Money Questions and Answers

How To Think About Frugality Like An Economist And Save Money

Frugality and using toilet paper like an economist Is being frugal worth your time and effort? Can the law of supply and demand work in your favor to earn additional savings on your everyday purchases? Did you know that you actually hurting the US economy by saving your pennies and being too frugal?

You may be surprised to find out how you can save money when you approach think about frugality like an economist. Here are a few lessons from your economics class and how you can apply them to your frugal life.

Toilet Paper Is Worth More Today Than Tomorrow

If you won the lottery, would you want the lump sum payment today or would you want to spread your winnings out over 20 or 30 years? Thanks to our friend, inflation, you would be better off financially by taking the lump sum payment up front today. A dollar today is always worth more than a dollar in the future because of the effect of the time value of money and inflation.

These same economic theories can be applied to frugality and saving money on everyday purchases as well. When you stockpile toilet paper by the case after finding a good deal at the grocery store or discount warehouse chain, you are not only incrementally saving money on each item’s cost by buying in bulk. You are also saving money by not paying higher cost of the products later due to inflation as well.

What Is COBRA Health Insurance And Why You May Need It

by Guest Contributor

What is COBRA health insurance? Consolidated Omnibus Budget Reconciliation Act (COBRA) is a law that was passed by Congress in the mid 1980s that gives some employees and their dependents the ability to continue receiving health insurance coverage even after leaving employment. There are many times when you need to continue to receive private health care even though you may have lost your job. Health insurance is expensive, but COBRA health insurance can help you cover the gap in coverage until you find a new job with adequate health insurance for you and your family.

Who Is Eligible For COBRA?

An employee and their immediate family is eligible for COBRA health insurance coverage if one of the following qualifying events occurs that results in loss of benefit coverage:

Death of the covered employee
Employee loses coverage due to involuntary termination
Employee loses coverage due to a reduction in hours as a result of resignation, discharge (except gross misconduct), layoff, strike or lockout, medical leave, or slowdown in business operation
Divorce or legal separation that terminates the ex-spouse’s ability to receive coverage
A dependent child reaching the age when he is no longer covered

20 Things I Should Have Known Better About My Finances

by Hank Coleman

I should have known better about my finances in my 20s. Heaven knows that I have made a few financial mistakes along the way.

This list of what I should have known better about my finances in my 20s is an attempt to help others before they make some of the same mistakes. It is not too late though to recover from your errors though if you have made these listed below.

20 Things I Should Have Known Better About My Finances

1. Don’t borrow from your 401k retirement plan. Even though you are paying yourself back with interest, you are going to be forever behind the retirement savings power curve.

2. Invest enough to get the employer matching contribution to your 401k Retirement Plan.

3. Whole life insurance policies are a waste of money. Term life insurance is a much better use of your money.

4. Your children don’t need any life insurance policies. You should have enough to bury them with your emergency fund.

5. Maxing out a Roth IRA is one the best things we can do. This should be your goal as soon as you are financially able after you start working.

I Fibbed And Bought A Bar Of Gold – Five Crazy Safes

by Hank Coleman

A few months ago, J. Money from Budgets Are Sexy showcased several very awesome manly piggy banks and crazy safes that people could buy on the internet. I fell in love with this bar of gold safe (see attached picture of my bar of gold below).

I have a theory that people will save more money if they have somewhere cool to put it. I have a jar labeled casino money that helps motivate me to save money! Just like nicknaming your savings accounts, naming your spare change jar can have a huge benefit and really drive your desire to save money for a specific purpose.

Here Are Five Cool Safes That Inspire Me To Save

1) Gold Bullion Bar Coin Bank

2) Grenade Bank

3) Vacation Fund Coin Jar

Harnessing The Power Of Compound Interest

by Hank Coleman

harness the power of compounding interest Compound interest is an amazing factor of investing and growing wealth. It is built into almost every financial calculation when looking at retirement, growing investments, and increasing your net worth. Even Warren Buffet said that compound interest played a large part in his accumulation of massive wealth.

Compound interest is what happens when the interest earned on an amount of money becomes part of the principal, and then more interest is then earned on that larger sum. You interest earns you interest. This continues to repeat, and the account is said to compound year after year with new interest being earned because you reinvested the old interest in your account.

Why Good Companies Do Not Always Make Good Investments

by Hank Coleman

There is a difference between a good company and a company’s stock that makes a good investment. How do you choose and know when a good company may be a poor investment choice? How do you keep from falling in love with a company? These are some of the tricky questions that individual stock investors wrestle with.

Here are a few things to consider when trying to identify when a good company may be a bad investment.

The Right Stock Valuation

Classic finance theory states that the valuation of a stock price over the long-term is based on the current value of its future earnings (cash flows). So, what does that even mean? It means that a company’s individual popularity unfortunately does not always translate into higher share prices. Wildly popular companies can have next to no profits. Just look at the earnings of internet companies like Facebook, Yelp, Groupon, and the like. Far too often, they are more popular than profitable.