In this episode of Tightwad Tuesday, I share my story of avoiding a unibrow, fraud alert, and the resulting love connection.
When your paycheck hits your bank account, it might not look like much.
Federal, State, Social Security and Medicare taxes are taken out. Medical, dental and vision insurance and your 401(k) contribution are withdrawn before you even see your check.
Automatic deductions such as your Employee Stock Purchase Plan, car payment and transfer to savings hit, too. Your net pay looks a lot different than your gross pay. Don’t let that fool you though.
When you look at one single net paycheck, your income stream might look small but when you look at how much money you make over your lifetime, it’s astounding!
For example, if you make $50,000 and get a 3% raise each year, even if you never get a bonus or promotion, you’ll make $3.7 million dollars over your lifetime!
Even if you are at the tail end of your career, you’ll still make a lot. For example, if you have 10 years left to work and make $100K per year, you’ll make another million dollars before you retire.
Let’s face it. A lot of money flows through your hands. It might not seem like it, but it does.
The key is to keep some of it.
Check out this Lifetime Income Calculator and see how much you’ll make during your career.
If you are inspired by this idea, do something about it.
Here are 5 ways to keep some of your money:
1. Bump up your 401(k) by 1%
2. Start a Roth IRA (if you qualify)
3. Set up an automatic transfer from checking to savings or an investment account (timed to hit on payday)
4. Enroll in your employee stock purchase plan at work
If you need to, change your mindset. Tell yourself:
I make a lot of money, I’m going to keep some of it.
I used to be excited when I bought something on sale. The “deal” was my indication of success. In hind sight, I wasted a lot of money with this mindset. Price is only one part of the equation.
A better way to think about your purchases is to determine the cost per use.
For example, when I changed jobs 3 years ago, I needed a lap top bag for client appointments. Professional looking was a must and something sturdy was vital. I decided on a black Michael Kors tote so it could double as a purse. I’ve used it just about every day for three years now and it looks brand new. I anticipate it will last at least another two years.
That tote was a great purchase. It was about $250.00 at the Michael Kors factory outlet store (not on sale.) Since the purse is a classic style, made to last many seasons and goes with everything I own, it was a winner.
Let’s look at the cost per use of my designer laptop bag purchase. I’ll use it 5 days a week for 50 weeks out of the year (since I love it so much, it’s always by my side.) The tote is intended to last 5 years – after 3, it still looks brand new.
The break down:
5 days a week x 50 weeks = 250 days a year
x 5 years = 1,250 uses
$250/1,250 = $0.20
Cost per use for designer laptop tote/purse = 20 cents per use
Let’s compare my purchase to a less expensive tote that would last one season because it wouldn’t hold up to constant use or we’d get tired of it because it wasn’t fabulous.
Nice lap top tote bag for $78. This bag is anticipated to last one season.
Let’s check out the cost per use.
5 days a week x 50 weeks = 250 days per year
x 1 year = 250 uses
$78/250 = $0.24 per use
Rounded up, it costs about 25 cents a use for the bag for one year. It costs slightly more per use than the fancy bag.
So what would you rather have though, something you really love that’s special or something basic you’d need to replace each year?
I vote for fabulous.
If you take really good care of your things, and have the funds to make the initial investment in a higher quality item, you could end up either paying less in the long run or having something nicer (or both.)
Remember: The longer you keep your stuff and the more you use it, the better the cost per use — in every single case.
I still love my bag and even use it on the weekends. What about you? What was your absolute best clothing or accessory purchase? Please tell!
Check out my Tightwad Tuesday Episode 10 video on how to determine if your purchase could be considered an expense or an investment.
In Episode 10 of Tightwad Tuesdays, I share thinking behind making a major purchase.
Skiing is my favorite sport so I bought new boots this season.
Were they an expense or an investment? You tell me!
What was your very best sporting goods purchase?
Have you heard of The Project 333 Challenge: Reduce your wardrobe to 33 total items?
The system consists of paring down the clothes in your closet to the items you love the most, fit the best and go together well. Now that’s a sensible idea! Courtney Carver, the mastermind behind Be More With Less, recommends 33 total items including footwear, accessories and jewelry. Workout clothes, pajamas, and sportswear are exempt.
Why would I pare down my closet to 33 pieces?
I like to try new things. Ever since my 50th birthday, I’ve tried something new every single week. This practice helps me stay open to whatever life throws at me. So “new” I’ve got down.
It’s “letting go of the old” that’s my problem. When my husband and I lived in California, we had a house with a 3 car garage, 4 bedrooms, an office, 7 closets and a huge pantry. When we bought something new, we never had to get rid of anything. Can you relate?
Even though we live in a smaller space now, my closets are still stuffed. So I figure the problem must be me!
How did I do? Well, it was pretty tough I have to say. I failed: Thirty three items is an itty bitty wardrobe. So I modified (as Courtney suggests) and ended up with 44 pieces (not including jewelry and shoes) instead. Though I pared down to a much smaller wardrobe, not a tiny one, I am never going back and you shouldn’t either.
Don’t worry, you don’t just throw things away. You pack up the other season’s clothes in boxes. I did toss some things, sold a few, and gave the rest to St. Lawrence Thrift store.
Here are 5 unexpected things I learned and changed immediately in my life (and you can, too):
1. My clothes don’t fit but I keep them anyways.
How lame is that? I had 7 pairs of work slacks and only a few of them fit well.
What am I doing about it?
Fashion show time. I tried them on one at a time for my husband and we rated them. I kept three, sold one and gave away the rest.
Why was I keeping pants that didn’t fit well and I didn’t like? I have no idea! But they are gone now.
2. I keep things I don’t like.
My closet was packed with pants, shirts, and sweaters that I don’t really care for. I’ve done that all my life. (Please tell me I am not the only one.)
What am I doing about it?
Selling on consignment. I sent them to ThredUp. This online consignment shop sent me a “send in your stuff bag” in the mail. I filled it with cute dresses, sweaters, and “on trend” tops to sell for cash or ThredUp credit. I’ll let you know how that goes.
(Have any of you tried it? I’d love to hear your experience with online or physical consignment stores.)
3. There are hidden items in my mess.
Things I found in my closet:
10 pairs of gym socks (who loses 10 pairs of gym socks?)
2 pairs of black leggings – wearing one right now
Several cute scarves
10 ball caps (who needs 10 ball caps?)
2 pairs of awesome Fabletics yoga pants
A back massage “tapper” from Sharper Image (putting to use right now)
You can’t wear what you can’t find.
Biggest find: my purple Smart Wool ski sweater in the bottom of my sweatshirt bin. I’ve been skiing and snowshoeing 8 times this season. I seriously could have used the sweater.
What am I doing about it?
I pared down to 44 things. These little gems of mine hang in my closet or are stored in my line of sight in clear plastic bins. The clothes from other seasons are labeled and boxed up, waiting for me to open them when the weather changes.
4. I am not wearing my favorite clothes all the time.
My biggest take-away is that as a grown up, I can wear what I want! Why wouldn’t I wear clothes I feel great in? My friend Sheri asked me how the challenge was going and initially, I told her, “Not well. I think I am a hoarder!”
What I didn’t tell her was I feel like I need a series of meetings with a psychologist or to read a book titled, “You Are What You Wear.”
What am I doing about it?
Wardrobe capsules. I set up separate wardrobe capsules for work, home and date nights. I organized my outfits around my absolute favorite pieces of clothing.
I’ll put together several outfits based on a favorite anchor item. For example, my favorite skirt is a super classy black textured pencil skirt from Express. The skirt pairs well with a cream colored polka dot shirt and a black suit coat. To make this a wardrobe capsule, I keep the skirt as a base and change out other pieces adding a statement necklace or accessory.
Now when I am heading to work, I’ll have at least 4 outfits pre-planned that go well with my favorite skirt.
I’m envisioning some happy mornings in my future. What a difference in my attitude when I look in the closet in the morning, instead of thinking “nothing fits, this doesn’t work, and I have nothing to wear.” I’ll be thinking, “awesome, I love this skirt.”
5. I have everything I need.
How amazing is that?
By going through my closet, purging, and then putting everything back together in an organized way that works, I realized, I don’t need anything else. In fact, I even have enough to give away.
Going forward, if I pick up a piece of clothing, it will be something I absolutely love, of great quality and goes with everything.
Now I have a question for you. How does your closet look and what are you doing about it?
Are you looking to make your financial life easier? I just came across a tip you might have heard but forgotten.
Review your credit reports to spot errors – for free.
There are a lot of errors, by the way. A Federal Trade Commission’s study showed 25% of credit reports had errors and 80% of disputed claims produced some kind of modification. Since it is free, it’s worth it. Check your credit report at least once a year.
Guess what? I just got mine and it only took me 5 minutes from start to download. Most of that time was spent answering questions to verify my identity such as streets I’d lived on and dates of financial accounts I’d opened.
The credit bureaus have to give you this information. The Federal Trade Commission requires them to provide information to individuals at least once annually for no charge. You won’t obtain your credit score this way but you’ll at least get your credit information.
Go to Annualcreditreport.com, verify your identity by answering the questions and either order reports from all 3 agencies at once, or stagger them throughout the year. If you plan on making a large purchase such as a car or obtaining a mortgage, order them all at once. Also, frankly, if you are a procrastinator and just want to knock this out and be done, do it.
Otherwise, you might want to order one report now, another in the spring and the final one in the fall. That’s what I did. This way you are on top of your credit reporting throughout the year.
By the way, this is the legit site – watch out for copycats. No credit card required. Oh and if you do find an error on one of your reports, dispute it right there. It’s easy.
I’d be happy to help – I’ve done it a few times myself since the name Anderson is extremely common, my husband and I end up with some interesting items on our credit reports! So let me know how it goes.
For more information check out the FTC’s site here:
Happy New Year and cheers to meeting your financial goals in 2017.
I am not one for buying on Craig’s list.
First of all, it’s time consuming. Once you finally find something fabulous, you have to connect with the seller. If the treasure hasn’t been sold yet, you still have to coordinate a meeting to take a look. By this time, you’ve already invested hours.
Then there is the whole “stranger danger” issue. Do I really want to walk into someone’s home to look at their dining room table? What if I am walking into the “Bates Motel?” As the door shuts behind me, I can’t be sure I’ll walk out alive and well.
That’s why I love consignment stores. It’s not just that you can find wonderful items at 50 – 75% off of retail prices, there’s more:
They are stores!
They are “public places” with no worries of weirdo’s jumping out at you from a closed door and blocking you from leaving. (Am I paranoid? I don’t think so!)
The designers choose quality, “on-trend” furniture so they do the sifting for you.
Your decisions aren’t permanent either. Because the prices are reasonable, you can always pick up furniture that works for your space but isn’t your lifelong dream piece. You can always “consign-it-back.”
Oh, and you can sell your stuff too, for cash or credit.
There are a few drawbacks. You have to pick up and deliver items yourself, or hire furniture movers to help.
There is no “90 days same as cash” or any special financing available for new furniture. You pay cash or with a credit card.
Overall, consignment stores are a great way to inexpensively fill your home with quality furnishings without the hassles of online ads.
What’s not to love?
We are givers. In fact, research shows spending money on others makes us happier than spending on ourselves.
I don’t know about you, but I just want to make sure my gift is going to a real charity, the funds aren’t just spent on overhead, and the organization is professional. That’s not too much to ask is it?
Here are 3 easy ways to check out your charity before you write a check:
1. Determine if they are a “qualified” charity. The IRS has a database of charitable organizations (501(c)3 organizations) that are eligible to receive tax exempt donations.
Here is the link to search for your favorite charity – click here.
2. What percentage of contributions actually go to the charitable programs versus administrative expenses? Of course, every organization has some overhead but it should be reasonable. CharityNavigator.org is a resource.
3. Does the charity receive excessive complaints? The Better Business Bureau Charity Guide may have the information you need. They have a 20 point charity accreditation guide that gives plenty of details. Not all charity information is populated saying, “Under review.” The ones that had information were pretty thorough.
Mom was right. It is better to give than receive. When I give of my hard earned money, I just want it to mean something. Don’t you?