you pay cash, you may pay too much. You can even use your credit card at Dunkin’ Donuts and the Post Office and earn reward points for trips and toys, or a rebate, depending on the card.
Lesson: Be careful. If you don’t pay your bill in full and have to pay interest, your savings are gone.
When you’re in your teens, twenties, thirties and forties, it’s easy to justify spending one, ten, twenty or a hundred dollars on brief experiences or exciting things.
When you’re in your sixties or older with limited assets and income, you’ll likely find that no one will pay even one dollar for the toys and baubles that you spent much more for.
Lesson: You’ll realize they did not bring you more than a few minutes’ pleasure and you’d much rather have the money now—preferably with interest.
ALTERNATIVE THEORY: Let’s say you bought something for $100 and you used it a few times each year for 20 years. Then you realized that you really didn’t need it anymore. You couldn’t even sell it for ten bucks at a tag sale and you gave it to the Salvation Army. Some people feel miserable if they lost 100% of the cost.
Lesson: Another way to look at it is that you used it 50 times and got a pleasure from it for just $2 each time. That’s not so bad.
In the USA, Individual Retirement Accounts allow tax-deductible investing for future financial security. IRA “contributions” may be made until the due date for filing your return, not including extensions, which is usually April 15th.
(below) When times are tough it may be tempting to liquidate IRAs and maybe even to cash-in insurance policies to pay your mortgage. Since this increases the equity in the house you will sort of be moving money from your right pocket into your left pocket.
However, if you need to buy food it’s much easier to liquidate an IRA than to sell a piece of a house.
Lesson: As I said before, you can’t eat equity.
Years ago Marilyn and I were feeling cramped in our large condominium home in Westchester County, New York. We bought two nice timeshares so we could escape for vacations on Cape Cod three times a year. Later on we bought a bigger house and no longer felt the need to escape. We also got a dog who was not welcome at the timeshares.
Even though we seldom used the timeshares anymore we had to keep making annual maintenance payments and paying occasional assessments. We ended up having to pay a lot of money to give away our shares.
Lessons: (1) A timeshare is a vacation, not a real estate investment. (2) Very often you can have a vacation for about the same price as the annual maintenance fee for a timeshare. (3) There are always vacation deals available. (4) If you really want to buy a timeshare you can probably save money by buying it from an owner or the estate of a deceased owner—not from the timeshare company.
Many companies offer various shipping options ranging from “early tomorrow morning” to “we’re not sure when it will get there,” at different prices for people with different priorities.
Some companies also offer different speeds and different prices for actually processing the order (which might include printing or assembly or other custom work).
I use VistaPrint.com for a lot of printing, including business cards, postcards and T-shirts. On a recent order, I selected their slowest/cheapest method (“Slow 21 Days”). They shipped the order just four days after I placed the order, and I had it three days later.
Another time, I selected the middle grade (“Priority 7 Days”) and it was shipped the day after I placed the order.
When I chose the quickest service (“Rush 3 Business Days”) it was shipped the same day I placed the order.
Other companies do similar things. It’s common with TV infomercials. When you call to place an order, you’ll be offered or pressured into buying faster order processing. Very often there’s no difference in service, and the extra money is pure profit for the seller.
Lesson: There is often little or no difference between the speeds, regardless of the price you pay. Unless you really need something ASAP, select the least expensive option. There’s a good chance you’ll receive the shipment sooner than you expect.
•The easiest way to make a small fortune is to start with a large one.
•When you don’t need money, banks love to loan you money. When do you need money, they act deaf, blind and stupid.
•If you lend someone $20 and never see that person again, it was worth the $20.
•No two families with the same incomes and same fixed expenses will spend their money the same way.
•If you sell on eBay, a three-day listing (including weekdays and part of a weekend) is usually better than a longer-lasting listing. You have a better chance of selling sooner and getting paid quickly. If the item doesn’t sell you can get an automatic relisting, probably for free.
•Supermarkets often promote items with prices like “Two for $5” or “Ten for $10.” That implies a quantity discount but you can usually get the same unit price if you buy just one box of crackers or bottle of soda.
•A reverse mortgage—as frequently touted by former senator, former actor and former presidential wannabe Fred Thompson—may be very alluring to seniors. However, the processing cost is very high.
•If you lend more than a hundred bucks to someone—including a relative—put the deal in writing, with signatures and dates, ideally with a witness.
•If you file your tax return late, you may have to pay a big penalty—even if the government owes you money.
•If you owe money to the IRS, talk to them, don’t hide or run away. You can probably make a deal to pay off a tax debt with surprisingly low interest without paying for the services of an “expert.”
•Most of the people I’ve dealt with at IRS are friendly, understanding, compassionate and even logical.
•Every year or so use a video camera to make a movie of your home. Open closets and drawers, recording everything, and store the recording outside your home. It could be critical if you have to prove that you actually possessed something that was stolen or destroyed.
•Be wary of stores that display “going out of business” signs for more than six months. Or maybe even two months. They may be selling junk at high prices rather than normal products at low prices.
•When you don’t care about your credit rating you live very differently. A threat from a bill collector to ruin your credit rating is just not very threatening.
•“When you ain’t got nothing, you got nothing to lose.” (Bob Dylan)
