense. However, usually with these wealth series, I base the post off of rich friends that I know of that have over a million dollars. Now for my discussion about the Financial Saving Delta.

Your Financial Savings Delta is simply:

(Discretionary Income – All Other Expenses) = Savings Delta

“Discretionary Income” is the money from your paycheck that could be in your wallet. So it’s your Gross income – (Taxes, medical, 401(k) contributiosn, and practically anything else that is automatically taken out of your paycheck).

“All Other Expenses” is all the expenses that you spend your discretionary money on.

It’s a very straight forward simple equation, but knowing it and actually increasing it are 2 different matter!

The 1st way to increase the Savings Delta is to increase the “Discretionary Income” while holding the “All Other Expenses” constant.

So what are the ways to increase the “Discretionary Income”:

Get a part time job in addition to your fulltime job. If you are a work house, you could instead get another full time job in addition to your 1^st full time job. Yes, I’ve thought about this, but I want to know my kid’s names (plus I love them…)
Win at the neighborhood poker night game (I’m good at this, but not much money to win that way, plus the booze costs make it a fun break even event). I could go bigger scale, but I could also lose bigger too. Maybe someday I’ll try it out, but for now I’m good.
Find a product to sell on eBay. I’ve been successful with this in the past! Note that I didn’t say sell your old stuff. While this is commendable, it’s a limited source of product. And besides, most often you sell your stuff at a loss vs. what you initially paid.
Investment! Stocks, bonds, real estate, whatever you fancy… I hope to really expand this area soon!
Blogging (lol, to date (almost 6 months) I’ve made $5.00… That works out to be about a penny and a half per hour of work! Move over Bill Gates, I’m moving on up!

The 2nd way to increase the Savings delta is to decrease the expenses that you have.

This is easier than it sounds! Here are some ways to do so:

Switch your credit card balances to no-interest credit cards. They sometime offer these kinds of deals. Make sure they don’t charge you a transfer fee thought.
Reduce your dinning expenses. I was amaze to find that I could save $40.00 more a week, jut by packing a cheap health lunch instead of eating out with the guys.
Do It Yourself with help from Mr. Google, almost anything for me is possible!
Carpool, yeah this kind of sucks but it reduces your commuting cost by practically half!!! Not to mention extending the life of your vehicle!
Cut out pop, go with flavored packets
Pay off your mortgage early, this will reduce you expenses by ¼ t 1/3!
Eliminate your land line! Go with Magic Jack, Skye, a cell phone or whatever…
The list just goes on and on…

It is very important to increase that Savings Delta though, and then invest it!

Can you think of any additional ways to dramatically increase the Savings Delta?

13 comments »

Posted in Savings, Wealth

Tags: increasing savings reduce spending savings delta

Someone Clipped My Car!!!

March 18th, 2010

Practically every day for lunch, I go to the library. My library is within 2 miles of where I work at, and overall it’s a great experience. In some ways, it’s like I’m Norm from the old TV show “Cheers”, but instead of a loud “Norm”, I get a hushed “Hi” from a few of the Librarians. I’ll hop on the computers and read other blogs, respond to comments on mine, and sometimes start writing a blog article.

Four months ago, a really sucky thing happened! I did my regular library routine, but when I came out to get in my car and go back to work… somebody had clipped me! My bumper was damaged and even cracked badly! Now, as regular readers know, I’m totally debt free, and this includes my cars.

So can you guess what I did?

Nothing! Yep, that’s right I did absolutely nothing to fix the problem. Here’s why:

The damage to the car is cosmetic (although I’m sure it’s a little less aerodynamic).
The depreciation on the car makes the cosmetic repair less appealing!
I have a high deductible on my car.
Since it’s a Malibu, nobody is checking it out anyway. If it were a Lexus, well then I’d fix it.
It’s basic purpose in life is to be a work car.

Would you fix your work car if it’s wasn’t worth it?

- D

12 comments »

Posted in Problems

Tags: car damaged

Dark Side of Frugality – Losing Your Integrity

March 17th, 2010

With frugality, we must be careful, not to take the practice so far that we start to lose our integrity!

What do I mean by this? Well a year ago I went to Wal-Mart to replace my kid’s electric ride-on car battery. I paid my $50, and brought it home, opened the package, and low and behold… someone’s old used battery in the box. I was very upset!

Of course, I returned it… and Wal-Mart took it back, but I was still very upset! Being the frugal guy that I am I thought what happened to would be so easy to do! Buy the new battery with cash, and return it! But I won’t stoop to that level.

So what else would be considered dark practices of frugality? How about buying clothes wearing them for a month then returning them? I know of people that do this.

Most of the people I know justify their actions by trying to put a false face on the businesses that they end up taking advantage of. It’s almost like they brainwashing themselves into believing the stories that they make up, or just don’t care. The funny thing is I never see a hint of remorse or doubt about their actions.

Then you also have the people that steal from the goodwill dropoff points. They’ll go to drop off their junk, but then take something else that’s worth value.

The exchange of the battery is criminal since it’s stealing, but the exchange of the clothes is a gray area. As for the exchange of items at goodwill dropoffs… hmmm, I would think it would be stealing, but very hard to prove?

- MR

16 comments »

Posted in Problems

Tags: dark frugality

Reasons For Having A HSA

March 15th, 2010

The main reason that I wanted to have a HSA was the fact that I hated to pay all of that money to the health insurance company every year!

Hundreds of dollar each month was taken out of my paycheck and never seen or ever used. It was very disheartening for me.

Then in 2005, the company I work at announced that for year 2006, they were going to included a HSA plan in their medical options! That when I started reading about it. The first year it was offered, I didn’t bite, but it was very tempted and I really regretted that I didn’t join! Then in 2007, I finally mustered up enough courage to take the plunge. Nobody else around me was switching like I was, so I was second guessing myself alot, but the numbers made sense to me, so I switch to the HSA plan.

My company had a yearly max of out of pocket expenses of almost $5,500 for family coverage, and $2,500 for individual max expenses. Luckily, I had a Roth and other monies set aside that if the need truly arose, I could tap those funds to cover such emergencies.

Reasons and logic as to why I went with a HSA:

I hate that I never, (NEVER), saw the money under the non-HSA plan. It’s like renting…
We hardly used any money for health needs anyway. Everybody is pretty healthy and young.
I thought the money would come in handy if for some reason I got laid off. Taxes on it would suck though!!!
The tax benefits are phenomenal! The contributions are tax deductible! Up to the following top limits: (for 2010) $3,050 for individual coverage, $6,150 for family coverage (and if you are 55 or older, you get an additional $1,000 amount tacked on to the above limits).
My company kicked in a free monthly contribution in addition to the one I was making!!! Yeah Baby!

There were negatives too with the HSA plan such as:

You have to pay the money for all the visits to the doctor’s office, etc (although certain things were still covered with the company plan, like a physical and the kid’s checkups). We got a credit card option with our HSA provider for HSA charges…
If we had a serious medical emergency the first year, then this would have costs us more than it would have benefited us.

As you can imagine, the positive aspect outweighed the negative aspects for my family.

Here is the real kicker! We have enough of a money basis in our HSA that we can now invest the money in a dividend stock of some sort and the dividend would pay for our yearly medical expenses (which currently come in less that $250.00)! Not all plans let you do this though, but many will let you invest in mutual funds though.

So far my small not-too-risky gamble has paid off with the HSA I am in. Most of my work peers, don’t share my enthusiasm for the HSA plan, but for me, it’s a win-win!

Readers, what do you have an HSA, and do you realize what a great money saving device it potentially is?

13 comments »

Posted in Costs, Family

Tags: HSA HSA benefits

MoneyReasons Weekly Cache 2010, Mar 13

March 14th, 2010

Weekly Cache - 2010, Mar 13

Random Thoughts:

First, a sad note for those pf (personal finance) readers out there! One of my favorite sites “mbabriefs.com” has pulled the plug on his website. For those of you who were familiar with David’s site, it’s a huge loss to the pf blogsphere. I was very inspired by the quality of David’s content! For those of us know were regulars, David’s contribution to the pf world will be greatly missed!!!

I’ve added a new sidebar topic called “Best of MR”. Currently it’s has some programming stuff that I’m working on, that I’m pretty proud of, I’m learning sooo much! Eventually, it will include a link to a page with a listing of my favorite (or most popular) posts.

This has been a very productive week for me at least from a technical learning standpoint. I’m learning Ubuntu, WordPress and other associated technologies around my website. It’s very interesting and let’s the geek in me come out!

My Favorite Top 5 PF Blogger Posts For The Week:

www.personalfinanceninja.com – LifeStyle Inflation: Why Your Savings Is Not Growing as Fast as Your Income: Mike provides an convincing article on keeping Lifestyle inflation in check! Pretty cool post for a ninja!
www.littlehouseinthevalley.com - Travel Accident Insurance: Great article and very smart move on her part! I also love the graph that she has included in her article, it was very interesting!
www.mymoneyminute.com – The 200,000 Mile Club: Jason joined that awesome frugal club for car owners that have cars where the odometers has officially hit 200,000. Very frugal and a very wise article! Check it out! Big Congratulations to Jason and his family!!! I’m also looking forward to his wine reviews!
www.investorjunkie.com - http://investorjunkie.com/life-isnt-fair-now-get-over-it: Great points about the fairness of life! There will always be someone richer than you (barring Bill Gates and Warren Buffett), and someone poorer or more misfortunate than you are. The key is be happy with what you got, that’s what really matters in life!
www.financialsamurai.com - The Mental To Physical Connection For A Healthier Lifestyle: This post by Sam really got me pumped up and ready to refocus my efforts on my yearly goals. Yes, lately my commitment has been waning on them… Perfect timing Sam!

My Favorite Post from Money Reasons This Week:

What I Have Learned To Date From Blogging! - This was written around 1:30am to 2:00am, and was kind of thrown together at the last moments of the night. Lately, I’ve been working on a Yakezie link page that will display many things about each member and have a link to each members web sites. So, part in because of that, but also the way I’m evolving as I blog, I wrote this piece.

Closing thoughts:

This week has been a busy but productive one for me! I did have a good time at my son’s soccer game, he scored 2 goals today! He was so excited! Another proud Dad moment brought to you by MR!!! www.moneyfunk.net is starting her own business! Great new from her, I wish her well! Monevator’s article about Warren Buffett made me go to the libary and check out the book called “the Snowball”. I can’t wait to find time to read it!

-MR

UPDATE: 03/14/2010 – 4:00am , I did patching and system maintenance… so my system was down from 3:10am til 3:39am EST. If you tried to come to my site during this time window, I express my sincere apologies!