What’s Your Type?

Posted on Tuesday 29 April 2008

I recently read The Number by Lee Eisenberg.  In it, he defines four different types when it comes to retirement planning – the procrastinator, the plucker, the plotter and the prober.  (Click here for definitions.)

Personally, I think I fall somewhere between plotter and prober.  I’m definitely a number-cruncher.  I get a great deal of enjoyment (maybe TOO much – LOL) from creating spreadsheets and planning my path to my own “number”.  However, I have defined what I want retirement to look like and I think I have a pretty balanced lifestyle in terms of living for today vs saving for tomorrow.

I suspect a large part of the population falls into the two first two categories – procrastinator or plucker, which can prove troublesome.  I can’t imagine how it feels to wake up one day at age 50 or 60 and realize I have no idea on how to retire.

So which type are you and if you’re one of the first two types, what are you going to do about it?

savvy @ 1:54 PM
Filed under: General Finances andRetirement
Lifestyle Creep

Posted on Tuesday 22 April 2008

Over the past few months, I’ve noticed that I’ve started succumbing to what some call ‘lifestyle creep’.  My finances are on auto-pilot and doing well so I’ve stopped paying attention.  I don’t always take the time to search for a frugal solution and I’ve started spending money on things I previously haven’t.

As of late, I’ve been valuing my time much more than money (and not necessarily wrongly).  I was on travel last week and got home late Thursday evening.  I was off on Friday and the last thing I wanted to do was clean house.  So I didn’t.  I paid a housekeeper to come in and do so.  I’m also seriously considering having someone come in once a month to clean.  Sure, I could do it myself but I really don’t want to and why else do I work if not to have the freedom to decide how to spend my time and energy?

So while, lifestyle creep is always a bad thing, it’s something to be aware of.  The key is making well-thought out decisions and not just spending blindly.  So while I’m going to keep the housekeeper, I will be sure to plan/shop better in order to avoid buying takeout (an increasing and undesirable trend) instead of preparing food at home.

Have you noticed that you spent more once you got to a comfortable financial place?

savvy @ 10:26 AM
Filed under: General Finances
What do YOU want to know?

Posted on Wednesday 16 April 2008

I apologize for neglecting my faithful readers.  However, I’ve been out of town on business travel.  So, what do YOU want to know in regard to personal finance?  Ask your questions in the comment section and I will try my best to answer them.  Thanks!

savvy @ 7:10 AM
Filed under: Uncategorized
I’ve been tagged

Posted on Saturday 12 April 2008

Ok, so there’s a game of tag going around the blogosphere. Bloggers who are tagged are asked to to write a six-word memoir, link to the person who tagged them, tag five more blogs, and leave a comment with five more blogs to play. The Frugalista tagged me.

My memoir is….

Living my life like it’s golden.

This is from a Jill Scott song.  I try to make the most of each day because I realize that tomorrow is not promised.  While I do save and try to be frugal when I can, money is nothing but a tool.  My goal is financial freedom but that doesn’t mean I shouldn’t stop to smell the roses along the way.  I’m not going to tag anyone but feel free to tag yourself.

savvy @ 1:56 PM
Filed under: Uncategorized
Evaluating the Wisdom of a Purchase

Posted on Tuesday 8 April 2008

Creative Commons License photo credit: Kecko

A few weeks ago, Mr. Savvy and I decided that relying on the kindness of friends was getting old when it came to transporting/hauling stuff.  So this past weekend, we bought a pickup truck (no, that’s not our truck).  Now, one could argue that it would have been cheaper to simply rent a truck for the occasions we need to haul something.  However, that’s not really convenient.  So let’s see if convenience is costing us.

Around here, you can rent a truck from Home Depot for $19.99/hour.  Let’s assume each rental would be for two hours.  That gives a cost of $42.38/rental (including tax).  Our cost of ownership of the truck for the first year will be $967.20 (purchase, insurance, registration).  That means we would have to use the truck 22 times in the first year to break even on our purchase.  I’m quite sure that we will use the truck at least that much this year because we have a couple of landscaping projects we’d like to complete.

For subsequent years, the cost of ownership will drop to $367.60 (insurance, registration) which will only require 9 uses to break even.  Once again, I believe we’ll use the truck at least that much.   Note that I didn’t include the opportunity cost (cost of using funds to purchase the truck upfront vs saving or investing).  I didn’t want to overly complicate the calculations.  I also didn’t include gas or maintenance.  These costs will be neglible since the truck won’t be driven much (in terms of mileage) and can be considered the ‘cost of convenience’.  So it seems that financially and otherwise, it was worth it to purchase the truck.

This type of calculation can often be useful when decided whether or not to make a purchase or when evaluating various options.  Of course, it would be wise to make this calculations BEFORE you actually make a decision  🙂

savvy @ 10:04 AM
Filed under: General Finances
Easy Breezy Budgeting

Posted on Thursday 3 April 2008

Creative Commons License photo credit: PPDIGITAL

People often wonder how they should go about making a budget.  In my opinion, CREATING a budget is easy.  It’s STICKING TO the budget that can be hard.  Here are the simple guidelines I used when I created a budget.  Of course, you can tweak these percentages as need be.

tithes or charity – 10%

retirement savings – 20%

savings (e-fund) – 5%

taxes (estimated effective rate) – 15% for homeowners, 25% for renters

housing – 30% (mortgage/PITI and maintenance) for homeowners, 20% for renters

everything else – 20%

I’ve found that using these amounts as a guideline will have you well on your way to financial stability/independence.

savvy @ 1:45 PM
Filed under: Budgeting andSaving