Consumerism Commentary - Latest Comments in Is Finding $6,000 in Saved Expenses Better Than a Raise?

Re: Is Finding $6,000 in Saved Expenses Better Than a Raise?

nickle young — Sun, 17 Aug 2008 12:32:40 -0000

I think finding a way to save $6k of your money is better than getting a $6k raise, based on the fact that you have already paid taxes on your money.

The better solution though, is to find a way to do a little of each. ;)

Re: Is Finding $6,000 in Saved Expenses Better Than a Raise?

Mike — Sat, 16 Aug 2008 05:33:22 -0000

Of course it's better to save $6k, for exactly the tax reasons already stated.

Let's keep it simple. Suppose you have $50 in hand, and you HAVE TO buy things that currently cost $100. So how do you get there? Well, if you can find a sale, or a substitute, and "save" $50 so that your $100-worth costs you only $50, then you're home free.

But suppose you don't go that route. Suppose you take the $50 in hand, and then you go out and earn your other $50. You're there, right? $50 + 50 = $100. Um... NO. That second $50 is fully taxable. So that second $50 is really only (let's say) $40. So in scenario 1, you have all the cash you need; in scenario 2 you have $50 + 40 = 90 but you're trying to buy $100 worth of stuff. Good luck-- maybe the store owner LOVES YOU and will give you a discount? If not, where's that $10 coming from?

A penny saved is NOT a penny earned. A penny saved is a TAX-FREE penny earned.

Re: Is Finding $6,000 in Saved Expenses Better Than a Raise?

Andy — Fri, 15 Aug 2008 15:40:19 -0000

Credit card arbitrage.

Easy way to make lots of extra dollars.

Re: Is Finding $6,000 in Saved Expenses Better Than a Raise?

Patrick — Fri, 15 Aug 2008 14:21:34 -0000

I think finding a way to save $6k of your money is better than getting a $6k raise, based on the fact that you have already paid taxes on your money.

The better solution though, is to find a way to do a little of each. ;)

Re: Is Finding $6,000 in Saved Expenses Better Than a Raise?

Ben — Fri, 15 Aug 2008 14:06:05 -0000

Okay, sure, for a lot of people this kind of thing is pretty useful. But for a lot of the kind of people who read this blog are probably not going to be able to get much in the way of these low-hanging-fruit savings. Bank fees? Phone costs? Are you kidding me? I looked, and not one of their suggestions applied to me at all, except - arguably - food shopping; admittedly, I'm single and without responsibilities, so I don't even have life insurance.

Re: Is Finding $6,000 in Saved Expenses Better Than a Raise?

vilkri — Fri, 15 Aug 2008 11:18:16 -0000

I don't think saving $6000 is better than getting a $6000 raise, but I do think it is easier. If you want to improve your cash flow, you have two conceivable options: (a) you can spend less, and (b) you can earn more. Option (b) is quite often not available. The only thing you can control for sure are your expenses.

This also reminds me of business school. The professor of controlling made sure that we got the following point. It is easier to save $1 dollar somewhere within the organization which goes straight to the bottom line than it is to earn another $1, only part of which makes it to the bottom line.