Personal Finance: Saving Money and Digit

I support frugal and intelligent ways to save money especially for those that have a very difficult time doing so.

Digit is a comprehensive tool for saving money for problem savers. It analyzes your expenditures and calculates how much you should contribute each month. At first glance I was quite impressed.

However, with the advent of Digit, saving money has now become a way to steal money from people and sell their personal information.

I came across an article on Yahoo! News and Digit was being explained. What was more revealing was the information it left out.

First, the stealing. How Digit works is you give Digit a certain dollar amount per month (or however you set it up) and it makes a deposit for you at one of their bank affiliates like Wells Fargo. The interest is paid to Digit NOT you. But you saved money that you would have otherwise spent, goes the logic.

Second, the selling of personal information. To maximize profits Digit (will most likely) sell your personal information to credit and advertising companies. Google’s interest in Digit sort of seals the deal with that as once Google starts investing in such a company it is only a matter of time until they acquire them entirely.

We are all too familiar with how Google makes money off of selling personal information to advertisers and their use of Carrier IQ to spy on you by logging all of your keystrokes on ALL devices as mentioned in one of my previous blogs.

It makes more sense to me to be more dedicated to saving by setting up a separate account and automatically depositing $50-$100 each month and not touching it. This is what we call DISCIPLINE.

I have done this off and on for a long while now, though, being married it is a little more difficult to do, but still I manage.

My primary check is bi-weekly. I deposit $50 every check for a total savings of $100 per month. At the end of the year I have a nice chunk of change that can either be applied to a family vacation or annual outstanding debt.

Do not misread, I am NOT debt-free…yet. It is something I continually work towards.

This method allows me to observe my bills and pay them according to either highest interest rate or easiest bill to pay off first.

Like Dave Ramsey, I prefer the snowball method…which would only work if my wife would stop charging the cards.

I take a payment to a small value card I paid off and apply it to the next larger value card and so on until I am left with the largest of cards. I’d like to pay that card off in the next three years.

The argument that you are paying more in interest over the long run is true. It does cost more, but it makes all of your debt manageable and that large card at the end of it acts sort of like a debt consolidation loan, if you will, in that all of your debt is now owed to a single creditor with one (very) large monthly payment that would otherwise have taken twice the number of years to pay off than what you are at with only the one card.

One day I will put this into a diagram. Until then Dave Ramsey has a few you can peruse.

The key is learning to do without. If you do not absolutely NEED something, don’t buy it.

The difference between needs and wants is not that hard to decipher. There is that gray area that an item could/would strongly improve your life or fiscal situation. Good! Keep that in mind…for when you can afford it.

Nobody is going to discipline you, but you, and only you.

Advertisements

Taxes and Death: What is Fair

In keeping with a request to update financial matters, although this piece is not of a personal finance perspective directly, it does have an impact on personal finance.

The AP lead is quoted as saying:

“LONDON (AP) — HSBC’s Swiss private bank hid millions of dollars for drug traffickers, arms dealers and celebrities as it helped wealthy people around the world dodge taxes, according to a report based on leaked documents that lifts the veil on the country’s banking secrecy laws.”

HSBC’s Swiss branchg has been found guilty of hiding millions of dollars to assist wealthy individuals avoid income taxes in their native countries. This may or may not be an issue for a variety of people for a variety of reasons.

On the one hand, why is it the business of a gov’t to know how much money one makes? Why not tax people on what they spend? The wealthy spend more so by default they would be taxed more. The poor spend less, and by default would be taxed less. If the argument is taxing people a “fair share” a flat tax on expenditures would be the most fair.

On the other hand, why do the wealthy desire to hide so much money and not be taxed in accordance with the laws of their nation? What makes them above reproach? If everyone is taxed on income as the national standard then by being caught engaging in tax evasion should result in severe financial and punitive punishment.

Working and/or operating in free-market economies means that taxes ant tariffs are expected. A justification for taxing individuals with higher incomes just because they can afford it could be valid or not under the law. Taxing a person less because their income is less could be valid or not under the law as well. What about morally?

The issue I see with this standard is that by trying to create financial equality the system is inherently creating more financial inequality.

Why is it “fair” to pay less than you can or more than you should?

What is “fair” to me is everyone paying what they can. Governments need to determine what that means to their respective economies and social systems. I would suggest first researching the 1601 Elizabethan Poor Laws as a springboard to that future.

Some people choose to live off of social assistance. Some people simply fall into a large inheritance. Some people are just as corrupt on one side or the other. This does not mean both sides need be entirely demonized for a select few actions. I have personal experience with very corrupt and very charitable persons on both sides.

The way I see it is that the poor NOR the wealthy are especially at fault. I will always err on the side of liberty and balance. There will always be those wealthy in something and poor in something.

The most recent tragedy would be that of Robin Williams. He was wealthy in everything he could tangibly need. He was poor in personal support and became a lost soul which resulted in drinking and eventually suicide. For a man who brought so much happiness (wealth) to others he died in misery (poorness of spirit).

Robin Williams was not just an example of what not to do, but an example of what to do for others. He will always be one of my personal favorites.

What is “fair” is what you can do in the name of selflessness. This is not a written law and never should be. It is what defines our humanity.

Is the US tax system fair? By my standard and way of thinking the answer is a huge and resounding NO.

http://finance.yahoo.com/news/report-reveals-extent-tax-dodging-123038088.html

Buy Nothing Month

This is a re-blog of an article I read years ago as well. It isn’t difficult at all not to purchase something that is not a necessity. The difficulty comes when media and advertising slap your face with it day in and day out.

Write a list of monthly recurring necessities. Yes, necessities are those pesky things you literally cannot function without. For example, depending on where you live and where you work, a car may or may not be a necessity. You will have to be honest with yourself. There is not one to cheat but you.

C/O AskMen.com

Chances are good you wouldn’t mind a little extra cash in your savings account. No matter your reasons, improving your financial position is an admirable goal for anyone. And while you could build your savings over time, this article is focused on one of the more dramatic steps you can take to save money: the “buy nothing month.”

A buy nothing month is simple: buy nothing that’s not a necessity, and simplify your spending on necessities as much as possible. That means spending zero dollars on going out and, barring a rip in your work pants, you won’t buy any clothing either. You can buy groceries, but groceries means the food your body needs, not splurging for a T-bone steak every night. Add in gas for your car and that’s about it.

If this sounds a bit extreme, it is. A buy nothing month is hardcore personal finance, but if you’ve been struggling to get your money in order, it’s time to turn off the spending altogether. You’ll learn a lot about your relationship with money when you’re constantly feeling the urge to spend and having to resist it. Learning to free yourself from the urge to spend is genuinely rewarding, so don’t be surprised if you emerge from your month with a new perspective. Take the example of Mark Boyle, a UK man who set out to buy nothing for a year as an experiment. Boyle found it suited him so well that he’s now continuing to live moneyless indefinitely. While we don’t want to go to that extreme, and don’t think you should either, the point is that learning a bit of self-control and a healthier perspective on money may well be a bigger reward than all the money you’ll save. If you want to build your bank account and learn some financial discipline, well, welcome to the fast track.

Read on for our advice on cutting the most common expenses. And hold back the tears, champ: it’s only buy nothing month for 30 days.

Groceries

If you normally spend lots of money on going out to eat each month, this will be one of your biggest money savings, and also the biggest challenge. Stocking up on frozen entrees isn’t an option: they’re full of sodium and aren’t very nutritious. You can, however, have a few around for the days when work goes late and you come home utterly exhausted. Beyond that, it’s going to be you and your kitchen taking care of the meals — and without Starbucks to make your coffee for you, you’ll be up early taking care of breakfast. A little bacon and eggs in the mornings has more flavor than that drive-through breakfast sandwich you normally fuel up with, and costs pennies compared with fast food prices. And if you’re the type who sleeps to the last possible moment, a quick breakfast smoothie can be ready in less than a minute — plus it’s easy to take in the car.

For dinner, why not try some new recipes? If you’ve never cooked your own food, bust out your cooking utensils — it’s time to learn. Dying for that one dish your favorite restaurant serves? Make it yourself — if you’ve never looked one up before, you’ll be shocked to learn that most restaurants’ “signature dish” recipes have been figured out by foodies and posted to the web. So, you don’t need to go without your P.F. Chang’s lettuce wraps — a quick Google search and a few minutes in the kitchen will cure your craving, and for a fraction of the cost of eating out.

Entertainment

Since you won’t be going out this month, you’ll need to focus on entertainment that doesn’t cost anything. That doesn’t mean you need to be a social leper, but hitting the bars isn’t in the cards this month. What you can do, however, is have people over to the house, make dinner for some friends and play some board games. If you already have the gear, activities like fishing and camping make a great choice. And you should still catch the big game, but watch it on somebody’s couch instead of at a sports bar.

In your alone time, be sure to spend a few minutes reflecting on your month. If it helps, you can jot down notes about your experiences to reflect on later. And reading should be at the top of your list of entertainment activities — it’s good for your brain, makes you a better man, and you’ll finally be tackling all those books you’ve bought but never read. If you’re the rare man with no unread books in the house, head to the library for a lifetime’s worth of free reading, and grab some CDs and movies while you’re there.

Bills

Consider the role bills have in your life. Know any friends who have a gym membership they never, ever use? It’s wasteful, and cutting that expense would save them money every month. So, go through all your subscriptions, bills and fixed costs, and suspend everything that can be paused or “turned off” for the month. Even though you may not get rid of the bill by suspending it for a month, you’re cutting through all the financial noise in your life, and the simplicity of this month will help you realize what’s actually worth keeping and what’s just fiscal clutter. If anything is more costly than it is useful, get rid of it. So, if you’ve been enjoying your Netflix, keep it, but if you’re not getting value from it, maybe you’re better off without it after all.

Bills and memberships are a special case with the buy nothing month: you can’t cancel your subscription to a magazine for a month and some memberships can’t be suspended for a month. They still get reviewed this month, though: use this time to review all of these costs, and decide whether or not they actually add value to your life.

Exercise

This could have fit into the entertainment section as well, but getting exercise is an excellent use of your time during a buy nothing month. Your gym membership is out, so you’ll be using the equipment you have around the house and getting out into the fresh air and the great outdoors. Get together with friends to shoot some hoops, throw the Frisbee or play a little soccer. And if you’re trying to build your muscles, not having a gym membership for the month is no excuse — ask any serious fitness buff and they’ll tell you that body weight exercises alone are more than enough to get you ripped. If your location permits it, riding your bike to the store or work will save you money on gas, and let you strike one more “necessity” off the list of things you’re going without for a month.

Taking It To The Extreme

The buy nothing month is an extreme exercise, but it can make all the difference in both the amount of money you have, and how you use it. When the month is over, spend a bit of time getting back to normal. A great first step would be to invest a little time in thinking about your relationship to money and how much of your enjoyment in life is directly tied to money. What expenditures did you miss the most? What were you surprised to find you barely missed at all? (Pro tip: you can probably stop spending money on these for good).

It’s also important to make sure that all that money you saved goes to something useful. Don’t just leave it in your checking account to disappear a little at a time: save it, invest it or pay off some bills with it. Finally, it’s tempting to spend lavishly once the month is over. With the pressure of living so frugally finally off, many people go on a spending spree and undo all the saving they just did. So don’t “treat” yourself to something; just go back to your old spending habits, unless your old habits suck. Allow yourself a pat on the back for achieving your goal, then spend within your means and enjoy the nest egg you built up in record time.

http://ca.askmen.com/money/investing_300/342_buy-nothing-month.html

5 Big Budget Mistakes to Avoid

From time to time I save articles that have impacted me or made me think about certain aspects of life. This financial article is both a combination of mistakes and possible solutions dating back to 2010. There is no one-size-fits all solution to every little task life throws at us, but guides are useful when we take an unexpected hit.

C/O US News

By Kerry K. Taylor

Do you know where your money went? If you just got paid but your bank account is empty, maybe it’s time to rethink your budgeting skills. Fixing the big budget blunders is not hard to do–you just have to want to do it! Here are five reasons why your budget is broken, and the ways to fix it.

Mistake 1: You don’t have a system. Is your filing system a mess of envelopes scattered throughout the house? When your budget is blowing from room to room and you’re confusing last year’s grocery receipts with this month’s food bill, it’s time to try a better system.

The Fix: There are numerous ways to build a better budget. There are spreadsheets, software, and mobile phone apps to get the job done with less pain and more success. Download this free budget spreadsheet or check out these 6 Free Budget Software Choices for Everyone and pick your favorite option. You may just find your fortune.

Mistake 2: You don’t honestly track your spending. You spent how much at the mall last week? If you’re fudging your numbers before entering them in your budget, it’s impossible to make everything balance.

The Fix: Tracking the money you spend and earn may sound like work, but it’s easy to do when you save all your receipts and paycheck stubs. When you’re on the go, enter your expenses in a mobile device, or carry a notebook. The idea is to track your cash, credit card, and debit card purchases to identify the costly culprits.

Mistake 3: You don’t make it a habit. Old habits are hard to break, right? Well, ditching your budget after a few tries is a surefire way to fail. Building a solid household budget takes practice, and giving up after a week is a common reason for failure.

The Fix: To get back on track, give yourself the chance to succeed by setting aside time each week to track the flow of money into and out of your life. Only after several weeks of practice will you get into the habit and be able to update your accounts quickly.

Mistake 4: You don’t have an emergency fund. There are exceptional people out there who never get sick, never lose their jobs, and never need a car repair. Lucky ducks, but I bet you’re not one of them. When bad things happen to good people, chances are you’ll need money to get through the tough times. And maxing out your credit cards or running up your credit limit can put you in a bad financial situation, leaving your budget broken.

The Fix: Add some wiggle room to your budget by starting a modest emergency fund. You probably don’t need to save tens of thousands of dollars to protect yourself from life’s gotchas — a modest amount should keep you safe and prevent you from tapping your plastic when times are tough. See How to Start an Emergency Fund on any Budget for some helpful hints.

Mistake 5: Your spouse hates budgeting. Do you argue about money with your partner, spouse, or significant other? You’re not alone. Fighting about money is a common practice in households across America, and can lead to bitter breakups that bust the bank.

The Fix: When he’s a spender and she’s a saver (or vice versa) it’s time to calmly chat together. Set aside 15 minutes each week to discuss the current money situation and work together to set a few financial goals and to calculate your net worth. Lay no blame and make a commitment to work together to get through the mess. Download these free 3 Financial Goals Worksheets and try this simple Household Net Worth Spreadsheet to get on the same page with your spouse.

http://money.usnews.com/money/blogs/my-money/2010/11/04/5-big-budget-mistakes-to-avoid