Bryan's Financial Tips     

If you consider that you can brew your own for 15 cents, you save $1.45 per cup. That comes to a $529 savings per year. What if you took that savings of $1.45 a day and invested it in a good growth mutual fund (8% conservatively) over the next 20 years? That $1.45 a day would become $25,793 in just 20 years!!

You are looking to buy that $1000 couch, and you say, “It is only $1,000.” Right? Wrong. Let's look at what it really costs to make that purchase.

First, let's assume you need to pay sales tax of 7%. So now you need to come up with $1070. But you need to earn the money to pay for this, and where I come from, there are some items called federal tax, city tax, state tax, and FICA. Let's assume you are in a 15% federal tax bracket, 6% state, 2% city, and your portion of FICA is 7.15%. That is a total of 30.15%. That means you will need to earn at least $1,531.86 before taxes to make that $1000 purchase.

In other words, the $1000 couch will cost you $1531.86, or 153% of the sale price. What if the item is something like a $20,000 car? Plan to earn at least $30,600. The $3.50 cup of gourmet coffee is $5.35. So when considering a purchase, make sure you evaluate the real cost.

For those who believe in and participate in Biblical tithing (giving 10%), instead of using 153% as your factor, you will need to use 170%.

In an earlier article I discussed the need to look at the real cost of an item by remembering to factor in what you needed to earn. One example was that you needed to earn $1,531.86 before taxes in order to have enough to purchase a $1,000 item. Or, if you wanted to purchase a $20,000 vehicle, you needed to earn $30,600. (If you have to borrow the money, then you will have to earn even more to pay for the interest.)

Now I want you to consider the cost in hours. Let's assume you make $30.00 per hour before taxes. To purchase the vehicle, that means you need to work 1,020 hours to pay for it. If you work 40 hours per week, that means you are working 25.5 weeks (or six months) for the vehicle. What if you make $15 per hour? That means you will work an entire year for the vehicle.

When considering a purchase, not only do you need to look at the real cost in dollars, but you need to look at the real cost in hours. Do you really want to work six months or a year for a vehicle that will lose 70% of its value in the first 4-5 years of ownership? What else could you be doing with that time? So remember, when you are evaluating the need for an item, consider the real cost in both the money needed to purchase the item and the hours needed to generate the income.

Have you ever filled up your vehicle with gas only to drive another block to see gas for 15 or 20 cents less than what you just paid? Here is website that may help you to find the cheaper gas. Gasbuddy.com

The average American has less than one month’s worth of expenses set aside for an emergency. Having such a small amount set aside is why we are seeing an increase in foreclosures and repossessions. The best way to protect yourself is to have 3-6 months of expenses set aside. One of the best ways to accomplish this is by setting it up so that a part of your paycheck is automatically deposited into a money market account. This way you systematically build your emergency fund.

The Pension Protection Act of 2006 made Roth 401K plans permanent, so you are going to see more employers offering them to their employees. The Roth 401K is different in that you put money into this plan after taxes instead of pre-tax like the traditional 401K. The advantage of the Roth 401K is that at age 59 ½, you can withdraw your money tax-free. If you are expecting to have more than $750,000 in retirement funds at retirement, then a Roth 401K is something you should investigate. Be sure to talk to your accountant or financial planner.

Are you properly insured under your auto and homeowners policies?  If you are using your vehicle for business, (or have someone in your family delivering pizzas,) or if you are running some type of business out of your home, your current policies may have exclusions that would deny coverage. Check with your agent to make that sure you are properly insured.

Let's say that you are a family of four that eats out once a week. Drinks at $1.75 each (taxable) comes to $7.50. If you do that 52 times a year it comes to $390 per year. What if you took that money instead and placed it in a Roth IRA, in a mutual fund averaging 8% per year? After 30 years (and if you reached the age of 59 ½), you would now have $45,007 tax free. Now that makes the free water with lemon taste pretty good.

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