Increase Revenue, Decrease Cost

Get Rich Slowly wrote a great article earlier this year about finding and claiming missing money. The article describes how individuals can use MissingMoney.com to locate and recover unclaimed property records.

MissingMoney.com is a great search tool that allows users to claim missing property from a search results set. The site uses state databases to track unclaimed property.  To start searching, the user simply enters his/her last name and hits “GO”. The site retrieves all unclaimed pieces of property under that last name and allows the user to click on any items that match his/her name. Clicking on these items allow the user to review high-level details about the property and then presents the opportunity to claim the item from the site.

This is a pretty easy way to increase revenue if you ask me.

Note: The US Government provides a similar service, but lacks MissingMoney.com’s interface appeal and ease of use.

The best way to decrease everyday costs - get stuff for free. Below are four sites I use to check for free stuff:

1.  WeeklyFreebie.com: This site is updated every Monday and shares some of the top freebies of the past week.
2. Absurdly Cool Freebie Finder: I check this site once a day and usually find one good freebie a week. I also like the search capability to find certain free products.
3. Freebies from the Bargainist: I have an RSS feed for this entire site and this section really displays quality freebies. In fact, I am planning on using this Arby’s coupon posted today.
4. Spoofee.com’s Feebies Form: Again, I use an entire site RSS feed to browse the quality freebies, but this form is quite a freebie vault.

Please restrict your freebie impulses to items you will really use. No use wasting a good freebie!

Sunday Links

1. This Home Energy Audit tool, developed by Lawrence Berkeley National Library, is an awesome way to ensure your home is best designed for efficient energy use.
2. After you complete your audit, consult Real Simple’s post on additional heat-saving tips and products.

In the last lesson (post) we managed to cover the basics of allocating income to emergency savings accounts. Nearly all experts agree that building an emergency account is a necessity. The last, and least important, savings category is “other” savings; the final lesson in our three part series.

Some individuals are in great shape when it comes to retirement savings and have already built a nice emergency savings portfolio. These individuals have the opportunity to allocate income to this third category. Income within these accounts could be used for a slew of activities. Some of these activities include major purchases and family vacations.

As you can probably predict, there is not much depth to this lesson (post). The important takeaway from this lesson is that this savings category is the last choice when allocating income. If an individual needs to allocate 12% to retirement and has yet to build an emergency savings base, he/she should not allocate more than 1-2% of income to the “other” savings category.

Congratulations, you have successfully completed Income Allocation 101! Good luck with your income allocation.

In the last lesson (post) we managed to cover the basics of allocating income to retirement accounts. Nearly all experts agree that retirement savings should be the first priority when it comes to income distribution. The next most important savings category is emergency savings; lesson two in our three part series.

Welcome to Income Allocation 101: Emergency Savings

Before we attempt to evaluate how much income we need to allocate to this savings category, we should quickly address the need for these accounts. An emergency savings account is a risk management tool used for unexpected life-shifting situations. Life-shifting examples include losing your job or a loss in the family, not a recent urge to buy a new car. Building a stockpile of savings within this account could be used until life gets back to normal.

Again, few experts agree on the amount needed in this category. Honestly, the more the better, but a reasonable goal is three months of your current income. This will allow you to maintain your current standard of living for three months. Let’s go back to Scenario 2 from the last lesson to strategize ways to accomplish our initial goal:

Scenario 2: 30-year-old with some retirement savings and $70,000 salary

This individual makes $52,500 in income after taxes. In order to build a three month emergency savings account, this individual would need to dedicate 25% of his/her current income to do so. Given that he/she is already planning on allocating 9% to retirement savings, I would predict that saving 34% of this individuals current salary may be to aggressive. A more reasonable plan would be to tackle half of the three month goal this year, and another half the next year. This situation means the individual only dedicates $6,562.50 to emergency savings, representing 12.5% of his/her gross income, accounting for a combined retirement and emergency savings goal of 21.5%.

The nice thing about building an emergency savings account is that it ultimately gets easier to fund as time passes. Let’s build upon the prior example, hold the income at $52,500, and assume he/she contributed the rest of the three month goal the second year. Now that the individual has a nice three month base, he/she may want to simply add another month of emergency savings per year, or $4,375 (52,500/12). This amount only accounts for 8.3% of income, reducing the total savings goal to 17.3%. Three years pass and this individual has a six month emergency savings account and no longer needs to allocate money to this savings category.

But what if my salary increases? The beautiful thing about an emergency savings account is that many investments within this account will outpace your wage growth. In short, your emergency savings account will likely more than compensate for raises in your salary.

I will offer more in-depth analysis on which account types and assets are best for these emergency account at a later date. But for now, I would suggest taxable trading accounts and high-interest online savings accounts with liquid holdings. These accounts offer the highest return and allow you to easily sell and withdraw funds when your emergency hits.

Two quick recommendations:

1. ING Savings Account: Offers around 4% interest, great user interface, and easy money transfer. Leave a comment and I will email you my referral code so you get an free $25 for signing up!
2. Zecco Online Trading: Free trades! Great user interface and easy money transfer. Leave a comment and I will email you my referral code.

This post has since been added to the Carnival of Personal Finance.

Welcome to Lesson 1: Retirement Savings. This is the first of three lessons (posts) attempting to determine how best to allocate our gross income.

Retirement savings is simply a function of many different variables. Bankrate.com offers an excellent calculator that show how all of these variables interact and present your retirement savings progress. Click on this link and we’ll see how this report will offer insight on how much of our income we need to allocate to retirement.

Scenario 1: Default

This particular individual is in a bit of trouble. His current income allocation to retirement (10% of $50,000), given the other inputs, will not be enough to sustain his desired retirement lifestyle. This individual could persue a more aggressive investment strategy, but his/her best bet is to allocate more of his/her gross income to retirement. Let’s run another scenario.

Scenario 2: 30-year-old with some retirement savings and $70,000 salary

After taxes this individual has to contribute 9% of his/her income, which is only a little bit higher than the prior individual who had a much larger retirement savings base. As you can see, being young is a big advantage. Let’s run one more case that displays an individual that will need to allocate a significant amount of gross income to retirement savings.

Scenario 3: 50 year-old with a pretty good retirement base and $80,000 salary

With $250,000 it appears this individual is set, but this example shows that he/she will need to contribute 15% of his/her income to achieve his/her desired retirement goals. It is really important that you build your retirement base early to alleviate retirement situations like this.

So what have we learned? We learned that given our current inputs, we may have to allocate more of our income to the retirement savings category. Retirement calculators like these will be our first stop when evaluating how much of our income we need to save.

In the next lesson (post), we will evaluate how much of our remaining income we need to allocate to an emergency account.

Many individuals in the personal finance community preach the importance of asset allocation. But before you can balance assets across different portfolios, you must decide how much of your income should be allocated within these accounts. And before your decide where to put your money, you need to determine how much of your income you really have to allocate.

Welcome to Income Allocation 101: How Much Should I Save?

Personal Finance gurus love using the “rule of thumb” when it comes to gross income savings. Some say 10%, others say 20%, but this percentage is really the sum of several savings categories:

1. Retirement
2. Emergency Savings
3. Child Education Savings/Other Savings Goals

Income Allocation 101 will use calculators to show how to estimate the amount you will need to allocate in each of these categories, which will ultimately provide a total savings goal. I will dedicate one lecture (post) to each savings category. After completing this course (series of posts), we will be able to replace some of the assumptions in our savings model to craft a more accurate income allocation plan!

This site is an asset to individuals that are exploring different ways to build net worth. The pages and posts are dedicated to exploring ways to cut lifestyle costs and build revenues.

How to Use This Site:

1. Use this site to the fullest by visiting regularly or subscribing to our feed.
2. Find specific ways to save money by clicking on the “Decrease Cost” sidebar category.
3. Find specific ways to increase revenue by clicking on the “Increase Revenue” sidebar category.
4. Share tips by posting comments or filling out comments on the Contact page.

Thanks for reading and good luck maximizing your bottom line.