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Tactics for a frugal lifestyle

May 11, 2011 / Staff

If you like nice things, it can be difficult to lead a frugal lifestyle – unless you’re willing to work at it! The key is being smart and creative and doing the leg work.

Here’s a great article on tactics for finding incredible bargains for luxury or designer goods. The author likes watches, so he digs around on the Internet for deals:

I Love Movado Watches
Anyone who knows me knows that I love Movado watches and will rarely, if ever, wear anything else. At a $30,000-a-year salary, I certainly can’t afford to shell out $1,000 or $2,000 on a watch. So I had to find a new source. I began scouring Craigslist, eBay, and pawn shops for good deals on watches. I found three Movado watches that were used and paid less than $500 total for all three of them. I recently sold one of these watches on eBay for $600. I now wear watches valued at more than $800 each, and I basically paid nothing for them.

Give it a try!

Frugality

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Collapsing home prices are good for the young

May 9, 2011 / Staff

Robert Samuelson is usually bringing bad news. He’s a respected economist, but nobody will accuse him of being an optimist. In fact, he’s very bearish on our fiscal future and he believes that life will be more difficult for the next generation of Americans given our massive debt and the inevitable need for higher taxes or cuts in benefits like Medicare and Social Security.

But he sees a silver lining with the collapse of housing prices. It’s terrible for anyone who bought a home in the past decade, but it’s good news for young people who home to buy a home some day.

But housing’s troubles may have a silver lining. If you’re a homeowner, the steep fall in prices is calamitous. But if you’re a future buyer, it’s a godsend. What we’re seeing is a massive wealth transfer from today’s older homeowners to tomorrow’s younger homeowners. From year-end 2006 to 2010, housing values fell $6.3 trillion, reports the Federal Reserve. Assuming there’s no sharp rebound in prices — a good bet — that’s $6.3 trillion the young won’t pay.
Up to a point, the lower home prices merely deflate the artificial “bubble.” But there’s evidence that the declines transcend that. The National Association of Realtors routinely publishes a housing “affordability” index, which judges the ability of median families to buy the median-price home at prevailing interest rates. By this measure, existing homes are the most affordable since the index started in 1970.
Young buyers “will be able to enter the housing market at bargain prices,” argues NAR economist Lawrence Yun. When home prices again rise, increases will parallel income gains, meaning that the relative burden of housing costs will remain roughly stable, Yun says. He expects only modest increases in interest rates. (A rise of one percentage point — say, from 5 percent to 6 percent — on a $150,000 mortgage boosts the monthly payment about $95.)

The important thing for young people, however, is learning to avoid credit card debt. If they don’t learn this lesson, lower housing prices won’t matter much as they wont be able to afford a mortgage payment if they’re loaded up with credit card payments.

Frugality, Personal Finance, Real Estate, Retirement, Saving

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The Medicare debate

April 23, 2011 / Staff

With the radical new budget proposed by Paul Ryan and passed by the House Republicans, we have a full-fledged debate about the future of retirement in America. Ryan’s budget removes the guaranteed Medicare entitlement and replaces it with vouchers (or premium supports, depending on who you listen to). According to the Congressional Budget Office, the subsidy from the government will not be enough for most seniors to purchase medical insurance, assuming private insurers even want to cover them.

This is a radical departure from the social safety net. The Republicans argue that this will not apply to current seniors, just those under the age of 55. But that cold comfort for everyone else, including seniors who care about the future of their children, relatives and friends.

It’s doubtful that anything like this will pass with the current President and Senate, but everyone needs to pay attention. Who knows, the next election may affect your retirement years.

Budgeting, Insurance, Retirement, Saving

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How much does net worth matter?

April 18, 2011 / Staff

For shallow fools like Donald Trump, net worth means everything. Yesterday he was bragging that he was worth more than Mitt Romney, as if that mattered when judging someone as a businessman, let alone a President or a person.

Net worth does not equal happiness, and it doesn’t always reflect ability. Of course we want to increase our net worth, as it helps to make your life less risky and more comfortable. But don’t fool yourself into thinking that net worth means everything. If you do that, you’ll neglect things like family and relationships.

Also, as we’ve seen over the past decade, net worth can be the result of many things, including luck and sometimes fraud.

Donald Trump has been a very successful real estate developer and self-promoter. He deserves credit for that. But he also started with significant resources from his father, and he happened to make a bet on New York City at the right time. That said, his business ventures outside of real estate have not fared very well (other than his turn as a reality TV star, and we’ve seen from the likes of Snookie that you don’t need much in the way of talent in that arena).

Mitt Romney was a very successful business consultant. He was successful in a range of businesses, so Trump’s net worth crack is just silly and demonstrates how shallow some rich people can be.

Personal Finance, Real Estate

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