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Credit Cards: How to Pick a Winner
We live in a decidedly credit-centric culture. Whip out cash to pay for $200 in groceries and watch the funny looks from the other customers and the disgust from the clerk. It’s almost like they are upset they have to know how to count to run a cash register.
If someone doesn’t have a credit card, everyone wonders what’s wrong, and assumes they have terrible credit. That’s a lousy assumption to make, but it happens. For most of the last two years, I shunned credit cards as much as possible, preferring cash for my daily spending. Spending two years changing my spending habits has made me comfortable enough to use my cards again, both for the convenience and the rewards.
Having a decent card brings some advantages.
Credit cards legally provide fraud protection to consumers. Under U.S. federal law, you are not responsible for more than $50 of fraudulent charges. many card issuers have extended this to $0 liability, meaning you don’t pay a cent if your card is stolen. Trying getting that protection with a wallet full of cash.
The fraud protection makes it easier to shop online, which more people are doing every day. At this point, there is no product you can buy in person that you can’t get online, often cheaper. How would you order something without a credit card? Even the prepaid cards you can buy and fill at a store will often fail during an online transaction because there is no actual person or account associated with the card. The “name as it appears on the card” is a protective feature for the credit card processors and they dislike accepting cards without it.
If you’re going to use a credit card, you need to make a good choice on which credit card to get. There are a few things to check before you apply for a card.
Annual fee. Generally, I am opposed to getting any card with an annual fee, but sometimes, it’s worth it. If, for example, a card provides travel discounts and roadside assistance with its $65 annual fee, you can cancel AAA and save $75 per year. A good rewards plan can balance out the fee, too. I’m using a travel rewards card that has a 2% rewards plan. That’s 2% on every dollar spent, plus discounts on some travel purchases. In a few months, I’ve accumulated $500 of travel rewards for the $65 fee that was waived for the first year. The math works. A card that charges an annual fee without providing services worth several times that fee isn’t worth getting.
Interest rate. This should be a non-issue. You should be paying off you card completely every month. In a perfect world. In the real world, sometimes things come up. In my case, I was surprised with a medical bill for my son that was 4 times larger than my emergency fund. It went on the card. So far, I’ve only had to pay one month’s interest, and I don’t see the balance surviving another month, but it’s nice that I’m not paying a 20% interest rate. Unfortunately, as a response the CARD Act, the days of fixed rate 9.9% cards seems to be over.
Grace period. This is the amount of time you have when the credit card company isn’t charging you interest. Most cards offer a 20-25 day grace period, but still bill monthly. That means that you’ll be paying interest, even if you pay your bill on time. To be safe, you’ll need to either find a card that has a 30 day grace period, or pay your balance off every 15-20 days. Some of the horrible cards don’t offer a grace period of any length. Avoid those.
Activation fees. Avoid these. Always. There’s no card that charges an activation fee that’s worth getting. An activation fee is an early warning sign that you’ll be paying a $200 annual fee and 30% interest in addition to the $150 activation fee.
Other fees. What else does the card charge for? International transactions? ATM fees? Know what you’ll be paying.
Service. Some cards provide some stellar services, include concierge service, roadside assistance, and free travel services. Some of that can more than balance out the fees they charge. My card adds a year to the warranty of any electronics I buy with it, which is great.
Credit cards aren’t always evil, if you use them responsibly. Just be sure you know what you’re paying and what you’re getting.
What’s in your wallet?
All About Tax-Sheltered Annuity Plans
This is a guest post.
If you’ve previously heard of tax-sheltered annuity plans but are unsure of what they are, let this guide help you. Here’s what you need to know about tax-sheltered annuity plans.
What is it?
First things first, what are tax-sheltered annuity plans? A tax-sheltered annuity plan, or a 403(b) plan, is a retirement plan for some employees of various institutions to participate. This plan allows employees to contribute a portion of their salary to the plan. The employer may also contribute to the employee’s plan.
Who is Eligible?
Eligible Code Section 501(c)(3) employees tax-exempt organizations may participate, an employee of a public school, a state college, or a university, and eligible employees of churches. Employees of public school systems organized by Indian tribal governments, Ministers employed by Code Section (501)(c)(3) organizations, and self-employed ministers may also participate. Ministers must be employed by organizations that are not Code Section 501(c)(3) tax-exempt organizations, and they must function as ministers in their day-to-day professional responsibilities with their employers.
What are the Benefits of a 403(b) plan?
In a 403(b) plan, contributions are tax deductible. Taxes are paid on distributions in retirement, which is when a lot of people are in a lower tax bracket. As mentioned earlier, employers can match 403(b) contributions on a pretax basis. Loans can be taken against a 403(b) plan, which will help in certain situations, like buying your first home.
What types of contributions can be made?
In a 403(b) plan, you can have several types of contributions:
- Elective Deferrals – These are contributions made by the employee under a salary reduction agreement. This allows an employer to withhold a certain amount of money from an employee’s salary to deposit it in their 403(b) account.
- Nonelective Employer Contributions – These are any contributions to the 403(b) plan that were not made under a salary reduction agreement, which include matching contributions, discretionary contributions, and certain mandatory contributions that were made by the employer. The employee will pay income tax on all of these contributions, but only when they’re withdrawn.
- After-Tax Contributions – These are contributions made by an employee, which are reported as compensation in the year they were contributed and are included in the employee’s gross income for income tax purposes.
- Designated Roth contributions – These are elective deferrals that the employees elects to include in their gross income. The plan must keep separate accounting records for all contributions and for all gains and losses in the designated Roth account.
Can Employees Exclude Employees From Contributing?
Absolutely. The 403(b) plan must allow allow employees to make elective deferrals under the plan, but under the universal availability rule, if the employer permits one employee to defer salary by contributing it to a 403(b) plan, they must extend the offer to all of their employees. The only exceptions are employees who would contribute less than $200 annually, those employees who work less than 20 hours a week, employees who participate in a 401(k) or 457(b) plan, or students performing services that are described in Code Section 3121(b)(10).
So When Can Employees Get the Dollars?
Employees may withdraw from the 403(b) plan when the reach the age of 59 and a half, have a severance from employment, have a financial hardship, or become disabled. Money can also be taken out if an employee passes away. The employee will have to pay taxes on the amount of the distribution that was not from designated Roth or after-tax contributions, and they may have to pay an additional ten percent early distribution tax.
Are There Rules for In-Service Transfers or Exchanges?
Yes. Contract exchanges with a non-payroll slot vendor are permitted only if the plan permits it, the accumulated benefit after the exchange is, at the very least, the same as before the exchange, if the employer and the non-payroll slot vendor agree to share information regarding the plan’s terms, if any pre-exchange benefit restrictions are maintained after the exchange, and if the vendor complies with the terms outlined in the plan.
How Much Can be Contributed Annually? Does the Employee Have to be Current?
As of 2013, the maximum combined amount that an employer and an employee can contribute to a 403(b) plan is $51,000. That number may go up, depending on the annual cost-of-living.
If the plan allows, an employer can contribute up to the annual limits for an employee’s account for up to five years after the date of severance. No portion of the contributions can come from money that was due to be paid to the former employee, and these contributions must cease if the employee passes away.
There’s much more to learn about a 403(b) plan, but these are the basics. Does your company have a 403(b) plan?
Side Hustle: Garage Sale Management
Pre-sale preparation and marketing are important, but ultimately, the money comes from how you manage the sale.
How many people will you have staffing the sale? There are a few considerations here. How many people are involved in the sale? How many people can take the time off? It’s best to have three people at the sale at all times. Two people can manage the money while the third plays salesman and security. Staffer #3 is in charge of watching for price-tag swaps or other theft, answering questions, and trying to upsell. It also allows for breaks, which, if you’ve ever spent a day in a garage drinking coffee, is important.
When are you going to be open? You don’t want to open so early you don’t have time to wake up and get ready for the sale, but you don’t want to open so late the professional garage-salers drive past and forget about you. Plan to open sometime between 7 and 9. When will you close? Staying open until 6 will catch most of the after-work crowd, but it makes for a long day, but closing at four cuts out a lot of the late-day shoppers. Our hours were 8-5, which seemed to be a good compromise between a long day and the best sale.
[ad name=”inlineleft”]Don’t be afraid to shut down. The first day of our sale was cold, wet, and miserable. We had to canopies in the driveway, but everything was getting wet, anyway. Traffic was slow and we weren’t enjoying ourselves, so we shut down. Lunch and a nap improved our outlook considerably. At the end of the day, we start packing up, even if people were there. We tried to only pack what they had looked at, and we didn’t try to rush the potential customers, but we did let them know that the sale was ending for the day. The folks who came in half an hour after close on the last day seemed upset that we didn’t unpack everything for their amusement.
Our layout was designed to get everything easily visible while maximizing traffic. The first day, we were confined to the garage and tents, so space was limited. There were baskets under each of the tables. That forced people to crouch and block each other. The second day, we expanded to fill the driveway. Our tables were organized in 3 rows–a “U” shape with a double-wide row of tables in the middle. This allowed people to see everything in one pass. The middle row had periodic breaks so we could move around to help the customers. The pay table was in the middle of one of the outer rows, which let us monitor the entire sale.
Find someone to watch the kids and pets. If you have to keep an eye on your children, you aren’t watching the customers or giving them the attention they need. Your dog–no matter how well-behaved–is a liability. It will be stressed at the people. Some customers will be allergic or afraid. Just don’t do it.
Ideally, you will have someone who isn’t taking money, knows a little bit about most of the merchandise, and isn’t too shy to talk to strangers. His job is to wander around, answer questions, and help people decide if they want an item. He’s the sales-weasel. If he’s pushy, he’ll chase off the customers, but if he’s hiding, he isn’t making any money. Unusual items should have a sign attached explaining why they are special, so the sales-weasel doesn’t have to explain it to everyone.
Every single item should be priced, but not everything needs to be priced individually. We priced all of the movies in a group. “VHS: $0.50 or 5 for $2, DVD $3 or 4 for $10”. Nobody should have to ask what an item costs. If there are multiple people doing a sale together, make sure everyone is using colored price tags to identify who is selling what.
People come to garage sales expecting to find good deals. If they don’t, they’ll leave. Our rule of thumb for pricing was about 25% of retail, with wiggle-room for the item’s condition. New-in-the-box sometimes made it up to 50% of retail. Our goal was primarily to reduce clutter, so a lot of items were priced at 10%. You have to keep in mind that, if you price things too low, people will assume there is something wrong with it and not assign a value in their own minds. Price it at what you would be willing to pay in a garage sale, then mark it up–just a bit–to account for haggling.
People love to haggle at garage sales. It gives them an opportunity to brag about the great deal they fought for. Try to accommodate them. One of the people participating in our sale was selling antiques with a definite value. She didn’t want to haggle on any prices, so we simply hung up a sign that read “All white-tagged prices are firm.” Everyone else was willing to accept almost any reasonable offer. Our most important rule for accepting a price? If you pissed me off, I didn’t budge on price. Insult me, or offer 1/10 of the price, and my defenses go up, bringing your final price with it. Talk nice and use some common sense while haggling, and you got what you asked for.
[ad name=”inlineright”]Could we have maximized the sale more? Probably. I had intended to hang up a sign that simply said “$100” to set a high anchor-price on everything, but I forgot.
Note: The entire series is contained in the Garage Sale Manual on the sidebar.
Update: This post has been included in the Carnival of Personal Finance.
Carnival of Personal Finance #307: The Silver Edition
This is the 307th Carnival of Personal Finance, the Silver Edition. As of 10:00 PM CDT last night, silver is at $43.76 per ounce. Three years ago, when I last bought silver, it was at $11.30. In honor of that, and inspired by my first editor’s pick below, I’m going to share some facts and history about silver.
The last time prices rose like this was in 1979, when the Hunt brothers bought or controlled close to 50% of the world’s silver. They managed it by leveraging their silver hoard. As they bought more, prices went up, increasing the value of their hoard, which they then used as collateral for more loans to buy more silver, which caused the prices to go up so they’d use it as collateral…. You get the idea. Prices went from $11 per ounce to $50 per ounce in less than a year, before the regulators figured out the game and changed the rules, bringing the whole thing crashing down. The resulting losses and lawsuits bankrupted the former billionaires within 10 years.
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Editor’s Picks:
First, we have a post from Squirrelers, Is There a Silver Bubble? How High Can Prices Go?. This post reminded me of not only the Hunt brothers story, but the small box of silver I own. Now, I’m debating taking it to a precious metals dealer and cashing out for 400% of my purchase price.
Suba from Wealth Informatics brought Never Pay full price : How to save 10-50% on every purchase. This was entirely new to me, which surprised me. I see a lot of ideas presented in new ways, but rarely see something I know absolutely nothing about.
If you’ve got legal papers you need to fill out, or questions you need answered, you could do far worse than to start with the site Jeff Rose from Good Financial Cents gives us with 7 Free and Cheap Online Legal Resources. If you think you don’t need the resources, that means you a complete estate plan, right? You have a will?
Saving
Dimes, quarters, and half-dollars were 90% silver until 1964. Half-dollars continued to be 40% silver until 1971. At that time, the government tightly controlled the price of silver and kept it at $1.29 per ounce so the face value of the coins matched the value of silver they contained. Today, a supply of 90% silver coins with a face value of $5 can be had for the bargain price of $173.74.
Fanny from Living Richly on a Budget – Personal Budget Blog presents How to Build the Crucial $1,000 Emergency Fund, and says, “How do you finance unexpected personal expenses, such as car repairs, medical visits, home maintenance repairs, etc? The most effective way to finance these expenses is through a personal emergency fund.”
Flexo from ConsumerismCommentary presents Silent Inflation is Destroying Your Net Worth, and says, “Inflation continues to deflate individuals net worth and there are no signs of it getting any better.”
Adam Piplica from Magical Penny presents Avoid Hitting the Rocks of Financial Ruin, and says, “This post draws on a famous story in Homer’s Oddessey how a captain made it safely passed the Sirens because he had protected himself from making a poor short-term decision. It’s exactly the same thing you have to do if you want to grow your pennies.”
Clint from Accumulating Money presents Baby-Boomer Generation Must Get Serious About Planning for Retirement, and says, “The “Baby-Boomer” generation has undergone two severe business-cycle reversals in the past ten years alone. Many of these fifty and sixty year-olds are now facing a daunting task – how do you rebuild your net worth in so short a remaining time period?”
Jason from One Money Design presents Planting a Garden to Save Money, and says, “As Spring is here, planting a garden is a great way to help feed your family and save some money at the same time.”
Career
Silver is almost always found with lead. Through most of history, mining silver meant mining lead and breathing lead dust. In the ancient world, silver miners had a life span of about 3 years, so free men refused the job. This was a slave occupation.
Crystal from Budgeting in the Fun Stuff presents Job Experience – Don’t Rock The Boat, and says, “Being young and ambitious may seem like the best thing in the world but knowing your audience and environment is very important. You don’t want to come off as the young new hothead…here’s a story all about exactly that.”
Well Heeled Blog from Well Heeled Blog presents 5 Ways to Spend Your Raise, and says, “Congratulations, you got a raise! Now what? Now, what to do about this extra money? No matter what, don’t want to fritter this raise away. Here are 5 ways for the extra money to work hard for you. ”
Kathryn @ Financial Highway from Financial Highway presents 30 Common Interview Questions and How to Answer Them, and says, “This guide not only tells you what the interview questions are but also provides insight into what the interviewer is really asking and what types of answers will help you get the job.”
Credit
Around 500 BC, Athenians discovered a huge silver mine on land belonging the city-state. This find was used to finance building their first effective navy, which catapulted them to the heights of power they achieved.
Craig Ford from Money Help for Christians presents Best Ways to Maximize Cash, Credit Card, and Debit Card Rewards, and says, “How to maximize your credit cards or debit card rewards.”
Tim Chen from NerdWallet Credit Card Watch presents Premium Credit Cards: The Value Beyond the Cost, and says, “A premium credit card is a step above your average card: better rewards and extra perks offered at, well, a premium. These exclusive credit cards come with additional goodies like lounge access and free plane tickets, as well as hefty annual fees.”
Kevin (for Moolanomy) from Moolanomy presents How to Avoid Credit Cards and Credit Repair Scams, and says, “Credit cards don’t have to be a bad thing, but they definitely have their fair share of scams out there. Here’s how to avoid them.”
Real Estate
In World of Warcraft, silver is a rare spawn of tin. If you want to find silver, you should try mining tin. Over and over. (Source)
Mike from Green Panda Treehouse presents How Much Should We Spend on Housing?, and says, “How much is the right amount for housing costs?”
Ben from Money Smart Life presents How to Use a Mortgage Calculator to Compare Home Loans, and says, “A post about how to use a mortgage calculator to screen and compare the rates and costs of home loans.”
Frugality
The early discovery that water, wine, milk and vinegar stayed pure longer in silver vessels, led to its desirability as a container for long voyages. Herodotus wrote that Cyrus the Great, King of Persia, a man of vision who established a board of health and a medical dispensary for his citizens, had water drawn from a special stream, “boiled, and very many four wheeled wagons drawn by mules carry it in silver vessels, following the king wheresoever he goes at any time.” (Source)
Donna Freedman from Surviving and Thriving presents This isn’t your grandparents’ recession, and says, “When the going gets tough, it’s tempting to invoke our grandparents and their tribulations during the Great Depression. But some of their advice wouldn’t help us. ”
Glen Craig from Parenting Family Money presents Inexpensive (Cheap) Date Night Ideas for Parents, and says, “It’s tough getting out with the spouse when you have kids. With babysitting and the date it can get expensive. See some inexpensive date night ideas and how you can save on babysitting as well.”
Finance
From 1998 to 2009, Bernard von NotHaus marketed the Liberty Dollar as an alternative to U.S. government fiat currency. Liberty Dollars were made from silver and later, gold and copper. von NotHaus was later convicted of–among other things–counterfeiting coins, even though he only produced his own coinage and didn’t pretend it was the same thing.
N.W. Journey from Net Worth Journey presents What is Compound Interest?, and says, “A basic introduction to compound interest.”
Bret from Hope to Prosper presents Age 21: A Year of Change and Humility, and says, “The year I turned 21 was the most tumultuous of my life. In many ways, that one year shaped my life more than any other and determined the direction of my future.”
Economy
Colloidal silver is claimed to be a near-magical cure-all. Its proponents claim it has the ability to “benefit the immune system; kill disease-causing agents such as bacteria, viruses, and fungi; serve as an alternative to prescription antibiotics; or treat diseases such as cancer, HIV/AIDS, diabetes, tuberculosis, syphilis, scarlet fever, shingles, herpes, pneumonia, and prostatitis (inflammation of the prostate).” Scientific evidence for any of this: none. (Source)
Money Beagle from Money Beagle presents The Economy Must Be Improving, and says, “I don’t need a government report to show me that the economy is improving; I look no further than the latest coupon offerings from local restaurants!”
Darwin’s Money from Darwin’s Money presents Stop Complaining About Gas Prices, and says, “Americans are complaining about prices at the pump. I say “Stop Complaining and Look in the Mirror”. Here are some very rational reasons and real solutions.”
Investing
The best method of storing silver is in bullet form. When the werewolves attack, none of us will have long to fight back.
Mike from The Dividend Guy Blog presents 7 Deadly Sins of Investments, and says, “Are you making these mistakes with investing?”
Mike Piper from Oblivious Investor presents Replacing Index Funds in Your Portfolio, and says, “For the most cost conscious of investors, it might make sense to build a portfolio of individual securities rather than index funds.”
RJ Weiss from Gen Y Wealth presents How to Convert a 401(k) to Traditional or Roth IRA, and says, “Reviewing your options with your 401(k) when leaving or changing jobs. More specifically, to look at the steps to convert your 401K(k) to an IRA, since this is most likely the optimal choice.”
Michael from DoughRoller presents How Half a Percent Can Ruin Your Retirement, and says, “Investing for retirement is crucial to securing your financial future. Make sure to find the best interest rates available, as even half a percent can ruin your retirement aspirations. ”
Money Management
I had a silver ring in my septum for almost 10 years and, in fact, still maintain the piercing, but it’s usually empty.
Cathy Moran from Money Health Central presents An Alternate Truth About Financial Literacy, and says, “Financial literacy is grounded in understanding bigger truths about money, not in acting on those truths.”
Kara from Frugal In My Forties presents Worst Money Lessons My Family Taught Me, and says, “My parents had great financial skills: Unfortunately they weren’t really great about passing them on to their children. These are the 4 big things that I think they should have done differently!”
Mike from The Financial Blogger presents Teaching Finance In High School, and says, “A look at getting finance across at the high school level.”
Eric from Narrow Bridge Finance presents How Your Insurance Rates are Calculated, and says, “Ever wonder how insurance companies determine your monthly rates? Find out what you need to know here.”
FMF from Free Money Finance presents How Millionaires Become Millionaires, and says, “Many people mistakenly think that most millionaires have their wealth handed to them from either their relatives or some stroke of luck (like winning the lottery, being gifted with amazing abilities/talent, etc.) This is completely false. Most people with over seven-figure wealth got it the old-fashioned way, they earned it.”
Matt Bell from Matt About Money presents Money Lessons From the Royal Wedding, and says, “Amid all the royal wedding hoopla, did you notice what Prince William and his fiancée, Kate Middleton, asked for in terms of wedding gifts? Since this is one couple that truly does have everything, they asked anyone wanting to get them a gift to consider making a donation instead. For all of us commoners, there are two lessons we can learn from the royal couple’s philanthropic mindset.”
Debt
Sterling silver is 92.5% silver and 7.5% other, usually copper. Pure silver is too soft for most applications. It is, however, the most optically reflective element.
Jacob Irwin from My Personal Finance Journey presents Helping A Friend Get Out of Debt – Part 3 – Cut Your Interest Rates In Half, and says, “A look at the steps my friend and I took to get his credit card interest rates lowered, and how you can too!”
Junior Boomer from Consumer Boomer presents Top 5 Bankruptcy Myths Dispelled For You, and says, “For those who have been considering bankruptcy, but are concerned about the overall impact it could have on their financial future, we are going to break a few myths.”
Other
Silver fulminate is an explosive, ionic, fulminic acid salt of silver. Yes, silver goes boom.
Echo from Boomer & Echo presents Assessing Your Estate Plan, and says, “Before making an appointment with your lawyer take some time to assess your situation and review your estate plan.”
Sustainable PF from Sustainable Personal Finance presents Eight Favourite Blogs, and says, “There are some awesome PF blogs out there and these are 8 you shouldn’t miss!”
Nicole from Nicole and Maggie: Grumpy Rumblings presents Dissecting an emergency room bill, and says, “Nicole and Maggie discuss how a recent bead up a preschool nose cost one of them $1400. (Actually $1700– a additional bill just came.)”
Tom Drake from Canadian Finance Blog presents The new breed of financial bloggers: Young, frugal and vocal, and says, “I’ve discovered a lot of young bloggers who do care about personal finance. Young bloggers can fill a void in financial education for young people.”
Tom from Stupid Cents presents What Is Term Life Insurance?, and says, “Life insurance is important for everyone but it can be expensive. That is where term life insurance can be the most helpful.”
Philip from PT Money: Personal Finance presents How to Pick a College that Suits You, and says, “Financial and other considerations when deciding on a college.”
That’s it. If you enjoyed this little journey through silver, please take a moment to subscribe to Live Real, Now.
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.
