Author Archives: Brian Hawkins

About Brian Hawkins

Middle aged frugal (cheap) guy interested in personal finance and becoming debt free.

Looking At Middle Class Mindsets And Roadblocks

I was recently reading an interesting article on Financial Samurai discussing the psychology of the somewhat upper class (financially) to publicly portray a simpler lifestyle. It’s an interesting read, check it out at: Most People Make A Lot More Money Than You Think.

wealth to poverty scaleMiddle Class Mentality?

I’d like to expand on the topic by looking at the difference of mindset in that upper class and the middle class. There seems to be an interesting contrast and may explain a lot as to the path to wealth and the mental roadblocks most people develop.

Middle Class Scenario

Okay, let’s say Sam’s article is correct (I have a slightly different viewpoint) and most people have more money than we think. What about those people one step below the financially privileged? What about those in the mid to upper middle class. I’m referring to those earning around $70,000 to $100,000 a year. We see a completely different public image and mindset in this group, in my opinion. This is where we find a large percentage of people living in homes they find tough, financially, to maintain. Many are driving large and expensive vehicles they cannot afford. Trips to the malls and shopping sprees at the mercy of credit cards are almost the norm with many in this group. Unfortunately the public image is almost always far better than the real picture.

The Financial Roadblock

I don’t know what makes the person earning eighty grand a year feel the need to lease or finance a forty thousand dollar car when those that can easily afford the same vehicle in cash opt for better value rather than image but I believe it’s a huge roadblock for the middle class. Out of control spending and living beyond their means is what’s keeping those deep in debt from achieving more. It’s a case of mindset and self-control, plain and simple. So the next time you see that dressed to kill couple climbing into a Yukon Denali with bags from high-end specialty stores don’t be too quick to judge success. Rather than being impressed you might be closer to the truth feeling sorry for them. This is far too often the case. A true inside look at their finances might tell an entire different story. Which scenario do you want to be in?

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Prepare and File Your 2011 Federal Income Taxes Free

IRS Free File ProgramIs your 2010 Adjusted Gross Income (AGI) $58,000 or less *(Check your Adjusted Gross Income from last year’s tax return)? Consider saving a little money and use the IRS Free File program. Taxpayers can prepare and file their federal income tax returns using commercial online software provided by the Free File Alliance companies.

Free File is available 24 hours a day, 7 days a week and there’s nothing to download. The software stays on the Free File company website and you file your tax return there. Grab your tax return from last year, your W-2s, 1099s and other tax documents and head over to http://freefile.irs.gov/

*According to the IRS, 70% of all taxpayers have an AGI of $58,000 or less.

Understanding Our Money System In Fifteen Minutes

ten dollar billThis admittedly boring video will explain how the United States Fractional Reserve System works. Learn how the United States Government manipulates and creates the ‘money’ we use daily. The money reserve system is complicated and if everyone understood how it worked there would be public outrage like no one has ever seen. This video isn’t anti-government or another conspiracy theory, just a clear explanation on modern money mechanics. Thinking about money online? Learn to make money blogging by the blogging experts.

MONEY = DEBT: Modern Money Mechanics & The Fractional Reserve System

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Live Rent Free Or Make Millions With This Idea – Seriously!

Live Free With No Rent Or House Payment?

Bank Owned - Home Sitter WantedA member of our family is losing their home soon and their situation gave me an idea. There may be a little hope for those in similar situations if my guess is right.

The Details:

Ok, real quick; they don’t make a lot of money. They haven’t made a house payment in over a year and the bank just listed their home for sale. BUT, they haven’t been officially foreclosed on or evicted yet.

The bank said they could continue to live there, without making payments, until the house sold. Even then they will have plenty of time to move out – up to six months!

Why would the bank be so generous? I am sure it’s in the bank’s best interest. I know the banks have taken it hard and dry lately with the ‘revenge’ damage and vandalism involved with evictions and vacant homes. I imagine it’s better to keep someone living there, even free, which will take care of the place. That way the house is less likely to be broken into and little things like the utilities remaining on must be a big plus for the banks.

My Idea:

It might sound farfetched but what if people in that position made a proposal to the banks that they would ‘house sit’ on foreclosed and vacant property? I don’t know if it’s been done before but it sounds like a win-win for both the family and the bank.

It would be rough moving every year, or even more often, but that’s a great trade off – living somewhere free.

Business Idea:

Could this be a huge business idea for the right person? Imagine a professional ‘house sitting’ service with a client list full of large banks? Am I crazy or just a freakin’ genius?

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When Should We Pay For A Gym Membership?

gym$I bet a lot of people would think my short answer for when to buy a gym membership would be never but we’re a lot more complicated than that.

I would say, generally, it’s perfectly okay to pay for a membership to your local gym if we can say yes to “all” of the following questions:

  1. Have you been exercising consistently several times a week for at least six months?
  2. Do you have four to six months of family income in a separate and accessible account for an emergency fund?
  3. Have you paid off every credit card and interest bearing loan except your home?
  4. Do you have a few hours of free time each week that you can, and will, dedicate to the gym?

If we can say “yes” to those four simple questions I would say we are in great shape to join the gym. Now don’t use this advice as a reason not to workout. As long as it’s physically safe for you to do so, you can and should exercise at home. You can get a very nice workout without forking out a dime on expensive exercise equipment or gym membership fees. Let’s get into shape both financially and physically.

Photo Credit: Flickr – twicepix

Save Thousands With A Mortgage Acceleration Program

Mortgage AccelerationOne of the quickest and easiest ways to pay your home loan down fast is by using some kind of mortgage acceleration plan. Paying off your mortgage loan faster can easily save you thousands or even tens of thousands of dollars.

How Mortgage Acceleration Works:

Weekly, bi-weekly or monthly payment plans? If you can manage it, and if your mortgage company or bank allows it, I recommend you pay your home loan payment weekly. This simple debt reduction tactic can save you a lot of money over the life of the loan. Here’s how:

To simplify things, let’s say your monthly home loan payment is $100. Lucky you, right? So you are paying $1,200 a year.

$100 x 12 months = $1,200

Rather than paying $100 monthly, you start paying $25 weekly. It’s the same thing, right? Now you are sending 52 payments of $25 which adds up to $1,300 a year.

$25 x 52 weeks = $1,300

So now you have sent an extra payment every year, which goes toward the principle, simply by changing ‘when’ you pay, not how much. Actually you are paying more but you just don’t feel it. There’s something like 4.3 weeks in a month, not 4 week in a month. Mortgage acceleration lets you take advantage of that extra time.

My Personal Example:

My personal equity accelerator detailsUsing my personal example, you can see that by making weekly payments and sending a little over $350/month extra toward the principle my 30 year traditional mortgage will pay off in fifteen years (only 12 years to go). Using this tactic, I will save close to $100,000 during the life of the loan. It would take a lot of grocery store coupon clipping to save that kind of cash! 🙂

Side Note: My monthly home loan payment just dropped by $130/month because my home lost market value – Hooray! I’ll still continue with the same weekly payments and we should be completely debt free, including the house, before this blog post is eight years old. Man this stuff is FUN!

The First Step:

Check with the financial institution servicing your home loan and ask about a mortgage acceleration program. These programs go by many names but you generally have to ask. Other names include interest reduction plans, equity accelerator (for Chase Bank), or mortgage reduction programs.

Don’t Stop At Basic Mortgage Acceleration:

Now that you have the ball rolling, and once you have a REAL emergency fund established, start dumping extra principle payments into your loan (DO NOT interrupt your debt free plan to do this). It’s amazing how quickly you can pay off your home with a little planning and when you get proactive.

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Cheap Home Entertainment With Redbox

DVD RentalYou’ve seen the big red kiosks in your local grocery store or even McDonalds. Redbox has about 24,900 of these cool machines. You pick from a list of new release movies, slide your debit card (we hate credit cards here) and the automated machine slips the DVD into your hand. It truly is the fully-automated video store experience.

Just A Dollar A Day:

Of course if Redbox was expensive we wouldn’t be writing about it but, wow, just a dollar a day? Hey, use that dollar you saved by not buying that lottery ticket.

Watch A Free Redbox Movie Free Every Month:

If you sign up to receive text alerts from Redbox they’ll send you a promo code each month for a free DVD rental. As if it wasn’t already cheap enough, am I right? To get text alerts just text the word REDBOX to 727272.

Follow Redbox On Facebook:

If you ‘like’ the Redbox Facebook fan page you won’t miss their special promotions and sweepstakes.

There you go, another fantastic quick money tip from HotMoneyTips.com Don’t ya just love us?

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