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Posted
Aug 06 2008, 06:23 AM
by
Karen Datko
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This guest post comes from Silicon Valley Blogger at The Digerati Life. We live with them all the time -- those money leaks that burn holes in our pockets ever so slowly. Often, we find ourselves spending a little bit here and there, and before we know it, we're scratching our heads wondering where our money went. But it could be worse: Our credit card bills can grow to the point when they can be unmanageable, a situation we should all try to avoid before debt becomes too overwhelming to handle. At my household, we're trying much harder to be economical as we face financial uncertainties over the next few years. Both my husband and I are now self-employed and facing a short-term income shortfall until we get our business ventures off the ground. This has prompted us to work on optimizing our family budget much more carefully and to keep a closer eye on those extra costs that add up. In doing so, I've realized something -- that money leaks don't just lead to growing debt. It has dawned on me that even if we can seemingly afford these small outlays -- what's an extra $2 for a pack of gum and a bottle of Calistoga? -- the money we spend actually has an opportunity cost, which in itself can be quite huge.
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Posted
May 08 2008, 08:32 PM
by
Karen Datko
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The cost of a first-class stamp is going up yet again on May 12, by one penny to be exact. The smart shopper will lock in the soon-to-be-departed 41-cent rate for a standard letter  by stocking up on the forever stamp. The U.S. Postal Service introduced the stamp about a year ago so people can avoid having to buy those annoying 1- or 2-cent stamps every time the rates go up. The forever stamps you buy now for 41 cents will cover the postage for a letter weighing no more than an ounce no matter how high the first-class rate climbs. Love may not be forever, but this stamp is.
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Posted
Apr 07 2008, 06:25 AM
by
Karen Datko
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This post comes from J.D. Roth at partner blog Get Rich Slowly. When I was young and stupid, I became addicted to spending. I got my first credit card in college, and over the next 15 years, I accumulated $35,000 of debt. I'm debt-free now, and have even begun building a nest egg, but I didn't reach this place without making a lot of financial mistakes along the way. And I still make mistakes. Dealing with mistakes and setbacks is an important tool in your personal-finance arsenal. Preventing problems The best defense is a good offense. I used to spend a lot of time reacting to problems: bounced checks, car repairs, soccer injuries, and -- worst of all -- my own dumb choices. I never could seem to get ahead. Then I realized that the best way to defend against financial setbacks is to actually prepare for them before they arrive. Simple, I know, but it's the simple stuff like this that forms the basis of smart personal finance. Two methods in particular helped me deflect many setbacks.
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Posted
Mar 19 2008, 05:59 AM
by
Karen Datko
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This post comes from partner blog The Dough Roller. A mind is a terrible thing to waste. So let's not waste ours today. Here are four useful financial calculations that you can perform in your head: What am I giving up in retirement savings when I spend money today? This is an easy one: Add a zero to the price tag. Assuming you have 30 years until retirement and earn 8% annually on your investments, that $3,000 watch would have been worth $30,000 in retirement if you had invested the money instead. Coming down to earth a bit, the $4 latte (it's always the latte) purchased five days a week costs about $1,040 a year, or $10,040 in your retirement account 30 years later. How much do I need to earn before taxes to buy stuff that I want? Assuming you're in the 28% federal tax bracket, multiply the cost by 1.4. That means a $20,000 car costs $28,000 before taxes. Yikes! Of course, this doesn't account for state tax and Social Security and Medicare taxes, all of which would make the multiplier even higher.
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Posted
Mar 03 2008, 05:57 AM
by
Karen Datko
Rating:
This post comes from J.D. Roth at partner blog Get Rich Slowly. Do you save for one thing at a time, or do you pursue several goals at once? If you're like me, you work toward several financial goals simultaneously, but you dump most of your money in one account. It's easy to forget how much you've saved for each goal. And it's easy to borrow money from one objective to pay for something else. In his book "The Six-Day Financial Makeover," Robert Pagliarini advocates "purpose-driven investing." I've found that I can apply that concept to my personal bank accounts as well.
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Posted
Feb 20 2008, 02:30 PM
by
Karen Datko
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We'd never thought there was an upside to smoking until we read Ryan's post called "When smoking is good for you" at Millionaire Money Habits. After all, it's linked to serious illness and shortens your life span. "The health implications of this habit are great news for smokers who have a limited retirement fund or have plans to spend their retirement (savings) frivolously," he writes. In other words, who needs a lot of retirement money if the dirt nap comes early. (Just make sure you have good health insurance.) You do need a lot of money for smoking. With a pack-a-day habit, you're spending $1,825 a year -- and in some places even more -- or $76,000 between ages 18 and 59 1/2, not including inflation and higher taxes (and not to mention the additional costs of smoking noted in an MSN Money article). On the other hand, Ryan says, if you invest that money, you'll have about $1.2 million by the time you retire.
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Posted
Feb 20 2008, 05:50 AM
by
Karen Datko
Rating:
This post comes from partner blog The Dough Roller. "We are what we repeatedly do. Excellence then, is not an act, but a habit." -- Aristotle So often we define our lives by the big events. Graduation, marriage, children, a big promotion and retirement are some of the milestones that many of us remember -- or will remember -- as defining moments in our lives. What often gets neglected, however, are the little things we do each and every day that make the big events possible. As Aristotle said, it's what we "repeatedly do" that produces excellence. So when it comes to money and wealth, what do you repeatedly do? Financial security cannot be reduced to a simple formula. But, like excellence, it is the result of our daily habits. This can perhaps best be seen in the high-income individual who, due to daily habits, fails to achieve financial security. It also can be seen in the individual who, with relatively low income, achieves financial freedom. So what are the seven habits of wealth?
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Posted
Jan 24 2008, 02:49 PM
by
Karen Datko
Starbucks seems to be taking aim at lower-cost competitors by testing a $1 cup of coffee at some of its stores. Mighty Bargain Hunter -- in a post called "Low-fat latte factor?" -- said that's no reason for frugal folks to get in line for fancy coffee. "I'm all for cheaper prices, but Starbucks is still making money on this deal ...," MBH writes. "The bottom line is that an inexpensive habit is still a habit and it still costs money."
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Posted
Jan 18 2008, 07:16 PM
by
Karen Datko
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Millionaire Mommy Next Door offers a suggestion for making $1 million for retirement, and it all begins with lunch. You don't spend $9.50 for lunch every workday, and instead eat a $3 lunch from home. You invest the difference in a Roth IRA, and "let the account simmer for 41 years," she says. (We can only imagine how much more money you would have if lunch were a simple tuna fish sandwich and an apple, instead of, say, Lean Cuisine.) This wonderful post illustrates the beauty and power of compound interest in a way everyone can understand. Her point is that you can make even small amounts of money work for you in a meaningful way.
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Posted
Jan 17 2008, 11:29 AM
by
Karen Datko
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Paul Navone is one of those quiet millionaires next door. His friends had no idea he had money until he started giving it away -- $1 million to a college and another $1 million to a prep school. The 78-year-old retiree never made more than $11 an hour while working in the New Jersey mills, according to a story by Joe Logan in the Philadelphia Inquirer, and to this day Navone buys his clothing at thrift stores, and doesn't have a TV or a phone.
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