Where the money is....

When Willie Sutton bank robber was asked why he robbed banks he said "Because that is where the money is". How things have changed.

The banker's Bank the Federal Reserve is now robbing savers with near zero interest rates. Why? Because that is where the money is. It is a hidden tax. No law was passed. Still you are having the your money stolen through near zero interest rates to restore bank's balance sheets. If you had $300,000 in an IRA (or 401k) earning 5% in 2007 ($18,000 a year with nearly no risk) you are lucky if you earn half that today. That is a $9,000 or more of hidden taxes.

I hope to expose these types of actions and others by the FED and government. Boomers need to be vigilant - because their savings is where the money is. I will also delve into other areas of finances of interest to Boomers.

Friday, December 31, 2010

Increase you savings in 2011

Want to save more in 2011? Where to start? Start with a budget. You know - that list of your income and expenses. Then decide what is necessary and what is not. That is your starting point.

1. Eliminate unnecessary expenses. Do you have a premium cable TV plan with dozens of channels you never watch? Maybe you need a cheaper plan that better fits your viewing habits. This could save you $20-30 or more a month. Got a premium cell phome plan and land lines at home. You might save money by getting a cheaper land line plan (or eliminate it entirely) with just local service. This could save you $15-20 a month. Something like Magic Jack might save you even more. Maybe you have multiple cell phone plans (one for you and one for the spouse). Combining cell phone plans for the spouse (and children) and getting a "family plan" could save your $40-50 or more a month. Those lattes at Starbucks - are they necessary? Buy a thermos and make your own. Go through you list of expenses - without too much trouble you will find $150-200 a month of savings.

2. Eliminate expensive debt. Are you carrying debt on credit cards costing you double digit interest while you have money in savings? Why? Take some savings and pay off (pay down) high cost debt. You are earning very little on those savings and paying dearly for that debt. Keep in savings only what you need for emergencies (3 months of income).  Pay off that credit card debt or expensive car loan. It could give you $50, $100, $200 or more depending on your debt level to increase savings. The money you spend to pay off this debt can be replaced in very little time from the savings.

3.Are you running all over town to grocery shop, go to the dry cleaners, go to the bank, go to the post office, etc. Why? With gasoline over $3 a gallon this can get expensive fast. Try and use grocery stores, bank branches, dry cleaners, etc located in close proximity to each other and consolidate trips. You will be surprised at how much you save. It could be $20-30 a month or more on gasoline. Consider car pooling or public transportation to commute to work and save another $30-40 a month. For a 2 car family this could easily free up another $100 or more a month to save.

4. Getting a $2-3,000 income tax refund? Why? Adjust you W-4 (and state equivalent form) and increase your cash flow $150-250 a month. This is money that can be used to pay off high interest debt or added to savings. If you have a 401k at work you may be able to contribute an extra $200-350 to your 401k (or IRA if you qualify) .

5. That boat (jet ski craft, RV, motorcycle, off road vehicle) you use 4-5 time a year.... Are they worth the money they cost to keep up (insurance, repairs, finance costs, etc). Sell them and use the money to pay off high cost debt and/or save the money. You may save $500-1,000 a year or more on insurance alone. If you want to take an RV vacation - rent one..... That time share - how much is the monthly maintenance fee each year? More than 2 weeks rental at a resort? Unload that turkey and save that monthly cost.

These are only a few ideas of mine. I feel certain most of you can increase savings $500-1000 a month without too much trouble. Do this and in 5-10 years you will have enough to pay off that mortgage BEFORE you retire.

If you have other ideas please add them as comments. Have a healthy and prosperous New year.

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