Sharon Marchisello's Blog, page 2
June 14, 2021
Countdown to Financial Fitness: Find the Best Value - When to Splurge
June 1, 2021
Countdown to Financial Fitness: Squeeze the Most out of Your Money - Part 2
Squeeze the Most out of Your Money - Part 2
To celebrate the audiobook release of my self-help, personal finance book, Live Well, Grow Wealth, I'll be sharing excerpts each week on this blog.
This excerpt is from Chapter One, Live Within Your Means, and it discusses how to squeeze the most out of the money you have.
Do you drive to places where you could walk or ride a bicycle? Change that habit and you'll help the environment, do your body a favor, as well as save money on gasoline and wear-and-tear on your car.
Next time a server brings you a generous stack of paper napkins, take the unsoiled ones with you when you leave the restaurant; use them in your car or at home. You'll reduce what you spend on paper products—and help reduce the quantity of paper that gets thrown into our landfills.
I once overheard a colleague of mine lamenting to another, "I had to drive back to the grocery store last night after I unpacked everything, because I'd forgotten to buy trash bags for the kitchen. And today was trash pick-up!"
His friend commiserated. "Yeah, what would the garbage collector think if you'd had to stuff your trash into a Publix bag!" They both laughed at the horror of the scenario.
I kept silent. I rarely buy kitchen trash bags. I have a waste can under my sink that fits the plastic bags that come free at grocery stores. I suppose the garbage collectors are making fun of me right now! I'm repurposing something my colleague would wad up and throw away in his "official" trash bag. But my house is paid for; his isn't.
One Saturday, we were taking yard waste to the county recycling center and noticed someone had dumped half a dozen brand-new biodegradable bags on a bed of grass clippings. These sturdy paper bags are suitable for multiple uses, as long as they don't get torn or wet, and the ones we spotted were in pristine shape. We emptied the bags and took them home to reuse; most remained intact for months afterwards. I'm not advocating "dumpster diving" as a way to save money, but if you can maximize your use of every item before discarding it, your savings will mount, little by little. The homeowners who dumped those bags will probably go out and buy new bags next time they clean up their lawn, when they could have easily reused the old ones.
Some waste occurs because we're disorganized or careless. Check your receipts from businesses to ensure you weren’t overcharged, and that any discounts or coupons were properly applied; also, make sure nothing you purchased was left behind. Don't leave money on the table by forgetting about gift cards, store credits, coupons for events or services you know you plan to use. Or what about items you purchased but found you don't need? Most stores will take unused goods back within a reasonable amount of time, so do it; get your money back. Keep the item and receipt by the door or in your car so it can be returned on your next visit.
Waste a little bit here, a little bit there, because it's too much trouble to do otherwise. What does it matter? It's not that much. You feel stupid and cheap taking home paper napkins and reusing bags. You have better things to do than stand in line to return a product. But over time, frugality adds up. You've squandered money and resources that could have been used to grow your wealth and buy the things and experiences that add value to your life.
Once you get the hang of it, once you start to respect yourself for being frugal instead of being embarrassed because people will think you're poor or a cheapskate, reducing waste in your life and squeezing the most out of your money and possessions will become one of the easiest ways to shrink your financial footprint and begin living within your means.
For more tips, read or listen to Live Well, Grow Wealth by Sharon Marchisello.
May 17, 2021
Squeeze the Most out of Your Money - Part 1
To celebrate the audiobook release of my self-help, personal finance book, Live Well, Grow Wealth, I'll be sharing excerpts each week on this blog.
This excerpt is from Chapter One, Live Within Your Means, and it discusses how to squeeze the most out of the money you have.
We live in a rich country, and most of us are guilty of waste: wasting food, wasting resources, wasting money. We overbuy, we overpack, and as a result of our wasteful habits, we overspend.
You have probably seen someone use half a roll of paper towels to clean up a small spill, ruin a half-full can of paint by not bothering to put the lid back on, leave good tools outside to rust. Walk through any restaurant and observe how much food is left on customers' plates, ready to be thrown away.
Examine your own life to see if you can cut expenditures by wasting less, by recycling and re-purposing. Do you throw away a tube of toothpaste before squeezing out the last bit? Do you open a bottle of water, take a sip, set it down somewhere and forget about it? Instead of recapping it and putting it back in the refrigerator, do you just pour it down the drain? You could at least water the house plants or rinse a dirty dish with the contents if you're not going to drink the rest of it.
I have neighbors who let their newspapers pile up on the driveway while they're on vacation, and then throw them away when they return. Not only does the collection of newspapers send a signal to potential burglars that the residents aren't home, they are paying for a service they aren't using. With a quick phone call or online request, they could suspend their subscription and have their account credited for the time away, or perhaps have the papers donated to someone who might enjoy reading them.
Print on both sides of a sheet of paper when feasible—and don't waste ink and paper to print out anything unnecessary. I worked with colleagues who printed out every email they received. Why? Learn to trust electronic storage. (But be sure to back up your data regularly.)
Excess copies, documents printed in error or no longer needed, and even junk mail and opened envelopes can be used as scratch paper. No need to ruin a clean sheet of paper to write yourself a note or make a grocery list.
Don't mail anything you can pay online or hand-deliver. I've received Christmas cards, thank-you notes, and invitations from next-door neighbors that were stamped first-class and processed through the Post Office when the person could have walked over and handed it to me or slipped it under my door.
If you use a credit card that offers reward points, periodically check your balance and redeem your points as soon as you’ve earned enough to purchase something you want or need. Don't let the points expire or become devalued by the company's policy changes. And take a moment to compare your redemption options to ensure you're getting the best value.
For example, when I first signed up for a Discover Card, I received a cash rebate once a year which equaled approximately one percent of my qualifying purchases. Now Discover has converted to a point system and added a lot of gift cards and products as redemption options. I still assumed I would prefer to receive the cash, which I usually applied to my current Discover Card bill. But after closer review, I found I needed fifty reward points to redeem fifty dollars in cash (or credit toward my bill). However, I could redeem only forty-five reward points for a fifty-dollar gift certificate at certain restaurants where we dined frequently. As long as I selected a gift certificate I knew I would use in its entirety, I was able to squeeze an extra five dollars from my reward points.
For more tips, read or listen to Live Well, Grow Wealth by Sharon Marchisello.
Countdown to Financial Fitness: Squeeze the Most out of Your Money - Part 1
April 26, 2021
Countdown to Financial Fitness: Audio Release of Live Well, Grow Wealth
Audio Release of Live Well, Grow Wealth
I'm pleased to announce that the audio version of my nonfiction book, Live Well, Grow Wealth, is now available. Jennifer Henry did an excellent job with the narration, so please check it out. To preview or order, click here.
Live Well, Grow Wealthcan be described as Personal Finance 101, a commonsense guide to shrinking your financial footprint. Based on my experience of living frugally, investing, and retiring early, I compare achieving financial fitness to maintaining a healthy weight. In ten easy-to-follow steps, Live Well, Grow Wealth shows ordinary people how to build wealth by living within their means without compromising their values.
Here are the ten steps that are discussed in detail in Live Well, Grow Wealth:
1. Live Within Your Means
2. Find the Best Value
3. Get out of Debt
4. Build an Emergency Fund
5. Save for Retirement
6. Begin to Invest (basics)
7. Consider Relationships
8. Teach Your Children
9. Get Completely out of Debt (pay off long-term debt, like a mortgage)
10. Invest More (stocks and covered calls)
I hope you'll check it out and share it with someone who can benefit.
April 19, 2021
Cash, Credit, or Debit
In preparation for the release of the audiobook version of Live Well, Grow Wealth, I'll be sharing excerpts each week on this blog.
This excerpt is from Chapter One, Live Within Your Means, and it discusses the pros and cons of various forms of payment.
Many financial consultants will tell you to cut up your credit cards, or to never apply for credit at all. I won't tell you that. I love my three credit cards; they are a secure alternative to carrying a lot of cash. I use them for groceries, gasoline, and even some utilities; I pay by credit card whenever one is accepted without an additional charge for the convenience. The secret is to remit the balance in full every month, on time, so you never pay one penny of interest. For me, a credit card is a convenient form of payment, and a side benefit is that I get to use other people's money for a short while. Additionally, many credit cards offer rewards like frequent flyer mileage, gift cards, or even cash back. If you think of a credit card as a magic plastic wand that enables you to buy something you cannot otherwise afford, perhaps cutting yours up is a good idea.
Those who tell you to cut up your credit cards may counsel you to operate on a cash-only basis, and this works well for some people. The premise is simple: when you run out of cash, you can't spend any more. Personally, I find it harder to keep track of expenditures when I pay in cash. Withdraw twenty dollars from the ATM, and it disappears. At the end of the month, it's just something that went into the "miscellaneous" column. If you are a cash-only person trying to get a handle on where your money is going, be diligent about writing down every expenditure. When you use credit cards, debit cards, and/or checks, you can retrace your steps and account for every outlay. Keep the credit card receipts and make use of your check register so you can reconcile them with your statements each month.
If you pay mainly with cash, keep coins working for you. Many people cast their small change into a drawer, the bottom of a purse, or the floor of a car and do not even bother to pick it up when they drop it. I'm not advocating stopping at the bottom of an escalator or jumping into traffic to retrieve a quarter. But I find it odd that so few people take the time to pick up a "lucky" penny—or nickel or dime. That penny you found on the sidewalk yesterday may come in handy today when your total is $5.01 and it keeps you from breaking a larger bill. The smaller the monetary denominations, the less they matter, and the faster they go. Check your coin purse to see if you can produce exact change for your purchase; cashiers will appreciate it (especially if you can pull it out quickly enough to avoid annoying the customers in line behind you). The longer you hold onto those larger bills, the richer you’ll feel.
Some people save all their change and take it to the bank once they fill a mason jar, treating the proceeds like a windfall. My father saved his change for about thirty years. I collected coins as a child, and he continued the hobby long after I lost interest. He figured the coins would appreciate in value, which was true for the ones issued before the early sixties, when the U.S. mint stopped making them out of silver. When he died, I inherited his collection: a steamer trunk full of jars and jars of pennies, nickels, dimes, quarters, half dollars, and silver dollars. Most of the coins only fetched face value and were more trouble than they were worth to transport and cash in. Some banks even wanted to charge a fee to accept them! Unless you come across a rare issue or a coin older than 1964, spend your change.
Some people claim the best solution is a debit card. It offers the convenience of a credit card, and it’s easier than writing a check. You don’t have to carry a lot of cash, yet you are unable to spend more than you have in your checking account. While you don’t have the same protection as with a credit card, some merchants offer the option to select "credit" instead of "debit" at the time of transaction, which adds some fraud protection. But because the funds are paid immediately from your checking account, it's harder to dispute an incorrect charge, and your financial life can be crippled if a thief steals your card number and PIN, and then wipes out your account (or even overdraws it, incurring additional charges). If you write checks and also use a debit card, be sure to document debit transactions on your check register and keep track of your balance to avoid getting hit with overdraft fees. Also, be vigilant with your statements to ensure there is no unauthorized or forgotten activity.
To learn more, read Live Well, Grow Wealth by Sharon Marchisello.
Countdown to Financial Fitness: Cash, Credit, or Debit
April 12, 2021
Absolutely Necessary Expenses
In preparation for the release of the audiobook version of Live Well, Grow Wealth, I'll be sharing excerpts each week on this blog.
This excerpt is from Chapter One, Live Within Your Means. I suggest categorizing your expenses as absolutely necessary, necessary but reducible, discretionary but important, and totally unnecessary. This post discusses expenses deemed absolutely necessary, such as housing, taxes, and insurance.
The absolutely necessary category should contain fixed expenses like your rent or mortgage payment, which are hard to reduce, but not impossible. You might be able to refinance your mortgage or move to a less expensive dwelling; however, while those actions can save you money over the long term and may be warranted, they can result in added short-term expenses.
Taxes belong in this fixed-cost category, as they usually are not negotiable. But if the value of your home has dropped significantly, you have the right to contest your property tax assessment with the county. (You can do it yourself; you don't have to hire one of those companies who offer to do it for you—for a fee that eats up most of your savings.)
F.I.C.A. is a fixed part of your payroll tax, but if you work more than one job and earn a high income, don't forget to re-claim the excess at the end of the year. Review your pay stubs and ensure you have not paid more than the maximum.
If you received a large income tax refund last year, or if you need more money in your pay check now, change the amount of federal tax your employer withholds by adjusting your W-4 form. You still have to reconcile next April 15 when you file your tax return, but do the research to ensure you are claiming every deduction to which you are entitled.
Insurance is another fixed cost that is hard to reduce. But if you haven't done any comparison shopping lately, obtain quotes from competing companies to ensure you're getting the best possible rates for the coverage you need. If you do find a lower rate for the same coverage from a different provider, your current provider may be willing to match it in order to retain your business.
Consider raising your deductibles to save money on premiums. Set the savings aside in an emergency fund in case you have a claim.
Look for unnecessary line items. Do you have a teenager on your policy who is no longer driving your car? Are you carrying collision insurance on an old car whose blue-book value is less than the deductible? Are you paying for towing insurance when you're a member of the Automobile Association?
If your net worth is high, do you have an umbrella policy? For a small surcharge, this additional liability coverage can provide good value. Are you getting all the discounts that apply to your situation?
Some people buy more insurance than they need. Life insurance is important if you're the main breadwinner and you have a family dependent on your income. But if you're single, who will suffer financially when you die? If the answer is "no one," why do you need to pay for a lot of life insurance? My husband and I each carried supplemental term life insurance while we had a mortgage. After the mortgage was paid off, we dropped the life insurance coverage. Because we both worked and had accumulated assets, the death of one of us would not have caused undue financial hardship for the other. Those premiums were better spent building up our assets.
Think carefully before letting an insurance agent talk you into buying a "whole life" policy, which is sometimes marketed as a savings plan. Unlike term life, which covers a specified period of time when it's needed, whole life covers the insured's entire lifetime, provided the premium is paid. Premiums for whole life insurance are generally higher than for term life, and the policy builds up a "cash value" as well as having a death benefit. My parents purchased whole life policies for my brother and me when we were babies, which carried a $1500 death benefit. Now that our parents are gone, my brother and I each own our paid-up policies, and the cash value exceeds $1500, but the money our parents spent on premiums could probably have grown a lot more had it been invested in something else.
Even if you don't need life insurance, you might, however, need disability insurance to help support yourself if you can no longer work because of illness or an accident, and you need your wages to cover your expenses. On the other hand, if your income is not dependent on your ability to work, why buy disability insurance? I discovered that my 94-year-old mother-in-law was paying $19.00 a month for an accidental death and dismemberment policy; unlike wages, her pension and Social Security would continue even if she became disabled, so why insure her income against disability? She had stopped driving, and even if she died in an accident, I believe it would have been hard to convince the insurance company that her death was not at least partially attributable to natural causes. The fine print on the policy read that the death benefit would be cut in half "once the insured reaches age 70"; she was over 80 when this totally inappropriate policy was sold to her through her credit union. When purchasing insurance, consider your age and what risks you face. What's the probability and the impact, versus the cost to insure against that risk?
Think carefully before you purchase travel insurance or all the add-on coverage the car rental agencies try to sell you. What risks might you face, and what would it cost you to deal with that situation without insurance? Check your existing policies (auto insurance, medical) to ensure you're not duplicating coverage you already have. Some credit cards offer certain protections when they're used to pay for car rental, cruise, or plane tickets.
A word about travel insurance. For years, my husband and I passed up purchasing travel insurance when we booked cruises at the last minute, often at a very low rate. We figured the odds of our canceling and losing our cruise fare were slim. Also, working for an airline, we'd fly space available, and missing our cruise because we couldn't get a standby flight—the biggest risk we faced—was not a covered loss.
I also had a bad memory of my mother's experience with travel insurance. Her companion dropped dead of a heart attack a few weeks before their planned trip. While the company refunded my mother's money because "death of traveling companion" was covered, they refused to refund his portion because his death "must have been due to a pre-existing condition." And dealing with travel insurance bureaucracy, providing proof that his "pre-existing condition" was cancer, not heart trouble, was the last thing his bereaved family wanted to do.
My attitude toward travel insurance changed when we took a Panama Canal cruise, with a stop in a small Central American port that our airline does not serve. A woman from our ship collapsed and died during a shore excursion. The cruise line put her husband off at that remote location and left on time. Fortunately, the couple had purchased travel insurance to cover those many unanticipated expenses: hotel accommodations while dealing with the death and securing release of the body, transportation of human remains back to the United States, etc. Now, my husband and I usually purchase travel insurance when our itinerary includes remote destinations.
Final thoughts about all types of insurance: don't buy more than you need, but don't skimp where it’s most important, or you could leave yourself vulnerable to catastrophic loss.
Review each of your expenses carefully, decide which ones are truly necessary, which ones can be eliminated or reduced, and then make a fiscal plan. The sooner your outgo becomes less than your income, the sooner you can start building wealth and enjoying financial security.
To learn more, read Live Well, Grow Wealth by Sharon Marchisello.
