11 Ways to Creatively Save Money in Your Daily Life by Debt.org

America’s Debt Help Organization at Debt.org is a company that helps people become more knowledgeable about their financial well-being. Each staff member is an IAPDA Certified Debt Specialist and Certified Credit Counseling Specialist who works to set, meet, and exceed your financial and life goals. They believe strongly in financial literacy and have been kind enough to write a guest post sharing a list of everyday ways to save money, after all one of the first ways to stay out of debt is to never get in debt. Here is

11 Ways to Creatively Save Money in Your Daily Life

Saving money is a long and arduous task for many people. It takes a certain level of patience, dedication and sacrifices. But that doesn’t mean these sacrifices have to be big. Small changes to your daily routines can add up to big savings. Here are 11 ways to save money in your everyday life.

1. Bring lunch to work

You may be spending an average of $6 a day eating lunch out when you could be spending about half that by making your lunch and bringing it to work. This would save you $60 a month, or more than $700 in a year.

2. Quit smoking

If you’re a pack-a-day smoker, you spend around $200 a month on cigarettes alone. You may also have higher medical and life insurance costs. Even just cutting down on the amount you smoke can put hundreds of dollars back in your wallet each year.

3. Rent and borrow movies and books.

Instead of going to the movie theater, rent a movie overnight. And instead of buying books and movies, borrow them from your local library.

4. Make your own coffee

Save a few dollars every day by brewing your own coffee before you leave home. If you’re a daily coffee drinker, investing in a coffee maker can pay for itself within just a few weeks.

5. Carpool, bike or ride the bus to work

With the ever-rising price of gas, avoiding extra miles in your car can mean major savings. Try out public transit, get a simultaneous workout by commuting by bike or get to know your coworkers in a carpool. It’ll also save you some money on car maintenance.

6. Pay cash

Bring a set amount of cash with you when you go shopping and use it to pay for nonessential items. You’ll be more aware of price tags and your actual spending, and it’ll be more difficult for you to go over your budget.

7. Freeze credit cards

Freeze your credit cards — literally. Place them in a cup of water and put your plastic in the freezer. It’ll make it more difficult for you to make big purchases on impulse. You’ll have to plan ahead when you want to go shopping, and it’ll give you time to change your mind. And once you implement this in your monthly routine, you’re likely to stick with it and establish your financial future as a priority avoiding future pains such as debt settlement.

8. Use coupons and buy off-brand products

Coupons are a great way to save a few dollars on your shopping list. Likewise, skipping over the name-brand groceries and trying out the store brands can also trim your grocery bill. You may not even notice a difference in the products.

9. Cancel unused gym memberships and magazine subscriptions

Check your credit card bill for needless recurring payments. Cancel your gym membership if you haven’t used it in months, and unsubscribe from magazines you no longer have time to read.

10. Plan a “staycation” or no vacation at all

Skip those plane tickets and that expensive hotel or cruise. Rediscover your own area or state by planning a “staycation” close to home. Or if your company offers a payout for unused vacation time, consider forgoing a vacation altogether in exchange for an additional week’s pay.

11. Don’t spend your tax refund

Instead of buying a large item like the newest LED TV or going on a vacation with your refund check put it away into savings or start a retirement account like a Roth IRA, this will help kick start your savings into high gear only a few months into the year.

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Get Your Finance On!

I just came across a neat little fact that I was completely unaware of; April is National Financial Literacy Month. A month aimed at helping Americans get educated about their personal finances. Having a career in finance and having went to school for finance I am surprised I never heard of this before. Seeing as taxes are due on April 15th financial literacy seems quite fitting for the month of April. For the occasion I will be publishing a few new posts and sharing some of my past favorites on Facebook, Twitter, Google+, etc. Spread the word about National Financial Literacy Month by sharing this post! (Hint use the buttons below ;))

For more information check out: http://financialliteracymonth.com/

It’s a Retirement Party!

I have received many requests to write a blog post on the various types of retirement plans. This isn’t surprising, since many of my friends are recent college graduates starting their first big boy (or girl) jobs and have never given retirement planning a thought. Instead of doing one long post covering every type of plan I am going to write three separate posts covering the most popular plans, the 401(k), IRA, and Pension. With that little introduction out of the way let’s kick this retirement party off with the big daddy, the traditional 401(k).

So what is it? The traditional 401(k) is a company sponsored retirement plan that allows you save for retirement by making pre-tax contributions to the plan. Not every company offers a 401(k) and you can not open one on your own, it must be through an employer.

How does it work? You elect through your employer to contribute funds to the plan on a pre-tax basis, usually a set percentage of each paycheck (for more information on pre-tax deductions check out the mini series your paycheck). The company sponsoring the plan will provide the employee with multiple options where they can choose what to invest the funds in, common investment options include, index funds, mutual funds, bond funds, and company stock. Once you retire and begin withdrawing funds, those distributions are then taxed at ordinary income taxes rates (see here for example) In many instances your company will match your contribution up to a certain percent (aka: Free Money![1]).

For example, say I make $10,000 a month (I wish!); and the company I work for will match my contribution up to 6% dollar for dollar. This means if I contribute 6% of my paycheck ($600) the company will also contribute an additional 6% ($600) for a total contribution of $1,200.

Matching varies from company to company and the terminology may differ as well. You might find out that your company matches the 1st 3% dollar for dollar then a 2nd 3% at .50 cents on the dollar, up to 6% total. This means the first 3% of your contribution is matched in its entirety and the subsequent 3% is matched at 50%. Using the $10,000 example from above an employee contribution of 6% ($600) would equate to an employer match of 4.5% ($450), the first 3% dollar for dollar equaling $300 and the second 3% .50 cents for each dollar totaling $150.

Important information to note: a 401(k) is not like a normal bank account, it is governed by different laws and regulations. The biggest difference is you can not access your money whenever you want, because it is a retirement account the money can not be accessed until you retire or reach the age of 59 and a half. Now, there are certain instances when funds can be withdrawn before retirement but you could be subject to penalties or additional taxes. Each situation is unique; if you need to withdraw money early from your 401(k) it is best to speak with your HR department or a financial advisor. There are also limits to the amount you can contribute to the plan in a given year, for 2012 the limit is $17,000 and if you are over 50 you can contribute an additional $5,500 for a total of $22,500. These limits do not include employer matching.

What’s all this noise about a Roth 401(k)? A Roth 401(k) is the same as the traditional 401(k) except for one key difference, contributions are made after tax instead of before.  When money is withdrawn in retirement there is no tax withheld since it was already paid. Now many people want to know which plan is better, Roth or Traditional, and the truth is one is not “better” than the other. The choice of which plan to choose largely comes down to your individual tax situation, weather you prefer to pay taxes now or later, and your assessment of future tax rates (something very hard to determine). If you think tax rates could be higher when you retire it may be beneficial to choose a Roth plan, if you think rates will be lower the Traditional plan may suit your needs better.

WTF does the (k) mean? The (k) refers to the sub-section of section 401 of the IRS code. Not nearly as exciting as you thought the answer would be, was it?

Next up is the Individual Retirement Account, or IRA.


[1] It’s for this very reason that if your company offers a 401(k) you should be contributing!!

Making the Offer

While home for Christmas I decided to resume my car search after a 2 month hiatus (my previous post published a few days ago was long overdue as those test drives occurred in early October). Now just because I wasn’t searching for a car that doesn’t mean I wasn’t thinking about it, I was. As my friend Chris put it so eloquently “dude, you’re the King of waffling” and you know what, he was right. I have gone back and forth on this car decision more times than I care to count. I’d wake up one day ready to rock n’ roll determined to buy a car, the next I would be telling myself “the Saturn is fine, no need to buy something you don’t need.” However, after more deliberation I decided that if I was going to make a purchase, the last week of the year was the time to make it happen.

First I started off by looking for loan pre-approvals; I checked three sources, Bank of America, BBT, and Chase. Bank of America’s process was simple enough, I filled out the online application and heard back almost instantly, they literally called 10 minutes after I hit the submit button. I was approved for a 72[1] month $16,000 loan at 4.07% not too bad, but I thought I could get better. So next was BBT, one of banks used by my parents. For this route they suggested I call and see what the rates were since I wasn’t an account holder. Ten minutes later the guy on the phone is telling me the best rate I would be approved for was 7.25%, I was shocked, but the reason was because I didn’t have a minimum five lines of credit history. That requirement surprised me as well, five lines seems to be an awful lot of credit. Regardless I only have two, my Chase Freedom Visa and Bank of America Visa. Oh well, on to Chase. I filled out the online application which was similar to Bank of America, but this time I had to wait a day for an email response. I was rejected…why? I have not a clue. I been a customer for 3+ years, paid my credit card off every month (balance is often over $1,000), and have part of my paycheck direct deposited to them. I will be investigating this further and will post what I discover. So in the end, Bank of America it was.

Now that I had financing in order I just had to find the car. I decided during my 2 month break that I wanted a BMW 328i Coupe 2007 or newer. I had been eyeing this one since before thanksgiving http://www.hillsboroautomart.com/web/used/BMW-3-Series-2008-Tampa-Florida/2139099/ it’s list price was certainly over my budget of $23,000 or $21,000 with trade-in but I figured since it had been sitting for a while, there was a good chance they would come down in price (at the time of my offer the list price was $26,976). Before driving out to Tampa to take a look I decided to do some searching near my neck of the woods so I spent an afternoon driving around the Clearwater St. Pete area looking for coupes, and ended up finding nothing I was interested in. The next morning it was off to Tampa to check it out in person. The car was just as nice as online, it was exactly what I was looking for, dark blue exterior, tan interior with wood trim, and spoke wheels. Time to take it for a test drive, upon the initial start the engine made a weird ticking sound, according the sales guy that was normal for a BMW that had been sitting for a while and would go away once driven (and it did). Music to my ears, the car had been on the lot for a few weeks now and because of this clicking I knew no one had driven it for quite some time. We took the car out and everything checked off, as I pulled back into the dealership I was ready to make an offer.

Turned out the sales guy Nick who had been helping me out up until now couldn’t talk about the offer and had to get a “numbers guy” to take over if I wanted to make one. Which looking back was unfortunate, because Nick was a great guy and had made the experience up until that point a pleasurable one. No “number guys” were available at that time so he hooked me up with the owner. At that point I was feeling really good, I found the exact car I wanted, it had been sitting for weeks, and I was about to talk to the owner who has the most wiggle room, which meant I wouldn’t have to deal with the “aww I got to check with my manager” crap, sweet! But this is where the story turns, the owner brought me into his office and proceeded to take me on a 20 minute sales pitch about how great the dealership is, how they don’t offer the antiquated financing technique of add-on loans (which I am pretty sure is not used anywhere, and is possibly illegal), he busted out the paint meter and told me they are the only dealership who uses one, told me how many vehicles they sell each month, and showed me pictures of the dealer auction of where they buy their cars. The real kicker was when took out a binder of email print outs from Gmail to show me “proof” of why a car-fax is unreliable and how every car from Miami is junk…I have no idea who would buy email print outs as proof…for all I know he could have typed them up and sent the “proof” to himself. Once we got past all this, I made my offer, which I knew was lowballing him, but I figured start low and work our way up. I offered $19,000 plus my trade in; he looked at me then got up and left the office mumbling something about being too far apart and not playing the numbers game. I sat there for a second to register what happened, then I got up and walked out. A bit flabbergasted by the utter rudeness of the owner I got in my car and left.

As I drove home I was a bit bummed that a counter offer wasn’t made. I decided I was going to give it two days and if I still wanted the car, I would call back and make a second offer. Well two days passed and I still wanted it, I called up the dealer to make my 2nd offer $23,000 no trade. The conversation was short and to the point, the “numbers guy” insisted the best they could do was $28,000 out the door. Since that was the case no deal was made. So, here I am few weeks later still driving the Saturn, but still looking for the right deal. My first car buying negotiation didn’t quite go as I expected, but hey, I learned a few things this time around and will be better prepared when I make the next offer.

Update: As of 1/15/12 I noticed the car had dropped in price to $23,976, a $3k reduction, so much for “the best we can do is $28k out the door.” I am considering putting in a third and final offer, $24,000 out the door, no trade in, what do you guys think?


[1] The reason I chose 72 months was to give myself the most flexibility in terms of the monthly payment. I don’t intend to take the full six years to pay off the loan, but if there is a month where I can only pay the bare minimum I wanted that payment to be the lowest amount possible.

Buying a Car – Test Drives (2)

See part one here

Lexus IS250 – 2008

What I liked: Overall it is a very good looking car, (if you haven’t noticed by now, a cars looks are very important to me). That it has four doors, having driven a door two for 8 years I know there are times when four would really come in handy. It had a very functional interior; many cup holders, little storage spaces, and logical layout for controls.

What I disliked: The drive was very mundane for a car that is marketed as “sporty.” Lack of power and lose steering did less than impress.

Other notes: Basically reminded me of driving a really nice Camry…

Mercedes C300 – 2008

What I liked: Not much, the Mercedes badge on the front?

What I disliked: Wow was I underwhelmed with this car, I had never driven a Mercedes, maybe rode in one once, but I expected much more. I think I have been in Fords nicer than car I test drove. Overall the car was just a let down, maybe because this is their entry level model? I could write a list of everything I disliked or just save us both the time and say see below…with that said, see below.

Other notes: Drove like…an overpriced four door sedan.

Infiniti G37 coupe – 2008

What I liked: Intuitive controls for the radio, A/C, etc, luxurious interior and kick ass factory Bose sound system. The 330hp engine and the mean growl it made when I punched it. I believe it shares its engine with the 350z, which is one of my favorite sounding cars.

What I disliked: no sunroof, breaks seemed a little weak for a car with that much power, driver seat head rest is in the way of checking for blind spots, and really small back seats. Overall the car certainly felt used, more so than the other 2008’s I drove even with only 37k miles on it. That makes me wonder if it was just the particular car I drove or if all Infinities hold up questionably over time.

Other notes: Out of all the cars I have driven so far this had the best combination of luxury, performance, and price

 

 

 

Your finances are your responsibility

Check out this article I found last week on Yahoo! Finance. It stress’s the importance of understanding your financial decisions and taking responsibility for educating yourself, an opinion I strongly agree with.

“Using the recent financial crisis as an example, Leibowitz says there’s ample blame to go around, not just the predatory behaviors of big bad banks, but also as a function of people that took out mortgages they really didn’t understand”

http://finance.yahoo.com/blogs/breakout/back-school-nyse-euronext-coo-stresses-financial-literacy-131210002.html