Monday, December 31, 2012
As of late, my distrust of the stock market and feelings of wariness have grown. When I hear investment advisors immediately jump on IRAs and 401(k)s as their main form of retirement investment, and tell people to max out their contributions to maximize tax savings, it reminds of the good ‘ol days when the housing market was all the rage. “Buy a home. You have to buy a home. It’s such a great investment!” I kept hearing.
I’m of the opinion that if I hear that everyone is doing or advocating one thing, it’s probably best to step back, re-evaluate and maybe even do the opposite.
If you think I’m a little overly cautious, I’m providing a link here to a great article on NPR taken from the Associated Press about the current state of the stock market to back up what I’m saying. It’s not just me who is concerned.
Friday, December 21, 2012
Here are some of the things that having that lifetime income number helps me do using numbers and examples that don't pertain to my actual financial situation.
First off, here’s a quick review of my previous article and the equation I used to calculate my lifetime income number, using $20,000 (this isn’t my expense number, but it works for this example) as my current annual expense number and 3 percent as my annual lifestyle inflation number over the next 45 years (my life expectancy):
“Personally, I make this calculation by way of a financial calculator that I keep handy on my desk, but it can also easily be done by way of a future value online calculator, by inputting:
Present value: $20,000
% Change per time period: 3
Time periods: 45
Future value: $75,631.92
Determining Retirement Age
After seeing my income needs and Social Security benefits, I can begin to put a finer point to my retirement age number. Knowing that if I wait until age 70 to retire, that my monthly payments might be $2,000 instead of $1,500, I could wait to take my benefits in order to bolster my retirement income. Or working an extra five years or so could provide me with enough money to increase my income from retirement savings. If nothing else, it might tell me if I need to mix some amount of income earning work into my retirement to supplement Social Security and retirement savings income streams.
Sunday, December 16, 2012
Start Early and with Variety
But just starting early isn’t where I leave my New Year’s resolution preparation. Instead, I consider multiple resolutions that are both short and long-term in nature. Meeting a few resolutions shortly into the new year can provide the motivation to maintain interest, keep pushing to meet my longer-term resolutions throughout the rest of the year, and maybe even set more goals.
Make Resolutions Lofty, Yet Realistic
While I might use certain short-term, simpler-to-meet type resolutions to push myself to attain various goals during the year, I don’t make the majority of my resolutions too easy to achieve. Instead, I like to set certain lofty, yet realistic resolutions to push myself.
What’s the point of setting goals, if they don’t push me to achieve?
Therefore, I utilize a combination of easily met goals, paired with loftier financial expectations to drive me in meeting a tiered goal structure. For example, cutting expenses a little each month helps drive me toward an overall 10 percent expense reduction goal year-over-year, or increasing productivity by an extra 5 percent each week can help me achieve a goal of producing an overall increase in profits for the year of 20 percent.
Make Resolutions that are Pertinent to My Financial Life
Tuesday, December 11, 2012
Hi there readers! Wanted to let you all know that I've started a new blog -- Simple Man's Money -- focused on simple saving tips, tactics, and techniques that I use -- or at least attempt to use -- to maintain a simple, low-cost lifestyle. Feel free to pop by and take a look. Don't forget to add yourself as a follower while there!
Monday, December 10, 2012
Of course it was this year that my wife got a job that required a roundtrip commute of 50 miles each day. And of course, it was this year that gas prices in the Chicagoland area easily exceeded $4 a gallon.
This means that we paid at total of about $5,500 this year for a vehicle that we own outright. It’s kind of a shocking total considering that we didn’t even have to make a single payment on it, and it’s a good example of just how costly vehicle ownership can be.
Sunday, December 2, 2012
Even though I’m a good saver and I could handle the upkeep of our property on my own, having a set $300 monthly fee to pay to cover items such as common insurance, water/sewer/trash fees, exterior maintenance, snow removal, and landscaping, as well as fund a condo reserve account, is great for a person like me, here’s why.
Proper Insurance Coverage
Now I’m not one to scrimp on homeowners insurance, but I’m not going to sink a ton of money into over-insuring a property. I’m more apt to get the standard coverage and be done with it. This means that should a damaging event occur to the property, we’d be covered, but not necessarily covered to the extent of certain other homeowners.
With our condo association though, I’m well covered in this area. With the combination of many individual owners throughout our condo building, we have a much higher liability limit that most of us would likely assume on our own, and this is just made a portion of our flat monthly association fee.
Preventative Maintenance and Upkeep
While in our previous, single-family home, I did pretty well at maintaining our property through a lot of do-it-yourself type projects, it’s kind of nice to have someone take care of many such aspects of home maintenance for us. It was always hard for me to take on preventative maintenance work in our previous home. I hated spending money on things if they were still working, being more of the mindset of waiting (if possible) until they broke completely to fix them.
However, such an attitude isn’t always the best one to take, and while it can save money in the near-term, it can end up costing money in the long-term. This is why it’s nice to have regular maintenance projects such as tuckpointing, drain rodding, door repairs, cleaning of public areas, landscaping, and similar items that I’m forced to pay for whether I would have done them myself or not, thus maintaining the appearance and quality of our living location without forcing me to make decisions upon what I’m going to fix, when, and how much I’m willing to pay to do so.
Even when I set money aside for a repair or a repair fund, to me, it’s still like it’s saved money and part of my asset total, so it doesn’t make it any easier when I eventually have to spend that money on repairs. This is why I really like paying our association fee. It takes that ability to choose whether or not I want to spend the money on repair work out of the equation, plus it acts as a communal pot into which we can all pay to fund larger projects down the road.
This means that when it comes time for new windows, a new roof, or similar big-ticket repairs, I won’t be left “going cheap” on the cost of the repairs and getting a lousy product in return. And since our association fee goes to fund a general reserve for such items, it makes for great peace of mind knowing that by the end of 2013, that fund is projected to be at nearly $200,000, which can go a long way in funding repair work for which I won’t have to pay any additional funds.
Tuesday, November 27, 2012
Utilizing mortgage calculators to figure out interest costs over time helped us cut thousands of dollars in interest off our loan amount. Rather than going for a 30-year, fixed-rate mortgage on a higher loan amount, we instead put more down on our home, and took on a 15-year mortgage.
While the monthly payment amounts were higher with this type of mortgage, by taking on a shorter term mortgage, we would effectively be able to cut the interest we owed over the course of the loan’s life in half. And knowing that by taking on a 15-year mortgage, we could cut our interest rate by nearly a full percent compared to a 30-year mortgage, we realized that we could shave thousands more off our mortgage costs over time. Eventually, such knowledge allowed us to become mortgage free altogether.
I’ve recently started a spreadsheet to track our annual earnings and in turn make keeping up on our Social Security estimated benefit calculator a little easier. The calculator into which I plug our income information is found at the Social Security Administration’s website (ssa.gov), and it requires data such as our dates of birth, age at retirement, how we’d like our estimates presented to us (either in today’s dollars or future dollars that have been adjusted for inflation), and income information.
The secured assets comprise one total, the non-guaranteed assets another, and then we have a combined total for an overall net worth once our assets totals are relieved of any liabilities. We update this calculator regularly, and it allows us to stay apprised of our overall financial situation at a moment’s notice.
Friday, November 23, 2012
We certainly wanted to give the house a good going over cleanliness wise before we started to clutter up spaces with boxes, sofas, mattresses, and all the rest. Cleaning a home is just so much simpler when you don’t have to work around furnishings. We didn’t have to worry so much about spilling cleaning solution on upholstery, maneuvering around vases and dishware, moving certain items back and forth to clean behind them, and otherwise dealing with awkward cleaning situations.
Speaking of carpets, we decided that we’d like to give the upstairs and finished basement carpets a good cleaning before we got settled in with all our furniture. Therefore, we spent about $35 to rent a carpet cleaner from the local grocery store, buy a little carpet shampoo, and I set to work giving the carpet a good going over, not having to worry about moving furniture back and forth, missing areas due to oversized furniture pieces, or hurrying the drying time of the carpet in order to be able to move furniture back into a more livable arrangement.
Monday, November 19, 2012
Mulch and Yard Maintenance
It doesn’t always take a huge investment to make a yard look presentable. In our case, some weed pulling, a bit of sidewalk edging, a good lawn cutting, a little shrub trimming, and 10 bags of mulch that we’d purchased on sale during the winter for $1 a bag, had our yard looking pretty darn good.
During the point at which we were preparing to put our home on the market, our back porch awning looked terrible. It was a canvas covering on a steel frame, but the canvas had torn at one side and the rip had progressively worked its way along the entire edge, making the canvas droop and all-in-all look pretty pitiful.
This was the entrance through which prospective buyers would be entering our home. Therefore, we paid $450 to have the structure removed, the steel sandblasted and repainted, and the cover replaced with new canvas.
Garage Roof Repair
When we bought our home, the inspector noted that the condition of the garage roof was less than favorable. It had three layers of shingles that were crumbling and in need of replacement.
One of the final adjustments we made to our home in an attempt to make it more marketable was to make some changes to our window areas. We spent a couple hundred dollars to buy several new, crisper, cleaner looking blinds for our bedroom and dining room areas and added some sheers in the master bedroom and a window treatment over the dining room window in an effort to add a little character to the spaces. We also removed the dated vertical blinds in the dining room to give the space a newer more updated feel.
Tuesday, November 13, 2012
Becoming Mortgage Free
I’m not a fan of debt. While I know that sometimes it’s tough to avoid, this doesn’t mean that we can’t try. A mortgage is the one aspect of our debt-related finances that is especially difficult to avoid due to the cost of many homes. However, I never liked the fact that such a payment was there whether we were able to afford it or not; therefore, we downsized our home and bought a space that we could afford outright. This allowed us to avoid mortgage payments and gave us a little breathing room and extra peace of mind in our financial lives.
Debt is one of those things that can not only weigh on our minds but can eat into the strength of our financial resources. Unlike a mortgage, items like credit card debt may have little positive outcome other than enabling users to delay the eventual payment for purchases. The problem is that this delay can come with excessive interest payments and worry over the making of those payments. We’ve been debt free since we paid off my wife’s student loans several years ago. It’s a wonderful feeling and provides peace of mind as well as other options to consider for how to make use of our money in more productive and positive ways.
From extra food and water to a propane fueled cook stove, batteries, flashlights, and similar items, we’ve found that spending a little extra cash to provide us some emergency supplies helps make us feel better about the future. It didn’t take much -- only about $300 in fact -- to get a multi-month supply of food, water, and additional supplies added to items we already had on hand and that set us up comfortably should an emergency of some sort befall our area. It wasn’t a big investment to make to ensure a more comfortable sleep at night through additional peace of mind.
Wednesday, November 7, 2012
Train Ride to the Future
I didn’t make the move into self-employment as a freelance writer until late 2007. However, I started writing well before then. I actually began writing as a way to work on a book idea I’d had and fill time spent on Chicago’s commuter rail system on the way in to work back in 2005.
My morning commute actually started at night (since I worked the third shift at the time), but that’s neither hear nor there. I would use the time to write (yes, I actually wrote longhand since I didn’t have a laptop at the time) and practice my trade.
While that book never came to fruition, I look back at it now and realize that it was the spark I needed to light the fire that eventually became my self-employment passion.
Using Regular Work as a Resource
I didn’t let on to the fact that I was interested in becoming a writer to many -- if any of my co-workers -- until I knew for a fact that I was making the transition. First off, I didn’t feel it was a great idea letting people at work know that I was interested in pursuing a career other than the one in which I was currently employed. Second, I certainly didn’t want to count my chickens before they were hatched. And third, I really didn’t want people asking me about my writing all the time. Therefore, I largely kept my self-employment dreams to myself.
This didn’t mean though, that I didn’t use my workplace as a valuable resource while I was there. I did this in several ways:
• As a source of information from co-workers and clients to be used as fodder for my writing career.
While this schedule wasn’t easy, it prepared me in the years leading up to my self-employment move for what was to come, and it helped me ensure that I had what it took to make a career out of writing and that it wasn’t just some phase or passing interest.
Saturday, November 3, 2012
We Just Had One Simple Question
We thought our trip to see FEMA officials would last about five minutes. We had one simple question, and we thought we already knew the answer. We just wanted to see if the replacement cost for our pump would be covered, since it was indeed storm-related damage.
So we figured we’d just go in, ask our question, and likely be on our way, since we guessed the answer would be “no”.
But it wasn’t that simple.
When we arrived to the area school where the temporary FEMA offices were located, we were directed to a waiting area where we sat for about 10 minutes. Then we were shuffled off to an area with a row of telephones where we had to register with FEMA.
I told the person taking our information over the phone that we just had one quick question, but this revelation didn’t stop the registration process, which lasted about 15 minutes. We were given a FEMA registration number (or something to that effect) and told to see the next person at a series of stations that were set up around the room. This station, as I recall, did something along the lines of explaining all sorts of inapplicable information to us over the next 10-15 minutes, before sending us on to the low-interest loan lady.
A Loan Interest Loan? What? Why?
We spent the next 15 minutes listening to what seemed to be a sales pitch regarding low-interest government loans. We told the lady we didn’t need a loan, but she proceeded to tell us that her mother always said, “Even though you don’t need it, you might want to take it just in case. It’s better to have it and not need it, than the other way around,” or something like that, I’m really not sure since I wasn’t listening very closely by that point.
She said these loans were great deals with interest rates in the two to three percent range and that we might want to do some updating to our home with the money even if we didn’t have any storm damage.
We finally escaped the “loan lady” by adamantly telling her we really weren’t interested and didn’t need or want a loan. We then got to move on to the next station in line, which was manned by the guy that dealt with water-related damage.
The Final Answer…Frustration and Waste
Finally! We had someone who would listen to our one simple question: Was the cost of our pump replacement covered by FEMA?
His first question was whether we had taken the repair to our insurance company, which we hadn’t. First off, I was just planning to eat the cost of the repair in the first place, and secondly, we had a $500 deductible on our homeowners insurance. For an $800 repair -- and the cost of the likely resulting associated rise in insurance premiums -- I didn’t think filing a claim was worthwhile.
“Why?” I asked. “Wouldn’t it just be a waste of everyone’s time?”
He replied that more than likely it wouldn’t do any good, but just to double check, he could have it done.
Monday, October 29, 2012
For several years, I thought that I was doing well by using ink cartridge refills that I could get at office supply stores and that allowed me to cut my costs by more than half. I was typically able to get cartridges that would cost me about $25 brand new, refilled for about $10.
Eventually though, I saw one of those self-refill kits at a local convenience store. I wasn’t sure about the success of such refills, but I decided to take a chance and give them a shot. By doing so, I found that I could quickly and easily do my own refills for about a quarter of what I was paying before, being able to get four self-refills for around $17, which left me stretching my office supply dollar in this area even further.
I rarely use staples any more. While they might not be super expensive items on my office supply list, staples are items that I still have to pay for and that I can’t reuse. Therefore, I’ve attempted to get away from using staples in preference of paper clips and binder clips instead. While it might only add a few bucks here and there to my office supply savings, as a self-employed individual, every little bit counts.
Wednesday, October 24, 2012
And while we might have our costume already picked out, here in the Chicagoland area, Halloween time can be accompanied by some pretty chilly temperatures. Therefore, we have to make sure that if the costume is not warm enough on its own, we have some cold weather undergarments available to keep our son from getting cold while out collecting his candy.
A Candy Plan
We start off our candy plan by having a conversation with our son about limits and candy intake amounts before we head out. This leaves no confusion when it comes to how much he is allowed to eat either on Halloween or the following days and weeks to come since I know what a temptation it can be…even for mommy and daddy.
I’ve learned that with our son, such treats are often best kept out of sight and out of mind. If we keep a big bowl of Halloween candy out on the kitchen counter or dining room table, it’s a constant reminder and temptation. Therefore, we usually put such items up high on the refrigerator or in a cabinet and out of reach to keep temptation to a minimum.
Schedules and Routes
We get our Halloween schedule organized well in advance to actually heading out. For us, as I’m sure it is for many families, we have multiple Halloween events in multiple locations and times. We have grandma and grandpa who want to see their grandson in his costume, and the customary trick-or-treating in their neighborhood. There is of course trick-or-treating in our own neighborhood. Then, our town does a candy walk in the business district with many local stores, restaurants, and other businesses participating. Therefore, by checking online for looking for fliers posted around town, we tend to get a head-start on planning our routes, dates, and times well in advance to make sure we accommodate all the necessary Halloween obligations.
Monday, October 22, 2012
The problem with this scenario was that while I was willing to train the guy who was replacing me at my previous job…there was no one to train me as a freelancer. And as I was about to find out, it was certainly easier to become a freelancer than stay one.
There were numerous hurdles that I began to encounter as soon as I left my regular work role. There was a significant cut in pay -- not to mention benefits -- with no clear path to replace that lost income. There was however, very little drop in my expenses, meaning that I had to bridge the gap between income and expenses with work that I had not expected to do. Building up these income streams took time, and in the meantime, I had to cut expenses to the bare minimum.
But there were also other issues that I began to realize came with my move that I hadn’t fully considered the effects of before I left my previous work role. The loss of perks like free lunches, free dry-cleaning, free downtown parking, and even just the loss of regular social interaction with co-workers started to settle in upon me. There were no longer employer-sponsored health care or retirement plans. And I quickly began to lose many of the network contacts I once had, which became a concern as I began to contemplate whether it would be as easy as I thought to reenter the field I left should it become necessary.
Therefore, if you’re thinking about moving into a freelance or self-employed role, I’d say think hard. Don’t just consider the freedom that comes with such a role, but think about all the other things that may come -- or not come -- with being self employed. And don’t just consider the immediate effects, but the long-term effects that can come with the move into the world of freelancing.
Thursday, October 18, 2012
I’ll admit, I’m pretty happy being a homebody. I work from home. I take care of the kids from home. And while I like a good dinner or night out with the wife occasionally, it’s not something I have to have on a consistent or nightly basis.
This positive outlook of spending time at home saves us money in a number of areas. First off, we save on the cost of a second vehicle since I can work from home. Without even factoring in the cost of car payments, the initial outlay for the vehicle or depreciation, we likely save between $1,500 and $2,000 a year on insurance, parking, gas, oil changes, and regular upkeep and repairs.
Similarly, since I’m at home, I’m also able to care for the kids, which adds significantly to our savings. With child care costs often running between $10,000 and $14,000 a year -- not to mention the costs of transporting the children between home and outside care providers -- you can see how this saves us huge amount of money on two kids.
While my income took a significant hit when I moved from hotel finance into a self-employed role, I love my job and the freedom it provides, and I’ve made up for this income loss in other ways. I’ve already mentioned one of them, childcare. And then there are other savings on things like meals out when at work, and costs related to working outside the home like work attire, transportation costs, and similar expenses that likely add up to thousands in savings each year.
On transportation alone, I save about 10 gallons of gas a week compared to my previous commute -- or at today’s prices in the Chicagoland area, about $2,000 a year -- and about $1,450 from when I used to take the commuter train.
I really don’t like the accumulation of stuff. It makes me feel good to live a downsized lifestyle in which I control possessions rather than the other way around. From resale options to reducing the size of our home, finding what makes us happy by way of reducing the stuff around us has ended up saving us money.
For example, our previous home was costing us nearly $2,700 a month to maintain (including utilities). However, the time effort and money that was going into maintaining this home was not something that made us happy. Therefore, we sold; downsizing considerably to a much smaller condo in an area that we love and in a home is averaging about $900 a month to maintain (also including utilities).
And by doing things like having regular garage sales, taking things we no longer want or need to resale or consignment shops, and donating other goods to charitable organizations, we often recognize hundreds of dollars in extra income and/or savings each year.
Thursday, October 11, 2012
I recently came to the realization that in my chosen career as a self-employed individual, many of the characteristics of gambling are present. This made me ponder just how much self-employment can in many ways be a lot like gambling and how I’ve done my best to minimize risk in my career and avoid that “losing money” aspect of gambling that I dislike so much.
Putting My Bankroll on the Line
I put quite a bit of time and effort into saving up enough money to bankroll my self-employment dreams. Just having such a fund though didn’t mean I had to move into self-employment. I could have saved that money for retirement, put it into buying a home or just gone on a nice long vacation. Instead, I put my bankroll on the line, risking it in an effort to make a success of my self-employment dreams.
Even a career that was relatively easy to move into such as freelance writing still came with expenses. There was the cost of giving up my regular income, yet still having to cover regular living expenses. There were office supply costs, mailing costs, technology-related costs for things like a printer, laptop, software, and similar expenses. And there was no guarantee of getting this money back unless I succeeded in my chosen role, so it really was a gamble.
The Daily Scratch off
Once I was assured of making it in my career transition, the gambling aspects of my self-employed career -- while still there -- weren’t as dangerous to my financial situation. Instead, they became somewhat enjoyable. As I grew into my role, I began to form multiple income streams through various customers and employers to hedge against failure in any one or two individual income streams.
As these streams became viable sources of regular income, I began to look at them kind of like low or no-risk scratch off lottery cards. Each day, I could log into my email or employment site for which I did work to discover my “winnings” or earning totals. There was -- and still is -- an expectant excitement that came with finding out just what I’d earned that day from income sources such as my blog, my e-books, and various websites for which I freelanced.
Knowing When to Hold Them and When to Fold Them
Maybe the most difficult gambling-related aspect of my self-employment work -- since I’m my own boss and make all the decisions regarding the future course of my career -- is knowing when to fold my hand and call it quits on certain income steams. Tracking my individual income streams and sources over time so that I can gauge their success -- or lack thereof -- helps me know whether or not to continue plugging away at them or pack it in and call it a day.
There are only so many hours in the day for a self-employed individual. And seeing as how I have other duties as CEO, CFO, tax accountant, marketing exec., at-home dad, and all the rest when running my own show, I have to make informed decisions regarding where and how to allot my time. I do this by using my experience and knowledge of past performance to decide whether certain sites, lines of work, and income streams are viable and worth continuing or if I should fold my hand and wait for a better one on the next deal.
The Difference is…Control
Control is the big difference between gambling of the casino sort and that found in my self-employment experience. When I go to the casino, I can determine how much I gamble, which games I play, and how much I spend at each; but when it comes to the actual odds of success at each game -- since I’m not a professional gambler -- I have, in most instances, very little control over the outcome.
With self-employment though, I can better affect my chances of a successful outcome in my work through my marketing, relationship building with clients, continuing my work-related education, branching out into related income sources (blogging, e-books), etc. So while my self-employment does share characteristics with gambling, it’s a form of gambling in which I can minimize risk through my actions and better control the outcomes of my “bets” through my efforts and the decision-making abilities.
Monday, October 8, 2012
Sure, following direction sounds simple right? But for many people (especially some men I know) it’s not that easy. They’d prefer to just jump into a project without reading the instructions, and doing that with one’s taxes could lead to some major issues.
Knowing our family’s own financial situation also helps me do my own taxes. Again, this might sound like common sense; however, having a good grasp upon things like our overall combined income, investment returns, and possible deductions we might be eligible for such as mortgage interest, student loan interest, child credit, self-employed health insurance premiums, and similar items, makes it easier when tax time comes to gather all such information together and ensure that I have everything ready and prepared before I begin.
Not having to scramble at the last minute to collect all of our tax information and documentation certainly makes things a little easier come tax time. By keeping up with tracking and retaining information related to income (since I’m self-employed), taxes owed, deductions related to charitable donations, business expenses, and similar items, and keeping such information in an easily located and reviewable file, I make my tax life come year’s end, just a little easier to handle.
Keeping Up with Changes to the Tax Code
While I don’t spend hours studying the U.S. tax code each year, I do pay attention when I read about adjustments to certain items that may affect the taxes we pay. For example, the payroll tax reduction has paid off by boosting our income, and it will make a difference in the amount I withhold as a self-employed individual. Also, there was an increase in the Illinois income tax rate from 3 percent to 5 percent this past year, which might not seem like a lot, but it’s a 66 percent increase over the previous year, so it could mean a big bump up in how much we pay.
Having a grasp upon such changes as they occur takes some of the surprise out of tax time when I suddenly realize that certain things may have changed -- either for the better or worse -- compared to last year.
Having a Tax Background
The author is not a licensed financial or tax professional. The information provided in this article is for informational purposes only and does not constitute legal, financial or tax advice. Any action taken by the reader due to the information provided in this article is solely at the reader’s discretion.
Saturday, September 29, 2012
My mother is sort of a pack rat. Don’t get me wrong, she’s not a hoarder or anything like that, but she is one of those people who can see a use for just about anything and everything, and therefore, she likes to hold onto stuff. However, as she nears retirement, she’s begun to downsize, making her household easier to maintain, lowering stress levels, and opening up possibilities as to what she’d like to do in retirement, where she’d like to go, and how much it will cost to get there.
Positives of Doing a Test Run Now
There are multiple benefits in our doing a downsizing test run well before we retire. First off, we know that we can do it and how to do it when the time comes. We know what sorts of items will be on the chopping block, like clothing, dishware, bulky furniture items, and heavier things like books. We also know how much time and effort it can take to downsize. Going through stuff can be draining, both physically and emotionally. It can be hard to make decisions on items that we’ve owned for years. Thankfully, my wife and I have each other, and we work as a team so that we help one another make decisions on items that otherwise we might pointlessly hold onto.
Maybe one of the most important aspects of doing a trial run downsize is that we are now well-versed in how to make money off the process.
How we Turned our Efforts into Cash
We wanted our downsizing efforts not only to make our lifestyle more efficient, but make us a little cash in the process. Therefore, we tended to look for resale options for much of the stuff that we were getting rid of.
How and Where we Downsized
When we were finished, we had just enough stuff to fit into a 10 x 10 x 10 storage locker and the back of our SUV. Therefore, we were ready to move when our home sold, and when we relocated, we could buy a much smaller home, saving ourselves significantly not only on the home price, but on the moving process as well.
Thursday, September 27, 2012
Just a few of my early morning thoughts on the matter. Our accepted national and societal norms have been confounding me -- and frankly, concerning me -- more and more lately. Don't even get me started on texting and driving!
Wednesday, September 26, 2012
As a self-employed individual especially, I’ve certainly realized just how important tracking my income can be in helping me maintain a better overall feel for my financial situation.
Consistent and Accurate Totals
Of course one of the main benefits of tracking income is that I have consistent and accurate totals for my various income streams, which come tax time, is quite beneficial. But even before tax time rolls around, having a running total of my year-to-date income totals helps me with tax planning and setting aside properly estimated payment amounts for items like income and self-employment taxes.
Additions to Income
But I don’t just leave my tracking at “regular” sources of income that come with jobs that I conduct on a regular basis and that are employer-paid. I also factor in items outside this realm of regular income. Things like stocks, bonds, IRAs, and commodities fluctuate in value, and while maybe not currently taxable (since profits on items like my savings bonds and retirement account are deferred until converted to cash), are a part of my annual income nonetheless; and tracking them makes it easier to manage the next benefit of gauging my income -- making comparisons.
I find that making month-over-month and year-over-year comparisons of my various income streams is valuable to my personal finances for several reasons. First off, it allows me to watch and determine how various income streams are performing over time. Secondly, it helps me set goals for changing poor performing income streams, and looking for ways to push income higher.
For example, after reviewing last year’s income performance, I set a goal for this year to increase income by 20 percent over last year’s total.
Additions or Deletions
Through my comparisons and tracking over time, I’m better able to evaluate my various sources of income to determine whether there should be additions, deletions or adjustments. At the end of last year, I determined that there were several sources of income that were underperforming, and thereby not worth the amount of time I was investing in them. I therefore removed these income streams from my tracking portfolio. However, this left some gaps in my income that I could look to fill with new sources, which would also be gauged and evaluated over time
I noticed that several other income streams such as my blog and residual income from certain writing sites were lacking in progress or had even decreased over time. I therefore decided to put a little more effort toward working on these income streams in an attempt to bolster them. As I watch my efforts over time, I can come to a better conclusion as to whether my work has paid off or if these are areas that I should eliminate from my income and income tracking in order to focus my attentions elsewhere.