Category Archives: Expenses

Financial Benefits of Having a Fuel-Efficient Car

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Are you thinking about buying a new car, or perhaps you are buying your very first car?

Well, I’m here to remind you to take into consideration the financial benefits of having a fuel-efficient family car as a viable, prudent option!  Personally, I know that in the past, I at one time would just looked at the total price tag when buying cars as the primary basis of my purchasing decisions, (much to my chagrin).  Today, a more “wiser” me, take many more variables into by buying decisions.

Today gas prices are incredible high!  In fact gas prices are so high that as a car buyer, you must take into account the financial benefits of having a fuel-efficient car versus just buying the cheapest option.  Oh sure, the fuel-efficient car will be more expensive out of the gate, but after a few years, the fuel-efficient car will usually be the winner!

Honda Accord

Honda Accord

In may ways the fuel-efficient car versus the cheaper, maybe used car is much like the race between the tortoise and the hare!  At the beginning of the race the hare (the cheaper car) is way ahead, but after a few laps and many gas station refills later, the tortoise manages to catchup and pass the hare in terms of overall financial benefit!

Now that you know that after a few years, the fuel-efficient car beats the used or gas guzzling car, let me list a few additional benefits of a fuel-efficient car!

  • More than likely, the fuel-efficient car will be newer and possible under a warranty.
  • Hopefully the new car will be much cleaner without any odd previous owner smells (did they smoke?).
  • The repairs of a newer fuel-efficient car will be minimal and in the unlikely even such a repair is necessary, it’s covered by the warranty!
  • Since the fuel-efficient car is newer, it should look nicer and be more in tune with your individual taste in car styles.
  • And let’s not forget, less trips to the gas station!  In my case (yes I’m looking for a new car), it would literally cut my gas station visits down by half.  In the winter months, this is truly a reward in and of itself!
  • And finally there is handling, comfort, looks and pride of having a new fuel-efficient car since you’ll be helping the environment in your own personal way!

In a future post, I’ll break down the math, but for now it’s worth it to note that my gas expense would be cut in half with the new fuel-efficient car for the family, when compared to my existing vehicle.

 

Bests,

Don

Spending Money Fail! How We Spend More Than We Realize

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Lately, our car air condition started making odd sounds and slowly it seems like the air coming out of the system is less and less cool.  So based on this, my wife decided that when she took the car in for an oil changed, that she would have them recharge the air conditioner too.

Now as you may now, I’m a diy guy of sorts, and I wanted to have a crack at it myself, but unfortunately, I’ve been too busy with my day and side jobs to take the time to do it.  So my wife went ahead and scheduled to have it the oil changed and air conditioner fixed.  The plan was that we would drive the car in, then I would drive her home in my car, then we would go back to Panera Bread (with our kids in tow) for lunch.

Panera Bread

Panera

The cost for both the oil change and air recharged was discounted because my wife found some coupons, thus making the total expense for both around $140.  So the recharge of the air conditioning cost a little over $100, not too horrible, although I’m sure I could have accomplished the task for a fourth of the cost or maybe even less.

The Spending Money Fail!

The funny think was I worried about this expense all day, thinking what a waste of money it was.  And honestly it was a waste of money, since I could have done the task for a lot less!

What I find funny now though is there I was working on my laptop at Panera, occasionally thinking how expensive it was to fix the car, not taking into consideration that we spend at least $50 at Panera that day!  And what really trips me out is that sometimes we’ll go to Panera twice a week (although it doesn’t usually cost $50 because my daughter gets something from Wendy’s beforehand).

So in a two week’s span, We’ll spend about $140 on food that is instantly consumed without a second thought, whereas the recharging of the air conditioner which will last for at least five years caused me considerable financial agony for that day.  In a nutshell, I was worrying about a little pinprick in my financial dam, while behind me (not in my financial vision apparently) was a cannon hole letting my money gush out at a horrible rate in comparison.

Financial Grade for that day… F!

Cheers,

MR

 

Lifestyle Creep Checkup

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Well, I decided to give myself a Lifestyle Creep checkup and report back my findings!

Now a lot of you are more familiar with the phrase: Lifestyle Inflation, but I prefer the more precise phrase: “Lifestyle Creep”. The two concepts are slight different and to me the more accurate representation of my experience is Lifestyle Creep. If you are interested in the differences between the two terms, check out my article called “The Difference Between Lifestyle Creep and Lifestyle Inflation“.

Before I go into my lifestyle creep checkup, let me discuss what has enabled lifestyle creep to come into my life in the first place.

At the beginning of 2010, I finally became totally debt-free! By totally debt-free, I mean no credit card debt, no car loans, no home mortgages or any other type of debt! Eliminating all of my debt increased my income stream by so much at I wrote an article about it called: Paying Off Your Mortgage is Like Working at a Second Job! This increased discretionary income stream is the source that has been fueling my slow lifestyle creep advancement. Now onto the checkup!

My Lifestyle Creep Checkup

  1. Increase in more expensive vacations, versus in the past occasionally skipping vacations for certain years. (I’m okay with this, and I totally accept and want this!)
  2. Increased consumption at gourmet coffee shops (This lifestyle creep element has to be stopped or reduced!)
  3. Lack of concern about sudden expenses. My wife got a speeding ticket recently and we just below it off. In the past, we should try to account for the expense (not to mention the increase in our car insurance payments). (complacency is enemy of those trying to become wealthy, this is not acceptable!)
  4. Kids are entered into sports without cost considerations (I’m half and half on this. If the program offers value to my kids, then “lifestyle creep” be damned, if not then I need to cut it out!)
  5. Dinning out, multiple times during the weekend. Sometimes, we go out to eat up to three times in one weekend. (This is horrible! Need to sharpen the Axe)
  6. Both my wife and I go out and spend money with friends on movies, lunch, golf and special trips. (I’m half and half on this too, some lifestyle increase is good since we derive a lot of value out of these experiences)
  7. I didn’t carpool with a friend from work when gas prices went over $3! See this post: Carpooling to Save Money and Reduce Gas Prices! I found that I enjoy my personal time too much to share it anymore. Plus, when I drive to work, I think of blogging ideas. (This is horrible, but I accept it anyway!)

Overall, for this past year, I would give myself a “B+” on my Lifestyle Creep Checkup, and here’s why:

  1. I’ve been able to pay my credit card bill in full each month.
  2. I increased my contribution to my 401(k) to near the max that is allowable. I didn’t max it out totally because of the unpredictability of bonuses and other extra monetary rewards.
  3. I’m participating on my employer’s ESPP! Read this article: Getting Over 15% Return By Saving Money In An ESPP for a way to make better money than the typical stock returns, with little to no risk (It’s been all up for me!). I consider this one of the more intelligent moves I’ve made recently!!!
  4. I’ve been able to make a little money by blogging. This is a win-win scenario for me because I get money for doing something that I really enjoy!!!

Lifestyle Creep Checkup Conclusion

Yes, I have some lifestyle creep in my life, but I’m still saving over 25% of my income and investing it. I’m also living a more balanced life and really enjoying my vacations without worrying about how I’m going to be able to afford them!

I will have to cut out some fat in my lifestyle if I want to remain debt-free, but I don’t think it will be that difficult to accomplish.

Hope you enjoyed my lifestyle creep checkup. How are you going, are you experiencing any such phenomena?

MR

 

 

Getting Over 15% Return By Saving Money In An ESPP

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First, let mes explain what an ESPP is.  This acronym stand for “Employee Stock Purchase Plan“, and it enables an employee to buy their employer’s stock at a discount (up to 15% off the market price during the purchase date).

The basic ideas of an ESPP is that it slowly drawn a certain amount of your salary and holds it for you to purchase company stock at a certain date in the future.  My employer does such a purchase on a quarterly schedule.  Then at the end of the time-period (again, my employer uses quarters), your employer uses your money that was saved to purchase your employer’s company stock, at a discount mentioned above!  Where I work at, the discount is 15%, which is a great!

When the company stock is purchased, the next day I go in and sell the stocks that was purchased by my employer.  This gives me an instant 15% rate of return on the money that was saved for the purchase!  So to think about it a different way, for those 3 months, I get a 15% gain on the money saved.  Mind you, the term is only 3 months and not an entire year!  So that 15% return is really better than it seems!

If you hold your shares, only selling them after 2 year, you’ll receive better tax treatment, but I’m more than happy to take the 15% return that my employer offers.  Waiting 2 years to sell the shares for better tax treatment seems risky to me.

Not as obvious as the 15% return is the forced saving provided by my employer.  Since I paid off my mortgage, I was having problems saving the money for investing.  Using the ESPP, my employer is basically saving the money for me, while paying me a 15% to do so!  Tell me this isn’t an awesome mechanism or what?

I’ll admit, I’m excited to have my employer pay me to save money!  The best part is that my employer does the work of saving the money for me, and then at the end of the quarter pay me 15% return…  What’s not to love with is deal?

If your employer has an ESPP, are you taking advantage of it?  IMHO, this is one of my best money hacks that I’ve done!  If your employer offers this benefit, look into it and the tax treatment of such a plan!  Perhaps you’ll view this as a win-win like I do!

Bests,

MR