By recording your expenses, you’ll figure out your habits and become conscious of where your money goes.  After a month of recording your expenses, start reviewing your expenses and see what areas you are spending too much on and come up with a plan to cut down or optimize your spending in those areas.

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.

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.

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.

To sign up and/or get more details visit: http://www.bing.com/cashback

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.

While my local library does not always carry everything at their site that I’d like, I can place a request for materials into the online catalog which draws from all the public libraries in my region.  After I place the request online, the material(s) will be sent to my local library so that I can pick it up at my convenience.

The library is a great resource for me.  For books/movies usually I’ll only read/watch it once and never look at it again, so it works out perfectly.

To simplify things, we’ll take a look at the following hypothetical scenario from a high level and assume no investment spending occurs. Bob earns $100,000 in a given year and spends $100,000 in that same year.  Sue earns $50,000 in a given year and spends $40,000 in that same year.  Sue is therefore able to build $10,000 more wealth than Bob despite earning significantly less than him.

Sue is able to build more wealth than Bob because she spends her money based on what she needs to live her modest lifestyle.  If Sue gets a promotion and earns $60,000 next year, she won’t spend more to move her lifestyle up, instead she’ll still only spend $40,000 next year.

Bob however sets his lifestyle around his income.  If Bob gets a promotion and earns $120,000 next year, he would increase his spending to $120,000 next year to live a more luxurious lifestyle.

If you emulate Bob and set your lifestyle around your income, you will never get rich.

By simply taking your rate of return and dividing it into 72 you’ll figure out roughly how long it’ll take to double your money. e.g. If you are getting a 6% return on your investment (compounded), it’ll take about 12 years for you to double your return since 72/6 = 12.