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frugal

Frugal Living, Lifestyle

Frugality the Right Way

My last blog post was a disaster. In an attempt to gain some breathing room I accepted my first guest post without proper vetting. An astute reader quickly realized the guest was promoting a debt consolidation service. I should have known better.

My reasoning was sound; execution needed work. Tax season is getting long in the tooth and I am exhausted from the long hours. Hoping to divert some time from writing to tax work, I allowed the enemy behind the lines. My promise to you, kind readers, is to up my game. I like the idea of guest posts, but I think it would be best if I invited bloggers I know and trust to do the writing.

That said, I have no intentions of reducing my writing output. You come here to listen to my stories and glean my words for valuable advice you can take back home.

Success is a poor educator. When things are going good—and life has been very good to me—I/we start to believe we are smarter than we really are. It takes a solid kick to the crotch to focus attention. As bad as the last post was, a lesson was to be learned you are not aware of: my traffic was rather good! For a terrible guest post I had a high level of traffic. I take that to mean people were attracted to the title: frugality. I decided I should write the guest post intended for you.Continue reading

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Hidden Value in Homeowners Insurance

img_20161031_201350Insurance is for the mathematically challenged. Insurance companies have the largest buildings in town for a reason. What other company do you write a check to for a thousand dollars and get nothing more than a promise to cover some bills in the event of certain losses? Commissions to the salesperson can reach or exceed 100% of premiums in the early years of some life insurance policies. Many credit card companies offer free extended warranty insurance at no additional cost when you buy with their card. You can guess the real value of the extended warrantee offered at Wal-Mart on $88 headphones.

Warren Buffett built an empire funded by insurance premiums at Geico. Some insurance is required by law. In the U.S., auto insurance is required for liability. Health insurance is also required since the Affordable Care Act passed.

Insurance is about risk management. Insurance companies are masters at it. The goal for the insurance company is to bring in as much as possible in premiums and pay out as little as possible in claims. Insurance always has a built-in profit for the insurance company. This is the house advantage.

Most insurance claims are for stupid small stuff. The cost of insurance to cover claims under $10,000 is massive. The processing of a claim is expensive. That is why higher deductible can save so much. But even better is not buying insurance at all and pocketing the cash.


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Renting a Car is Cheaper

img_20161002_101217The debate rages on over renting versus buying a home. Location determines the correct course of action; buying in one city might be a wise financial move, whereas, renting could be better two states over or even across town. Within the same city the best financial course can be different over time.

The debate of buy versus rent is heavily discussed with home buying because of the huge investment. At the end of each discussion someone always says they prefer owning (or renting) so the “best” financial move is not always the course chosen.

What surprises me is how the discussion never moves to other major purchases. Automobiles, for example, are a major investment and are significantly worse expenditures because the car will go down in value, whereas, real estate tends to rise in value, following inflation trends.

Buying a new car might be a good idea with all the current incentives and, in some cases, massive tax credits for electric vehicles. In the cases involving vehicles with tax credits you need to consider your personal tax situation. Generally, tax credits of this kind are non-refundable, meaning you need a tax liability to reduce before the tax credit has value. State credits also play strongly into the decision. For the rest of us, purchasing a car should not be a simple “yes, I need one” decision.Continue reading

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Rotating Frugality




img_20160910_202211Back in my college days I had a friend who was more frugal than I was. Bill never went out, socialized, or partied. A good night out was the museum if students were allowed in for free or the college library or cafeteria. Spending was off the list.

Bill became such a good friend I asked him to stand in my wedding. He accepted after considering the cost. After college we went our separate ways as life took over. I already had a small tax practice up and going while Bill went . . . I don’t know where Bill went. The last time I saw Bill was when he was on the local news protesting the Iraq War, the first one. It has been a while.

The newscast interviewed Bill for less than a minute. He looked happy and alive wearing shabby clothes and a million dollar smile. He looked as frugal as ever and willing to fight for a cause if it promised to make the world a better place. Whatever happened to the man who stood in my wedding, I’ll never know. I performed a cursory internet search and could not find him. Oh, and he loved the movie, Fiddler on the Roof. His parents had the movie on VHS. (Remember those things?) He never stopped singing If I Were a Rich Man. It was annoying. He is lucky to be a living man.

Regardless of what happened to Bill, I learned a lesson fromContinue reading

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Cut Your Clothing Costs 98%




IMG_20160827_095350Clothes are one of those expenses easily avoided. Paying $50 for a shirt, slacks, or any kind of clothes is something I’ve never done and is insane. Today I will show you how Mrs. Accountant acquires the necessary brand-new garments for our household for less than $200 per year for a family of four. If you read to the end of the post (no peeking) I will show you a trick where you can get nearly unlimited amounts of free clothing.

Trading time to find awesome deals is not cheap, nor free. Clothes shopping is simple and fast when you know where to look and when. I have a closet filled with more clothes than I need. The females of the house have more than I do. It still amazes me when Mrs. Accountant walks in the door from grocery shopping with a million dollar smile and two bags overflowing with clothes she spent less than $20 on. I must admit it is not hard to love that woman.

Low cost quality clothing requires a few tactics to divide and conquer. The most important tactic is to destroy any desire for trendy clothes. I am lucky my girls never wanted to keep up with the Sheila’s of the world and all the crap peddled by Disney teen stars. Learning to be happy with what you have is the first step. When you are in a bind and must buy something it is a recipe for disaster.Continue reading

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Buy a Car $4,000 Under Blue Book

Classic Car

By Liftarn – Own work, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=215686

Cars are a leading cause of wealth destruction; they are also a necessary evil in our society. The only way to win the “car” game is to prepare for battle with a fully loaded arsenal. Today I am going to show you how I buy cars for $4,000 or more under Blue Book.

Before we begin battle you need to understand my car habits. I drive 6,000 – 8,000 miles per year, mostly for business trips. I bike to work around 100 days per year and drive another 100 days. The round trip to work is 30.2 miles. I always buy a used vehicle. Once I claim ownership of said vehicle I drive it for 15-20 years. There are two cars in the garage. This means I buy a car every 7 to 10 years on average. I keep my cheapskate skills honed by helping clients and family members engage in the same mischievous auto savings activities.




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The Tragedy of the Commons in Investing

Just one more cow.

Just one more cow.

Back in the early 1980s a CPA named Herb Vest had this crazy idea to merge the investment and tax preparation fields. By the 1990s both HD Vest Financial Services and your favorite wealthy accountant’s tax firm were hitting full stride.

My first career choice was not tax preparation or accounting, it was financial services. I fell in love with the stock market crash of 1929 my sophomore year of high school and from that point on wanted to be a stock broker. Tax preparation was a seasonal job I preferred over working all year long, putting the stock broker idea on hold. Besides, I invested most of my income and the library was filled with great books on the stock market and its history.

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Cold House Journal

A bit cool outside this morning, but balmy inside.

A bit cool outside this morning, but balmy inside.

I grew up on a small farm in rural northeast Wisconsin. We lived in a shotgun shack which is more familiar to the U.S. South. If you don’t know what a shotgun shack is, it is a home with so many holes you could shoot at it with a shotgun and the pellets would pass right through without hitting the building.

A shotgun home in NE Wisconsin has problems in the winter months. The small furnace kept the pipes from freezing and not much more when the temperatures dipped below 0 F. My upstairs bedroom had no heat. As luck would have it, I had an electric blanket. There was one more advantage: I kept ice cream under my bed for two or three months a year and it would not melt. Those are wonderful memories.

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