What if I told you I have a magical way of converting waste into retirement savings? Would you take about two minutes and read the secret recipe?
If your answer is yes, then grab a pen and paper and make your own list as you read through this week’s blog.
How much do you spend each month/year in making your “FAT TAX” payments?
You read that right – FAT TAX, not a flat tax.
Don’t you know what the FAT TAX is? According to the Michael Tannery dictionary of terms not normally used in everyday business, the FAT TAX is spending $$$ for goods and services that you pay for BUT NEVER USE.
Convert Waste into an IRA Contribution with five easy steps.
Step 1 – Eliminate any subscriptions you are not using weekly.
Gym Membership – are you really going or was that a New Year’s resolution that expired 45 days into 2016? Are you honestly listening to a ton of books on Audible or are they instead becoming more of a forgotten item on your to-do list? What about your Shoedazzle subscription – are you really needing to buy new shoes every month and how often are you wearing them? Do you really need Redbox with Netflix and Hulu?
Step 2 – Cut the Cord to Cable
I find that some of the worst spending culprits are those pesky auto-renewing payments. They’re so pesky in the fact that I made the decision to eliminate everything on auto-renew, except for our internet (since we definitely use that on a daily basis). It was altogether too easy to forget we even had them in the first place. Sometimes it’s best to go old school and de-automate your expenses.
I think cable is one of the most egregious offenders in this category. There’s so much content available through cheaper services like Apple TV and apps on your Smart TV that having a cable subscription feels like a pricey relic of the past. So if you’re not legitimately watching it, ditch cable this Spring!
Potential savings: $99 (the average monthly cable bill in America)
Step 3 – Brown Bag It
It’s time to go old school, as in when you were in grades 1-12. Take your lunch to work. Grabbing lunch out is such an easy habit to get into and before you know it you are eating out at lunch five days a week. Taking your lunch to work is like finding a Grant in your pocket every Friday.
The secret to success here is to make your lunches ahead on Sunday. Cook up a huge batch of a couple somethings on Sunday nights. By cooking in advance, you no longer have the excuse of running out of time mid-week to make lunch. Each day’s meal is already portioned out and ready to go in the refrigerator—all we have to do is grab it and go.
Potential savings: $200 ($10 per lunch every weekday of the month)
Step 4 – Plan your weeknight meals
It’s just so tempting to pick something up on the way home from work, especially those Campisis pizza’s and salads (972-931-CAMP if you need to know). Despite being simple and stress-free, take out can rob your budget without you knowing that your wallet was open.
How do you do it? Meal Planning on Sunday (and yes there is an APP for that). Plan, shop, and prepare on Sunday makes the rest of the week easy and enjoyable.
Potential Savings: $120 ($30 per week for the entire month)
When you look at your monthly savings it quickly totals $511.89 for an annual total of $6,142.68.
More than enough to make a $5,500 annual IRA contribution.
Wait a minute Michael, you said 5 steps.
Step 5 – Automate your savings
After you have done your FAT TAX elimination, then you switch to being proactive about your future and set automatic savings into your IRA account. The monthly contribution is $458 and that means you have about $60 a month to save towards a rainy day fund.
So what do you do next?
Look at your list of FAT TAX items and start getting yourself into financial shape. I know that in a year’s time you can see incredible results.
Need Help? Want to set up a monthly automatic contribution? Give us a call and we can work together on this.
Let me hear from you; bring me up to speed on how things are going, what’s changed, what you need or if there is something I can do for you. Let’s connect.
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Michael Tannery CPA CDFA™ AIF® ● CEO