Posted: March 5th, 2012 | Author: Joe | Filed under: Debt, Saving, spending | Tags: Income, money, Saving, Single Income, spending | No Comments »
How can $50,000 seem like minimum wage? According to the Social Security Administration’s National Average Wage Index, the national average income for the USA in 2011 was $41,673.83. That means that to half the country, $50,000 a year would be a $8,326 raise, and yet this woman says $50,000 feels like minimum wage !
Well, if you read her story it makes a lot of sense.
Basically, she went from working at home to a full time office job and once she totaled the change in her spending she realized she was making about $7.50 per hour.
Here are some of the things she attributes to lowering her effective income:
- Commuting costs – increased wear and tear on her car, the cost of gas, etc…
- Childcare expenses
- Eating out more – less time to prepare meals at home means eating out or buying take out more frequently, which is more expensive.
- Increase in clothing and personal care expenses (i.e. hair and nail care, proper office attire, etc..)
- Coping with stress by spending more on vacations, or entertainment.. buying more wants than needs.
Her change in lifestyle brought about a change in spending with no increase in saving. It happens to a lot of people and it’s not always easy or even possible to fix. She could do some things differently. She probably doesn’t need to spend $40 a week on clothes, and she could plan ahead to prepare more meals at home, but that takes work too.
This is the kind of situation my wife and I work very hard to avoid. We avoid debt whenever possible to keep as much of our income as possible. I work hard to secure a steady income, and she works hard (sometimes harder) to make that income go as far as possible.
She’s the coupon clipper and meal planner. She’s turned comparison shopping into a competitive sport. She scours thrift shops and consignment stores for children’s clothes, and puts a healthy low cost meal on the table every day of every week all year long.
It’s not easy, but it’s cheaper than if she went back to work full time. And we believe it’s better for the family. Living on a single income is not easy, but it is possible and I believe better in most cases for families. The key is twofold: 1) limit expenses as much as possible, and 2) increase income.
It’s really no different than what most people should be trying to do regardless of their employment situation, but as the Yahoo! article makes clear, it’s so much easier to lose control of your spending when both people work out of the house. Those little money leaks turn into an effective loss of income over time.
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Posted: September 2nd, 2011 | Author: Joe | Filed under: spending | Tags: Frugal, save money, Spend less, Tips | 7 Comments »
Saving money is always a good thing and with the recent recession, more people are casting an eye on their expenses in the hopes of cutting back. It’s not just a good idea during recession. If more people became more watchful of their spending, then the country as a whole would be in a much better place financially.
Here are 7 things that many people spend too much on, as well as some tips for cutting back on that spending.
1. Bargain traps.
Buying cheaper isn’t always better. For expensive and inexpensive items alike, there are often a multitude of options to choose from. The cheapest is not always going to save you the most, but the most expensive is usually not the best either. Be sure to weigh all the aspects of the item and choose the trade off in quality vs. price you can live with.
Also, beware of “spend x and save y” type bargains. Spending $50 more than you planned, just to “save” $10, still leaves you with $40 less.
2. Going warehouse when you have a small house.
My wife and I love the local warehouse store. We buy many things in bulk: diapers, paper towels, dish detergent, laundry detergent, etc.. with a 5 person household and 3 growing kids, we go through that stuff pretty quickly. But buying in bulk rarely makes sense for a single person or even just a couple living in an apartment. Saving on large quantities doesn’t help much when you have no place to store them and can’t use them before they spoil.
3. Buying what you can borrow.
Why buy a single-use new tool from Home Depot when your neighbor already has one? Use social networking, or just ask a neighbor if you need a tool for a job that you know you’re unlikely to ever use again. Just remember to return it when you’re done. 
4. Suffering from sticker-price tunnel vision.
Don’t focus solely on the sticker price of a car (or other big-ticket item). Look at depreciation, cost of ownership, repair, upkeep, etc..
For example, the base model Chevrolet Malibu costs about the same as the Honda Accord but their service and maintenance costs, average fuel cost and depreciation are quite different.
5. Jumping on the “new” used car.
Buying a used car is a great way to save money on an auto, and most used cars that have been on the lot for more than 30 days receive at least 1 price drop. Buying too soon can leave that extra savings behind on the lot. When looking at a used car, find out how long the car has been on the lot and don’t make an offer until it’s past the 30 day mark. One caveat to this is if the you’re having a hard time finding a used car that suits your needs. One of the results of the misguided Cash for Clunkers program was that the clunkers (i.e. used cars) had to be destroyed. This has created a scarcity of used cars, and driven prices and demand up. Also, certain vehicles, like minivans, hold their value well and always seem to be in demand so you may not be able to play the waiting game on these models.
6. Control your urge to splurge.
Impulse buying is costly. Stores know they can charge a little more for that merchandise in the display rack near the register and the entrance. They’re counting on your impulse. Use a list and stick to it. That list is your mission, do not deviate from your course!
7. Skip the travel sites.
Booking a hotel room through a travel site like Expedia.com or Hotels.com requires you to pay in advance. Cut out the middle man instead and use these sites for comparisons, but call the hotel directly yourself. You will likely get the same rate if not a better one and not have to prepay. I’ve also heard that calling a local number (i.e. not the 1-800 number) can get you in town prices that are lower than what they charge out-of-towners. That ay not be standard practice, but it’s worth a try.
Source
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Posted: June 14th, 2011 | Author: Joe | Filed under: spending | Tags: money, news, Robert Adams, windfall | 3 Comments »
Pop Quiz: You walk up to the ATM to get some fast cash for a burrito, and almost step on a bag of cash – $17k in cash. What do you do?
I’d like to say that I’d find a way to return the money, like Robert Adams did, but I honestly don’t know if I would. $1 million is definitely a game changer, but it’s also easy to decide what to do with (as evidenced by this post). But my wife and I were just discussing the other day about how something as simple as an extra $1,000 a month would change our life significantly. 17 grand would go a long way to easy many of my money worries…
- I could pay off my car loan and still have $10,000 left over…
- I could put that extra $10k in savings for my next car and never need another car loan again…
- I could finish the unfinished room on the 2nd floor of my house, increasing the number of bedrooms…
- I could fully fund my IRA for the year, and have enough left over for the next two years and pocket the interest…
- I could pay off my student loans, and still have enough left over to almost pay off the family car…
- I could take my wife and kids to Disney land…
- I could make a nice donation to my favorite charity…
- I could buy a new home entertainment system….
- I could hire a maid and make my wife’s life a lot easier…
Well, I could go on… but this little dream is moot because I probably would hand the money over. The way I see it, I’d have to sleep sometime and when I did, my conscience would gnaw away at me.
For the record, if I suddenly came into $17,000 I didn’t have previously, I’d probably pay off the family car and bank the rest for my next car since it’s getting a little shaky these days.. then I’d hire a maid.
But what about you?
Would you return the money?
Forgetting about the source of the money for a minute, would an extra $17,000 change your life in any way?
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Posted: June 7th, 2011 | Author: Joe | Filed under: spending | Tags: Infographic, spending | 1 Comment »
According to the Wall Street Journal, the rich are changing the way they think about shopping and spending money. Instead of simply buying items based on brand name, they are considering the “price per wear” first.
In one Harrison Group survey, done in the first quarter of 2011, consumers with an income of $275,000 were 7% more likely to wait for items to go on sale than they were in 2010 – 38% in 2011 compared with 31% in 2010.
“What’s showing up in the latest research is a broad-based caution — a sudden aversion to salespeople, a tepid response to ads focused on brand images, and a new interest in price-shopping.”
It seems “the rich” are shopping more like most Americans these days, thanks to the recession.
Here’s an infographic of the Harrison Group survey:
Of course, affluent consumers can’t just be like average consumers because, well that would make them average. So they’ve coined a special term to describe their thriftier approach in a more stylish way: recessionista.
Read more.
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