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Avoid the Three Biggest Financial Pitfalls
For the average person and/or family, the three biggest financial pitfalls to avoid are new vehicles, credit car interest, and short-term loans. Any and all of these can drain a person's or family's coffers of much needed funds. At best, they...
Going Mobile, Part 1: Wireless Phone Service for Your Home Business
This article may be used freely on your website as long as it remains intact, including author byline and resource box and links. We would appreciate it if you would notify us when it is used: Going Mobile: Wireless Phone Service for Your Home...
Important Considerations When Setting Up A Profitable Home Business (And A Handful Of Work From Home Income Streams That Are Quick & Simple To Set-Up!)
As our divine world drives furiously into this new “Information Age” a new type of millionaire is fast emerging from the incredible changes that have been driven by the internet – the “Work From Home Millionaire”. This article probes into the...
The Fabric of Economic Trust
Economy is called the dismal science because it pretends to be one, disguising its uncertainties and shifting fashions with mathematical formulae. Economy describes the aggregate behaviour of humans and, in this restricted sense, it is a...
The Musketeer Approach
Stories of intrigue, treachery, politics, lies, double crosses, and power struggles fill the history books, much like they fill today’s headlines. In the world of the 17th century musketeer, life depended on who you could trust. In the world of the...
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Ben Franklin Didn't Quite Get it Right
When Ben Franklin said "a penny saved is a penny earned", he didn't quite get it right. Actually, a penny saved is worth more than a penny earned. Do you find this statement shocking? I am about to prove to you that what I'm saying is true.
Most people erroneously believe the best way to strengthen their financial health is to increase their income. On the contrary, saving money by cutting costs will get you there quicker. You see, it's very simple. When your income increases (with some exceptions like the part of it you put into your 401k), that extra money is taxed. On the other hand, any amount you save by cutting costs is not taxed. Therefore, $20 saved by cutting costs is worth more than a $20 increase in income.
The following (although over-simplified) example will illustrate this principle. Let's suppose that Jack and Cindy have identical jobs and incomes. Let's also suppose they shop at the same grocery store and pay about the same amount for groceries each week. Now, Jack gets a $20 per week pay increase and Cindy does not. However, at about that same time, Cindy finds a new grocery store where she is
able to save $20 per week on her grocery bill. Assuming nothing else has changed, Cindy is now better off financially than Jack, even though she did not get a raise and he did. How can this be? It's because Jack has to pay taxes on his $20 raise but Cindy does not have to pay taxes on her $20 grocery discount. Assuming Jack is in the 25% federal tax bracket (and disregarding any possible increase in his state or local taxes), he will be able to put only $15 into his piggy bank each week whereas Cindy will be able to put the whole $20 a week into hers!
Bottom Line: It is more blessed to receive a discount than to receive an equal amount in a pay increase!
About the Author
Terry Mitchell is a software engineer, freelance writer, and trivia buff from Hopewell, VA. He also serves as a political columnist for American Daily and operates his own website - http://www.commenterry.com - on which he posts commentaries on various subjects such as politics, technology, religion, health and well-being, personal finance, and sports. His commentaries offer a unique point of view that is not often found in mainstream media.
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