Recently I asked you to share the best financial advice you've ever received. Here's a second installment of some of that advice. A reader named Bob said that during a pre-marriage class he and his then fiance attended, the teacher suggested using pay raises to build an initial savings account. In Bob's words, "I can remember how taken aback I was when I did the math and realized what a significant savings base we could establish in just three years. All it would take was establishing and maintaining a reasonable budget, committing to staying within it for three years, and banking 3 years of modest raises." Bob says following that advice helped his wife and him develop the habits of living beneath their means and saving money. They have raised five children on one income (he's a teacher) and have never had debt for anything except a mortgage.
Matt's View
Bob said the savings advice stemmed from a simple question the teacher asked: "What do you do with your raises?" Without some forethought, expenses usually increase to absorb all new income.
Twenty years ago, when Nike signed basketball superstar Michael Jordan to an endorsement deal, $100 basketball shoes became all the rage. Kids begged their parents for a pair. Some even killed for them. Flash-forward to today and New York Knicks guard Stephon Marbury is out to end the insanity of overpriced sneakers. As reported on ABC News, Marbury remembers longing for Air Jordans as a kid. But his family lived in a housing project and $100 for a pair of shoes was out of the question. Now that he earns $17 million a year, he could easily afford even Nike's $2,000 gold-accessorized shoes. Instead, he has introduced a line of "Starbury" (his nickname) athletic shoes, jerseys, and hats--all selling for less than $15. The products are available exclusively at a retail chain called Steve and Barry's. To see if there's a store near you, click here
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Matt's View
Our fascination with celebrities is often a hindrance to wise money management. With the media full of stories touting the latest example of celebrity high living, it's refreshing to see someone using his star power for a good purpose. But can a pair of $15 athletic shoes really be any good? Apparently so. They're the same shoes that Marbury wears on the court.
The one downside to the inexpensive Starbury shoes is that they're made in China.
So far this year, income tax refunds are averaging $2,650--up about $100 from last year. Among the suggestions about what to do with that money from a recent MSNBC article: Put the money in an IRA, pay down debt, give some to charity, invest in yourself by taking a class, pay to have a will or more comprehensive estate plan created, use a portion of it to treat yourself to something you've been wanting, and change your withholding so you don't overpay on your taxes again this year.
Matt's View
Giving to a good cause is a great use of at least a portion of a tax refund. Which organizations are addressing issues that you care about? One favorite of our family is Compassion International
, which helps impoverished children. As for other ideas for your refund, if you don't have an emergency fund, open a money market fund with a brokerage house such as Fidelity or Vanguard. Paying down debt is my next choice. And one last idea: If you have children and haven't started saving for their college expenses, consider putting some of your refund money in a 529 plan. Savingforcollege.com
is a good resource for finding the right plan.
A recent article on the Motley Fool's web site talked about the challenges of living through a kitchen remodel. After trying to temporarily make room for their kitchen stuff in other parts of their house, the author and her husband concluded that they simply have too much stuff. That made her curious to know how many other people are in the same boat. When she discovered that there are now nearly 60,000 self-storage facilities in the U.S. she realized that she's not alone in her stuff overload.
Matt's View
As spring dawns after another long winter, the owners of overstuffed homes turn their hearts toward...garage sales! It's an annual rite of passage in which we pass all of the unused stuff from our homes to our neighbors' homes!
Seriously though, done right, a garage sale can help us de-clutter while raising money to build an emergency fund, pay off debt, or support a worthy cause. For ideas on how to have a great garage or yard sale check out Yardsalequeen.com
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