Episode #125 of the Stack Overflow podcast is here. We talk Tilde Club and mechanical keyboards. Listen now
72

It's important to differentiate between "living below your means" and being smart about money. Buying a used car with low mileage is generally a smart financial decision considering every car becomes a used car the second you drive it off the lot. Financially, there are only advantages to living below your means. You will save more money which can be ...


65

Your biggest problem is that this may be seen as a conflict of interest - in other words there is potential for you to make decisions about company money that benefit you, rather than the company. Fortunately it's not a very big problem, handled rightly. In order to prevent any possibility that this might be a problem, I recommend that you: Go and tell ...


59

Assuming you're in the US, you can't do that. The IRS doesn't value your time, they value your revenue and actual expenses. For your personal record keeping you can call it whatever you want, but for tax-purposes time you give away is irrelevant.


48

A simple budget spreadsheet is fine for this. In one tab, track all your income: - take-home money from employment (use an online calculator to estimate if you only know your gross salary, but within a few months you'll have actual real data to work with) - money from interest on savings - any other money you have coming in In another tab, work out your ...


47

While you have credit card balances that are accruing interest, you should not be charging anything new to the credit cards. There are a few reasons for this. When your credit card has a balance that is accruing interest, then any new charges will start accruing additional interest immediately. That means each purchase you make is costing you much more ...


36

Years ago I did some free work for a non-profit and I asked my accountant if I could deduct that effort as an expense. He explained why I couldn't like this: If you want to deduct it, then invoice them at your regular price, and after they pay you, donate the exact amount back to their charity. Then you can deduct the full amount, but, of course you'll ...


35

Other answers do a good job explaining direct financial disadvantages, so here's another point of view: Living frugally might negatively affect your social life. For example, if your friends like going out for expensive dinners, choosing not to join may damage your relationship. Appearing to be rich, for example by driving a nice car, may increase your ...


26

Vicky provided a great answer and I agree that a spreadsheet is good for budgeting, some of the budgeting apps available make it easier to track spending or resolve deficits/overages in your budget, but none of them are perfect. Having to look at your monthly spending when entering it into your budget can help you be more aware of what you are spending on. ...


26

I think there are a couple of budgeting tools that have served me very well. Consider the big picture Think about money in terms of years, not paychecks. Netflix isn't just $12 per month, just one latte per paycheck; it's $144 per year. Your rent is $15,000 per year. A Mercedes lease is $7,000 per year. Etc. Make the numbers in your head bigger not ...


26

Should I hire a tax person to represent me? Or go in myself? I'm just afraid of saying the wrong stuff. I can't tell you whether or not you should hire someone, but here are some things you should consider: Penalties/Interest: After an audit, if you owe additional tax you'll pay 0.5% per month up to 25% of owed amount in penalties and will also pay ...


23

Credit card companies charge 2%-3% transaction fees. On typical retail transactions [buying clothes, groceries, electronic goods, etc] the margin is in excess of 10-30%. Hence the Merchants tend to absorb the cost of card from profit margin. In petrol transactions, the dealer make a fixed amount per liter of pertol/desiel sold. They cannot absorb the loss ...


19

The big financial disadvantage is likely to be the risk that the low priced home you purchase appreciates more slowly (or declines in value) compared to the better house you could have afforded. This is obviously very location dependent but there are, for example, plenty of neighborhoods in Detroit where home prices haven't recovered since the 2008 ...


16

For quite a number of products, the cheaper option ends up being more expensive over time, an often quoted paragraph in that context is the Boots theory of socio-economic unfairness which highlights the problem well even if it is completely fictional. The running cost of a used car is likely to be higher than for a new car, because there is usually a reason ...


15

Typically you give a loan to the company from yourself as a private person, and when the company makes money the company pays it back to you. Then the company pays for all the expenses with the money from the loan. Even if you don't want a business account yet, you can probably ask your bank for a second account (mine in the UK did that without any ...


15

can I use my credit cards for the monthly expenses Sure you can. But I think you're really asking if it's wise to use the card for monthly expenses. My answer is NO, especially if you're in so much debt because of overspending. Advice from someone who paid off a lot more than $20K in CC debt: stick the CCs in the back of your metaphorical sock drawer, ...


15

The downside to living below your means, is that you don't have the same level of luxuries attainable if you lived at your means. You may also have fewer opportunities. This can impact your life in many ways, including financial. Living in a worse area to save money would be the most common example where the benefits may be deceiving. e.g. your commute ...


14

Your best bet is to call your insurance provider and ask. Typically copays do not count towards the deductible but do count towards the Out Of Pocket Max. It's probably the case that the PCP does not know that you hit your OOP max and charged the copay as your insurance card instructs. I expect you will receive a reimbursement check from your insurance ...


13

You spend ten dollars You get back six dollars in tax relief Total loss of four dollars. This will always be the case unless the tax relief is more than the expenditure, which it never is. There are some ways in which this can become worth it: if the thing you are spending the money on would actually be useful, of it you might be able to sell it for more ...


13

Is your credit card spending on things outside the categories listed in your question? I generally don't put credit card expenditures in their own category of spending because I'm buying things like gas and groceries, etc. I track all spending whether from my checking account (bill autopay) or credit card account as spending in budget categories, and I just ...


13

While in my heart, I respect Ben's answer, let me play devil's advocate. You don't mention the details for each card, the credit line, interest rate current balance. Say you have one card that offers 2% cash or equivalent miles. If you cycle the monthly $1200 thru this card, that's $14400 in charges, and $288 in perks you'll get back. That amount shouldn't ...


12

After a 6% commission to sell, you have $80K in equity. 20% down on a $400K house. 5% down will likely cost you PMI, and I don't know that you'll ever see a 3.14% rate. The realtor may very well have knowledge of the cost to finish a basement, but I don't ask my doctor for tax advice, and I'd not ask a realtor for construction advice. My basement flooring ...


11

I find it best to go to the horse's mouth (i.e. the company that operates the fund, in this case Vanguard): Extended Market ETF 0.16%


11

Generally speaking, under an standard Obamacare plan, you should not have to pay any copays or coinsurance on any essential benefits once you have met your out-of-pocket maximum (Obamacarefacts.com). In practice, however, there are a few complicating factors: Did the money you spend so far count towards your out-of-pocket maximum? If you payed for ...


11

A brand-new car is a luxury purchase that loses ~10% of its value the moment you drive it out of the dealership. It sounds like what you need is a reliable used car. That would be an investment in being able to do your job. Keep up the good work and continue to build your savings.


11

In addition to the other fine answers here regarding spreadsheets, and zero-based budgets, I have found that another great key to success is to only allocate money to be spend in the month after it was earned. I allocate the paychecks I receive in March to be spent in April, etc., because until I actually receive the paycheck I'm really just hoping that they ...


10

Here are the general guidelines on what you should report and pay - but the overall rule is that if it's not a business-related cost then you can't claim it. In your example, a client meeting may warrant a claim for 'entertaining clients' which could be claimed as a business cost - but buying yourself a coffee to get out of the house isn't a business cost.


9

The answer depends on your spending habits and priorities and many other factors. However, just on the basis of the numbers you give, the simple answer would be no. The difference in cost of living between Madison and San Francisco is almost certainly more than the roughly 25% increase in your salary. This is assuming you actually mean San Francisco and ...


9

First - pay off that credit card, skip the saving for a month or two to do that. No reason to keep high interest credit card debt. But as far as the car: From a purely financial perspective, new cars never make sense. As nanoman says, they lose a lot of value right away, and keep losing value. Used cars are far more cost-effective. Choosing to buy a ...


9

Is there a better way to budget for this other than just having a monthly "random" line item for non-monthly expenses? I think so. car tabs/registration, You know this is going to happen, so increase your Car Maintenance/Repair budget line item by the relevant amount divided by the average number of months between these "random" expenses. identity ...


8

Pub 527 my friend. It gets depreciated. Table 1-1 on page 5.


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