My examples that I use on this blog are meant to encourage real world examples of savings opportunities to become real world investment opportunities. I try to keep it relatively simple, and that is what I try to do personally as well.
I feel that a good rate of return (or investment return) that should be factored into "how much do I need to save" calculations is 5-6% before taxes/inflation. This differs quite a bit from what some companies want you to believe their products will do for you. I figure, if you "low ball" your expected return, you are more likely to try to save more. This is of incredible benefit because it puts more compound interest at your service, which is really my end game anyways.
I don't just want to make 5-6% and take it off the top every year, I want that 5-6% to add into my investments and continue compounding until I retire. This magnifies your savings in a ridiculous manner, which I like to highlight on this blog.
If someone is trying to sell you a product and is telling you that you will make ridiculous returns per year, you have to ask yourself some questions.
Why are they selling this product to me, instead of investing in this amazing opportunity themselves?
What do they invest in personally?
Will they share their personal asset allocation with you?
What does the product cost, including all fees?
Do I really need this product?
Is this product better than what is available to me as an individual investor?
Is this a "combo" product, that does not really do as well as individual products in their respective area?
After you work through these questions, many financial products do not hold their salt. Keep it simple with low fees, make it automatic, and start your plan as soon as possible. This will enable you to save for what you want, and you won't need to stress about it.
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Wednesday, November 11, 2009
Monday, November 9, 2009
Rent Negotiation.
As a renter, I am subject to potential rent increases. This year was no different, but I was successful in getting the increase reduced significantly by writing a letter to the manager and management company.
This could potentially save you some money, as long as you have been a good renter (paid on time, haven't had 20,000 noise complaints, don't use the apartment for science experiments, etc.)
To: Manager Name - Manager 9/4/2009
Apartment Complex Name
Dear (Manager name),
Thank you for your letter offering us lease renewal options. This letter is in response to that previous letter sent to my household concerning our rental lease renewal options for our lease ending on 10/19/2009 and the subsequent conversations we have had since then in person and by phone.
My household is unable to sign a new twelve-month lease agreement with (Property Management Company) with the current terms, however we understand the interest in your company maintaining a positive cash flow and occupancy of my unit with a 12 month lease in these economic times and thus respectfully offer the following modified terms.
My household is willing to sign, immediately, a 12 month lease for our current unit with the following modified provisions:
A monthly rent amount of #########, which represents no increase in rent from our previous lease agreement.
My household has been an (Property Management Company) customer for two years now, but after our lease renewal options were presented we looked at available and comparable units in the (your county area), both (the neighborhood you are in) and in other areas. Simply put, there are many units available that are not with (Property Management Company) that are much more economical in their pricing structure. Many start at a lower monthly price, and also offer rent credits that range from two weeks to a month of free rent with a new lease being signed. We have a good history with your company and would like to continue our relationship if possible.
We recognize the economic situation, and believe this represents an equitable compromise. (Property Management Company) is facing many revenue challenges, as is our own household. By accepting these modified terms, (Property Management Company) maintains the following advantages.
My household represents that of a "model tenant." My household presents rent checks on time, and in the majority of cases, early rent checks are presented. This represents an uninterrupted revenue stream. The savings from keeping your current tenants in place with a new lease at our modified terms instead of having an empty apartment represent a cost savings. Even a two week vacant period would result in a 35% loss of revenue as compared to keeping your current tenants at the same rental rate for the proposed 12 month lease. When the extra costs associated with prepping our current unit for new tenants are added onto this, the option seems less than ideal than our modified terms.
By meeting our household at an equitable compromise, this arrangement would benefit both parties. (Property Management Company) and my household can mutually meet our respective individual and corporate needs.
Immediately, the proposed terms enable our unit to continue generating income for your company for an additional 12 months. Your company maintains it's revenue stream, but eliminates cleaning fees, advertising fees, carpeting and painting fees, and income loss. This is very positive and you are also maintaining a quality tenant who pays consistently on time and keeps the unit in very clean and quality condition.
Please call me upon receipt of this letter so that we can complete the necessary documentation. I look forward to a mutually beneficial outcome.
Sincerely,
JH
Unit #
Phone ###-###-####
cc: propertymanager@yourpropertymanagementcompany.com
This letter could have been better I'm sure, but the end result was a much smaller increase than originally proposed.
This could potentially save you some money, as long as you have been a good renter (paid on time, haven't had 20,000 noise complaints, don't use the apartment for science experiments, etc.)
To: Manager Name - Manager 9/4/2009
Apartment Complex Name
Dear (Manager name),
Thank you for your letter offering us lease renewal options. This letter is in response to that previous letter sent to my household concerning our rental lease renewal options for our lease ending on 10/19/2009 and the subsequent conversations we have had since then in person and by phone.
My household is unable to sign a new twelve-month lease agreement with (Property Management Company) with the current terms, however we understand the interest in your company maintaining a positive cash flow and occupancy of my unit with a 12 month lease in these economic times and thus respectfully offer the following modified terms.
My household is willing to sign, immediately, a 12 month lease for our current unit with the following modified provisions:
A monthly rent amount of #########, which represents no increase in rent from our previous lease agreement.
My household has been an (Property Management Company) customer for two years now, but after our lease renewal options were presented we looked at available and comparable units in the (your county area), both (the neighborhood you are in) and in other areas. Simply put, there are many units available that are not with (Property Management Company) that are much more economical in their pricing structure. Many start at a lower monthly price, and also offer rent credits that range from two weeks to a month of free rent with a new lease being signed. We have a good history with your company and would like to continue our relationship if possible.
We recognize the economic situation, and believe this represents an equitable compromise. (Property Management Company) is facing many revenue challenges, as is our own household. By accepting these modified terms, (Property Management Company) maintains the following advantages.
My household represents that of a "model tenant." My household presents rent checks on time, and in the majority of cases, early rent checks are presented. This represents an uninterrupted revenue stream. The savings from keeping your current tenants in place with a new lease at our modified terms instead of having an empty apartment represent a cost savings. Even a two week vacant period would result in a 35% loss of revenue as compared to keeping your current tenants at the same rental rate for the proposed 12 month lease. When the extra costs associated with prepping our current unit for new tenants are added onto this, the option seems less than ideal than our modified terms.
By meeting our household at an equitable compromise, this arrangement would benefit both parties. (Property Management Company) and my household can mutually meet our respective individual and corporate needs.
Immediately, the proposed terms enable our unit to continue generating income for your company for an additional 12 months. Your company maintains it's revenue stream, but eliminates cleaning fees, advertising fees, carpeting and painting fees, and income loss. This is very positive and you are also maintaining a quality tenant who pays consistently on time and keeps the unit in very clean and quality condition.
Please call me upon receipt of this letter so that we can complete the necessary documentation. I look forward to a mutually beneficial outcome.
Sincerely,
JH
Unit #
Phone ###-###-####
cc: propertymanager@yourpropertymanagementcompany.com
This letter could have been better I'm sure, but the end result was a much smaller increase than originally proposed.
Friday, November 6, 2009
Laptop on the fritz
I am working on getting my laptop fixed today. Another lesson on why it's not really any better to spend more on a laptop!
In the meantime, check out Bankrate.com for great banking interest rate availability. They also compare credit cards, and mortgage rates.
Another awesome site is Dinkytown. Funny name, awesome financial calculators.
Have a good day!
In the meantime, check out Bankrate.com for great banking interest rate availability. They also compare credit cards, and mortgage rates.
Another awesome site is Dinkytown. Funny name, awesome financial calculators.
Have a good day!
Wednesday, November 4, 2009
Avoiding overdraft fees
When I got my first bank account and started depositing my own paychecks and using an ATM/Debit card, I made some mistakes. I overdrafted twice, and realized I never wanted to do it again. I had a few fees taken out of my account, and I realized I didn't like that either.
The cure for overdrafting for me was a simple rule my wise grandmother helped me out with, always have at least $500 in your checking account. This was a tough rule when my paychecks from my first job were miniscule, but I have stuck with it since and it has served me well. I have bumped up the amount and currently try to keep right around $1000 in our checking account. This is a good amount for us, and let's us maintain our automatic deductions into our savings/investing accounts as well. These do not need to be huge automatic deductions, but making them automatic means we don't think about them on a day to day basis and then BAM! a few months later we see that we are making progress. That bam was for effect =D
If you have overdrafted, don't be afraid to ask the bank to waive the fee. Feel free to throw in that you have been a great customer/1st time you've made the mistake/anything that will help your case. Avoiding the overdraft fee for me was easy the first time, and took a little more effort the second time. I felt embarrased after I got hit with the fees, but after I put my pride aside I was sucessful in avoiding $70 worth of fees. In this case, the fees were a huge portion of my small take home pay at the time. Granted, I was a bit younger, and that may have been why the manager took pity on me, but it never hurts to ask your bank to waive a fee. If you find you are getting hit with fees all the time, maybe it's time to shop for a new bank.
The cure for overdrafting for me was a simple rule my wise grandmother helped me out with, always have at least $500 in your checking account. This was a tough rule when my paychecks from my first job were miniscule, but I have stuck with it since and it has served me well. I have bumped up the amount and currently try to keep right around $1000 in our checking account. This is a good amount for us, and let's us maintain our automatic deductions into our savings/investing accounts as well. These do not need to be huge automatic deductions, but making them automatic means we don't think about them on a day to day basis and then BAM! a few months later we see that we are making progress. That bam was for effect =D
If you have overdrafted, don't be afraid to ask the bank to waive the fee. Feel free to throw in that you have been a great customer/1st time you've made the mistake/anything that will help your case. Avoiding the overdraft fee for me was easy the first time, and took a little more effort the second time. I felt embarrased after I got hit with the fees, but after I put my pride aside I was sucessful in avoiding $70 worth of fees. In this case, the fees were a huge portion of my small take home pay at the time. Granted, I was a bit younger, and that may have been why the manager took pity on me, but it never hurts to ask your bank to waive a fee. If you find you are getting hit with fees all the time, maybe it's time to shop for a new bank.
Tuesday, November 3, 2009
MSN Article with good advice
MSN Money has a fantastic article on very basic wealth building concepts.
While the entire article has great material, my favorite is the "Part-time millionaire" mentioned at the bottom.
This is a concept my wife and I try to take seriously by actively pursuing new ways to add to our income without over working ourselves.
The article also mentions the years from 18-30 being some of the most important years as far as wealth building is concerned. It doesn't really hit on the fact that this is the age range where many people are the least concerned about saving, until they are shown how important a few extra years of compound interest is!
While the entire article has great material, my favorite is the "Part-time millionaire" mentioned at the bottom.
This is a concept my wife and I try to take seriously by actively pursuing new ways to add to our income without over working ourselves.
The article also mentions the years from 18-30 being some of the most important years as far as wealth building is concerned. It doesn't really hit on the fact that this is the age range where many people are the least concerned about saving, until they are shown how important a few extra years of compound interest is!
Monday, November 2, 2009
No dessert with this post.
Everyday I try to highlight easy, relatively painless ways to save money on Future Think Dollars.
This post is not going to sugar coat it.
Trying to save money sucks!
It is incredibly hard to not think about everything you would rather be spending your money on than trying to set up that Roth IRA, or start your 401k, or get yourself out of debt. It is also incredibly hard when it seems all your friends/family/acquaintances want to help you spend your money. It is simply not the "coolest" thing to hang out and watch movies, play some old school board games, or catch a cheap sports event. Now it seems that anytime people get together, the goal is to go spend money. Spending money has been incredibly well marketed as buying happiness by everyone that stands to profit.
The goal of this post is not to stop spending all money. Although that would be fantastic for your savings, it would be horrible for your life.
Instead, this is meant to encourage some reflection upon whether those nights out on the town, or shopping trips, or major purchases are indeed making you happy.
Don't spend money just to spend money, because you are only delaying the start of your financial life. This is your life, and you should be thinking about where you want to be in 5, 10, 20, 30 years. I don't think you will really wish to be back at the age you are now buying all of the things that are literally costing you a fortune over that time frame.
Some of the best days of my life have included days where I spent a decent amount of money.
Many of the best days of my life have been days where I only realized afterwards that we'd spent a pittance compared to the good times we had with a great group of people.
This post is not going to sugar coat it.
Trying to save money sucks!
It is incredibly hard to not think about everything you would rather be spending your money on than trying to set up that Roth IRA, or start your 401k, or get yourself out of debt. It is also incredibly hard when it seems all your friends/family/acquaintances want to help you spend your money. It is simply not the "coolest" thing to hang out and watch movies, play some old school board games, or catch a cheap sports event. Now it seems that anytime people get together, the goal is to go spend money. Spending money has been incredibly well marketed as buying happiness by everyone that stands to profit.
The goal of this post is not to stop spending all money. Although that would be fantastic for your savings, it would be horrible for your life.
Instead, this is meant to encourage some reflection upon whether those nights out on the town, or shopping trips, or major purchases are indeed making you happy.
Don't spend money just to spend money, because you are only delaying the start of your financial life. This is your life, and you should be thinking about where you want to be in 5, 10, 20, 30 years. I don't think you will really wish to be back at the age you are now buying all of the things that are literally costing you a fortune over that time frame.
Some of the best days of my life have included days where I spent a decent amount of money.
Many of the best days of my life have been days where I only realized afterwards that we'd spent a pittance compared to the good times we had with a great group of people.
Cut your own hair.
This post may be a lot easier for my male readers to take action on, but could be useful to anyone willing to give it a shot.
How much do you spend on a haircut?
These clippers probably cost a couple haircuts or less...and you can use them until they melt. I have had no issues with this set of clippers.
Take that figure (15-50 x 12) and this is how much you could potentially save in the first year alone. This assumes once per month plus tips
I used to get my hair cut at Supercuts for around 15 bucks plus a few dollars tip. Then one day the nice lady cutting my hair mentioned "Really? You could just do that yourself..." when I asked for my normal short haircut. Talk about killing your market lady! But she had a great point, and she was right.
I didn't realize for some time that my haircut is incredibly easy and I was shooting myself in the savings foot, and this was when I was younger and just saving up for the Friday night movies. Now I have much different savings goals for the wife and I, and we find ourselves stretching to meet those goals.
This method alone can easily save the average guy $200 a year. That's a lot of cash for taking the fifteen minutes to do it yourself! As long as you don't make to bad a hack job of it, at most you are just going to need to try again a bit shorter, and more carefully. After a cut or two, you will be pretty decent at it!
Did I mention you also saved all the time you used to spend just driving to, waiting for, and driving back from a haircut? That's wear and tear and gas for your vehicle, and the "cost" for your time too!
How much do you spend on a haircut?
These clippers probably cost a couple haircuts or less...and you can use them until they melt. I have had no issues with this set of clippers.
Take that figure (15-50 x 12) and this is how much you could potentially save in the first year alone. This assumes once per month plus tips
I used to get my hair cut at Supercuts for around 15 bucks plus a few dollars tip. Then one day the nice lady cutting my hair mentioned "Really? You could just do that yourself..." when I asked for my normal short haircut. Talk about killing your market lady! But she had a great point, and she was right.
I didn't realize for some time that my haircut is incredibly easy and I was shooting myself in the savings foot, and this was when I was younger and just saving up for the Friday night movies. Now I have much different savings goals for the wife and I, and we find ourselves stretching to meet those goals.
This method alone can easily save the average guy $200 a year. That's a lot of cash for taking the fifteen minutes to do it yourself! As long as you don't make to bad a hack job of it, at most you are just going to need to try again a bit shorter, and more carefully. After a cut or two, you will be pretty decent at it!
Did I mention you also saved all the time you used to spend just driving to, waiting for, and driving back from a haircut? That's wear and tear and gas for your vehicle, and the "cost" for your time too!
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