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Brown Bagging Your Way to Savings
Today’s post is written by Mike Collins of http://savingmoneytoday.net as part of the Yakezie Blog Swap in which bloggers were asked to share their best day to day money saving tip.
Do you buy lunch at work every day? Have you ever actually sat down and added up how much money you’re spending?
I did once…and I almost fell out of my chair when I saw how much I was spending!
Back in the day I used to buy lunch at the office almost every single day. It certainly didn’t seem like I was spending much. A chef salad here, a cheese steak and fries there. But every day I was spending about 7 dollars and change. That’s $35 a week, which adds up to a whopping $1820 over the course of a year!
I started thinking about all the things I could do with that extra $1820, like paying off some of our debt, increasing my 401k contributions(ed: but staying with your 401k contribution limits, of course!), picking out a new big-screen tv, or enjoying an extended family vacation at Walley World.
I immediately starting bringing my lunch to work 4 days a week (I do treat myself once a week) and I’ve been saving money ever since.
Now I know what you’re thinking. It costs money to bring lunch from home too right?
Yes, of course it does…but nowhere near as much as eating out every day. Let’s do some basic math to prove the point. Say you swing by the grocery store to buy some ham and cheese so you can make sandwiches for the week. You pick up a half pound of ham for $3 and a half pound of cheese for $2. A loaf of bread on sale runs you another $2. That means you just spent $7 for a week’s worth of lunches. Even if you only bring lunch 4 days a week you’ve still saved yourself $21. That’s over $1000 a year!
And here’s a tip to save even more: If you have extra food from dinner, just bring the leftovers for lunch the next day. We always try to make just a little bit extra so I can have free lunch the next day.
So the next time you’re sitting around complaining that you don’t have enough money for so and so, think about how much money you are spending every day on lunch, or coffee, or cigarettes, etc. You might just find that you have plenty of money after all if you just shift your priorities a bit.
Money Problems – Day 8: Insurance
Today, I am continuing the series, Money Problems: 30 Days to Perfect Finances. The series will consist of 30 things you can do in one setting to perfect your finances. It’s not a system to magically make your debt disappear. Instead, it is a path to understanding where you are, where you want to be, and–most importantly–how to bridge the gap.
I’m not running the series in 30 consecutive days. That’s not my schedule. Also, I think that talking about the same thing for 30 days straight will bore both of us. Instead, it will run roughly once a week. To make sure you don’t miss a post, please take a moment to subscribe, either by email or rss.
On this, Day 8, we’re going to talk about insurance.
What is insurance? Insurance is, quite simply a bet with your insurance company. You give them money on the assumption that something bad is going to happen to whatever you are insuring. After all, if you pay $10,000 for a life insurance policy and fail to die, the insurance company wins.
A more traditional definition would be something along the line of giving money to your insurance company so they will pay for any bad things that happen to your stuff. How do they make money paying to fix or replace anything that breaks, dies, or spontaneously combusts? Actuary tables. Huh? The insurance company sets a price for to insure—for example—your car. That price is based on the statistical likelihood of you mucking it up, based on your age, your gender, your driving history, and even the type of car you are insuring. What happens if a meteor falls on your car? That would shoot the actuary table to bits, but it doesn’t matter. They spread the risk across all of their customers and—statistically—the price is right.
What kinds of insurance should you get?
Homeowner’s Insurance
For most people, their home is, by far, the largest single purchase they will ever make. If your home is destroyed, by fire, tornado, or angry leprechauns, it’s gone, unless you have it insured. Without insurance, that $100, or 200, or 500 thousand dollars will be lost, and that’s not even counting the contents of your home.
Homeowner’s insurance can be expensive. One way to keep the cost down is to raise your deductible. If you’ve got a $1500 emergency fund, you can afford to have a $1000 deductible. That’s the part of your claim that the insurance company won’t cover. It also means that if you have less than $1000 worth of damage, the insurance company won’t pay anything.
You can get optional riders on your homeowner’s insurance, if you have special circumstances. You can get additional coverage for jewelry, firearms, computer equipment, furs, among other things. You base policy will cover some of this, but if you have a lot of any of that, you should look into the extra coverage.
Auto Insurance
Car insurance is required in most states. That’s because the kind caretakers in our governments, don’t want anyone able to hit you car without being able to pay for the damage they caused. To my mind, I think it would be more effective to just make whacking someone’s car without paying for it a felony. If someone is a careful driver or has the money to self-insure, more power to them.
Auto insurance comes with options like separate glass coverage, collision, total coverage (comprehensive), or just liability. Liability insurance is what you put on cheap, crappy cars. It will only pay for the damage you do to someone else.
Rental
I’ve never had rental insurance. The last time I rented, I could fit everything I owned in the back of a pickup truck with a small trailer, and it could all be replaced for $100. Heck, I had the couch I was conceived on. Err. Ignore that bit.
Almost everything you can get homeowner’s insurance to cover will also cover renter’s insurance, except for the building. It’s not your building, so it’s not your job to replace it.
Life Insurance
If you care about your family, you need life insurance. This is the money that will be used to replace your income if you die. I am insured to about 5 times my annual salary. If that money gets used to pay off the last of the debt, it will be enough to supplement my wife’s income and support my family almost until the kids are in college. You should be sure to have enough to cover any family debt, and bridge the gap between your surviving family’s income and their expenses. At a minimum. Better, you’ll have enough to pay for college and a comfortable living.
Life insurance comes in two varieties: whole and term. Whole life…sucks. It’s expensive and overrated. The sales-weasels pushing it will tell you that it builds value over time, but it’s usually only about 2%. It’s a lousy investment. You’re far better off to get a term life policy and sock the price difference in a mutual fund that’s earning a 5-6% return.
Term life is insurance that is only good for 5, 10, or 20 years, then the policy evaporates. If you live, the money was wasted at the end of the term. The fact that it’s a bad bet makes it far more affordable than whole life. It doesn’t pretend to be an investment; it’s just insurance. Pure and simple
Personal Liability Umbrella
An umbrella policy is lawsuit insurance. If someone trips and hurts themselves in your yard, and decides to sue, this will pay your legal bills. If you get sued for almost anything that was not deliberate(by you!) or business related, this policy can be used to cover the bill.
If you call your insurance company to get an umbrella policy, they will force you to raise the limits on your homeowner’s and auto insurance. Generally, those limits will be raised to $500,000, and the umbrella coverage will be there to pick up any costs beyond the new limit.
A little-known secret about umbrella policies: They set the practical limit of a lawsuit against you. Most ambulance chasers know better than to sue you for 10 million dollars if you only have a policy to cover 1 million. They will never see the other 9 million, so why bother? They’ll go for what they know they can get.
The flipside to that is that you should not talk about your umbrella policy. Having a million dollars in insurance is a sign of “deep pockets”. It’s a sign that it’s worthwhile to sue you. You don’t want to look extra sue-able, so keep it quiet.
Insurance is a great way to protect yourself if something bad happens. Today, you should take a look at your policies and see where you may have gaps in coverage, or where you may be paying too much.
5 Personal Safety Apps that Could Save Your Life
No one likes to think about the possibility of dying too young. But knowing that potential exists, you take the smart step of protecting those you love by carrying term life insurance. But what about preventing the worst? Did you know your iPhone or Android device can call for help or record vital information if you ever find yourself in a life-threatening situation? Here are five personal safety apps that could save your life.
1) myGuardianAngel
Once this app allows you to reach all of your emergency contacts with the push of one button. You enter the contact information for anyone you would want to get in touch with if you were in any sort of emergency as soon as you download it. If you are in an emergency, the app will call your contacts, send them an e-mail with your GPS location and immediately begin recording audio and video from your phone.
2) StaySafe
This app is good for anyone who works or travels alone. You can schedule the app to automatically notify friends or family after a certain period of time when your phone is inactive. For example, you can estimate how long you expect to drive from one location to another on your own and then the phone will contact someone automatically if you are out of contact longer than expected. That way your friends will know to send help because something is wrong, even if you aren’t in a position to contact them yourself. StaySafe sends your contacts a detailed GPS location for you so that they can easily find you and bring help.
3) RESCUE
This full-service app can help you on the scene as well as notify your emergency contacts for you. If you are in trouble, you can trigger the app to sound a loud alarm that might frighten off anyone who might be planning to do you harm. The alarm can also help someone find you if you are lost or unable to move from your current location. When the alarm is triggered, the app will also send immediate notifications to your emergency contact list so that they can begin to send help right away. Emergency services such as the police and fire department can also be set for notification through the RESCUE app.
4) Night Recorder
This is a good app to have when you need to make a quick recording of your surroundings for any reason. The app can be set to begin recording at a touch. If you are stranded, you could create a recording by speaking about the landmarks you can see and explaining how you got to your current location. The recorder can then send an email of your recording to anyone on your contact list.
5) iWitness
With this app, you can instantly make video or audio recordings of your situation so that there is a permanent first-hand record of everything that happens. It is a handy tool for anyone who has been in a car accident or involved in a medical emergency because you can go back and look at the video to see exactly what happened if there is any question about it later. The app will also contact emergency services or your personal emergency contacts if you are in trouble. The built-in GPS locator will transmit your exact location so that people can find you quickly and easily.
Post by Term Life Insurance News
Teaching My Child about Money in a Way I Was Not Taught
When I was in high school and working 15 to 20 hours a week, my mom gave me free rein to use the money I earned as I would like. Actually, she said nothing to me about saving for college or putting some money into savings.
When I had friends who complained that they had to put away some of their earnings, I commiserated with them. How unfair of their parents to make them save some of their money! They worked hard for their money, often at crappy part-time jobs. They deserved to spend the money any way they saw fit.
The way I saw it, why save for college? According to financial aid rules, if the student has any savings, she would have to use the majority of it to pay for college. How unfair. To add insult to injury, if prospective college students have some savings, they would qualify for less financial aid, which often meant fewer student loans.
The injustice.
Yes, it was better to spend my hard earned money than save it and be penalized.
No one told me differently. In fact, many people in my family agreed with me and encouraged me to buy a used car to get to and from my job. Of course, I paid the loan payments for the car, the gas I used and my insurance out of money from my job. That was a responsible use of money, but I also went out to eat with friends, a lot. At 16, I was going out to eat with my friends twice a week at least.
However, my plan worked perfectly. When I went to college, I didn’t have to use any of my hard earned cash. No, not me, because I hadn’t saved anything. Instead, I left college with nearly $20,000 in student loan debt. I took two years off and paid down as much student loan debt as I could, getting it down to about $8,000, but then I went to graduate school and took on more student loan debt. I graduated with nearly $25,000 in debt total. I am still paying on it today, 13 years later.
Now that I am the parent, I am one of those “awful” parents who makes her kids save. My son knows when he gets his allowance, some goes to save, some goes to donate, and some goes to spend. True, it makes me cringe when he uses his spend money on little trinkets like temporary tattoos, stickers, and gum, but I keep silent. He did the work to earn the money, and he can spend it as he likes. However, I am inflexible with saving; that money must be set aside. When he goes to college, I expect that he will have to use the majority of that money. Rather than seeing it as a waste, I see it as an important component of his financial education. Spending his money to pay a portion of his college education will hopefully make him take college more seriously.
Meanwhile, I have already begun having chats with him about money, spending, and budgeting. He watches his dad and I work hard to pay down our debt with gazelle intensity. He sees me use a calculator at the grocery store to see how much our groceries will be.
Ultimately, he will make his own financial decisions as he grows up, but I plan to teach him throughout these important years so that even if he turns into a spendthrift, he will have a firm financial understanding to revert to as he ages. While my mom taught me how to stretch money further, she never taught me how to save; I hope saving is a lesson my son takes with him throughout his adulthood.
How do you teach your kids about money management?
Melissa writes at Fiscal Phoenix where she encourages people to rise from the ashes of their financial mistakes as she and her husband are doing.
10 Tips to Help Parents Stay Out of Debt
People say that when you have a baby, your world gets flipped upside down. That’s not true. Your world gets dropped in a martini shaker and left to the whims of a sadistic bartender with a shaking fetish. Everything changes. That sounds like an exaggeration and nobody believes it until it happens, but it’s true.
When you find out you are about to reproduce, you will experience a phenomenon called “nesting”. Nesting is the idea that, if you take your credit cards and beat them against the curb until they bleed and VISA calls you asking for mercy, you will be transformed into the best parent ever, regardless of what you may actually screw up. It’s the way parents calm their fears by spending money, often on things that aren’t needed.
Q. How do you avoid becoming a debt-ridden, worried mess of an over-protective, over-extended new parent?
A. What do you get when you cross an elephant and a rhinoceros?
I can’t help with the rest, but here’s 10 ways you can avoid the debt problems.
- Have a budget. I may have said this before. It’s possible this counts as a recurring theme here. If you don’t have a budget, you aren’t in control of your money. If you aren’t in control, then how do you know where it has gone or where it is supposed to go?
- Budget for baby crap. This will be a recurring expense for years, so get used to it. A friend of mine is on the cusp of having everyone out of diapers for the first time since 1993. Do you think they plan that expense? Diapers.com has $10 off and free shipping on orders over $49. Use code “ LiveReal” during checkout.
- Double the number you have in #2. Seriously. It will cost you more than you think, but it doesn’t have to cost you as much as you fear. It’s far better to have too much budgeted and find yourself with extra money than it is to budget too little and be forced to make up the difference at the feet of Master Card.
- Only take the advice of people you know and trust. Every random jerkface on the street has (usually) well-intentioned advice for new and expecting parents. Ignore them all. If they aren’t your doctor, your mother(assuming she did her job right), or friends with children, they are clueless and their advice should be immediately round-filed. Ditto for parenting magazines. The writers don’t know better than you do. Read the magazines for six months and watch for conflicting advice, not only in the same magazine, but often from the same writer! Don’t add the stress of bad advice from strangers to what is already a stressful time.
- Don’t get every gadget designed to cushion the baby. A wipe warmer is a waste of money. Do you want your baby to be scared of a little chill forever? Cold wipes build character. If that isn’t good enough, hold the wipe in your hand for a few seconds before using it. There are a million other gadgets to keep your little one from ever feeling a moment of discomfort. Don’t waste your cash. It may only be 10 pounds, but it’s tougher than you think.
- Don’t get every gadget designed to cushion the parent. They make ergonomic bottles, braces to hold your arms in the right position to feed, fancy cloths to catch baby vomit. Tough it up. Support your baby yourself. Build some muscle and some character. Use cloth diapers to catch various treasures your little brat will spit up on you. Spending more doesn’t always make it better. The ergonomic bottles that make it easier to feed a baby, make it harder for the baby to hold the bottle. This is actually making your life more difficult.
- Focus on the necessities. Yes, the fancy formula with the pre-digested proteins has a nicer label. It doesn’t make a difference. The generic brand at the warehouse store usually has the exact same ingredients in the exact same ratios as the brand name at the baby store–for half the price. There is nothing special about the blankets in the baby section–except the price. The fancy bottle warmer doesn’t do anything that a cup of warm water on the counter won’t handle. You need: A crib, unless you are doing a family bed; a easy-to-clean mat to change diapers(on the floor works!); and a diaper bag(back-to-school backpacks are more ergonomic and easy to organize than anything in the baby store!). Everything else is a luxury.
- Time counts more than stuff. No matter what else you hear, no matter how old your child gets, time with you counts more than anything else you could do or buy. Be there for your kids and the rest is gravy.
- Brand-name and designer labels are not status symbols. The opinions of the other soccer mommies do not matter. The opinions of the random jerkfaces on the street do not matter. Designer labels do not make you a better parent and are not an indicator of a happy baby.
- Always remember: Babies bounce and have short memories. While I don’t recommend bouncing your baby on the floor, they are surprisingly resilient. They don’t hold grudges, either. There is room to make mistakes without screwing up your kid.
For a hundred thousand years, people raised babies with nothing more than a scrap of hide to alternately chew on or wipe with. You can probably get buy with just a bit more. Relax and enjoy the process of raising your kids. Money doesn’t matter nearly as much as your presence.
