January 25th, 2010
When making a purchase, people typically only consider the upfront cost but for many items there are additional costs to consider. Below are some examples of costs that will be incurued after ownership.
Car: Fuel (need to consider type of fuel and its fuel efficiency), insurance rates, and maintenance costs.
House: Taxes, maintenance costs, insureance, mortgage.
Phone: Phone plan (If you buy a smartphone, you’ll likely need to buy a data plan in addition to a voice plan to utilize all of the features).
TV: Electricity (Typically the bigger the TV, the more electricity it’s going to take to power).
When looking at a big purchase, be sure to look at the total cost to own. Sometimes spending a little more money up front for a quality or more efficient product that will result in a lower total cost.
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tim
Categories: Frugal Living, Misc, Saving Money
December 21st, 2009
A recnet article on CNN Money shows that the return on investment on home renovations has been decreasing over the past few years.
A chart within this article shows that in 2003 the average remodeling job costs $38,285 and would increase the home value by $31,591 vs average 2009 costs of $50,908 and increase of home value by $32,497.
Does anyone see anything wrong with this picture? An investment in renovating your home in a good year (2003) would net you a -21% return on your investment. In a bad year (2009), you would net a -35% return.
For most people, your home is not going to be a good financial investment, rather it is a lifestyle choice.
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tim
Categories: Housing
November 24th, 2009
When most people hear of a recession, they tend to think of it as a negative. Not everything about it is negative though. In recessions, people tend to make the most of their money.
For people who see a drop in their income due to the recession, they are forced to find ways to spend more efficiently because they have to.
For people who’s income level were not affected, they tend to spend more sparingly since there is a fear that their job may be next to go.
Will you maintain the frugal habits that are picked up during the recessionary times and use them when the good times come? If you start putting 10% of your paycheck into savings because you are scared that you may lose your job, then there is no reason why you can’t save 10% when your job stability improves.
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tim
Categories: Frugal Living, Saving Money
October 30th, 2009
Before I purchase an item online, I’ll check to see if I can get cashback (or a rebate) on it through Bing (Microsoft’s new search engine). Typically I’ll receive 2%-5% cashback with most stores I buy from, but there are a few places where there are 20%+ cashback offers.
To sign up and/or get more details visit: http://www.bing.com/cashback
www.bing.com/cashback/
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tim
Categories: Saving Money
September 25th, 2009
The best piece of retirement advice I have ever received was from my dad, “Save as much as you can as early as you can”. At the time I didn’t really understand the importance of those words since retirement would be around 40 years away from the time I received it but saving early allows you to build up tax deferred compound returns for many years and have a comftorable retirement nest egg.
Here is an illustrative example that shows it’s important to start saving early.
John starts saving $3,000/year for 10 years starting from when he is 21 and stops contributing after the 10 years. When he retires he has over $1.45 million dollars saved whe he retires (Johm retires at 65 and received a 10% rate of return/year).
Sally starts saving $3,000/year starting from when she is 30 and continues contributing until she retires. Sally has over $0.97 million dollars saved whe she retires (Sally retires at 65 and received a 10% rate of return/year).
As you can see from the above, John has only contributed $30,000 in total but ended up with more in his retirement account than Sally who contributed over 3 times what John contributed. This is due to the time value of money. John’s money was sitting in his retirement account longer, which gave his account a lot more time to increase in value.
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tim
Categories: Retirement