Four Ways I Upgraded Out Of My Raises

That one day a year you have been dreading/anticipating at work finally comes.

Your boss calls you into their office and shows you a piece of paper that tells you your new salary. Yay, it’s more! Maybe it’s just a raise or maybe it’s a promotion, either way the new salary figure looks better than what you had. “Now I can get ahead of my bills and save a bit” you tell yourself. A few months pass and you look at your bank account. “Huh? It didn’t grow? What happened? I thought I was making more” you ask yourself.I’ve been there. It would happen to me a lot. I would make more but have nothing to show for it.

Know why? Upgrades.

I discovered that I would upgrade little things in my life that would eat away at any raises I got. Of course I didn’t realize this until much later.

Here are some of the bigger culprits:

Coffee – There was a time I didn’t drink coffee. Didn’t like it. Slowly I came to love the brown nectar. Instead of making it at home I would simply go to Dunkin Donuts. As well as regular coffee I would get all sorts of specialty drinks there as well like iced coffee, iced lattes – you name it. Later as I had more money I upgraded to Starbucks. Love their frappaccinos! But Starbucks is more expensive than Dunkin Donuts. Nowadays I still go to Starbucks as a treat but I’ll usually make my coffee at home or at work.

Clothes – There was a time I would shop at Old Navy. I’d get a pair of khaki’s or a polo for work or maybe some personal gear. Maybe I would get stuff on sale at the Gap. As I made more I’d shop at the Gap and get stuff on sale at Banana Republic. My income grew and I would shop at Banana Republic or Macy’s or Bloomingdale’s, not always looking for the stuff on sale. Now I try to stay frugal and shop at discount places like Century 21 or maybe Target. I also don’t buy anything unless I need to (like if a pair of pants blew out a hole that couldn’t be fixed).

Food – I remember a time where if I went out and ate sushi I would be broke. I might have been able to budget for it once a month but that would be it for going out to a restaurant to eat. As I made more money I would find myself eating out more and more. Sushi night didn’t hurt as bad and became more frequent (as well as other foods). I’ve since cut back a lot. We go out to eat from time to time but the majority of our meals are home based (except my work lunches but even those I’ve been getting cheap).

Gadgets/Doodads/CD’s - I used to buy so much junk that would clutter my apartment! I don’t think I have much left to show for it though. I do have hundreds of CD’s (no, not the investment type). Those aren’t a total waste but many I bought just to get something new or try a new artist. A lot of them don’t get listened to any more (and not just because of my iPod either). And you know how I’d pay for a lot of the stuff? Credit cards. So in the end I probably paid more than what the price stated. I’ve cut back on my impulses a lot and when I don’t I have my wife to answer to (luv u hon). As for music, I’ll still buy CD’s but very rarely and only from artists I’m really looking forward to (if only more artists would release their music like Radiohead for free).

So you see, I think a lot of the time when we get a raise instead of upgrading our finances we tend to upgrade our stuff or our lifestyle. As a result we upgrade ourselves out of our raise.

Have you upgraded yourself out of a raise?

7 Ways to Get Rich Quick

Large Denomination Bill

These are trying times for our economy.  The money in my 401(k) is going nowhere, my high-yield savings isn’t yielding very high, Bill Gates isn’t the richest in the world, the economy basically evaporated…

What’s a person to do?!?

I propose seven ways for you to get rich quick!

Stock speculation

We all know money can be made on the stock market.  You just have to invest in the right companies.   Find lots of small companies that look good.  Big companies weren’t always big – they started small.  Find an emerging industry and invest there.   Surely professional companies will grow and as they do so will your stock price.  Check this out – as recent as 2003 stocks returned over 28%!!

Buy property and flip it

Rates have dropped.   Housing prices have dropped.  Now is the time to start reaping the rewards of of the housing bubble burst!  Do you own a home now?   Leverage that home with a home equity loan and buy up what properties you can.  Housing prices will go up again and you will see the green!

Insider trading

We all know someone on Wall Street in the stock market today, don’t we?  Think they keep everything secret?  Why do you think they are rich?   Next time you run into one of your Wall Street buds hit him up for some tips.  These guys work with stocks all day so they know where they are moving.   Maybe they can tell you the best trades in penny stocks (those always seem to go up, right?).  Use those tips and buy what you can!

GamblingUsing cash instead of credit cards

Ever played blackjack? Craps?   These games have some of the best odds in the casino!   You can learn all sorts of different playing strategies online to help you win.   Heck, there’s even a movie about some MIT students who beat the casinos with blackjack.  Go get to the casinos before everyone sees the movie and has the same idea!

Blog

Anyone can blog.   Really.   Look at me, I’m no Dostoevsky and you’re reading this.   There are so many ways you can make money with a blog.   Just throw some ads on your site, write some posts, and voila!  Instant cash!  Make sure to link back to me when you start up!

Tax return

List anything you can as a deduction.  We can all find some way to justify an expense.  The more you put the better.   The money you donated to the orphanage?  That’s like having a whole bunch of dependents to declare!   Get your tax return to the point where the government is giving you back a huge return.   When the money comes in you can try the other six tips here.  Oh, don’t have your accountant do it.  Do it yourself.  You know what your deductions are.

Win the lottery

Someone has to win.  Yes the odds are bad.  But every ticket you get improves those odds.  What if you took your tax refund or stimulus check and bought lottery tickets?  There’s bound to be a winner in there.

What’s that?………Hold on one sec……uh-huh…ok.

My lawyer and accountant just barged in on me.  They’re telling me I might have gotten a few facts wrong.

Umm, lets see…stock speculation’s not a great idea.  Speculation without real research is actually closer to gambling than investing.

But I like gambling!

Cross off gambling too.  Something about if it were so easy to do well with it then everyone would do it.  And that casinos have the best odds in the long run.  And those MIT kids were an exception that didn’t last.

Remember those 2003 returns?   Here are the returns for the three years before 2003: 2000 -9.03%, 2001 -11.85%, 2002 -21.98%.

Ohh.

Past returns do not guarantee future returns.   And lots of small companies fail or never make the successful leap to become a large corporation.

Related: Online Brokers with Inexpensive Trades.

On the same note, there’s no telling where the bottom is in the housing market.  Many thought it would never drop and here we are.  Buying now could be ok if you’re looking to buy your own house but otherwise you’re back to speculating.  Leveraging what you own could be a sure-fire way to end up foreclosed.

My lawyer mentioned that insider trading is illegal.

Ouch.   Ok, don’t do that!  My accountant chimed in saying that just because someone trades a stock it doesn’t mean they research the fundamentals of any of the companies they trade.   That’s good to know.   So watch out for any stock tips too.   Do your own research!

I just checked my advertiser accounts for this blog.   There’s a few cents in there but nothing to live off of.  I might have jumped the gun saying that a blog was instant cash.  You can make money with a blog but I it takes persistence and hard work and even then it could fail.

Nope, not a way to get rich quick.

That looks funny!

My accountant and lawyer are jumping up and down pointing to Tax Return.  Wha?   oh.

They are highly against putting anything fraudulent on your tax return.  There’s this thing called an audit which is not something you want to go through.   Make sure your return is correct and if you have questions seek out a professional accountant.  Otherwise, you can find yourself with a whole bunch of income tax problems that need a team of tax attorneys.

Can I keep my lottery tickets at least?  I can?  Oh, but odds are I’m just giving money to the state?  Even though someone wins the odds are very much against winning.  Better off saving the money.

Do people sometimes get rich quick?

Yeah, it happens.  But it’s far more rare than you might think.  Rather than spend your time on some get rich quick scheme, put your energy into a legitimate way to earn money.  Work hard at what you do.  Find ways to make money on the side.  Save.  Invest.  Create something of value to people.  Save more than you spend.  Be honest in your work and to yourself.

You may not find instant riches, but wealth is something we can all attain.

ING $25 Referral Bonuses

Have you wanted to open an online savings account?

Well here’s your opportunity to open one with ING Direct! They offer high-yield savings with no minimum to open (this includes both savings and CD’s). This means better interest earnings than most other banks. I’ve been using them since April 2003.  If you use one of the referral links below you will receive a $25 bonus. You’ll also be giving me a bonus of $10 so it’s great for us both. In fact, once you open an account you can refer your friends and receive the same bonus as I would. The catch (isn’t there always one) is that you need to open the account with at least $250. What about those no minimums? You can always open an account with any amount lower than $250 but you won’t be eligible for the $25 bonus.

And check this out - If you open with $250 your $25 bonus is an instant 10% return!

Here are the links to use:

Shoot me an email for a link!

ING Sign-up Bonus
ING Sign-up Bonus
ING Sign-up Bonus
ING Sign-up Bonus
ING Sign-up Bonus
ING Sign-up Bonus

If you get the message “We’re sorry, but the referral link within the email you received has expired and is no longer valid. We recommend that you contact the sender and ask them to re-send the referral email. Or click ‘Continue’ to proceed with the application process without the account opening bonus” then the referral has already been used. Shoot me an email and I’ll send you a new link.Like I said, I’ve been using ING Direct for years and I highly recommend them. If I had kept my savings in my brick and mortar bank I would have missed out on a lot of savings and earnings. So what are you waiting for? Go open up a high-yield savings account!

If you don’t have $250 but still want to open an an ING account please click the banner below (please note this is for the Electric Orange account not savings):


As always read the fine print from ING to make sure their online savings is right for you. You should never sign up for anything online without understanding what you are getting into.

We Went to Our Accountant to Get Our Taxes Done

This past Saturday we bundled everyone up and went off to our accountant to have our taxes done. (Yup, we brought the kids. They’re tax deductions after all).We go to a CPA that was recommended to us a few years back. He’s great to visit. He takes his time to go through our paperwork, asks us questions, and doesn’t rush to get us out of there. In fact we were there for about an hour.It ends up we’re getting back a decent-sized return this year. We have the little guy (our now one-year-old) as a deduction which also includes his daycare. On top of that it seems that when my wife went back to work her tax with-holding was changed. There was too much taxes being taken out of her paycheck. We’ve basically been giving the government a free loan!

One thing we need to do immediately is change the tax with-holding for both my wife and I. Getting back a tax refund is nice but it would suit us better to have the money in our pockets every paycheck rather than every April or so.

An interesting thing our accountant told us is he would like to see us contribute more to our 401(k) and 403(b) plans. I told him we were planning on putting money in our Roth IRA. He said it would be better to take advantage of the tax savings of the 401 and 403 plans. His rationale is that we are probably in our highest tax rate right now but when we retire we’d be in a lower tax rate. The 401 and 403 plans allow us to contribute $15,500 each in 2008 (not that we could afford to do that). One way to look at the tax break is $100 contributed to my 401(k) would only cost me $80 (assuming a 20% tax rate). For $80 I get $100 invested.

If you remember my Roth IRA goal for 2008, my wife and I were going to contribute $4000 each to our Roth IRA’s for ’08 ( a total of $8000). Well now I’m revising that goal. Since my 401(k) plan at work is pretty diverse I’m going to increase the percentage I contribute rather than put the money in my Roth IRA. Since my wife’s 403(b) isn’t as diverse (it’s something like either real stable or high-risk; about two choices) we’ll continue to invest her share in her Roth IRA. We’re also going to make sure both of our tax with-holdings are adjusted.

What are we doing with our tax return you’re asking? We’re getting some work done on our co-op so the refund will help replenish our savings. (We weren’t counting on our tax return for this expense so the return is a nice bonus). Also, if you’ve been reading Free From Broke you know that our garage was upset with us and jumped out and attacked our car recently. The return will help buffer those expenses too.

Are you getting a tax refund? What will you be doing with it?

TurboTax Is The Easy Way To Do Your Taxes. Do your taxes for free with TurboTax Online Free Edition – Start Now.

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7 Credit Card Tips From ING Direct

Pile+Of+Credit+Cards

I was just on the ING Direct site checking out my savings accounts and decided to check out their tips. They list seven great credit card tips. Check them out (descriptions are mine):

  • Make your payments on time – Very important! Late fees can be very expensive on credit cards and can negatively affect your credit score. If you have problems with the due date you may be able to change your credit card due date.
  • Try to pay off the full balance every month – Pay off the full balance to avoid any interest charges.
  • Avoid cash advances – Cash advances on your credit card have different rates than normal credit. Yeah, it’s gonna be more expensive than if you just charged it.
  • Shop around – Compare rates and services from different credit card companies to get the best credit card offers.  Find one that fits your spending habits.  Make sure to read the fine print as well.
  • Use savings to pay off the cards – It’s great that ING Direct exists offering high interest rates on savings but that high rate doesn’t compare with the interest on your credit card (unless you have a low introductory rate).
  • If you’d like a better rate, just ask – If you have been a good customer you can call the credit card company and ask for a better rate. Try telling them that you received an offer from another company with a better credit card rate; odds are they can lower it for you. Make sure you understand what the new rate is though. It may only apply to new purchases not your outstanding balance.
  • Don’t be left holding all the cards – If you have a lot of cards it means you can do a lot of spending damage. This is bad for both you wallet and your credit score. Get rid of credit cards you hardly use or ask that the credits limits be lowered (a high credit limit can hurt you for some credit card companies).

Of course you should also watch your spending as well.  Don’t abuse your card and know what you can really afford.

Do you have any credit card tips to share?

American Girl – Not Frugal At All (Or What’s A Smile Worth)

Last weekend we went to the American Girl store in Manhattan to buy my daughter a doll.

Have you heard of this place?

It’s a doll store that specializes in making the doll purchase a full experience for your child. Among the doll choices you have is their Just Like You collection where you pick out a doll that has features similar to your own (or my daughter in this case; I would make one ugly doll).

From the site:

Just Like You dolls help girls share their stories with the world. Every girl can find a doll to match her spirit and look—inside and out. The hair and eye color, skin tone, and outfits and accessories help bring their story, and friendship, to life. These 18-inch dolls are for ages 8 and up.

Sounds wonderful, doesn’t it?

Each comes with a story book and a music CD. You can buy girl clothes that match the dolls'; there’s a theater; a cafe; a hair salon; even a doll hospital! Yes, you can already imagine it isn’t cheap! The doll we bought (left) was $90!!

Let me go back a sec and explain how we got here.

Last Spring my daughter went to the American Girl store with her Girl Scout troop. They were able to get a doll’s hair made up and had lunch at the cafe. If you didn’t own a doll they gave you a loaner.

Well, my daughter immediately wanted one of her own!

It wasn’t too hard to say no to her since the dolls are so expensive. But we did strike a deal with her: If she behaved (as best she could) and tried hard in school we would get her one for her birthday. She agreed. Keep in mind we didn’t go overboard for the holidays knowing we would be getting this doll for her birthday. Also, besides the party at home, this would be her only gift from us.

Did I mention the place has like three floors?!?

I went in with strong resolve, vowing to buy only the doll! But man do I have ADD when I walk into a store. They have accessories and dolls everywhere. It wasn’t long before I was asking my wife if we she get another outfit or an accessory too. We came real close but my wife, having more sense than me, said we came only for the doll and that’s what we’re getting!

Yes, it was expensive for what is essentially a trumped up Cabbage Patch kid.

But did my daughter smile when we got home!

I took a picture with her and the doll and it’s one of the most joyful smiles of her I’ve gotten on film. I know this is no excuse to spend money. I don’t think we’re spoiling her since she waited so long for it and we made sure to explain to her that this is an extra special gift, the likes of which she shouldn’t always expect.

Here’s a few justifications for buying it:

  1. We made her wait a while before buying it to make sure she not only deserved it but would still want it and take care of it.
  2. It was the only major gift she’s getting from us for her birthday. We got her small gifts for the holidays but nothing expensive.
  3. Our son is turning one two days before her birthday. Although we do our best to give equal attention to both of our children it’s inevitable that the little guy gets a bit more attention since he’s a baby. The doll is a special present for her for being so great with him this past year.
  4. We had the money in savings and will not be in debt because of it.

If your daughter has friends that own an American Girl doll now might be the time to explain to her she can no longer be friends with them. Unless you want to buy her one too. (Just kidding of course).

What do you think? Are we spoiling her? Are we guilty of “keeping up with the Joneses?”

Interesting Credit Card Marketing From AAA and Bank Of America

My wife paid her credit card a couple of days late.

Between work and taking care of the kids (that includes me too) she forgot the exact due date.  It isn’t a card that’s used often.

It happens.

Unfortunately we got hit with a no payment fee (about $30) and an interest fee (a couple of bucks). There were no other late payments on the card so I decided to call the company and ask if they can drop the fees. We’ve been good customers and have been paying in full every month.

So I called the number on the back of the credit card.

I go through all of the phone hoops and get to an account person. He asks who I am. I give him my name and tell him I’m calling on behalf of my wife (this is a credit card she had before we were married). The account rep then says he sees my account. My account? This is my wife’s card! It seems that Bank of America is the issuer of the AAA card and since we have a banking account there he could see my account.

So I tell him our situation, that we never pay late and always pay in full, could you drop the late fees? He tells me since I’m not on the account he can’t authorize it. My wife has to tell the rep to put me on her account. So now I give her the phone which kind of defeated the purpose of me calling since she was taking care of the kids, and she gives him permission to add me to the account. Took two minutes maybe. Easy process. I get the phone back and go back to the original question of removing the fees. He looks at the account and says he can remove the no payment penalty but there’s nothing he can do about the interest fee. I press on the interest but he won’t budge. It was a couple of bucks and it was our fault so OK we’ll pay that. At least we got the no payment fee taken off! The whole process was a bit annoying but in 15 minutes we were able to eliminate a $30 charge.

Fast forward a week or so and we get a package in the mail.

Two new credit cards for the account. We didn’t ask for a new card. Since they added me to the account they assumed that I too would need one of their cards.

Hmm…interesting. I guess they want me to start charging on the account too! Now they double the chance of a late payment or interest charges (not really for us but hypothetically)! What they did wasn’t wrong from what I can tell but it annoys me that they automatically sent out another card assuming I wanted it. Very aggressive marketing on Bank of America’s behalf.

This gets me thinking though.

What cards do we have between us? Should we consolidate some accounts with both of us on the accounts? Until now it hasn’t even been a thought. We’re both responsible with our spending and very open with our spending habits. I like the idea of one separate card between us so we can buy gifts for each other without the cost popping up on a shared statement. How can this affect our credit scores? I need to do some research on this.

P.S. To prevent future late payments we signed up for email alerts from the bank that tell us the payment is due in a few days.

Do you think Bank of America was sneaky in sending us another card?

For those married folks out there – How do you handle credit cards between you and your spouse? I’m interested in hearing your stories.