Episode #37 – More Winning Financial Tips

[00:00:21] Hi everyone and welcome to another wealthy and wise Wednesday, hope you are doing great, hope your weeks are going good so far and we are going to finish strong. You know last week we talked a little bit about some winning tips to help you in your financial situation and I want to add to those this week, some of them are a little bit interesting because you know I don’t really like to dissect people’s lifestyle and there is certain things that you just kind of stay away from but on the other hand these are some good things to at least think about while you are going through your week and where you are putting your money so we will get there just a second.

[00:01:02] So first one I want to talk about is just putting your savings on autopilot and all that mean is well if we go back to last week, one of the tip was to pay yourself first. From the book, the Richest Man in Babylon and which one to do is to make sure that every week, every month, every time you get a paycheck or some sort, you want to put some of that in savings and have it on autopilot and that could easily be your banking system because that is where you want to build the majority of your capital for opportunities and things that might come along in your life anyway. But if you get it out of your hands, if you get it out of your eyesight and you can put it just a little further away than the checkbook. Then you are going to tender it just kind of forget about it and build that saving and then ultimately build your investment portfolio as well. So just put it on autopilot, I remember way back in the way when I was getting started where you are a young couple, when you had a little baby, when I can’t afford much but I think it was 25 bucks or something, I started putting $25 away in each pay period and then that grew to 50 and then a few 100 and then you know from there so if you just put your savings on autopilot.

[00:02:34] Now we are going to talk a little bit about taxes in just a seconds but one thing that you really should do when we kind of again hit on this last week in our podcast is to make sure that when you get these new tax savings that should be coming out of your paycheck these next few weeks, put that away and don’t put into your spending habits or it would just be lost. So let’s get you on autopilot.

[00:03:01] The next thing and this is one of those funny ones. I am not a coffee drinker so I can’t really relate to this but it is amazing, I look at some statistics of people who buy coffee every day and what that adds up to, I don’t know how much a coffee so I Google that really quick and it looks like anywhere between 2 and 5 bucks if you went to star bucks is what you know a typical coffee will cost you. Some people do this two or three times a day but if you only do this two or thrice a day and even if you only spent the minimum, the two or three bucks. You probably at least get into 50/60 dollars a months and if you think about that in a career span of you know most people work 40 or 45 years of their life. And then if you went out and bought coffee every day in that period of time, it can add up to a lot of money just a 20 years span and if you spend $50 a month on that kind of stuff that is about 29 or 30 thousand dollars if you are getting an average rate of returns on your money. So when you are holding that coffee next time, think is this worth $30000, if you go 40 years that is probably going to be pushing 80-100 thousand dollars in money that you could have had, had you not drank it down.

[00:04:35] Okay, so the next one is ditch credit cards that have annual fees. There are so many credit cards out there with no annual fees and they are not that hard to find and all you really had to do is look up credit cards with no annual fees. I recently just switched to one of them now, I have been running with a gold America express card for a mile and then I got hit with this annual fee and I say I am not going to pay annual fee for this credit card so I called them up, not only did they wipe out the annual fee but they hooked me up with another credit with no annual fee and it still give me the miles that I was looking for, for potential airline miles. But those can add up and again this is a wasted fee that doesn’t have to be there.

[00:05:30] Now another thing you could do to try and save a little bit more money each money, each year and that is increase your insurance deductibles, this can be your car and your home and any other kind of insurances that you have where there is a deductible, if you raise those that will typically lower the premium and if you take and you save the difference between what you are paying and then what you are paying now because you increased your deductible, that can add up to a lot of savings over the year. And you will be surprised how fast you saved that difference. So for instance if I had an auto insurance where my deductible was $100 and I raised that to maybe even as high as 1000 dollars but then save the difference in the premium, you will be surprised how fast I save that extra $900 so that it is there even when I do need to pay the deductible. If you could do that for several years, then that 900 grows to 1800, grows to [00:06:42] you know pretty soon you will have thousands and thousands of dollars there, that can help upset that higher deductible. The only downside to that, so be careful is you raise your deductible, you lower your premium and then you go again the [00:07:01] the next day, so let’s not do that.

[00:07:02] the next thing to maybe look at is rounding up your mortgage payment, this works well if you are trying to pay your house off as quick as possible, so let’s say your mortgage payment is I don’t know $1236, you know round that up to 1260 or even 1300, you will be surprised with that little extra principle does for your mortgage and how fast that can pay off. Because if you think about it this way, during the first five years of a mortgage. It is like 96,97% of all those payments just went to interest anyway. So if your mortgage was a thousand dollars you might find only as much as 40 or 50 dollars each months goes to principal and the rest goes to interest. So adding another 40 or 50 dollars a month actually doubles your mortgage payment for that year. So think about that and again this is for those who wants to get their mortgage paid off sooner, just round up to the next dollar might help you get there that much quicker.

[00:08:09] another thing to do is to avoid like a plague, overdraft fees. Now I know a lot of times it happens accidentally because we don’t balance our checkbook, I have even been guilty of that. Recently, maybe last 20 years I have always put maybe line of credit on my checkbook because sometimes we don’t balance like we should and my wife and I will write a cheque and then we will cover with savings and other funds and then lo and behold, we get this overdraft and that fee can be crazy expensive. I have seen people overdraft by a dollar and their overdraft fees can be as much as 50. Talk about a profit center from the banks, so either get some kind of overdraft protection or better yet balance your checkbook, know how much is in there and avoid those overdraft fees. That is a huge rate to return for the bank, often times I think mhen I will be happy to give you a dollar if you give me 50 back, that is essentially what is going on with the bank. Even if their overdraft fee was only 20, that is still a huge amount of money. A dollar, or 10, or 15 dollars and you get you know 20 back, that is a pretty way to return for the banks, so let’s not make them any more in fees than we have to.

[00:09:42] here is another kind of a funny one and kind of goes along with the coffee, I don’t know funny is the right word but anyway it is something to think about and that is lunch. What some many people do at lunch, they go out and make their spending anywhere from let’s just say 5 to 10 to 12, 15 dollars just for lunch. So you might consider if you are trying to get out of debt, if you are trying to save some money, maybe pack a lunch. A lot of time it is a little healthier and certainly cheaper than fast food. But if you think about somebody who is out to eat every day and maybe they are spending two or three hundred dollar a month. Again if we kind of calculate that out over the next 20 years, that could be a 100,000 dollars or more and if we do that over a 40 years working career, that could be a quarter million dollars. Now, think about it this way, if you are going to retire tomorrow would a 100 or 200 thousand dollars more in your retirement account make any kind of difference? Yeah I think it does and you will just be surprised how much money is spent, that just goes through our hands, we don’t think much about it between coffee and lunch and dinner and this and that and suddenly it is 100 of thousands of dollars that could be in our pockets. Now here is the thing and this is why I say I don’t want to be some kind of micromanagers, we want to enjoy life, I mean we work, we like to spend and enjoy a few things and certainly if you are not in a situation where you are up in debt up to your eyeballs and you are on a good savings programs and it does look like you are going to be retiring just fine. You know I am not trying to tell you don’t go out and eat but unfortunately so many people who just live paycheck to paycheck and part of their problem was saving is that spend money on this kind of things. So think about your next time you look at that sandwich or that hamburger and you think wow this could represent a 100 or 200 thousand dollars or more in my retirement income if I could just save this money. SO anyway see what you think about that.

[00:12:11] the next thing is if you get a big tax refund then what you want to do is get with your personnel department and adjust your W4 so that you reduce to what holdings so that you will get to take more money home with you. There is no reason to give the government a free loan for 8,9,10 months because that is exactly what is happening. You don’t ever get interested on a tax refund, you have essentially just overpaid, giving the government a loan for free and then when they pay you back, they don’t pay you any interest on it. Try not paying your taxes and see if they don’t charge you interest and penalties for missing your tax date. So if you are going to get this huge tax refund come this April, let’s adjust your W4 so that you take more home but what are we going to do with that, we are going to save that money and we are not going to put it into our spending habits.

[00:13:18] and the last one, I think this is pretty obvious but unfortunately not practiced very much and that is pay off your credit card each month. Okay, you know even today in this very low interest rate environment, credit cards are still charging 13,18, 21%. I mean can you imagine that, they can go out and get money a 3 or 4% and then turn around and charge you 18-20%. The amount of money they are making on people who carry balances is enormous. There is no reason to do that, so if you use a credit card, pay it off each month and then you don’t ever have to pay those high interest rate. Well another thing that might be kind of interesting, this little strategy that we have incorporate over the last number of years and that is we use our credit card for major purchases and expenses but we do pay them off at the end of each month. But I have got a few credit cards that gives me back cash back, I use that cash back because it is really just free money to me to buy gift cards at restaurants. So I never have to pay for a lunch or dinner, essentially I do my credit card charges right, I pay them off so I am not paying any interest and cost many things to run it through the credit card. I get cash back on that credit card and I use that cash back to buy gift cards for lunch and dinner and I can’t remember, I mean it has been quite a while since I have ever had to put out money for lunch and dinner because I have either gift cards or cash that I can use for lunch and dinner. Now I will be going out and eating lunch isn’t an expense, it is not costing me one way or another, I am just running it through my credit card and my credit card company without making any interest on me is paying for all my lunch and dinner. And whether that airline ticket you can use your cash to buy just about anything, I have just decided that I never have to pay for lunch or dinner again when I go out and this just worked out perfectly.

[00:16:01] So there is a few other tips you can use, hopefully I have incorporate one or two of them in your lifestyle, I think the biggest of them all is just make sure you get a monthly annual savings plan and it is on autopilot, you never have to think, you don’t have to write a check, you don’t have to do a thing, it is just automatically being saved building up your capital so it is there for your future opportunities that might come along and then the next one I think is just making sure you are not giving the government a free loan, bring home as much money you possible can without getting to a point where you are going to [00:16:43] in the air but just making sure you are bringing back and not overpaying your taxes, so that again you can have more money go on autopilot.

[00:16:54] well that’s it for this week, any questions, feel free to reach out questions@wisemoneytools.com. Any suggestion, anything you would like to talked about on future podcast, happy to hear your comments and your suggestions on that as well. Be sure to subscribe to the podcast and/or the video and stay tuned this week, we got some really good stuff coming up that I think is going to be beneficial, I think I mentioned last week that we have got a new infinite banking mastery course coming out and that is going to be really exciting and really help people get a better handle on how all these works. Well, other than that I think that is it for this week, it has been great to talk to you and I hope you had a good reminder of the week and a nice weekend and we will talk to you next week and until then take care.

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