Dear Fool,
How much money would it take for you to be happy: $50,000, $100,000, $500,000? Our own Morgan Housel has convincingly made the case that chasing wealth for wealth’s sake is a (small f) fool’s errand. Instead, he argues that having control over your time is the only sensible financial goal.
That doesn’t mean that we should ignore our finances. Instead, we should use the money we have as a tool to live the type of life we want. But for those of us who’ve grown up learning to spend, spend, spend—that can be a tough adjustment.
Below I’ve divvied suggestions into many different camps. Some suggestions are pretty obvious—but they are included because they are effective. Other suggestions—especially those helping you supercharge your retirement savings—may be entirely new.
In the end, this is about using your money to help make you happier in the long run.
- Switch to Republic Wireless for your smartphone—With Republic, you can get plans for as low as $5 per month. Most will opt for the $25 unlimited-talk-and-data over 3G plan.
- Consider using a company like SolarCity to provide electricity—You pay nothing for equipment, installation or maintenance. In return, SolarCity charges for the electricity that you use—but at a rate as much as 15% below your local utility!
- Build/Buy a house facing the south... By facing the south you are getting maximum exposure to the sun, drastically reducing your heating bill (and improving your winter-time doldrums).
- ...But with a deciduous tree for the summer months— Planting a deciduous tree (one that sheds its leaves during the winter) means that you’ll have sunshine when you need it, and shade during the summer.
- Cut your cable—With Netflix, Hulu, and YouTube, all you need is a Google Chromecast to connect your computer to your TV and you can be entertained for a fraction of the cost.
- Go to Costco for your bulk, processed foods—This one’s pretty self-explanatory.
- For everything else, consider a CSA or your local farmer’s market—CSA stands for Community Supported Agriculture. Local farmers offer “shares” of their farm’s produce for a flat fee, and make deliveries on a weekly basis. If the harvest is good, you’ll get more than your money’s worth.
- Or, consider using a grocery delivery service—Those living in big cities know what a terror weekend grocery- shopping can be. For as little as $5, you can use a service like Peapod or Instacart to free up precious time.
- Start a garden, plant a fruit tree—Unlike a lawn, a garden offers up tangible rewards. If you’re looking for a low- maintenance option, consider planting fruit trees.
- Use your car for transportation, not status—Buying a used vehicle that helps move your from point A to point B efficiently, gets over 30 miles per gallon, and has enough space to carry luggage is crucial. One famous blogger has a list of favorites with the Honda Fit topping the list.
- Lower your student debt—A San Francisco startup called SoFi is using creative fund-raising to offer student loan consolidation rates lower than what the Federal Government has available—but only to the safest of recipients.
- Contribute the maximum to your 401(k) and then convert it—Most people think the maximum contribution to a 401(k) is $18,000. Those over 50 believe the limit is $24,000. Both are wrong. The real limit is $53,000—but you don’t get the tax advantages once you hit the afore mentioned limits. That’s ok, though, because you can convert the difference to a Roth IRA and enjoy tax-free growth and distributions in retirement.
- Select a high deductible health insurance plan—If you’re in good health, there’s no need to get a “Gold” package when you’ll only be visiting the doctor once or twice per year. Plus...
- Open up a Health Savings Account (HSA)—You can only do this if you qualify by having a high-deductible plan. You can sock away $3,350 for an individual or $6,650 for a family per year—and each limit increased by $1,000 if the head of household is over 55. Money in here is never taxed—not on income, growth, or distributions—as long as it is used for qualified medical expenses.
- Open a Roth IRA for your child—Putting money away in a state-run 529 plan for college is a good idea. Starting a Roth IRA for your child is better. You have more freedom with your investments, and any withdrawals for qualified education expenses are tax-free.
- Harvest your winners tax-free—Did you know that if you fall in the 10-15% tax bracket, you don’t pay a dime on capital gains? While that might sound like a low threshold, a family household making as much as $115,000 per year could use this method.
- Significantly reduce college costs—Everything after your child’s first job will be based on his/her perfor - mance, not where he/she went to school. Knowing this, consider attending community college for two years to take care of required courses, then transferring to your in-state university for a bachelor’s degree.
- Use PropertyRoom.com for gifts—This website takes all of the stuff that police department auction off at cheap prices, and offers it to the public. For instance, the website currently offers a Louis Vitton wallet for $107. Bought new, the same type would cost $1,420.
- Get your gift cards at CardHub.com—This site matches up people who have unwanted gift cards with those who will use them. You can often get as much as 10% off.
- The best times to shop—According to data collected by Life Hacker, the best discounts are offered on Tuesdays and Fridays, as well as surrounding holidays, namely Thanksgiving, Christmas—but also MLK Day, Memorial Day, and Independence Day.
- Get hundreds dollars for free by hacking your credit cards—It takes a little effort on your part, but you can use the enticements of credit card companies to your favor. An example: By spending $5,000 in your first six months with a Starwood Preferred Guest Card from American Express, you can get at least 25,000 miles for flights. See more tricks here .
- Clear your cache before buying airline tickets—Airlines can look at your history to jack up prices if you are con - tinually looking for the same flight route.
- Let Groupon decide your entertainment for you— Using this service can cut down significantly on your “entertainment” costs. One example: You can attend Washington, DC annual Beer & Wine festival for $29 with Groupon—42% off the regular price.
- Likewise, if you need to go on vacation, let travel sites like Travelzoo pick for you—Be spontaneous and go where the deals are. Travelzoo is a good spot to start: a recent deal offered $499 per person to fly from Dallas to Cabo and stay for 4 nights at the all-inclusive Royal Solaris Cabos Resort & Spa.
- Choose the size and location of your house to meet your life’s needs.
CUT THOSE MONTHLY PAYMENTS DRAMATICALLY
FINANCIAL PLANNING TRICKS ONLY THE RICH KNOW ABOUT...UNTIL NOW
ENJOYING THE FINER THINGS IN LIFE
The 24 suggestions above are great. But if I had to narrow this whole list down to one simple recommendation, it would be this:
Most people think that real estate is a great financial investment. It’s simply not true.
That being said, real estate can be a great social and emotional investment, and picking the right size and location can be great for your heart, head and wallet.
- Live within walking/biking distance to work, stores, and social gathering places. This gets you outside and interacting with neighbors.
- You could easily become a one-car family, cutting down significantly on expenses, and avoiding the truly awful costs of commuting.
- Don’t “buy all the house you can afford”, instead “buy all the house you need.” The difference is crucial, and you can invest your savings from doing this to make financial independence arrive much sooner.
