Saturday, December 28, 2013

Life Planning

This is something I encourage everyone to do.

If everyone did this, maybe our country wouldn't be 17 trillion dollars in debt.

Take a couple minutes from your day and plan out how much money you will need for the rest of your life.

First off, make an estimate of your lifespan. In America, the average lifespan for a man is about 78 years and 79 for a woman. These figures include everyone, so if you determine yourself to be healthier than average, maybe you want to estimate your lifespan to 85 to 90 years.

Anyone can do this.

Take your estimated lifespan and subtract your current age.

For example:

85 (estimated lifespan) - 30 (current age) = 55 (years left to live)

The next step is to determine the amount of your expenses. Estimate your monthly expenses and multiply that by 12 to get your yearly expenses.

For example:

$1,000 (monthly expenses) * 12 (months) = $12,000 (yearly expenses)

Now, just multiply your years left to live by your yearly expenses.

55 (years left to live) * $12,000 (yearly expenses) = $660,000 (lifetime expenses)

Very easy calculation.

To get a better number, subtract your current savings from your lifetime expenses.

For example, lets say your current savings at the age of 30 is $50,000.

$660,000 (lifetime expenses) - $50,000 (current savings) = $610,000 (money you need left)


This is a very simple calculation to do.

Now, it might not be the most accurate figure because it is not that easy to estimate your lifespan, future expenses, living conditions, the future, inflation.

That is okay though. The point of doing this exercise is to be thinking about your future and your finances.

After all, trying to estimate the total money you need at the age of 24 is like trying to hit a target from 1000 yards away.

But trying to estimate the total money you need at the age of 45 is like trying to hit a target from a much shorter distance.

Every person should be aware of his/her current financial position at any time.

My next post, I'll demonstrate how to use spreadsheets to get a better picture of your finances.

Saturday, December 21, 2013

Stuff you should never pay for : TV service

This is probably going to help out older generations more than generation y. After all, generation y grew up with cell phones, mp3, google, and advanced technology.

If you have an internet connection and tv service, there is very little reason to pay for tv service.

Different tv packages can cost anywhere from $20 to $100 per month. On the other hand, Netflix costs only $7 to $12 a month.

Different services are available to stream tv shows over the internet and today, several different shows have some sort of internet presence.

One thing that bothers me about tv service is that you end up paying for lots of garbage that you don't even want.

Just go to walmart. Instead of paying for a montly service, you can probably find your favorite tv serives in a dvd box set. No commercials either.

Depending on what you pay for tv now, switching to netflix can save $10 to $90 a month.

Monday, December 2, 2013

Take Defensive Driving

Today's strategy will save money on car insurance premiums although it might be kind of a pain to do so.

You can reduce the amount you pay for insurance by about 10% by taking defensive driving. This benefit will usually only apply if you have a good driving history.

Defensive driving classes can be used to overturn a ticket, fine, or points. If used for that reason, you cannot get the insurance discount for 3 years.

The class I took was 6 hours straight on a Saturday with a half hour for lunch. If that sounds too tedious, most locations will offer different options like 3 hours per day split over two days.

The class is really basic and you take a very simple exam at the end.

After completing the course, you get a certificate. Send that to your insurance company, and the discount is good for three years.

It was very cost effective too. The class I took was only $30, so it paid for itself really fast.

I would recommend this to everyone. For example, lets say that you have full coverage on your car and your insurance premium is $100 per month. With a 10% discount, you save $360 over the course of three years.

Six hours of time to save $360 over 3 years.

It might not be worth it to everyone, but if you have a office job like me, 6 hours isn't so bad.