The stunning Capital One hack raises concerns across the board, even for those who give to churches and charities online. So how can church-goers who give electronically make sure their data safe?
Source CBNNews.com https://ift.tt/2SWBdOr
الثلاثاء، 30 يوليو 2019
A Mental Toolbox for Avoiding Unnecessary Purchases
Jeremy writes in:
You have mentioned before that when you’re considering buying something, you put it aside in a list and think it through before buying it by looking for flaws in the item. Can you explain how exactly you think it through?
First, let’s start with looking in detail at how I handle non-essential purchases (things I don’t strictly need).
If I don’t need something and I’m considering buying it, I put it on a list that I keep on my phone. I just type in what it is and add an online link if there’s one available.
Sometimes, if an item isn’t too expensive and I haven’t spent much of my incidental/hobby money for the month, I might just go ahead and buy the item spontaneously. I budget a certain amount for my hobbies and for such purchases each month and so some smaller purchases will come out of that money in a spontaneous way, but that’s the exception rather than the rule. An example of this: recently, I bought a couple bottles of seasoning at Trader Joe’s that we really didn’t need. I just wanted to try them out and they weren’t too expensive. I didn’t add them to any list – I just bought them.
At the start of each month, I add a big dotted line at the bottom of this list to indicate a fresh new month. I also delete the highest dotted line in the list.
So, let’s say I have a list that looks like this:
Item 1
Item 2
Item 3
———-
Item 4
Item 5
Item 6
———-
Item 7
Item 8
Everything above the first line is something I first jotted down before the first of last month. If this were late July, everything above that first dashed line was put on my list before June 1. Everything in that section is okay to buy if I find it at a good price. I’ve given it enough time and consideration.
Everything between the first and second line is something I jotted down during the previous month. Again, if this were late July, I jotted it down sometime in June. I don’t buy things from that section.
Everything below the second line is stuff I added this month. I don’t buy things from that section either.
At the start of the month, when I add a new line at the bottom, I delete the first line. So, on August 1, my list would now look like this:
Item 1
Item 2
Item 3
Item 4
Item 5
Item 6
———-
Item 7
Item 8
———-
I’m simply looking for a really good price on the first six items, but the other two are still in a holding pattern.
Every few days, when I have a bit of downtime, I go through the items on this list, from top to bottom, ignoring the dotted lines. I try to convince myself not to buy each of those items, and if I realize it’s a bad idea – or if I just come to an item and realize it doesn’t have any interest to me – I delete it. Sometimes, if it’s a small item that seems like it’d be fun but really unnecessary, I will stick it on my Amazon wishlist, which some relatives use for holiday gift-giving occasions. I often wind up with a bunch of sauces and other things like that on there.
This is the thought process I go through when evaluating each item. My goal is to find reasons not to buy the item, so that the stuff I buy is stuff that’s really purposeful and useful. You can apply this thought process to any purchase you’re considering, whether in the heat of the moment or reflecting on it later.
My Toolbox of Questions for Eliminating Unnecessary Purchases
I ask myself the following series of questions whenever I’m thinking about a potential purchase on my list.
Is this item of reasonable quality? If I’m actually going to buy something I don’t need, I generally don’t want the “junk” version of it that will barely meet my needs. If I go and look at comparative reviews of items like this one, does it score at least reasonably well?
This usually spurs me to look at reviews of the item to make sure that it compares well to similar items and doesn’t have any notable flaws.
Is this item durable? One key element I always look for in reviews is whether an item is durable or not. For newer products, this is hard to tell, so what I’ll often do is go back and look at previous similar products from that company as well as the company’s overall reputation.
For the most part, companies that have worked to cultivate a reputation for making well-made, durable, reliable products make well-made, durable, reliable products. I trust socks made by Darn Tough, for example. I trust Lodge to make cast iron items. In terms of bang for the buck, I trust cars made by Toyota. In each of those cases, I can’t necessarily know how reliable and durable their products are in the current model year, but I can rely on the company’s reputation.
Is this item easy to flip to someone else to recoup much of my cost if I decide it’s not for me? Does it depreciate slowly? I’m more likely to spend my money on an item that depreciates very slowly than an item that’s going to lose a lot of value quickly or wear out quickly.
I’ll poke around the secondary market for a particular item and see what it sells for. I’ll also look at the secondary market for similar items, particularly older ones, and see whether the price has held up.
Will this item take up a lot of space? This is important to me for a lot of reasons. Something that takes up a lot of space comes with a lot of drawbacks and thus I need to be extremely sure about a purchase if it’s going to be bulky.
What’s the problem with a large item? It takes up space in my home, which means that I need the space to house it. That space comes with a direct cost in terms of the portion of my home it takes up. If I have many large items, I either have to ditch some of them or get a larger place to live, and that’s pricy.
Furthermore, moving becomes progressively more difficult when you have more large items. You have to rent a larger truck or pay a moving service more. I simply don’t want to deal with it unless there is an extremely good reason.
Is this item something I can make myself? This question often applies to food items, which I can usually make for myself at home. A great example of this is the spice mixes I noted earlier in this article. I could have gone home and looked up the recipe for that spice mix and simply made it myself in an empty shaker bottle.
Take food purchases, for example. When I’m considering many food purchases, what I realize that I’m actually buying most of the time is a slightly lower quality (or sometimes much lower quality) but much more convenient version of something I could make for myself at home, and unless it’s complicated, I’d rather just make it myself unless it’s something I’ve never tried before. I don’t mind buying raw ingredients but I’m less and less interested in buying food for convenience.
Does this item do something new, or does it merely replace things I already have? This is an important distinction because each side of this coin triggers a different set of questions and things to think about. Let’s look at these divergent paths.
If it’s new, is there a less expensive way to test drive the new experience before investing this money? The thing I’m really looking at here is the new actions in my own life that this new item will cause. Whenever you buy something new, you’re theoretically trying to imprint some change in your life that you honestly aren’t sure about in terms of whether it will “take.”
For example, let’s say I’m interested in buying a musical instrument with the goal of teaching myself how to play it. While I might eventually want a good instrument that’s well built and sounds good, it’s kind of silly to invest a lot of money in an instrument that I’m not sure I’m going to really get into playing. I’m much better off finding a beat-up used instrument for learning and initial practice. That way, if I do decide that I really want to dig into this, I can always flip that older used instrument for most of what I paid for it and buy a much nicer instrument.
If it’s a replacement, what am I actually gaining for this additional expense? Ideally, I’m replacing a broken (or nearly broken down) item so that what I’m gaining is the core functionality I need. However, if I’m replacing a fully functional item that isn’t in danger of failing, what am I actually gaining?
For example, part of me wants to upgrade to the current generation of iPads. I use my iPad all the time for notes and other things and there are a number of little improvements I’d really like, but is it worth the several hundred dollar upgrade cost to have much more convenient recharging of my Apple Pencil? It might be nice, but when I put it in that context, it seems ridiculous.
Is it easily compatible with things I already have, or are other upgrades going to be necessary? Some items require other items to function. For example, if you buy a new cell phone, it’s likely you already have charging cables that will work with it… or might not work with those old cables at all. An upgrade that requires a bunch of peripherals to be replaced as well adds an additional cost.
Keeping with the phone example, many phone upgrades require buying a new case to keep them safe, which is an additional cost added on to the upgrade that most don’t consider. New kitchen appliances sometimes end up requiring new peripherals and attachments. For some, clothing items often require new accessories. New electronic devices sometimes end up triggering a domino effect of other purchases, like a new video game console replacing an old one and requiring new game purchases to be enjoyed.
These things need to be carefully considered and, if you’re not happy with that new upgrade chain, you should avoid the purchase unless there’s a strongly compelling reason to go ahead with it.
Am I going to be compelled to replace older things by comparison, and if so, am I really gaining enough value overall? This addresses the Diderot effect, which I wrote about last week and in an earlier article a few years ago (thanks to reader Rex for pointing that out; I had completely forgotten my earlier article when writing the new one, which is why they cover some of the same material and some different things, too).
If I buy a new article of clothing, is it going to make the rest of my wardrobe look really shabby by comparison and then convince me to start replacing lots of clothes? If so, the I need to consider that as part of the expense. Is this really the time to start replacing my wardrobe (or a significant part of it)? What do I really gain out of it?
When I step back and look at the clothing I have, I’m actually pretty happy with it. It only seems bad in comparison to a really nice new shirt or something. Without that new shirt, everything is great.
In general, this thinking leads me down the path that leads to my current wardrobe strategy, which is to buy individual well-made items that last a long time and only replace them as needed. (Surprisingly, I find them on occasion at secondhand shops, where someone takes in a really nice item of clothing that seems to have been barely worn.) That way, I tend to think of clothing items on a more individual basis. Does this item look excessively worn by my own standards? If so, I should replace it. If not, I don’t need to shop for clothes.
Could I just borrow this item from someone or someplace? If it’s an item that you’re just going to use for a while and then stick on a shelf, like a movie or a book or a video game, ask yourself whether or not you can just borrow it instead. The same is true for a tool or other device that you need for one task and then you’re probably just going to stick it in the closet or in the garage.
Does the library have a free copy available that I can borrow or request? Are there any places that offer the item for rent, like a hardware store or a Redbox? Does a friend have this item and would allow me to borrow it?
Buying something you only need for a short while should be avoided. Save your purchases for things you’re sure that you will use many times over a long period of time.
What about the opportunity cost? Whenever you spend $X on something, that means you no longer have those $X to spend on anything else. Is this use of $X the best use of $X you can conceive of right now? Is this really the thing to use that money on?
If I’m considering spending $50, I spend time thinking about the other things I could use that $50 for, both now and later. Are there things I would rather have than what I’d spend this $50 on?
Will I still be happy with this purchase a year from now? Five years from now? Purchases that provide a short term burst of joy and use only to quickly fall into disuse are not wise purchases unless that initial experience is amazing. I prefer to buy things that I’m still engaged with a year later or, ideally, five or more years later.
When I look at my Steam library (in other words, the computer games I’ve bought over the last decade), most of them were purchases on sale that I played for a few hours and then basically uninstalled and forgot about. Those were poor purchases.
The good purchases were the ones that I’m still playing years later, which is actually a very small handful of games. If I’m going to spend money on a computer game, it’s a good idea to just buy an expansion for those games or something in their vein.
It’s worth it for me to consider what those games have in common and then look only for new games that have those threads.
The same goes with books. What books on my shelf are ones that I’ve had for years and still read occasionally and get value out of as a reference book or as a book I’ve read several times? Books that don’t have something strongly in common with those items probably aren’t smart buys for me at this point – those books should be borrowed. Perhaps those borrowed books will prove themselves to me and eventually be purchased, but the odds are relatively low.
In the end, do I really want this thing? After asking all of these hard questions, I come back to the core of the matter. Do I still really want this thing, even after addressing all of the issues with buying it?
I dredge all of the items on the list through these questions several times before they make the cut. If I start realizing that this purchase isn’t worthwhile, I just delete it from the list and it’s forgotten. If I change my mind later, I add it back on at the bottom.
Doesn’t This Just Take the Fun Out of Buying Stuff?
Yeah, and that’s a big part of the point. Spending your hard earned money shouldn’t be fun. That feeling of “fun” is disguising the cold hard fact that you’re spending your hard-earned resources and losing all of the opportunities that those resources bring to you.
I don’t mind spending my money on something I genuinely want, but I want to make absolutely sure that I want it first and that I’ll have a good use for this item in my life. If that’s not true, then I’ve just spent my money on something that’s not bringing value into my life, and that’s the surest route to financial frustration. I would far, far rather have my money sitting in my checking account or savings account or investments than have some item that I don’t really like or have a use for.
I prefer to find my “fun” elsewhere, outside of spending money on things I don’t need.
Final Thoughts
In general, I don’t want to buy stuff. That’s a change in perspective from where I was in life several years ago, when I very much wanted to buy things. I’ve learned that when you buy things, they often end up underwhelming you when you bring them home. I’m interested in things that exceed my expectations or handle things I really want to do very well. I’m not interested in things that don’t.
The point of these questions and this process is to do my best to filter those purchases before I make them. I do this for lots of non-essential purchases, even relatively small ones.
Not only does this process help me filter out good and bad purchases as I go, it also helps me hone my own internal sense of worthwhile purchases so even my spur-of-the-moment spontaneous buys are of higher quality.
Consider using these questions and some kind of similar system for your own non-essential purchases. You’ll not only find that they help you start to eliminate the things that aren’t big wins in your life, but they’ll also help you hone your shopping instincts.
Good luck.
The post A Mental Toolbox for Avoiding Unnecessary Purchases appeared first on The Simple Dollar.
Source The Simple Dollar https://ift.tt/2Kr7l9h
10 financial chores you need to tackle now
10 financial chores you need to tackle now Jo Thornhill Tue, 07/30/2019 - 12:54
Source Moneywise - 29 years of helping you with your finances https://ift.tt/2GCdQoj
First published on 29 July 2019
Source Moneywise - 29 years of helping you with your finances https://ift.tt/2GCdQoj
How can I minimise IHT on a £150,000 gift to my son?
How can I minimise IHT on a £150,000 gift to my son?
Patrick Connolly Tue, 07/30/2019 - 12:54
Source Moneywise - 29 years of helping you with your finances https://ift.tt/2ZhdWcw
I have taken a 25% lump sum from my self-invested personal pension plan (Sipp). The plan is to gift the £150,000 to my son to help him buy a house. Should I make the gift paperwork in joint names with my wife with no breakdown of the amounts shown? Or should I show 50% from each by way of a £75,000 transfer to my wife’s bank and then send £75,000 from each of our bank accounts? I’m aware of the seven-year inheritance tax (IHT) rule and my son’s IHT liability when I die.
My thoughts are that if I make the gift solely in my name then on my death my son would face an IHT liability. Whereas if the gift was made jointly with my wife, then he would be liable to IHT only on the remaining parent’s death. Could you confirm that this is right?
From
JP/Leicester
As the gift you are looking to make is more than the allowance exempt amounts, this would be treated as a potentially exempt transfer (PET) for IHT purposes.
For a PET to be free of IHT, you need to survive for seven years after making the gift.
If you die within seven years of making a PET, and the total of all PETs you make is less than £325,000, then the value gifted will simply reduce your nil-rate band on your death. Your nil-rate band is the amount your estate can be worth before any IHT becomes payable.
So while this means that those receiving the gifts won’t be liable to tax, it also means that you won’t make any IHT savings by making these gifts.
It is only if the total value of PETs that you make is more than £325,000 that your son would face a potential IHT bill on your death. The tax bill would reduce on a sliding scale if your death occurs between three and seven years after making the gift.
So, assuming you make the gift on your own, the total value of gifts you make is less than £325,000, and you die within seven years of making it, your nil-rate band would reduce by £150,000 (assuming you’ve made no other PETs) from £325,000 to £175,000.
If you make the gift jointly with your wife, you will be deemed to have gifted £75,000 each and as a result, if one of you dies, the value of their nil-rate band would reduce from £325,000 to £250,000.
For IHT purposes, the gifts from you and your wife will be assessed separately when each of you dies and won’t be delayed until after the second partner’s death. So, you would be better off gifting the money jointly with your wife.
Source Moneywise - 29 years of helping you with your finances https://ift.tt/2ZhdWcw
الاشتراك في:
الرسائل (Atom)