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Structuring Prosperity for Yourself and the Nation
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Newsflash: You can’t get out of debt until you stop being broke!
By Kevin M
Some argue that if you’re in debt the priority needs to be to payoff your debts before attempting to build a savings account. Many call for the establishment of a small emergency fund—typically $1000—to handle contingencies, and then to pour all extra funds into the pay down and eventual payoff of debt. Only when your debts are paid will you have the cash flow to truly build substantial savings.
While there is some merit to that advice, I believe it fails to address the basic reason a person might get into debt in the first place: a lack of savings, forcing the use of credit as a savings substitute.
Until that cycle is broken, it’s doubtful you’ll ever payoff your debts or accumulate substantial savings. Life has a way of throwing contingency after contingency at us and unless we’re fully prepared to deal with that reality, getting out of debt is little more than a fantasy.
Continue reading Build Savings or Payoff Debt – Which Comes First? →
By Kevin M
Last Saturday night, we decided to go see Avatar, a highly acclaimed movie that lived up to its billing. It was the first time we’d been to the movies this year, and I’m almost embarrassed to admit that the reason we decided to go at all was that our daughter was at a weekend sleepover, which meant that only my wife, my son and myself would go, saving us money on the fare (OK, she wasn’t really excited about seeing the movie anyway).
Now we live in the Atlanta area, which is a region nearly famous for having a very reasonable cost of living. Despite this, here’s the run down of what it costs to take in a movie in these parts:
Movie ticket: $10.50 per person (seems to go up a dollar every year)
Medium popcorn: $7
Medium soft drink: $5
Box of candy: $5
I can only imagine what it costs to go to the movies in “high cost” areas.
If each person in the family goes for the “full package”—movie, popcorn, drink and candy, the cost is an astonishing $27.50 per person, or $110 for a family of four (a 12 year old is an “adult” at the ticket window)! And we haven’t even added dinner!
Continue reading How to Save Money At The Movies →
The Local Watering Hole as a Financial Bottomless Pit
Kevin M
At the risk of personal safety I’m going to take aim today at an “expense” that may be sacrosanct for some, but that’s exactly why it needs to be discussed.
Jimmy Buffet’s 1977 sentimental favorite Margaritaville tells a tale of a carefree life lived on a warm beach in a perpetual state of inebriation. As appealing as that can be at times, when it’s romanticized into a regular activity at a local bar, the costs can be steep, and we aren’t just talking about money.
For the purpose of full disclosure, I’m a light drinker. I’ll indulge in an occasional beer or glass of wine (or two or three), most frequently with dinner guests, but consumption of alcohol has never been a priority in my life. I can go for months without drinking or sit in a bar for three or four hours nursing soft drinks, surrounded by people drinking the hard stuff. I don’t know if that status disqualifies me or gives me the vantage point of an objective outsider, or if it even matters.
Continue reading Wasting (Money) Away Again in Margaritaville →
By Kevin M
Redeeming Riches has been running a truly good series, 10 Money-Saving Tips to Help You Stash $10,000!, which includes tips in each post on how to accumulate such a pile of cash, one expense at a time. The initial post in the series ran back on February 22nd, and took aim at cutting back on going out to eat as the first tip in the quest.
It’s almost standard fare on the personal finance blogging circuit to take aim at eating out as a rich source of savings, either to build up a bigger bank balance, or to reign in a runaway budget. But how much money can we save by cutting back on this expense?
Running the numbers on eating out
Let’s do some quick calculations to illustrate just how much money we’re talking about.
It costs about $25 for a family of four to buy a meal at a typical fast food restaurant. Averaging just two trips per week totals $50; continuing the pattern each week over the course of a full year comes to $2600.
Continue reading How Much Money Can You Save by NOT Eating Out? →
By Kevin M
Last week in New Car or Used Car – Which is the Better Deal? we talked about the many virtues and monetary advantages of buying a used car.
One of the common objections to buying a used car is the higher cost of repairs and maintenance. Well, we may have at least a partial solution to that problem.
Car-Part.com–“Used Auto Parts Market”—provides access to salvage dealers across the United States and Canada. Car-Part.com isn’t a salvage dealer itself, but a database of hundreds of dealers in nearly every state and province across North America. Per the site “about us” description, they’ve been operating since 1998, so they’ve had time to work out any system bugs.
Continue reading Save Money on Car Repairs with Car-Part.com →
Low Cost/Debt Free lifestyle as part of retirement planning
Kevin M
Most articles on the subject of retirement planning focus completely on growing tax sheltered retirement savings plans like 401k’s and IRA’s. It’s an effort to build a large capital base as a way of creating a strong retirement income to enable us to maintain the lifestyle we’ve become accustomed to during the course of our lives.
Few pundits ever deal with the flip side of that effort—establishing a low cost/debt free lifestyle early in life. For a generation addicted to McMansions, late model cars, eating out, vacations at five star resorts and the like, no amount of money salted away may ever be enough.
Continue reading Good Retirement Planning Should Include a Low Cost/Debt Free Lifestyle →
By Kevin M
How is it, that when we put money into commodities or raw land, we’re “speculating”, but when we buy growth stocks or growth stock mutual funds, we’re “investing”? Where’s the dividing line? Is there a dividing line, or is it all marketing spin?
In recent decades, investing in the stock market has become common even and especially among the middle class. We’re routinely guided to “invest” money in stocks for future gain, and inundated with newspaper, magazine, TV and internet ads promising us double digit returns for placing money in this or that mutual fund—albeit with the caveat “past performance is no guarantee of future performance”. But exactly how do we process all of that? Do we process it at all?
In Investing Basics: What Is an Investment? Paul Williams at Provident Planning introduces the concept of familiarity blindness, a state in which “most of the basic questions don’t occur to (us) any more”. This is a valid observation of the human tendancy to avoid challenging assumptions once they’re fixed in our minds. Though we give lip service to the volatility of the stock market, do we also turn a blind eye to it’s clear speculative nature?
Continue reading Are We Investing or Speculating in Growth Stocks? →
By Kevin M
Question: is a car an asset or a liability?
That was a theory question in a sophomore level accounting course I took in college way back when. After some debate among the class, the professor confirmed what we all knew, that the technically correct classification is “asset”, but felt compelled to add, “Of course, in the real world, we all know that automobiles aren’t assets at all, they’re liabilities that cost money and continually drop in value from the moment you drive them off the dealer lot.”
Most of us know this to be true intellectually, but does that reality guide our decisions at buying time?
Cars represent a structural expense, that is, an expense that’s mostly a consequence of an underlying cost structure created at the time of purchase. Once we’ve made the initial purchase, we’re largely stuck with the expense level over a period of years. It’s in our best interest then to make the most intelligent decision at the time of purchase.
With that thought fresh in our minds, I believe used cars are the better choice for most people in most cases.
Continue reading New Car or Used Car – Which is the Better Deal? →
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General: Any information in regard to money, credit, personal finance, or in regard to any other monetary topic, provided or shared on OutOfYourRut.com is presented for information and entertainment purposes only and does not constitute financial advice. It is intended to provide general information only and does not constitute personal financial advice in regard to your specific circumstances...MORE-->
Survival+
Structuring Prosperity for Yourself and the Nation
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Why It Might Be Better to OWE on Your State Income Tax Return
By Kevin M
A disturbing report came out last week in an article on Yahoo Finance in regard to state income tax refunds being delayed. In Cash-Strapped States Delay Paying Income-Tax Refunds it was reported that several states will be delaying the issuance of refunds this year in response to budget issues.
The article said that the delays represent “…essentially an involuntary no interest loan from the taxpayer.”
Projections indicate that this is a trend will continue into the foreseeable future. The Christian Science Monitor reported in December that (What recovery? Budget deficits get worse for states) 48 states face budget deficits for fiscal 2010, and at least 41 are projected for 2011.
Continue reading Why It Might Be Better to OWE on Your State Income Tax Return →