Monday, January 26, 2009

Thrifty Habits

Here's an old educational film, "Your Thrift Habits” about money management. Produced in 1948 by Coronet Instructional Films, it’s filled with great advice, and is fun to watch, too. It does remind me a bit of the Andy Griffith Show.

“Your Thrift Habits” highlights some important aspects of budgeting and thrift that are still valid today:

• “If you can do without extravagances, you can save regularly.” In the film, Jack’s budget-breakers are peach super-delights. Your budget-breaker might be Starbucks.
•“Buying cheap, unsatisfactory products is never thrifty.” If you buy TOO cheap of items, they just break and you end up spending the money again.
• Sometimes you’ll have to make choices. In the film Jack chooses to attend a football game instead of sticking to his budget for one week. He actively chose this course of action and accepts the consequences of delayed gratification of his goal. But he got back on track.

In the Film, Jack starts saving for a specific goal: a camera. I find it easier to save when I have a specific goal in mind. In my life now, its easy to want to save because our income is reduced. My vague goal has been save for retirement and kid's education. But why dont people save more when they arent under financial duress?

I think if I had been Jack, I would include a budget item for "Emergencies."



If you like this, you might also like my recent post "Purchase Useless Things."

NOTE: Thanks to the "Get Rich Slowly" blog for bringing this movie to my attention

Sunday, January 25, 2009

Happy Birthday Mac!



I know, I am a day late. But I am usually a day late for most Birthday greetings. I just couldn't let this milestone go by without commenting. I am surrounded by Macintoshes in my life. I've been using Macs for so long I hate to admit that I remember days before Mac's. I remember programming simple accounting program in basic on Apples. Long live the Mac!

Friday, January 09, 2009

Purchase Useless Things?

Yesterday, I listened to an interview with Charles Handy on NPR's "Marketplace." Handy was very insightful. He was talking about how we got in to the economic mess we are in and how people spend a lot of money because they could spend it and thought they would always be in good times (positive speculation).

He quoted from Adam Smith's Wealth of Nations.
"A profitable speculation is presented as a public good because growth will stimulate demand and everywhere diffuse comfort and improvement. No patriot or man of feeling could therefore oppose it. But the nature of this growth, in opposition, for example, to older ideas such as cultivation, is that it is at once undirected and infinitely self-generating in the endless demand for all the useless things in the world."
Governments are trying to create stimulus packages to get consumers to spend again. They want us to purchase more "useless things," in other words.

Another quote from Handy made me think:
We may get back to a saner kind of world -- what Adam Smith called "cultivation" or "civilization" -- where we don't all sort of spend our life trying to make money, to buy things we don't really need to impress the neighbors, and so on. Where we actually do work -- not 60 hours a week, but 40 hours a week. Where we actually do take holidays. Where we actually get to know our kids again. Where it actually becomes smart to have a tiny car, to walk and bicycle and these sorts of things. And we may find we enjoy it actually just as much as the hectic pace that we've seen in recent years. I've often said that capitalism, particularly in America, is a very exhausting business. It tires people out.
In a very hectic, and troubled world, Mr. Handy made a lot of sense on a very basic level.

Thursday, January 08, 2009

Get Organized NOW for taxes



The IRS announced the top 10 Tax Time Tips. The number one tip is
"Gather your records…now! It’s never too early to start getting together any documents or forms you’ll need when filing your taxes: receipts, canceled checks, and other documents that support an item of income or a deduction you’re taking on your return. Also, be on the lookout for W-2s and 1099s, coming soon from your employer."

Actually, you should have been getting documents together ALL year long. But if you didn't for 2008, there's still hope for 2009. I keep my records in an expanded file folder. I've tried various types. Here are 2 different ones:





These folders are great for receipts and records. I use one folder per year. I change most of the headings by putting labels over them, printed on the computer for the categories I use such as "Donations", "Utilities", or "Credit Card." I keep the folder handy in a drawer near where I pay my bills.

File space is smaller than the standard 8.5 by 11 inch papers, so most papers need to be folded to fit. Sometimes a larger type of expanded file my be needed.

Of course by mentioning these files, I'm probably helping out the storage industry as mentioned in this blog posting.

What do YOU do to help organize for taxes?

Thursday, January 01, 2009

2008 IRA Contribution and Deduction Limits

Its a new year and its always time to think about taxes. If you dont participate in other retirement plans (like a 401k plan), you may be eligible to contribute to an IRA.

According to the IRS:
If you are under 50 years of age at the end of 2008: The maximum contribution that you can make to a traditional or Roth IRA is the smaller of $5,000 or the amount of your taxable compensation for 2008. This limit can be split between a traditional and a Roth IRA but the combined limit is $5,000. This maximum contribution to a Roth IRA and the maximum deductible contribution to a traditional IRA may be reduced depending upon your modified adjusted gross income (AGI).

If you are 50 years of age or older before 2009: The maximum contribution that can be made to a traditional or Roth IRA is the smaller of $6,000 or the amount of your taxable compensation for 2008. This limit can be split between a traditional and a Roth IRA but the combined limit is $6,000. This maximum contribution to a Roth IRA and the maximum deductible contribution to a traditional IRA may be reduced depending upon your modified AGI.

You generally have until April 15 of the following year. Publication 590, Individual Retirement Arrangements can answer most questions. I also like this link.

For 2009 401K contribution limits click here.