Think wiseli about your finances

Living_Cheap


Does living cheap mean being miserable, or giving up what you want? Not at all. In my own case, it meant getting the things I really wanted. Spend less on each thing or activity, and you can have more of them, right? The key is to spend less and still get what you need and want. I'll tell you how I managed it.

Living Cheap - Housing

The first house I owned was a mobile home on a small lot. I paid less than $20,000, and had payments of $257 per month. With taxes, insurance and repairs, it still cost less than rent. With three bedrooms, an expanded living room, and a nice fenced-in yard, it was very comfortable. Eventually I sold it for $45,000.

Two things that I did made it even cheaper. First, I paid down the mortgage as much as I could when I was working. Within five years I owed nothing, and from that point on it cost an average of $300 per month to pay for the utilities, phone, garbage collection, taxes, insurance, and repairs. This is living cheap.

It became even cheaper when I found that I could easily rent the other two bedrooms. I got $65 per week for one, and $75 or more per week for the other, and I included all utilities. I found decent young guys to rent to, and the rents added up to $600 per month, making this more than cheap living, and even better than free housing. I was making $300 per month AND living for free.

Living Cheap - Think And Plan

With lower expenses I could work less, so I could get by without a car. This saved even more money. An occasional bus fare, and the used bicycle I bought didn't add up to a fourth of what it cost to have a car. I needed to plan my trips around town a little better, but it was worth it.

Until I was almost 40, I never paid more than $40 for a piece of furniture. You have to know what is important to you. I DID pay $220 for a high-tech sleeping bag, because ultralight backpacking was important to me. On the other hand, since I couldn't tell the difference between a nice, clean used couch for $30 and one that cost $900, I bought the former.

I found that when I worked less, I had time to more carefully consider my options. Time can save a lot of money. I paid half of what others paid for groceries, and when I did get a car, I found a repossessed one worth much more than what I paid. When I went to Ecuador for a month, it cost $1,040, including airfare, hotels, meals, a guided climb up a 21,000-foot mountain - everything. It was possible because I had time to search for the deals.

I never cared much for jobs, and I worked only part-time for years. I played chess, wrote poetry, and read good books. I traveled several times a year. I met the love of my life in South America (happily married for almost 5 years now). This was all possible not because I made a lot of money, but because I spent less than I made, and used the difference for the things that mattered to me.

This article isn't meant as a how-to guide. I explain how I traveled and bought things so cheaply in many other articles. This is simply to get you thinking about the possibilities, and to point out some principles. What are the principles? Find ways to pay less without getting less. Don't buy things you don't need. Spend a less time working and more time thinking. Stay out of debt. Finally, know what is truly important to you, because this is what you can have more of by living cheap.

Not_To_Late_To_Make_2005_IRA_Contribution


Many Americans make annual contributions to individual retirement accounts. If you haven’t done so for the 2005 tax year, you still can.

Not To Late To Make 2005 IRA Contribution

Contributing to individual retirement accounts just makes sense. Most don’t believe social security is going to survive for long. Even if it does, one has to wonder how small the distributions are going to be. With the baby boomer generation about to put significant strain on the system, distributions in ten or twenty years are going to be paltry.

If you failed to contribute to your individual retirement account in 2005, you have until April 15, 2006 to do so. This is also true if you contributed during 2005, but failed to deposit the maximum amount allowed under law.

The contribution limits for individual retirement accounts went up in 2005. You can generally contribute up to $4,000. If you are older than 50 years of age, the limit bumps up another $500 to $4,500. When making contributions, just make sure you note on the deposit slip that it is for the 2005 year, not 2006.

Although there are variations, individual retirement accounts come in two general forms. The traditional independent retirement account is a pre-tax contribution vehicle. If you meet salary and filing requirements, the money you contribute from your earning is excluded from your adjusted gross tax calculations. If you are looking for extra deductions for 2005, catching up on your individual retirement account contribution can create a healthy reduction of your reported earnings. The downside, of course, is distributions from traditional IRAs are taxable when you hit the relevant age limit.

The Roth IRA represents a different approach to the individual retirement savings conundrum. Essentially, the Roth IRA shifts the tax burden to the beginning of the savings cycle. In human terms, this means you get no deduction for contributing to a Roth IRA. If you don’t get a deduction, why would you use a Roth? The huge advantage to the Roth is found in the distributions. Simply put, distributions are tax-free when you reach the appropriate retirement age. If you are young, say under 40, Roth IRAs typically present a better return than traditional IRAs. This is because the money invested has more time to compound and grow.

Regardless of your choice, socking away money for retirement makes sense. Fortunately, you can still do so for 2005.