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An Honest Look at Your Business
There is a difference between being comfortable and being in apathy. It is very comfortable to have a smooth running organization when you have a team that knows what to do and does it. It is comfortable to have this group take care of your company...
Ben Franklin Didn't Quite Get it Right
When Ben Franklin said "a penny saved is a penny earned", he didn't quite get it right. Actually, a penny saved is worth more than a penny earned. Do you find this statement shocking? I am about to prove to you that what I'm saying is true. Most...
How to Share Your Home Office with a Sick Child
Monday rolled around and I was ready to go. I showered early, fired up the computer and pulled in all my email before my daughter's alarm went off at 7:00 a.m. As I was making her breakfast, my thoughts were focused on all the work I was going to...
Tax Reform, My Way
We need real tax reform and we need it now. Previous attempts have been made at tax reform, but they have only provided band-aid solutions that have still left us with too many quirks, complication, and read tape. There are several things...
Winning the Credit Game
Everywhere we go, the word credit can be found, shining huge dollar signs in front of our very eyes. Everyday we receive solicitation and promotions offering us credit. Credit actually makes the financial world go round, yet just the mere mention of...
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Ben Franklin Didn't Quite Get it Right
When Ben Franklin said "a penny saved is a penny earned", he didn't quite get it right. Actually, a penny saved is worth more than a penny earned. Do you find this statement shocking? I am about to prove to you that what I'm saying is true.
Most people erroneously believe the best way to strengthen their financial health is to increase their income. On the contrary, saving money by cutting costs will get you there quicker. You see, it's very simple. When your income increases (with some exceptions like the part of it you put into your 401k), that extra money is taxed. On the other hand, any amount you save by cutting costs is not taxed. Therefore, $20 saved by cutting costs is worth more than a $20 increase in income.
The following (although over-simplified) example will illustrate this principle. Let's suppose that Jack and Cindy have identical jobs and incomes. Let's also suppose they shop at the same grocery store and pay about the same amount for groceries each week. Now, Jack gets a $20 per week pay increase and Cindy does not. However, at about that same time, Cindy finds a new grocery store where she is
able to save $20 per week on her grocery bill. Assuming nothing else has changed, Cindy is now better off financially than Jack, even though she did not get a raise and he did. How can this be? It's because Jack has to pay taxes on his $20 raise but Cindy does not have to pay taxes on her $20 grocery discount. Assuming Jack is in the 25% federal tax bracket (and disregarding any possible increase in his state or local taxes), he will be able to put only $15 into his piggy bank each week whereas Cindy will be able to put the whole $20 a week into hers!
Bottom Line: It is more blessed to receive a discount than to receive an equal amount in a pay increase!
About the Author
Terry Mitchell is a software engineer, freelance writer, and trivia buff from Hopewell, VA. He also serves as a political columnist for American Daily and operates his own website - http://www.commenterry.com - on which he posts commentaries on various subjects such as politics, technology, religion, health and well-being, personal finance, and sports. His commentaries offer a unique point of view that is not often found in mainstream media.
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