Tuesday, July 31, 2012

Vending machines are a rip off!

My husband will spend $3.50 on a pop and muffin at work. He could probably a pop and a muffin from the bakery than for less than $1.50 from the grocery store. If it were me, I'd go one step more and have water or coffee in place of the pop and make my own muffins. A dozen muffins can probably be made for less than $2.00 and even if he has 2 at a time because they are a little smaller, he could have muffins for a full work week for probably less than he spends on one muffin in the vending machine. This just started at his new job, so maybe I will have to propose doing it that way. The only bad thing is having muffins around the house. They might not last the whole week. Maybe if I freeze them it would discourage us from just eating them because they are there. But if he goes to the vending machine 5 days a week, he is spending $17.50 per week. Here is what a daily $3.50 vending machine purchase can do to your finances in a year.
Using the vending machine each work day would cost.

$17.50 x 52 = $910!

In this scenario, let's still let him have his soda, but buy a 12 pack of soda for about $3.50 (assuming I stock up when it's on sale) and make a dozen muffins a week. So he has 2 cans of pop and 2 muffins each day and still has 4 of each left over at the end of the week.

$5.50 per week x 52 = $286

That amounts to a savings of $624 in one year.
What could you do with an extra $624?

Monday, July 30, 2012

Need to think bigger when it comes to earning money

I was thinking a bit more about what my co-worker was telling me about renting out his cabin for $200 a day. He earns great money and lives in a completely different financial world than I do. $100 is still a lot of money to me. But to someone like him $100 is probably like $20 to me. The main reason is my income. If I didn't have my husband, I'd pretty much be living on a boarder of the poverty line. Even if I get offered overtime, a full day (earning time and a half) is only worth a little more than $100 after taxes. I can think of several small ways to save money such as setting the thermostat to 74 instead of 70 in the summer, using coupons only on double coupon day at the grocery store, saving myself $2 when I fill up with gas on Tuesdays because they double any competitor's gas coupons. And I'm sure all this still does help to a certain extent. But I'm not going to get financial security by just doing things like that. I need to find a way I can bring in a few hundred or even a few thousand dollars extra per month. I will sometimes have an idea, but I always stop myself by over thinking and thinking oh that wouldn't work or that my husband would not approve. For example, I thought about buying some equipment to detail cars and then advertise that I will clean and detail your car for $50. If I did just 2 a day, I could make as much as I do in a day at my job. Or I think about offering to clean houses, but then I worry what if I accidentally ruin something like if I used the wrong type of cleaner and ruined the floor or something. I'd love to really go big and do some real estate stuff.  However I fret over if I should get gas today or tomorrow because will the price go up or not, so I don't know if I could handle the stress of losing larger amounts of money. I need to not worry too much about pennies and worry more about the bigger picture.

Sunday, July 29, 2012

A great passive income idea

I was recently talking to my co-worker and he was telling me how instead of going to his cabin every weekend, they are renting it out for shorter periods of time. He must charge $200 per day because he said something about getting $1,400 for renting it out of a week. Then he said he also rents out his boat for an additional $50 per day. He is not booked solid, but it sounds like he has about half the dates in August already booked. So if he rents it for just 15 days he can make $3,000 a month. If he rents the boat too, it would be $750 per month. If he was able to get it rented for every day of the month, he could make $7,500 per month if they rented the boat too. You always hear about people buying homes to rent out monthly for some income, but depending on the area, you could probably get $1,000-$1,500 per month. By renting your place out by the day or week, even if the place is only occupied 50% of the time, you can probably make twice as much money. Of course this works better is your property on a lake, or in some sort of vacation setting.  We are renting a house for just one night for my sister's bachelorette party and they are charging $435 per night! So if they rented their place out every night of the month, they would make over $13,000 a month! Sadly, I don't think I we are in a position to do something like this at this time, but it definitely something I would consider in the future.

Saturday, July 28, 2012

Planning for your financial future and your mortality

I don't know why I keep having this thought I'll die young. Maybe because it is because I see young people in their 30's, 40's and 50's in the obituary section of the newspaper. I think something like 20% of people die before they are 65 years old. And by the time I retire the "retirement age" might be 70, and I'm guessing even less people make it that long. For some reason I am having trouble motivating myself to put more money into retirement. I have been putting in $200 a month since March, so if I continue that I will have put in $2,000 by the end of the year. But I still keep thinking I should max it out again this year and put in the full $5,000.

Another issue is there is a lot of stuff we need to save for in the short term future. The big one is both our vehicles are getting old and will need to be replaced within a few years. I don't want to tie up so much money into something I can't access for another 30-something years. I am still thinking about possibly doing a regular IRA instead of a Roth because then at least I'd get the tax break today, but I would still be putting something away towards the long term future. I wish I had a job that actually had a 401(k) because it would make it less painful to have it taken out of my checks automatically (and if there was matching that would be even better). I don't really even think about the fact I have been having an extra $50 a paycheck taken out for Federal and State taxes.

I know I should just assume that I will live well into my retirement years, but it's tough when I have to be frugal right now and not enjoy life as much because I have so much else to save for. I want to enjoy life now while I know I have it. That extra $5,000 that I would put into a Roth IRA could allow us to be more generous with other people, buy a few nicer things, and just enjoy life more.

My sister is getting married, so of course it would be nice if I could get her something nice and splurge on her bridal shower. It would be nice to take my friend who is unemployed out for lunch. I would be nice not to feel cheap going to a wedding and only giving them $40. It would be nice to get myself a pair of shoes that cost more than $20 so my feet won't hurt as much at the end of the day. It would be nice to get a massage once in a while. It would be nice to get a VIP ticket for my favorite band's concert. It would be nice to get a new computer since mine is crashing more often. It would be nice to take a short trip to a warm weather destination when it's -20 degrees in January. It would be nice to buy myself a few nice shirts instead of the cheap K-mart shirts that are so thin you can see my bra through them. It would be nice to get some more jeans that actually fit me. Or better yet,it would be nice to spend a little extra to get healthy foods and supplements so I can fit into my jeans again. Having an extra $5,000 would allow me to do more of these things. But reality is I can't really justify spending money on this stuff because we have so much to save for now. Even though investing in an IRA is a supposedly wise investment, I feel like I'd be better off saving short-term for a new car and allowing myself to loosen the reins a bit and enjoy my money. After all, why do I drag myself to work every day? For one reason and that's money. I wish I had such an abundance of money that I could max out my Roth IRA, not stress over taxes, pay cash for our replacement cars and new windows and siding for the house and still have money left over to do all that other stuff. But reality is I have to make choices. And right now the biggest choice is do I bother locking up more money in retirement accounts or just use the money now? I wish I knew how much life I had and how to save for it.

Wednesday, July 18, 2012

Why it is important to have some money in savings

A week ago today started off like any other day. I got up and drove to work and parked in the parking lot (which is probably nearly a ten minute walk to my building so I get my exercise each morning). But anyway, I turned the car off and went to pull out the key and it wouldn't let me! It got close to the "off" position, but not quite enough for me to pull the key out! The lights were all still lit up on the dash board so I didn't want to leave the car out in the parking lot all day with the key still in the ignition and all the dashboard lights on. So I brought the car into the mechanic. To make a long story short and because I still don't know exactly what was wrong (I'm a girl, I don't understand cars), I will just say it cost $1,000 to get it fixed. So that was a huge bummer! I wish I could have put that money towards a nice vacation, an eventual gently used vehicle or even something boring like putting it into my IRA. So now I have to work for two and a half weeks just to get back to where I was.

Thankfully it was not a huge blow to us financially. That's why it's nice to know we have money in the bank! I wasn't expecting to spend $1,000 that day, and it's for reasons like this it is good to have an emergency fund in place!

Monday, July 9, 2012

Passive Income

I have seen a lot of other personal finance bloggers talk about increasing their passive income. Right now I have a little bit of passive income from my savings accounts, but I’d like to increase it. I have also been making some money doing blogging, but I still have to put time into it, so I don't know if that would be considered passive or not. If I stop blogging I might get a little bit of passive income, but it would probably eventually dwindle away to nothing. Right now I have nearly $20,000 in the bank, however the interest rate is so low, I only made $11.24 last month. It’s better than nothing and I didn’t really have to do any actual work for it.

I recently heard about Lending Club which allows people to lend others money. There is a little more risk involved, but the returns are much better. It looks like if you diversify your loans and play it safe, you can still make about 6% even if you consider about 1 to 2% of the loans will default. One negative thing is you have to tie up the money for either 3 to 5 years. I will need to use the majority of the money I am saving within the next 3 years, so I wouldn’t put it all in there. Currently I have $4,000 set aside as an emergency fund. I know it’s not much, but I believe my husband’s job is pretty secure, and if anything were to happen we’d probably get enough warning to stock up. There is an opportunity to sell the loans to others, so the money can be liquidated if needed, but it probably wouldn’t be as liquid if it were in a regular savings account or CD. What are your thoughts on using a site like Lending Club? Would it be a good place for me to put $4,000 in?

Thursday, July 5, 2012

Net Worth Update - Second Quarter 2012

Every quarter I like to check how much my net worth is. Here is the numbers for July 2012.

Approximate value of our house: $186,700* (up $11,000)
Roth IRA: $23,910 (Down $87)
Simple IRA: 5,049 (Down $283)
Savings (including emergency fund): $19,162 (Up $4,433)
Total assets: $234,821 (Up $15,063)

Mortgage: $180,903 (Down $1,407)

Total net worth: $53,918
Difference since last quarter: +$16,470

*Estimation from Zillow

I'm very happy to see the results this month. I jumped past the $40,000's into the $50,000's in just 3 months. However, $11,000 of the increase in my "net worth" is because Zillow told me so. So of course some of this may be artificial. I hope the house really is starting to become worth more again. If the number is accurate, then we now owe less on our house than it is worth again! Let's hope it is never "under water" again.

The IRA's are still losing money. It doesn't look bad when you see my Roth only lost $87 since last quarter, but I also have invested an additional $600 since then, so it has really lost about $687. If you add up the losses from both the Roth IRA and the Simple IRA is was nearly $1,000.

Wednesday, July 4, 2012

Extra Cash Challenge - June Results

Here are the results for June's extra cash challenge! I had a little more work for my part time job in late May and early June. My sister also had a garage sale in which I sold some of my stuff. So those those results are not typical, but they helped me have a great extra cash month!

Part-time job: $61.92
Advertising: $213.26
Amazon: $2.81
Garage sale: $88.20

Total: $366.19

Last Month: $261.24
Difference from last month: $104.95