One of the most effective and painless ways to save money without altering your standard of living is by earmarking earmarked money. Money that can add up to thousands of extra dollars, which can give you an unusually strong boost towards a better savings plan.

When you get down to the last couple of coupons in your loan payment book, don’t think about the extra cash you’re about to have. Instead, think about a personal savings plan vehicle into which you can divert it, or into a high interest account where you can hold it while you analyze other possible investments.

After the loan is paid off, keep writing a check to yourself and desposit it where it will do you some good. You won’t miss the money since it has been going out anyway. You will be surprised at how fast you can accumulate extra funds to help save you more money.

Ultimately, saving money from a one time or intermittent expense should be everyone’s goal. For example, you may have been paying off your student loan for the past 10 years at $75 a month. Or for two years you may have been sending your doctor $100 a month for a minor surgery.

Let’s say you finance your car for three years, but trade it in every five years. During the intervening two years, where does the installment money go?

These payments are fixed expenses budgeted into habits like any ordinary rent or mortage payment. But, what’s shocking to know is they aren’t fixed. They come to an end, and when they do, where does the money go? For most people – it evaporates!

These expenses exist in:

–Mortages, which some people do actually pay them off.

–Tuition for private schools, universities, housing.

Finding more money doesn’t just stop there. Knowing the metrics to become a superior saver moves into what to look for in mark-ups and business services.

Because of the necessity for stores to arbitrarily mark up the price of their products and services, it’s extremely important that you never assume that listed prices are set in stone. Only under highly unusual conditions is there no reason for you to get a price reduction.

Mark-ups on some goods and services include:

– Jewelry and Furniture 100%

– Luxury Automobiles 25%

These money saving areas has multiple paths that can lead you to even greater savings. Remember, the more money you can pay yourself into a savings account, the more you will learn how to make saving money a wonderful habit!

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Individual Retirement Accounts (IRAs) began to see a big change in 1987 with new tax laws. You or your spouse may be entitled to deduct from your taxable income, all, some, or none of the contributions to your IRA, depending on the type you select, your adjusted gross income and whether you or your spouse is eligible for an employer sponsored retirement plan.

The thing is, even if you don’t get any deduction from your income for your IRA deposits, it may still pay to keep making contributions (if you can afford it) to your IRA account. The taxes on any IRA interest or dividends receive special tax
protection.

For example, let’s say you have a high yield IRA that earns 10 percent annual interest. You and your spouse will receive 100 percent tax deferred income on the $4,000 contribution, or $400 per year without compounding.

If you leave the $400 in the account, then next year you can earn 10 percent on your new principle of $4,400 – not figuring compound interest. This interest buildup increases the size of your IRA until you are ready to withdraw funds from it. Taxes may be due immediately, but if you are retired, you will most likely be able to pay a lower tax rate.

The real eye opener, is that you may have more money available from your IRA than you think. Let’s say you and your spouse are currently working, and each of you opt for electronic deposit of your salary and you elect to have your bank electronically transfer $166.66 per month to your IRA account. You both soon realize that you each have accumulated

$1,999.92 toward your IRA by the end of the year. The theory is that if you never SEE the money, you never spend it!

However, you may find yourself near the year’s end without having set aside the needed sum ($4,000 for both of you). If this occurs, you might choose to borrow the money. This kind of strategy can actually work out well for you.

Another example, let’s say you take out a home equity loan. Your bank charges 10 percent interest, and you pay off the loan plus interest ($4,400) in one year, with monthly installments of approximately $367. You choose the standard IRA rather than the Roth IRA for this strategy. The $4,000 deduction for a standard IRA will reduce your taxes by $1,120 if you are in the 28 percent marginal tax bracket, and the interest on the home equity loan may be deductible under certain conditions.

Let’s also assume you earn 12 percent interest on the IRA. In the first year, you pay back the $4,400 on the loan. The $4,000 in your IRA earns $480 over the year for a difference of $80 a year in your favor. If you can manage to follow this strategy for five years, here’s what your numbers will look like:

You will have spent $2,000 (5 x $400) in interest on the loans. Your IRA will have earned you $2,400 (5 x $480) in interest, plus you will have accumulated $20,000 (5 x $4,000) toward your retirement.

During this time, you received a $1,120 tax reduction (from your $4,000 IRA deduction) every year for a total of $5,600 and possibly a deduction for the $400 interest on the loan. This mainly depends that your total mortgage (if any) interest does not exceed  the interest on the purchase price of the home, or any improvements you’ve made. For a 28 percent tax bracket, this amounts to $112 a year, or $560 for five years.

Now you’ve earned $2,400 in your IRA and received a possible $6,160 worth of tax breaks. If you compare the $2,000 interest you paid on the equity loans, you can see that IRAs are not just a tax strategy, but it’s a well thought out investment.

The current state of the economy probably won’t give you a base for an IRA investment strategy for tax reform, but taxes will always be one of the many factors to consider when planning for future investments. Due to different investment options with varying risks and returns, give this some thought as how close you are to retirement, and the amount of risk you’re willing to take.

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Roughly four months ago, I had a few errands to run. So, with arms full of mail and packages I managed to open the door of my truck so I could hurry and beat the traffic. Out of nowhere this guy steps up and asked if I needed my truck washed, or possibly waxed.

The guy had a clean cut look and was well spoken. I told him that I was leaving, but when I returned – sure thing. I asked how much and he replied, “Oh for a wash and a wax, for you let?s say $50.00″

I thought long and hard about this strange fellow while I was making my rounds and figured that he needed the money pretty bad to do this amount of work for that price, considering what a regular car detailing service cost these days!

When I returned to the office I agreed to let him wash and wax my truck for $50.00. He asked me if I had a water hose, and I gladly pointed towards the side of the building. I noticed he had bucket handy with all the cleaning stuff inside.

While he washed and waxed my truck, I asked him if he does this all the time or just part time. He told me that he does this all the time, because he lost his job at our local textile mill, which closed its doors last year. And that he was searching for a way to obtain the correct setup.

I immediately excused myself and went inside and called my banker to see how much interest it would be on a short term loan, and to see if there was any vans that were repossessed. My banker told me that he did have two that were on a lot across town, but I had to give 5% down in order to finance.

I then went back outside to check on his progress and to ask him if he’d be interested in doing this full time, only if could get all the things to do it with. He replied “sure but how?” “I don’t have any money.”

I explained to him how he could get a low interest loan with 5% down, that I called and found a repossessed van. I expressed further that all he would need to get this going is a van, pressure washer, a water holding tank, cleaning supplies and drive around to businesses around the area. He could wash and wax vehicles while people worked and they never had to come to him. He would go the their place of business and do this.

This guy was so excited to say the least when I explained this in detail. So, I told him what he had to do, who to talk to at my bank, I paid him for his work, then he left.

Four months later, almost to the day that he washed and waxed my truck, here he comes pulling up to the front of our office driving a white van with a logo…

“Stan’s Mobile Cleaning Service”

I was shocked. He stopped by and said that, not only was his business doing great, but he had bought another van, hired a two man crew, and was staying very busy.

I was extremely impressed. The reason he stopped by was to thank me for giving him such encouragement and helping out the way I did. He took me out to lunch, and gave my truck another wash and wax – for free!

He couldn’t stop thanking me for what I did for him. I said that business opportunities are there, all you have to do is learn how to “Grab what’s Yours.”

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