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Principles
No CommentsFREE MONEY: PART 1
Would You Like Some FREE MONEY?
There is so much money that we spend without thought that you can find it if you use the techniques shown here.
Step 1 NEEDS and WANTS:
What is the difference between needs and wants? Do you ever have trouble distinguishing between NEEDS & WANTS? I do! I hope this self-therapy written to remind myself will help you too. If you are confused, it is NO wonder. Even many online dictionaries don’t know the difference!
From the FreeDictionary we have “Noun1. the condition of lacking something: he has need of a new coat 2. a requirement: the need for closer economic co-operation 3. necessity: there was no need for an explanation 4. poverty or destitution: the money will go to those areas where need is greatest 5. distress: help has been given to those in need”
In other words, to stay alive, you have needs. After you have STAYED alive, you may WANT ADDED things.
Definition of Wants “1. a. To desire greatly; wish for: They want to leave. She wants a glass of water. See Synonyms at desire.b. To desire (someone to do something): I want you to clean your room.”
Maslow was the first to come up with a good explanation of REAL NEEDS. His work is called Maslow’s Hierarchy of Needs found at http://en.wikipedia.org/wiki/Maslow%27s_hierarchy_of_needs
So to summarize: NEEDS are what you NEED or have to have to stay alive. WANTS are things you have a desire or craving for but they are NOT needed!
Our society has grown and flourished because of needs and wants. Also it has gone beyond good sense as witnessed by the 2007-2008 market drop because of people not knowing the difference between the two words.
You NEED:
- food
- air
- water
- shelter
but you do NOT NEED:
- a car [in most cases at least in cities]
- a house [apartments are fine for some with less responsibility]
- large LCD Hi-Def TV
- computer [hard for me to admit to that and for some it is a necessity]
- sex or
- a steak
- a vacation
They may all be good things BUT they are WANTS not usually needs. When we get mixed up between our needs and our wants we tend to use credit cards and other means of going into debt because WE WANT something right now! But we don’t need it.
If we can get those two words straightened out, we can begin to find FREE MONEY!
More at my personal financial and computer website or
FREE MONEY PART 2 – HOW?
First I must explain that ALL of the pension money that my wife and I must live on is in the market in mutual funds. When the market dropped so steeply last fall, we lost a lot of capital. At our age in 2009, 65, we are taking money out to live and there is not much time to wait for investments to recover to former levels.
We had to look very carefully at our finances like I have never done before. I should also explain that my wife is very good with money. She doesn’t mind waiting for something that she really wants. On the other hand, you have me. I find it very difficult to wait. With a little help from above, I have learned a lot. I also share what I have learned from my wide reading on finances and from various family and friends that really have learned to live well but live on less.
How Can You Save Money without ever getting a cent more? (More sense, I mean cents are nice, even dollars), but let’s assume there is no way to get more. What can you do?
ONE: Keep a record of EVERYTHING YOU SPEND for a WEEK, then for a MONTH and then see what ANNUAL expenses that you pay only once yearly.
Then you will know where you stand.
Then you will need to sort out what you NEED from what you WANT.
Let’s start with the biggies.
This year 2009 I switched insurance companies, getting more for money but with less expense. I saved $300 on our combined auto-home policy. If the cost for insurance was $1500 and I saved $300 that is a 20 PER CENT SAVING!
In Canada we have Kanetix.ca and Insurancehotline.com. I am sure there are similar online sites which let you put in what insurance you need and you get back quotes from many insurance companies which you can then compare.
To be fair I also try local companies but I have to admit so far they have not beaten the online quotes.
Perhaps you can save $300 too! What difference would that make to you?
FREE MONEY PART 3: EASY WAY TO RAISE YOUR INCOME
I hope you have seen by now that the easiest way to raise your income is actually to LOWER your outgo!
In our lifetimes, we handle hundreds of thousands of dollars but how much do we end up with? Would it be worth a little sacrifice now to make a brighter future for us and for our family? Sorry I cannot answer that for you but I have already answered “YES” for myself. If you write down your expenses for even one week and see what you spend money on, you may be very surprised how much of it gets frittered away on little things.
Now I do enjoy a Tim Horton’s coffee up here in the frozen north (:-)
However I was once with a guy who in the course of 2 hours had 3 Tim’s coffees! At $1.50 per coffee x 2 = $3.00 per day x 365 days per year = $1095 in one year. And I fully expect that if I had been with him longer, I might have had to double this figure.
So what could you do with $1095 EXTRA THIS COMING YEAR?
I do indulge a few times a week in Tim Horton’s coffee but that is part of my entertainment budget.
Now if you take that figure of $1095 x 30 years = $32850. Did you REALLY want to spend THAT MUCH on extra coffees?
Let us say that someone has 2 coffees at $1.50 each a day every day for 20 days a month. That would be $3 x 20 = $60 per month. I’m trying to be conservative.
So take that figure of $60 per month and invest it in a good mutual fund for 30 years. Let us look at the results..
At 5% you would gain $49,381!
ANNUAL CASH FLOW Year Deposit Per Period Total Deposit Growth Estimated Value 1 $780 $780 $22 $802 2 $720 $1,500 $82 $1,582 3 $720 $2,220 $180 $2,400 4 $720 $2,940 $320 $3,260 5 $720 $3,660 $502 $4,162 6 $720 $4,380 $729 $5,109 7 $720 $5,100 $1,004 $6,104 8 $720 $5,820 $1,329 $7,149 9 $720 $6,540 $1,706 $8,246 10 $720 $7,260 $2,137 $9,397 11 $720 $7,980 $2,626 $10,606 12 $720 $8,700 $3,176 $11,876 13 $720 $9,420 $3,789 $13,209 14 $720 $10,140 $4,469 $14,609 15 $720 $10,860 $5,219 $16,079 16 $720 $11,580 $6,042 $17,622 17 $720 $12,300 $6,943 $19,243 18 $720 $13,020 $7,924 $20,944 19 $720 $13,740 $8,991 $22,731 20 $720 $14,460 $10,147 $24,607 21 $720 $15,180 $11,396 $26,576 22 $720 $15,900 $12,745 $28,645 23 $720 $16,620 $14,196 $30,816 24 $720 $17,340 $15,756 $33,096 25 $720 $18,060 $17,430 $35,490 26 $720 $18,780 $19,224 $38,004 27 $720 $19,500 $21,144 $40,644 28 $720 $20,220 $23,195 $43,415 29 $720 $20,940 $25,386 $46,326 30 $720 $21,660 $27,721 $49,381 WHAT WOULD THAT BE AT 10% RETURN = $125,805
Are those 2 extra coffees a day worth that much to you?
ANNUAL CASH FLOW Year Deposit Per Period Total Deposit Growth Estimated Value 1 $780 $780 $44 $824 2 $720 $1,500 $165 $1,665 3 $720 $2,220 $370 $2,590 4 $720 $2,940 $668 $3,608 5 $720 $3,660 $1,067 $4,727 6 $720 $4,380 $1,578 $5,958 7 $720 $5,100 $2,212 $7,312 8 $720 $5,820 $2,982 $8,802 9 $720 $6,540 $3,901 $10,441 10 $720 $7,260 $4,983 $12,243 11 $720 $7,980 $6,246 $14,226 12 $720 $8,700 $7,707 $16,407 13 $720 $9,420 $9,386 $18,806 14 $720 $10,140 $11,305 $21,445 15 $720 $10,860 $13,488 $24,348 16 $720 $11,580 $15,961 $27,541 17 $720 $12,300 $18,754 $31,054 18 $720 $13,020 $21,897 $34,917 19 $720 $13,740 $25,428 $39,168 20 $720 $14,460 $29,383 $43,843 21 $720 $15,180 $33,806 $48,986 22 $720 $15,900 $38,743 $54,643 23 $720 $16,620 $44,245 $60,865 24 $720 $17,340 $50,370 $67,710 25 $720 $18,060 $57,180 $75,240 26 $720 $18,780 $64,742 $83,522 27 $720 $19,500 $73,133 $92,633 28 $720 $20,220 $82,434 $102,654 29 $720 $20,940 $92,738 $113,678 30 $720 $21,660 $104,145 $125,805 Yes Size Matters!
Total Deposits $21,660 Growth $104,145 YES, SIZE MATTERS! LITTLE EXPEN$E$ CAN BECOME LARGE!
-Charles
