Tag Archives: saving money

Reasons To Save Money

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Money is a powerful tool, it can either make or break us.  Since this blog is called Money Reasons, I’ve decided to list reasons to save money. 

Money Reasons

 

Reasons to save money:  

  • Retirement – This has been beat into the ground, but I want to have a fairly decent retirement!  Even thought my retirement is far away, I think I’ll start rebalancing my portfolio every year.  At the very minimum, once a year!
  • Emergency Fund.  Who knows when disaster will strike again!
  • Vacations – Someday, I even want to travel overseas,at once!!!  Or go back to Disney!  We had a wonderful time and made some great memories.
  • College Savings – In the nearish future, I want to help my kids pay for college .  I’ve been investing in a few 529s, but I still have a long way to go.
  • Car Purchases – I don’t want any more car loans!  The next cars I buy will be bought outright!!!
  • Home  Repair – Things break (water tank, furnace, AC, new carpet, flooring, sinks, etc), and some day the roof will need reshingled.
  • Kid’s Sports – they add up!!!
  • Sense of security – It’s nice to know you have money invested in things that could appreciate greatly in value.

Money is a funny thing.  After all, it’s really just a small piece of paper.  the value that we assign to money, floats with thing going on in our economy and world.  And yet it’s what we all go to work for most of our lives. 

Do you have any additional “Reasons for Money” that I may have missed? 

If I had enough money, I’d travel the world and mainly manage my investments.  What would you do?

Frugal Puzzles, fixing small things can be fun!!!

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Hamster wheel

Fixing small thinks is oftentimes fun and can save a few dollars the frugal way.

My son’s hamster wheel was very noise. The spinning grinding sound of the hamster running in it started waking my son at night. I thought about pitching it, but I know that the hamster is healthier since he uses it. So, I thought about buying a new wheel. So I fired up my good friend Mr. Google.com, and typed in the following search words “Cheap hamster wheel”. Mr. Google.com answered by displaying that depending on the type of model, they run anywhere from $7 to $20.  So I thought it was time to put on my thinking cap and figure out this frugal puzzle.

I thought, hmm, it’s effectively broke, so I’ll tinker with it… after all, I’m going to throw it away anyway. So that’s what I did, I took it apart. I then started thinking about the reason it was so noisy. Then it dawned on me… using oil or some other kind of lubricant might make the noise stop.

I didn’t want to use real oil, that seemed like a bad idea! So I took a small dab of Vaseline (any type of petroleum jelly will do), and coated the stem that the wheel rode on. I then slid the wheel back on the stem and gave it a spin. Viola! No noise, the problem was solved!

Not much of a puzzle other than figuring out how to get it apart. Still, I was proud of myself for saving the money, not to mention the green aspect of not throwing the wheel away.

Beaming with confidence from fixing the hamster wheel, I started thinking of other ways I could use petroleum jelly. Then I remembered my old “lamp light warped” alarm clock. The buttons on the time setting piece was not longer popping back up after pressing it. So, a few day later, during a football game (Arizona Cardinalsand some other team), I started taking it apart. I unscrewed the cover, and surprise, the plastic pieces fell out (I should know better, but I was distracted by the game). After I figured out how the pieces went back in, I gave each button a small lining of Vaseline on the inside edge of the buttons, and the hole they went through. Yes! This worked perfectly!

Overall the alarm clock was more like a puzzle than the hamster wheel. I probably saved $20 on it. I do know that super cheap ones go for about $10. It was kind of fun figuring it out! I even took the opportunity to make it educational too! I called in both my son and daughter and explained the electronics. This mini puzzle took me about 30 minutes to do (although the football game really took it’s toll on my time efficiency with this one).

Even though my savings was only $30, I had fun doing it and actually proud that I didn’t just toss it in the garbage (Go GREEN!!!)!

Before throwing something away… see if you can figure out a way to fix it or somehow manage to get a few more years out of it somehow.

 

The environment thanks you in advance! 😉

The Power of Spot Budgeting

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Okay, I’ve posted a similar post about this before, but there is power in this process!

What is Spot Budgeting?

Spot Budgeting is the lazy man/woman’s way of doing a limited form of budgeting.  The beauty of this technique is that instead of running your life like a bookkeeper or accountant, you just track 1 or 2 areas of concern to keep the spending in that area under control.

I use it to track my breakfast and lunches, presently I have a weekly spending budget of $20.

So what could you use it for?

 

Latte

Latte

 

  • That $4.00 latte 

     Don’t cut it out entirely, but have a weekly budget of $8.00, track it on a scrap piece of paper… piece of cake!!  Don’t cut it out entirely, but have a weekly budget of $8.00, track it on a scrap piece of paper…

  • Breakfast and Lunch meals (like me) set a max spending amount and stick to it… (so out of the $60 I use to spend, now I only spend a max of $20).  $40 dollars a week now goes towards investments.
  • Dinners out per month.  Maybe budget a max of 2 dinners out a month
  • Fast food dinners out per month.  Maybe budget a max of 8 to 10 dinners?
  • Entertainment. This is a prime area that you can cut out some of the fat, without living like a hermit.  There are many free activities that are still very entertaining.   Examples (walking or hiking, cycling, video games – “online or game consoles”. and movie night with friends).
  • Common sense thing.  You should know what you’re spending to much money on, and be able to create a spot budget for that weakness.

I’ve heard that it take 21 times of doing something to make it a habit.  With spot budgeting, I think it’s possible to change your behavior and make it a habit.  Then move to the next area you want to have spot budget.

Personally, I’ve been using this technique for the last 25 weeks, and I have to say… it works great!!!

What do you think?

Spot Budgeting To Save Money For A Goal Fund

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First, let me say, that I’ve always admired people that create budgets and could follow them to the T.  I’ve actually tried to create a budget when I was in college, but it’s never worked out for me. There was always something that would pop up that I didn’t save the receipt for.

Surprisingly, while doing my Breakfast/Lunch experiment, I “out of the blue” realized that my experiment is really a form of budgeting.  I decided to call this type of budgeting “Spot Budgeting“.

Here’s how “Spot Budgeting” works for me:

  • First, every monday, I clip 5 sheets of paper I recycled together and use them as a log for things I do at work.
  • At the top, I add Breakfast and Lunch cost to these 5 sheets, 1 entry for breakfast and 1 for lunch on each sheet.
  • On Friday, I add up the total cost for breakfast and lunch, then I do the following calculation:
    • Is 60 – (weekly breakfasts + weekly lunches), greater than 40?
      • If 60 – (weekly breakfasts + weekly lunches) is greater that 40, then I pay myself the full $40 dollars for an allowance.
      • If 60 – (weekly breakfasts + weekly lunches) is less that 40, then I pay myself the amount that’s less than $40 dollars.
      • The following week I’ll make it up by not eating out for lunch as much.  Then I’ll pay myself the amount over $40 dollars that I didn’t spend.
  • Since I’m adjusting and tracking this weekly, I don’t do any monthly or yearly budgeting comparisons (this makes it simple).
  • Since it a weekly comparison, and it typically only involves 20 entries (only 2 a day) to log per week, it’s very simple and quick to do.
  • If I want to calculate my yearly savings, it’s just (40*52, which is $2080)
  • That’s it…  My budget is just for Breakfast/Lunch and during the typical workweek only.

Now my next stage is to take the money I save by budgeting and put it into a dividend yielding stock (etf, bond, mutual fund or whatever).  Then use the dividend paid by that investment to increase the amount of money I have for lunch.  See my attached spreadsheet table below:

So after 3 years of saving, I can afford to buy another cheap lunch per week, while I’m at lunch… so instead of 2 days out for lunch per week, I’ll added another lunch out with the guys after every 3 years of savings.

My view on the “Spot Budget” is that you are no longer paying for the lunch out of your earned money, but instead using the money from your investment dividends.  So after the 1st year of investing the money, this will effectively be my “Lunch Fund”.

To speed up the savings, I also add “Additional Savings” to my “Lunch Fund”.  The “Additional Savings” could come from bonuses, part of my tax refunds, etc.

Additional Main Adult Total Yearly Amount & Interest Monthly Weekly
Savings Savings Allowance Contributions Interest Interest Rate Earnings Earnings
2009 1000 2080 3080 3,080.00 $154 3,234.00 5.0% $12.83 $2.96
2010 2080 2080 5,160.00 $258 5,418.00 5.0% $21.50 $4.96
2011 2080 2080 7,240.00 $362 7,602.00 5.0% $30.17 $6.96
2012 2080 2080 9,320.00 $466 9,786.00 5.0% $38.83 $8.96
2013 2080 2080 11,400.00 $570 11,970.00 5.0% $47.50 $10.96
2014 2080 2080 13,480.00 $674 14,154.00 5.0% $56.17 $12.96
2015 2080 2080 15,560.00 $778 16,338.00 5.0% $64.83 $14.96
2016 2080 2080 17,640.00 $882 18,522.00 5.0% $73.50 $16.96
2017 2080 2080 19,720.00 $986 20,706.00 5.0% $82.17 $18.96
2018 2080 2080 21,800.00 $1,090 22,890.00 5.0% $90.83 $20.96
2019 2080 2080 23,880.00 $1,194 25,074.00 5.0% $99.50 $22.96
2020 2080 2080 25,960.00 $1,298 27,258.00 5.0% $108.17 $24.96
2021 2080 2080 28,040.00 $1,402 29,442.00 5.0% $116.83 $26.96
* The idea here is to pack food, which saves money and to pay my allowance out of that money

This is my first “Goal Fund”, eventually I plan on have other “Goal Funds” that will pay dividend for other goals, perhaps vacations, taxes, etc.

Well, this is my evolution of my lunch experiment into a Lunch “Goal Fund”.  I’m kind of excited to see this come to fruition!!

Goal Fund for lunch

Goal Fund for lunch

– D