SHOW NOTES: 2021-01-07 MiM

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Last Week’s Question of the Week: What website will allow me to review my Social Security benefits?


HOST: Your topic today revolves around spending less and saving more, I assume for retirement someday?

KLAAS FINANCIAL: Yes, really looking at how and where you spend money and looking at creative ways to consider spending less money in the new year and putting away more for your future is really the best advice, we can suggest to you! If you are thinking of retiring sooner these ideas can get you to your goal sooner. But before we get into our ideas let’s have some fun with trivia this morning:

How much do you think a dollar bill weighs?
The answer: One gram.

How many bills equals a pound?
The answer: 454 bills. (454 grams = a pound by the way!)

And, if you have $1 million in singles, this would add up to over 1 ton!!! Ok, enough trivia!!

So, what areas can you consider spending less in the new year? Consider some small things:

  • Bring your lunch to work (if you are still going into an office for work). Average Americans spend around $3000 per year on lunches.
  • Consider making your own coffee at home vs. visiting your local barista. So, depending on your age, according to an Amerisleep survey, people over 65 spend very little in coffee shops ($7 per year,) whereas coffee drinkers aged 25-34, on the other hand, spend an average of $2,000 per year in coffee shops!
  • Buy a water filter. The average person in the US spends about $100 per year on bottled water. Buy a good water filter and then this expense can wash away!
  • Use a programmable thermostat. This is relatively affordable and then you can program your Heat and AC to come on when you choose, working to make sure you are getting full value for when you need it, and paying less overall for your utilities.
  • Switch to a more affordable cell phone plan. With cell phone bills costing over $100 month for many people, a family is likely to be spending a few hundred per month. Compare and see if another company can save you money.

    HOST: What other areas can we look at to reduce spending?

    KLAAS FINANCIAL: First of all, review all of your expenses. If they still make sense, then keep them.

    • Consider cancelling your gym membership, but don’t stop exercising! If you are able to use your membership and actually do, then keep it in place. If you have it, never use it and prefer to be outside to get your exercise, or to do it from your own home gym, then seriously look at removing that monthly expense of $50+ or more from the list.
    • If you smoke, consider quitting. While this is certainly not easy to do, we are reminded that tobacco kills nearly 500,000 people in the U.S. each year. From an expense standpoint, if you smoke a pack a day, you might be spending over $7 per pack in Wisconsin, or over $200 per month. In other states that amount may be over $400 per month.
    • Look at your cable bill and your various online subscriptions. The average monthly cable is close to $200. When you add in online subscriptions such as various streaming services this number can certainly grow higher.
    • Evaluate your car and home insurance bills. While insurance is a necessary expense, you may be paying for coverage that does not make good financial sense. Get this re-quoted every 2-3 years to make sure it is still competitive.
    • Think before you make a big purchase. When you spend big dollars, you want the purchase to be regret free. Ask yourself the following questions: Can you afford it? What else could you spend this amount on? Is it a need or a want? Am I simply adding to other debt? Do I like the feeling of debt?

      HOST: So, if I am saving money by spending less, then where should I direct those savings?

      KLAAS FINANCIAL: It depends on your circumstances, but generally we would suggest:
      Attack debt if you have any. Pay down your mortgage quicker so that as you approach retirement that monthly spend is almost gone. Build up your savings/emergency account. Increase your retirement contribution for your future. Making a retirement plan to retire when you want can happen when you make some good moves today!

      HOST: Renee from our Money in Motion Listener Corner asks: I am thinking about re-financing my mortgage in 2021. Is this a good idea since mortgage and re-finance rates are so low?

      KLAAS FINANCIAL: Yes, you should explore it if it makes sense for your situation. Mortgage and refinance rates are incredibly low right now. You will want to have your current bank run the numbers for you and discuss the fees that will be charged, and then compare this with other lenders. If you have a mortgage from 2-3 years ago with 4-5% interest rates, you should know that current 30-year rates are sitting at 2.93% as of December 31, 2020; and 15-year fixed rates are at 2.40%. Saving 1% point or more can be a significant savings so it is worth looking into.

      This Week’s Question of the Week: How many dollar bills are in a pound of money? Is it 250 or 454 bills?

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      Catch C.J. Klaas and Maleeah Cuevas on Money in Motion every Thursday on Madison's 1310 WIBA from 8:05-8:35am.