All of the money that we spend is for: things we need or things we want. Over the years, certain things (like a cell phone) have migrated to the "need" category, and an argument could probably be made that these are not really necessities and if we had to go without, we could. I will leave that argument to someone else.
While there is flexibility when it comes to needs, in the end, money is still expended. Wants, however, can be denied. That may be an extreme solution, though, and depending on the type of want, another option can often be found.
So, I would never suggest that expenses can be controlled by simply eliminating the things we want. Certainly, there are things that we want, be it a coffee or a movie, that, individually, do not adversely affect our personal economies, but that if removed completely, would be seen as a sacrifice in our standard of living.
This is where I come down on the "want to" vs. "need to" argument in personal finance - What is often overlooked is th ... more »
Posted: February 14, 2009 4:49 pm | 2 comments
Tags: finance, money, needs, savings, wants
Smoking, drinking, gambling: lose/lose situations.
Aside from the impact to one’s health and strained family relations, vices like these have one sure thing in common—they cost money.
Smoking is an $80 billion a year business. Americans spend $90 billion on alcohol each year, and, between casinos and state lotteries, nearly $50 billion a year on gambling.
No one is born a smoker, drinker or gambler so the surest way to not spend the money required for these activities is to not start.
For an idea of how much a person can spend (or SAVE) check out these calculators:
http://www.collegedrinkingprevention.gov/CollegeStudents/calculator/calc...
http://www.cancer.org/docroot/PED/PED_10_cigCostCalc.asp
Posted: March 7, 2009 3:02 pm | 0 comments
Tags: money, personal finance, savings, vices
Word of the day: Amortization.
Before those student loans come due, it is REALLY important to understand what amortization is and how it works. Before I explain that, though, let me give you an example so that you know WHY you should care.
Would you be surprised to know that a $200 payment on your student loan only reduces your total amount owed by $10? The remaining $190 goes to interest. Over the course of a ten year student loan, the amount paid in interest equals thousands of dollars. Why should you care? Because you DON’T have to pay it all.
Instead of each payment having the same share go toward interest and the same share go toward the principle (the amount borrowed), an amortized loan has the bulk of the interest up front, the amount of which gradually decreases over time. The amount applied to the principle increases over time. So, the lesson is: the longer it takes to pay-off your loan, the more money goes to interest.
Obviously, the way to save money by not paying ... more »
Posted: March 29, 2009 8:08 pm | 4 comments
Tags: interest, money, savings, student loans
I recently received a BJ's membership and thought I would share the benefits and drawbacks involved in buying in bulk.
The pros:
Savings. Buying in bulk means a wholesale discount. It isn't always significant and depends largely on the type of item purchased. But, this remains a main reason people shop at BJ's, Costco, Sam's Club, etc.
Quantity. As 'bulk' would imply, you get a larger size than is available at a grocery store. Quantity refers to larger sizes, but also to multi-packs. Either way, you don't run out as often.
The cons:
Storage. Buying larger quantities isn't always convenient if you don't have the space. People in apartments, for example, are at a disadvantage when it comes to where to put all those extra rolls of toilet paper.
Spoilage. Purchasing a larger quantity of specific food items can easily result in spoilage if it isn't consumed in a timely manner. Single people or even families of 2 or 3 can find themselves throwing out food because they couldn't fini ... more »
Posted: April 22, 2009 3:50 pm | 0 comments
Tags: money, personal finance, savings
If you were one of those who gasped at my freecycle and couchsurfing posts, just stop reading now - below is another idea that brings strangers together. Oooo, scary :)
Introducing Time Trading (or time banking), a way for people to have their needs met for FREE.
Think of it as bartering for the 21st century, where members trade services, rather than pay for them. Anything from knitting lessons to help with ebay, a ride to the airport or a bike tune-up can be found on the local time trade website: www.timetradecircle.org.
Using a web-based 'accounting' system, members post their services offered and requested. Once a match is made, the member who received the service logs into the bank account and pays the other member in hours. New members start with a 5 hour credit so they can begin participating right away.
Although based on the concept of reciprocity, time trading does not have to be between just 2 people. In fact, by involving members of the entire community, the Time Tra ... more »
Posted: April 26, 2009 5:28 pm | 2 comments
Tags: bartering, free, money, savings, time, trade
