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How to Maximize Your Income and Reduce Your Expenditures
If the past few years have taught us anything, it’s that we need to be taking out less debt and building up more savings. And certainly, it’s where the public seem to be heading – levels of mortgage overpayment and personal savings have rocketed in the past year amongst those who have the luxury of being able to put income aside.
For many of us though, finding money to save is a real struggle. After the bills and living costs are taken out of a monthly salary payment, there’s not always a lot left to play with. So what do you do?
The answer lies in getting tough with yourself, carrying out a review of your current spending patterns and working out a sensible budget. Essentially you need to both maximise income and reduce expenditure – both sides of the coin. There are plenty of ways to do this when you start thinking, so be creative and start thinking outside the box.
Here are a few top tips to get you started:
Ask for a pay rise – it seems like an obvious option, but so many of us never do it. Take a look at the market and see what similar companies are offering for your job role or profession. This will give you an idea of whether you’re currently being paid enough for your skills level and experience.
Ask your manager in a calm and prepared manager and come with facts and examples to back up your request. If the request is turned down, try again in a few months time, with more evidence. Also, ask HR for advice about your job salary banding and progression, so you show that you’re serious.
Get a new job – the obvious option when your pay rise request is denied. You may find that you can earn more elsewhere in the same profession, or flex your skills into a new career entirely. See a professional careers advisor for guidance.
Get a second income – more people than ever are opting for this route, by becoming self-employed on a part time basis. There are numerous industries that rely on an army of part-time staff, often self-employed. Examples are party-planners, sales people, freelance designers, coders, copywriters and researchers, market researchers, bar and restaurant staff and plenty more.
Take in a lodger – if you have a spare room, then the government allows you to take in a lodger without paying tax on rental income (up to £4250 pa.) This can be an effective way to make the use of your home to bring in income. Do your research first though on how to select the right lodger and make the relationship work.
Look for opportunities to earn – examples include signing up for overtime during busy periods at work or selling unwanted items on eBay. You could also sign up with the local council to count votes during election period, or help steward at large events. There are various agencies offering links to such opportunities if you search online.
On the other side of the coin lies spending reduction. This is a bitter pill for some to swallow, but there really is no point in earning more if you’re not going to make good use of it!
Food shopping – when it comes to food shopping, start using grocery coupons/vouchers and sign up for reward schemes. Downgrade your brands when you’re out shopping, so that you save money on you shop each time. Look at bulk buying offers, local grocers, markets and other opportunities to slash monthly grocery bills.
Travel – identify ways to save on travel, firstly by walking when a journey is a mile and under. If you’re doing this regularly you’ll save on petrol and you can cancel your gym subscription! With train tickets, book well in advance to take advantage of special deals and with holidays, look for cheap holiday offers and promotions via online search sites – these check the whole of the market to find the best prices and options for your requirements. Holiday extras such as car hire and airport parking can also usually be arranged via these online travel sites so be sure to compare prices to save yourself some money.
Clothes shopping – instead of shopping expensively on the high street, channel your passion for fashion into eBay. Many of your regular brands will be on there already and you can sell last season’s purchases to make way for the current season of items. Get savvy with bids and set yourself limits – you’ll find some great bargains if you’re clever about it!
Entertainment – when it comes to entertainment, sign up to group buying schemes for special offers and look more broadly in your area for things to do that don’t cost a lot of money. Things like local leisure centres, museums, parks, libraries, city parades and exhibitions are often free or subsidised by the council and you can enjoy time with the family without spending a lot of money on more commercial entertainments.
Hobbies – rather than taking up yet another expensive sport that you’ll buy all the equipment for and then never see through, find low cost hobbies to enjoy and cultivate. Walking or running, painting, music appreciation, gardening, racket sports, debating groups, local social clubs – all of these can be enjoyed without necessarily parting with too much cash. And it will broaden your horizons too – thinking more broadly about what counts, such as spending time with loved ones, rather than throwing money at free time like there’s no tomorrow!
This post brought to you by MoneySupermarket.
Dealing With the Police 101
Last night, a friend called me up and asked me to accompany him to the police station. The police had knocked on his door, waking up his girlfriend while he was out. When he called, they wouldn’t tell him why they wanted to talk to him. Was it an ex trying to make his life difficult or one of his employees getting investigated?
This friend has had a number of interactions with the police, but never learned how to deal with them. Before we left, I gave him a crash course in “stay out of jail”.
Lesson 1: The Police Are Not Your Friends.
During an investigation, you are a suspect. They are looking for a conviction. There may be a “good cop” trying to “help you out”, but he is trying to put you in jail. “Protect and Serve” doesn’t mean you. In general, it means society as a whole. During an investigation, they are serving the interests of the prosecutor.
Generally, they are going to look at you–as the target of their investigation–as the enemy. This is normal. They spend all of their time dealing with scumbags and s***heads. Naturally, they start to assume that everyone who isn’t a cop will fall into one of those categories.
Don’t get pissed when they act rude, ignore you, or anything else. It isn’t a lack of professionalism, it’s just a different profession. They are using interrogation techniques that have been proven successful. Ignore it and focus on Lesson 2.
It will feel wrong to disobey the authority you’ve been taught your entire life to obey. You’re not. You are standing by your rights. Nobody cares about your future more than you do. Certainly not the guy investigating you.
Lesson 2: Your Lawyer is Your Friend.
The second a police interaction starts to look like they are investigating you, demand your lawyer, then see Lesson 4. When you demand an attorney, they stop asking you questions. You can take it back and start talking, so again, see Lesson 4. It’s your attorney’s job to talk to the police and, if necessary, the media. It’s your job to talk to your attorney.
You don’t need an attorney ahead of time. Criminal defense attorneys are used to getting calls at 3AM. It’s part of their job. If you have a low enough income as defined by whatever jurisdiction you are being investigated in, you can get a public defender. That’s better than nothing, but I’d prefer to hire a professional shark, even if it means mortgaging my future. Prison is a big gamble.
Lesson 3. Consent is Your Enemy.
The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.
“Officer, I do not consent to any search and I would like to speak to my attorney.” Remember this. Memorize it.
They need probable cause, a warrant, or permission to search your stuff. Never agree to it. Don’t stop them if they search anyway, but never, ever agree to a search. If the search is done improperly, your lawyer(see Lesson 2) will get the results of that searched thrown out.
It isn’t possible to get into more trouble for standing by your rights. There is no crime on the books anywhere in the US called “Refused Consent to Search”. Your day will not go worse because you defended your Constitutional rights.
Lesson 4. Shut Up.
I know a few defense attorneys. According to them, most of the people in jail either committed a crime in front of a bunch of witnesses, or they talked their way into jail. Shut up. You’ll want to either justify or defend yourself depending on the circumstances. Don’t. Shut up. It may be one of the hardest things you ever do, but keep your mouth closed. The only thing worse than talking is lying. Don’t lie, just keep quiet.
There is nothing you are going to say that will make your interrogator invite you home for Christmas. He isn’t your friend, you won’t meet his parents, you aren’t going to his birthday party. There is absolutely no win in talking to him. Shut up. The answer to every question is “Lawyer.” If the only thing you say babble is “Lawyerlawyerlawyerlawyerlawyerlawyer”, you’re probably not going to do too badly.
In your car, the dynamic changes a bit, but the principles don’t. When a cop pulls you over, don’t argue. You can’t win an argument with a cop on the side of the road. Be nice, be polite, and as soon as possible, pull into a parking lot and take as many notes about the encounter as you can. If you are planning to fight whatever he pulled you over for, don’t give him any reason to remember you or spin his official report to make you look bad. Again, shut up. Catching a theme?
Gambling With Your Future
If you are being investigated by the police, your future–or some part of it–is on the line. While you are gambling with your criminal record and your freedom, don’t forget that you are an amateur in this arena. The police, the prosecutor, and your attorney are the professionals and the stakes can be huge. Keep your mouth shut, call your attorney, and thank me later.
Best of Money Carnival #87, the Gold Rush Edition
- Image via Wikipedia
Welcome to the Best of Money Carnival #87, the Gold Rush Edition.
On January 24th, 1848, gold was discovered in Coloma, California by construction overseer James W. Marshall. The following year, one hundred thousand people moved to California to either strike it rich, or profit from those who were trying to strike it rich. The gold rush began 163 years ago today.
10. N.W. Journey presents Business use of Home Deduction posted at Networth Journey and says, “How to deduct your business home expenses.”
Some people recommend stockpiling gold so you’ll have something of value to spend after society as we know it collapses. Does anyone know how to make change from a gold bar for a loaf of bread?
9. Darwin presents Present Value of Money Explained – MBA Monday posted at Darwin’s Money and says, “One of the most important financial concepts is also one of the most misunderstood. Make sure you understand the Present value of Money – with these real life examples. It will save you thousands!”
In 1854, a 195 pound gold nugget was found at Carson Hill in California. It was valued at $43,534. That would be worth $3,160,357.20 today.
8. RJ Weiss presents What Your Optimal Income? posted at Gen Y Wealth and says, “An exercise to find your optimal income level.”
Q: Which weighs more: a pound of feathers, or a pound of gold? A: A pound of feathers. Gold is weighed using Troy Weight, which only has 12 ounces per pound.
7. BWL presents How To Select A Financial Advisor posted at Christian Personal Finance and says, “Find out how to select the best financial adviser for you.”
Until the onset of modern electronics, which use gold because it doesn’t corrode or tarnish, gold had no practical value of its own. Its entire value resided in the fact that it was pretty and relatively scarce.
6. Miss T presents 10 Ways to $ave Energy Comfortably | Prairie EcoThrifter.com posted at Prairie Eco-Thrifter and says, “How great is it to save money and the planet at the same time?!”
Q: Which weighs more: a ounce of feathers, or a ounce of gold? A: A ounce of gold. Troy Weight has fewer ounces that avoirdupois, but each ounce weighs more. There are 31.1 grams in a Troy ounce, but only 28.4 grams in a standard ounce.
5. Craig Ford presents Employers Look at Credit Reports | Ludicrous or Smart Business? posted at Money Help For Christians and says, “Should employers be able to see your credit report?”
Outside of collectible or government-issued coins, gold is priced according to it’s spot price, which fluctuates constantly. Dealers will generally pay a percentage under spot when buying gold, then sell for a percentage over spot. Always know the spot price of gold before you agree to buy or sell any.
4. MoneyNing presents Tax Time: Do I Have to Report that Income? posted at Money Ning and says, “Did you receive any income last year? Do you really have to report everything?”
Gold is the 58th most rare natural element, out of 92.
3. Silicon Valley Blogger presents I Just Lost My Job! How I’m Downsizing My Household Expenses posted at The Digerati Life and says, “I share my story of job loss and what ideas I have for paring down my expenses in order to cope with this loss of income. In the meantime, I’m doing what I can to find a new job!”
Only 20% of the gold from the Gold Rush deposits has been reclaimed. The rest is still out there.
2. The Financial Blogger presents 5 Reasons Why You Need A Partner In Your Business posted at The Financial Blogger and says, “A post outlining the benefits of a business partner.”
As of the end of 2009, more than 160,000 tons of gold have been mined, most of which was done in the latter half of the 20th century.
And the winner is…
1. Amanda L Grossman presents Frugal Lessons from People Who Survived the Great Depression posted at Frugal Confessions – Frugal Living and says, “Have you ever met someone who was alive during the Great Depression? They are changed people. The Great Depression left a great impression on their thoughts, their styles, and their habits. I am fascinated by this time period, and researched the question of what frugal habits these people developed to survive.”
I’d like to thank everyone who participated. Next week’s host is PT Money, so don’t forget to submit your entry!
5 Pain-Free Ways to Save Your Money
Everyone needs an emergency fund. More than that, you will eventually need retirement savings, a new car, a big-screen TV, or maybe just a new kidney. Whatever the reason, one day, have a comfortable savings account will make your life easier.
But, Jason, you say, it’s hard to save money! How can I start saving when I can’t make ends meet? I’ve got rent, 9 kids, and a DVD addiction that won’t quit. My mortgage is underwater, my Mercedes still has 8 years on the loan, and the Shoe-of-the-Month Club only carries Christian Louboutin’s. What can I do?
Well, I’ll reply, since I am Jason and you asked for me by name, you need to find a way to make it happen. I’d never recommend someone give up their diamond-studded kicks, but something’s gotta give. In the meantime, there are some ways you can save money without feeling the sting of delayed gratification.
1. Save your raise. When you get your next raise, pretend you didn’t. Set up an automatic transfer to stick that new 5% straight into a savings account. Don’t give yourself an opportunity to spend it.
2. Find it, hide it. When your Aunt Gertrude dies and leaves your her extensive collection of California Raisins figurines, sell them and save the money. If you find a $20 bill on the ground, throw it right into your savings account. When your 30th lottery ticket of the week gives you a $10 prize, save it! Don’t waste found money on luxuries. Use it to build your future.
3. Let it lapse. Do you have magazine subscriptions you never read? Or a gym membership you haven’t used since last winter? Panty-of-the-Month? Crack dealer who delivers? Stop paying them! Let those wasted services fall to the wayside and put the money to better use. I don’t mean flipping QVC products on eBay, either. Save the money.
4. Jar of 1s. Roughly once a week, I dig through my pockets and my money clip looking for one dollar bills. Any that I find go in a box to be forgotten. I use that box as walking-around money for our annual vacation, but it could easily get repurposed as a temporary holding tank for money I haven’t gotten to the bank, yet.
5. Round it up. Do you balance your checkbook? If you don’t, start. If you do, start doing it wrong. Round up all of your entries to the nearest dollar. $1.10 gets recorded as $2. $25.75 goes in as $26. If you use your checkbook or debit card 100 times a month, that’s going to be close to $75 saved with absolutely no effort. It even makes recording your spending easier.
There you have it, 5 easy ways to save money that won’t cause you a moment’s pain.
Do you have any tricks to help you save money?
Your Budget is Worthless
When you realize that you’ve buried yourself in debt and decide to get out from under that terrible burden, the first thing you’ve got to do is build a budget because, without that, you’ve got no way to know how much money you have or need. After you’ve got a budget, you’ll start spending according to whatever it says. Hopefully, you’ll stay on budget, but what happens when an emergency does come up? What do you do when your car dies? When you suddenly find out your kids needs vision therapy? How do you manage when your job suddenly gets shipped off to East De Moines?
Your budget isn’t going to help you meet those expenses. Most people don’t have enough money in their bank account to make it all the way to the next payday, let alone enough to keep the lights on and food on the table. How can you possibly hope to deal with even the little things that come up?
You whip out your emergency fund.
The problem with a budget is that it does a poor job of accounting for the unexpected. That’s where an emergency fund comes in. An emergency fund is money that you have set aside in an available-but-not-too-accessible account. Its sole purpose is to give you a line of defense when life rears up and kicks you in the butt. Without an emergency fund, everything that comes unexpectedly is automatically an emergency. With an emergency fund, the things that come up are merely minor setbacks. Without an emergency fund, your budget is nothing but a good intention waiting to get shattered by the next thing that comes along. With an emergency fund, you are managing money. Without it, it’s managing you.
How much money do you need in an emergency fund?
Every “expert” has their own opinion on this. Dave Ramsey recommends $1000 to start. Suze Orman says 8 months. The average time spent looking for work after losing your job is 24.5 weeks(roughly 6 months), so I recommend 7 months of expenses. That’s enough to carry you through an average bout of unemployment and a little more, but that’s not a goal for your first steps toward financial perfection. To start with, get $1000 in a savings account. That’s enough to manage most run-of-the-mill emergencies, without unduly delaying the rest of your debt repayment and savings goals.
How do you build an emergency fund?
Let’s not kid ourselves, $1000 is a lot of money when can barely make it from one check to the next. Unfortunately, this vital first step can’t get ignored. If you really work at it, you should be able to come up with $1000 in a month or so. Here are some ideas on how to manage that:
- Cut. Drop every possible expense. If you drop cable, your cell phone, Netflix, and a weekly dinner out, you will already be saving $400 that month. You’d be almost halfway there.
- Sell. How much stuff do you have that you don’t need, want, or use? I’d be willing to be there’s more than you realize. Last spring, I had a garage sale that brought in about $1300. Everything we sold was just crap we don’t use any more. We sold candles and candle-holders, DVDs, books, clothes, toys, electronics, games, and anything else we could find. I spent a month going through every room in my house to find my inventory. Craigslist is a good way to sell just one or two things at a time.
- Work. Have you thought about delivering pizza or working weekends in a gas station? If you have some technical or writing ability, you could pick up some part time work on oDesk or eLance. Your opportunities are only limited by what you are willing to do.
Stop at a grand?
Dave Ramsey’s advice is to get your fund up to $1000 and then leave it alone until your debt is paid off. Screw that. I’ve got money going into my fund every month. It’s only $25 per month, but over the last two years, it has almost doubled my fund. Don’t dedicate so much money that you can’t meet your other goals, but don’t be afraid to keep some money flowing in .
Using the fund?
When can you pull the money out? That is entirely up to you. I have ju st two points to make about withdrawing from your emergency fund:
- Don’t keep the money in an easy-to-access account. If your fund is in the savings account that serves as your overdraft protection account, it’s too easy to spend it, and it will go away. I keep it in my INGDirect account. I don’t use the checking account for anything in person, so I don’t carry the card. If I want to spend that money, it will take 2-3 days to transfer into my main bank account.
- Never decide to spend the money on the spur of the moment. There are very few major financial decisions that can’t wait until morning to be answered. Sleep on it. If it’s still necessary tomorrow, you can spend it without guilt.
An emergency fund makes your life easier and your budget possible when the unexpectable happens. Don’t forget to fund yours.
How much money do you keep in your emergency fund? What would it take to get you to spend it?
