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Frugal Habits that may actually Cost You in the Long Run

Here’s a riddle for you; When is a money saving habit not a good habit? Answer: When it actually cost you more money than it saves you. All right, we admit that our riddle possibly wasn’t the most original or even fun riddle ever but it does apply to a lot of consumers. While most of us know that if you buy something cheap it’s probably going to break and need to be replaced quicker, there are some frugal habits that people have that actually aren’t all that frugal or all that good for your finances.

With that in mind we put together a little blog today that explores a number of frugal habits that people have that, for the most part, are not actually saving them money but costing them money. Read them, learn from them and, as always, enjoy.

Not writing a Last Will & Testament or trying to write one yourself.

While it’s true that it can easily cost $1000.00 to hire an attorney, even to draft a simple Will, and it’s also true that not writing out a Will won’t actually cost you a thing, if you don’t have one when you die your relatives could well end up getting substantially less of the money and assets that you leave them.

When you pass away without having a Will lawyers call this dying “intestate”. It also means that in order to take care of all of your money and financial needs and make sure that everyone gets what you left behind, they’re going to need to go to “probate court”. Now if the words “intestate” and “probate” make you think “expensive lawyers”, you’re exactly right.

Doing it yourself can be just as bad and frankly, jotting down a few notes on a MS Word file usually isn’t enough if you have a large family, a lot of money and lots of other assets. An excellent example is former Supreme Court Chief Justice Warren Burger. One of the most intelligent lawyers on the planet, Burger actually decided that he would write his own Last Will and Testament and, because of his folly, his relatives spent years, and hundreds of thousands of dollars, in court trying to get things straightened out.

Leasing a car instead of purchasing it.

Here’s the thing: there’s really not a whole lot wrong with leasing except for the fact that, with most leases, your mileage is limited to 10,000 to 12,000 miles a year. If you don’t go over that amount, leasing can be an excellent idea but, if for whatever reason your life or your job changes during the time that you have the lease, and you find that you are suddenly driving much more than the mileage allowed, you could well end up spending a huge amount of extra money on your lease.

If you look at the numbers closely, every extra hundred miles that you drive over the limit will cost you $10. When you consider that just driving around town once or twice a week will quickly eat up 100 miles, the extra amount you’ll be paying on your car’s lease may make you feel like you’re actually riding around in a taxi.

Avoiding the doctor when you’re sick and skipping annual physicals.

This “frugal habit”  is not only a money mistake but a health mistake as well. If, for example, you have a health problem that, because of the fact that you don’t go to the doctor for your yearly physical, goes unnoticed and untreated for several years, it might turn from “treatable” to “deadly” or from “acute” to “chronic”. This is especially true for eye exams and dental checkups.

Lest you think that skipping the dentist really isn’t all that bad, in the last decade there has actually been a huge rise in the number of emergency room visits for dental problems. When you consider that the average cost to have preventative checkups twice a year is approximately $700 and the average cost for an ER visit for a dental emergency is just under $6500, you see immediately that dental maintenance is much more palatable to your finances.

Putting away little or no money for retirement.

Lastly, and possibly most importantly, is the fact that less than 45% of Americans put away money for retirement on any sort of consistent basis, if at all. Taking advantage of tax-free contributions from your employer’s 401(k) or even a Roth IRA will net you literally thousands of dollars over a 30 or 40 year span and, if you’re not taking advantage of that, you’re leaving an immense amount of retirement income on the table.

 

How You Can Save on a Rental Car

The average traveler is under the very false impression that car rental prices and car rental companies are pretty much all the same. With that false pretense they also believe that shopping around is not only unnecessary but also a waste of time.

That couldn’t be further from the truth however as rates can vary greatly from 1 company to the next depending on where you rent and where you’re going. If a rental car looms in your future then read on as we take a look at some excellent tips for saving money on your next rental.

One thing to keep in mind; generally speaking, car rental companies reward people who make it easy for them as far as the renting procedure is concerned and definitely make it hard for people that don’t.

Tip 1- Never agree to let the car rental company fill your tank when you bring it back empty.  They normally charge 20 to 30% higher for the same gas that you could pump in yourself around the corner. Instead always fill it yourself before you drop it back off unless they make an excellent offer to fill it for you for less (which rarely happens).

Tip 2- Always take a look at the ‘fine print’ and look at the additional charges before you make a decision.  A ‘great deal’ can begin to look mighty average once a ton of extra charges and taxes are tacked on.

Tip 3- Don’t rent at the airport.  The ‘airport charges’ that can and usually are tacked on can increase your rental fees by 25% or more!  Better to take a shuttle to the car rental place near the airport as most have them for free.  An extra ride in a fee shuttle bus can save you gig bucks.

Tip 4- Don’t let them hype you into taking extra insurance.  The simple fact is this; your auto insurance will cover you while you rent.  The amount of extra money you will pay for insurance is ridiculous and the odds are super slim that you’ll ever need that extra coverage.

Tip 5- Ask to rent a subcompact car. The chances that they will have one when you arrive to rent (no matter where you rent) are low because nobody likes to rent subcompacts and the rental companies know this. If they don’t have one they’re obliged to give you an upgrade to whatever they have which could mean a 1 or 2 car class upgrade for you for free.

 

3 Excellent Behaviors you need to Stay on your Budget

When it comes to Budgets most people have few problems making a budget.  The problem comes when it is time to maintain that budget, and that’s where most fail miserably.  Like most things in life a person starts on their budget with great intentions and positive thoughts but, like a diet plan or a gym membership, those plans can sometimes quickly go out the window.

If you don’t want that to happen to you there are three behaviors that you need to possess to stay on track of your budget.  Read below to find out what they are and, if you don’t have them, how to get them.  (You’re on your own with the diet and exercise. Sorry.)

The first is to stay motivated. Like anything in life if there’s no motivation to do it there’s a good chance you’re going to stop.  For example, with a diet your main motivation may be fitting into those size 2 jeans that you’ve had your eye on at the store.  With a budget you can use something similar.  You can, if you like, reward yourself for sticking to the budget by purchasing those jeans or some other new clothing item.

Secondly you need to keep a positive attitude. This can be difficult because you may be sacrificing some of the things that you really love to stay on your budget but, if you let your attitude go south and get all negative, the likelihood of failure increases greatly.  Instead remember why you’re on a budget to begin with, because you want to build wealth and get out of debt, and keep in mind how great it’s going to feel once you have accomplished those goals.

Finally, having realistic expectations is paramount if you want to keep to your budget successfully. When you set your goals too high you will inevitably fail and become disheartened at the whole process. Better to set smaller, shorter, more achievable goals that you can meet and, once you’re able, start setting them higher.

There you have them. 3 behaviors that, if you can get a grip on them, will make staying on budget a lot easier and reaching those goals a lot more possible.  Good luck and stay positive.

 

Buy the Da*n Latte

If you haven’t already heard of the “Latte Factor”, it was popularized by David Bach in his now bestselling The Automatic Millionaire.

The basic idea is that you find an insignificant, daily expense, in this case your morning latte, and either cut it out completely or cut way back. Of course it could be the morning paper, the everyday lunch date, the salon, etc.

U.S. News recently put this statement to task, stating that “it might be based on faulty math.” Well, a penny saved is a penny earned, right? Not so fast.

His [Bach’s] so-called “Latte Factor” includes all kinds of expenses, such as manicures, massages, restaurant meals, and premium cable. In the example he uses, the total cost of these extra expenses comes to $1,100 a month. Over 30 years, he says, that money is worth almost $2.7 million. That’s true – if you can somehow find an annual interest rate of 10 percent.

Those types of returns in today’s markets are optimistic at best. The article continues arguing that you should go ahead and buy the latte and provides 5 good reasons why.

1) The Numbers. Here’s a more realistic look at the cost of buying one latte per day: If you spend $3 a day on coffee and if you could otherwise earn a 3 percent return on your money, then you could have just over $50,000 after 30 years.

Not a small amount for sure but not anywhere near millionaire status either.

3) The Tradeoffs. We make decisions about what to spend money on, and what not to spend money on, everyday. Some of us prefer to put cash into our pets but skip restaurants; others prioritize shoes over electronic gadgets or vice versa. For some people, buying fancy coffee is a priority because it brings them pleasure.

This is the argument Ramit Sethi makes in his book I Will Teach You To Be Rich. Find the one or two things that bring you real joy. Cut out everything else.

So, if you want to spend $5,000 on clothes every year, cut out $5,000 somewhere else in your budget. You’re happy and your bank account is happy. In other words, don’t spend money on junk.

Are you a “latte factor” devotee? Let me know what you think. I’d love to get feedback.

Read the other 3 reasons to splurge on your latte at U.S. News & World Report by Yahoo News

Pay for a Wedding – with Cans?

Andrea and Peter wanted a nice, modest wedding for their 150 person guest list. Nothing grand. In fact, their $3,800 budget was light years below the $19,581 average wedding cost for U.S. couples. How did they pay for it? With cans of course:

“From the start, we knew we wanted a simple wedding, an event that was more a celebration of the friends and family that made us who we are and are a part of our lives. Basically, get an awesome space large enough to hold everyone, and have a party — with a small ceremony held somewhere in the middle of it all”, Andrea said.

So they decided to raise the money by recycling aluminum cans—400,000 of them. What prompted them to go the frugal route when so many couples seem to have budgets that are bursting at the seams?

“When we started the project, it was the budget friendliness. I just got a job after 10 months of unemployment, we had just purchased a house a few months before I got laid off, and in general live pretty frugally. The prospect of dropping even $3,000 to $4,000 on a wedding just hurt.”

They were already living a frugal and environmentally friendly lifestyle so adding the can collecting to their already full schedule wasn’t a stretch.

They’ll say their “I dos” July 31 in Spokane, Wash., with their goal met, thanks to a little help from their friends, 1,487 Facebook fans, 247 Twitter followers, a blog and a worldwide media blitz. True budget snobs indeed.

Read the full story at MSN Money Central.

America’s Most Affordable Places to Retire


So, why am I writing about places to retire when I’m nowhere near retirement? Because if a place is affordable for a retiree, then it’s most certainly affordable for a working man, no?

I’m fascinated about places. Whenever I drive through a small town, I’m thinking, “How do people end up living here? What do they do for a living? Do they want to leave but can’t? Did they move here from somewhere else and love it?”

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