Here’s How Much It Would Cost to Eat Like Michael Phelps

You’ve undoubtedly heard tell of Michael Phelps’ ridiculous 12,000-calorie diet.

Perhaps you’ve even engaged a healthy-ish sense of schadenfreude by watching someone try to eat it… or a decidedly unhealthy sense of curiosity by trying to eat it yourself.

But aside from the gargantuan task of simply ingesting that much food, have you ever stopped to consider how much a diet that insane would cost?

Even if you could stomach the massive meal, your wallet probably couldn’t — at least not every day.

In fact, it’s possible Phelps felt the pinch himself: Word on the street is, he’s not eating quite that much this time around.

(The eight years that have elapsed between Beijing and Rio might also play a part in that change. Apparently age comes a-calling for everyone’s metabolism.)

But what did it cost him to eat the infamous “one of everything” diet in 2008? And how much is he saving on his scaled-back Rio regimen?

Here’s How Much It Costs to Eat Like Michael Phelps

To find out exactly how much it would cost to consume this smorgasbord each day, I headed to my local grocery store and priced out all the ingredients. Obviously, my St. Petersburg, Florida, location is not the same as Phelps’ native Baltimore, much less Beijing, so prices might vary a bit.

I gave Phelps the benefit of the doubt and tried to find the cheapest items available.

After all, training Olympians don’t usually make very much money, so it makes sense for them to hoard pennies.

(Obviously, following his incredible success and ensuing most-decorated status, Phelps no longer falls into this category — he’s raking in money from commercial deals and sponsorships.)

All right, ready to dive in? (Sorry, I had to.)

Here’s what Phelps ate — and spent — while training and competing in 2008.

Breakfast

The most important meal of the day is a real belly-buster for Phelps, who has to rally his energy for a full day of training — four hours in the pool and two hours of running at a minimum, with a side-dish of weightlifting.

He’d start his day off with:

• three fried-egg sandwiches complete with cheese, lettuce, tomatoes, fried onions and mayonnaise

• one five-egg omelet

• “a bowl” of grits

• three slices of french toast dusted with powdered sugar

• three chocolate-chip pancakes

• two cups of coffee

Let’s say those egg sandwiches are on English muffins, and that each contains only one, single-ounce slice of cheese and one egg (which I find kind of hard to believe).

Let’s also say Phelps uses this recipe for delicious, fresh fried onions he can use throughout the week… but doesn’t have quite enough time to whip up French toast and pancakes from scratch every morning, so he buys frozen.

The text says nothing about what he takes in his omelet or coffee, or how big his “bowl” of grits is.

An omelet just isn’t an omelet unless there’s cheese involved, but I’ll give Phelps the benefit of the doubt and throw in a vegetable — the only one that’ll show up in this version of his diet. And since he likes ham sandwiches at lunch, I’ll assume that’s his meat of choice here, too.

I’ll serve him a hefty two-cup portion of grits, and say that he tops those grits with butter like a proud American should.

And finally, because he is pretty badass, I’ll say he takes his coffee black.

Here’s the price breakdown for a single day’s breakfast:

8 eggs: $0.86 if he buys a flat of 30 large eggs like he really should; $0.92 if he gets a dozen Jumbo

4 ounces cheddar cheese: $0.60 if he buys a block and shreds it; $1.50 if he buys pre-sliced

1/4 head lettuce: $0.42

1/2 tomato: $0.41

1 onion: $0.89

2/3 cup milk: $0.17

2/3 cup flour: $0.10

1 cup vegetable oil: $0.70

3 ounces mayonnaise: $0.35 if he goes off-brand, but if he’s gotta have Hellmann’s, $0.57

3 ounces deli ham: $1.90

1/2 red bell pepper (hope you like your omelet like I do, Mike): $0.47

2 cups cooked grits: $0.28

1 tablespoon of butter: $0.12, unless he springs for grass-fed fancy butter, $0.18

3 slices frozen French toast: $1.50

1 ounce powdered sugar: $0.06

3 frozen chocolate-chip pancakes: $0.75

2 cups of coffee: $0.39

Total cost of breakfast: $9.97 — which is surprisingly low, given the insane amount of food.

Unless, of course, he just went to Denny’s — in which case the total is much, much higher.

Lunch

For lunch, Phelps stays on his carb-loading train, downing the following midday meal:

• one pound of enriched pasta

• two “large” ham and cheese sandwiches on white bread, “slathered” with mayonnaise

• “1,000 calories worth” of energy drinks

Here’s something you probably haven’t thought about before: What does Michael Phelps like on his pasta?

He’s recently admitted he’s “not a spaghetti fan” (what?) and that he “force[s himself] to eat it” — so to keep things simple and economical, we’ll say he just throws some butter on it and calls it a day. If it’s going to be unpleasant anyway, no need to get crazy with a fancy sauce.

(But, yeah, again… he doesn’t like pasta. As if we needed more evidence he’s some sort of alien.)

1 pound enriched pasta: $2.50 (high-protein pasta was conveniently on sale at 2 for $5 — perfect, since we’ll be revisiting this at dinner time!)

4 tablespoons of butter (hey, a pound is a lot of pasta): $0.48

12 ounces deli ham (6 per sandwich and equal to one whole pre-sliced package): $7.59

4 ounces cheddar cheese: $0.60

3 ounces mayonnaise gives him 3 tablespoons per sandwich, and that sounds pretty slathered to me: $0.35

4 slices white bread: $0.40 by my count, unless Phelps eats the end pieces like a crazy person

9 cans of Red Bull*: $14.61

Total cost of lunch: $26.53

* A note about the Red Bull — the original Post piece on Phelps’ diet talks only in terms of calories, saying he drank 1,000 of them in energy drinks at both lunch and dinner. Since there are 110 calories in one can of Red Bull, he drinks just about 18 of them a day, or nine at each meal.

A 12-can case was $19.49 at my local Publix, and that was on a $2-off sale… so let’s just hope Phelps got his in bulk (or from sponsors).

Dinner

Phelps’ dinner comes with a helping of déjà vu — and another go at his least-favorite, but effective, carbohydrate.

At least he rewards himself for downing that spaghetti with an entire pizza. Hey, no one said being an Olympian is easy!

• one pound of enriched pasta

• one large pizza

• another 1,000 calories in energy drinks

OK, even if he somehow hates pasta, I’m not going to force Phelps to have it the exact same way both times. For his night-time dish, let’s dump some pre-canned sauce on that pound of ziti.

Here’s what dinner runs:

1 pound enriched pasta: $2.50

12 ounces (again, it’s a lot of pasta) canned alla vodka sauce: $2.45

1 large frozen pizza: $5.47, unless Phelps is a “Meat Lover’s” kind of guy and spends $15.49 at Pizza Hut, before the delivery fee and tip

9 cans of Red Bull: $14.61

Total cost of dinner: at least $25.03… but easily up to $40.

That brings the total cost of Phelps’ 2008 diet to $61.53. For ONE day.

That’s about half of what some Penny Hoarders spend on groceries in a week… for a family of four.

How Michael Phelps Eats During Rio 2016

After his unstoppable string of Beijing wins, Phelps significantly scaled back his calorie consumption and turned to cleaner eating.

“My main goal used to be to just eat a ton of calories. But over the years I’ve adjusted my diet,” he told Men’s Health. “Now I’m eating less, but I’m getting my calories from nutrient- and protein-dense foods.”

He’s also saving a pretty penny. While specific amounts weren’t listed, Phelps’ average day is looking a lot more, well, average, from both a nutrition and cost standpoint.

His breakfast of “one large bowl of oatmeal, a large omelet with ham and cheese, fresh fruit and coffee” would run about $4.63 if he makes it at home, and his footlong meatball marinara from Subway costs about $5.50 — but what Subway employee isn’t going to comp a meal for Michael freaking Phelps?

Finally, if his dinner consisted of a whole head of broccoli, three large chicken breasts and three cups of brown rice, it still wouldn’t cost more than $15 — bringing a day’s total to $25.13, less than half of what he was spending before.

The biggest savings? Obviously, the energy drinks… and losing them is probably as good for his heart as his pocket.

That said, he might want to splurge on them occasionally — if only to improve his mood.

Courtesy of NBC Olympics

Your Turn: Have you ever tried to copy Michael Phelps’ diet? How much do you spend on food in a day?

Jamie Cattanach is a staff writer at The Penny Hoarder. Her writing has also been featured at The Write Life, Word Riot, Nashville Review and elsewhere. Find @JamieCattanach on Twitter to wave hello.

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American Express cuts top cashback credit card deals

Tom Wilson

amex.jpg

American Express has cut the rates on its two best-buy cashback cards for new customers, while existing customers will see the changes take force over the next 18 months, in a move that squeezes shoppers who seek rewards for regular spending.

American Express has cut the rates on its two best-buy cashback cards for new customers, while existing customers will see the changes take force over the next 18 months, in a move that squeezes shoppers who seek rewards for regular spending.

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Hey ‘90s Kids: Lisa Frank Wants to Pay You to Design Rainbow Unicorns

It’s back-to-school shopping time, and that makes me think of one thing: Lisa Frank folders.

Oh, and pencils. And erasers. And notebooks.

Don’t forget binders, pens, stickers, T-shirts, magnets to hang pictures of your besties inside your locker (and a neon-pink, heart-shaped frame designated for that one special person…).

Lisa Frank and her rainbows and unicorns made a solid mark on my childhood, as well as those of most of my classmates. She continues to do the same for many of us as adults — and for the next generation.

Want to Work for Lisa Frank?

Soooo… what if I said you could be the next artist behind those magical, memorable designs?

This is not a joke.

Lisa Frank is hiring digital artists to help the company “[paint] the world in rainbow colors.”

Yes, please.

If you’ve ever dreamed of living inside a neon-colored rainbow world filled with kittens, teddy bears and unicorns, this could be your chance.

Requirements for this position include:

• A bachelor’s degree or equivalent experience/training in graphic design

• Proficiency with the Adobe Creative Suite, especially Photoshop and Illustrator

• Experience in a brand’s art department is preferred, but not required

• The company only hires non-smokers

You’ll work in Tucson, Arizona, so you should live there or be willing to relocate for the job. The company offers a “competitive salary and benefits based on experience.”

To apply: Create an account, and fill out your application online here.

Your Turn: Were you a Lisa Frank fan as a kid?

Dana Sitar (@danasitar) is a staff writer at The Penny Hoarder. She’s written for Huffington Post, Entrepreneur.com, Writer’s Digest and more, attempting humor wherever it’s allowed (and sometimes where it’s not).

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What Happens to SEO When You Stop Blogging?

I’ve been blogging for longer than ten years.

Ten years! And I haven’t quit.

That’s a long time.

I’m not trying to toot my own horn here. I simply want to make a point.

Why haven’t I stopped blogging? After all, I get tons of traffic from old blog posts that I wrote two, four, and even eight years ago.

Why do I keep at it? Writing is punishing work. It’s tough, and it takes a long time. Don’t I have better stuff to do like binge-watching Netflix or just relaxing?

Why am I so devoted to blogging?

I’ll let you in on a secret. I actually love what I do. That’s one reason. I blog because I like to do it.

But there’s another reason. It’s a business reason. And it’s built on data.

If you know anything about SEO, you know that Google values fresh content. Fresh content is a significant factor in positively influencing ratings. The logic here is that the more frequently you update your site, the more frequently Googlebot (Google’s crawling bot) visits your site.

In turn, this gives you the opportunity to achieve better rankings.

Although you can update your site in several different ways (not to mention all the different types of content you can create), writing new blog posts tends to be the simplest way to generate fresh content.

So let’s go back to my question: why do I keep blogging? Why are you blogging? Should you quit? Should I quit? Are there better ways to do marketing, gain traffic, and grow conversions?

Is blogging truly all it’s cracked up to be? More specifically, just how big of an impact does it have on SEO?

In this article, I’m going to do away with niceties, guesses, and “best practice” advice. Instead, I’m going to dish up the data so you can get the cold, hard facts on what happens if you decide to stop blogging. 

Some key stats

First, here are just a few statistics from Kapost to put blogging in perspective:

• Brands that create 15 blog posts per month average 1,200 new leads per month.
• Blogs give websites 434 percent more indexed pages and 97 percent more indexed links.
• Blogs on company sites result in 55 percent more visitors.
• B2B companies that blog generate 67 percent more leads per month than those that do not blog.

These are some legit numbers. They show just how monumental of an impact blogging can have.

But what would happen if you stopped blogging?

You pull the plug. You quit. You’re done. No more publishing.

What would happen?

Would it have any catastrophic consequences, or would it merely be a mild impediment?

Let’s take a look at a study that put this to the test.

251 days of no blogging

WordPress developer/social media manager/SEO expert Robert Ryan conducted a simple yet enlightening experiment.

In 2015, he refrained from posting any new content on his blog for 251 days. That’s eight months and seven days.

Here are some of his key findings:

• Overall traffic to the site saw a major decline as it fell by 32 percent.
• Organic traffic dropped by a massive 42 percent.
• Traffic to the contact page was down by 15 percent.
• Overall site conversions fell by 28 percent.

What can we take away from these stats?

Blogging affects overall traffic

When Ryan quit blogging, his traffic rapidly fell by 32%.

The image quality is low, but here’s the chart that he posted:

The fact that Ryan’s overall traffic dropped by nearly a third during this time is tangible evidence that there’s a correlation between your blog output and your overall traffic volume.

Quite frankly, I find it a bit alarming to see such a dramatic drop just because of not blogging.

Of course, we should keep in mind that his experiment lasted for over eight months.

If you stopped blogging for only a month or two, the consequences probably wouldn’t be this extreme.

However, it still wouldn’t do you any favors.

This brings up a good point. What if your business runs into trouble, you get sick, or something else happens that prevents you from blogging for a time?

I suggest having a backlog of articles to publish at all times. I like to have several posts scheduled ahead of time. If something unexpected comes up, at least I know my posts will go live according to the schedule.

Organic traffic can take a massive hit

A 42 percent drop in organic traffic is colossal.

For some businesses, that kind of drop could make the difference between making money and losing money.

An organic traffic loss of that magnitude is similar to receiving an algorithmic penalty.

Most websites earn most of their traffic organically.

If you’re in the “business services” industry, you earn a disproportionate amount of organic traffic.

Where does all this organic traffic come from?

It comes from content. More specifically, it comes from blogging.

Organic traffic is nothing to wink at. This is the lifeline of your business. This is your audience.

It’s hard to dispute that Google does indeed show preference to sites with consistently fresh content.

As Moz explains,

“Websites that add new pages at a higher rate may earn a higher freshness score than sites that add content less frequently.”

It’s all theoretical, of course. No one knows exactly how Google’s algorithm works.

But we can’t dispute the fact that quitting a blog leads to an organic traffic nosedive.

By having a dynamic site (publishing content) as opposed to a static one (not publishing new content), you provide Google with new content to crawl and index. In turn, this keeps you on Google’s radar in a positive way.

You also have to consider the fact that each new blog post presents an opportunity to generate more backlinks and rank for additional keywords.

I imagine that you want to see an uptick in traffic like this:

The fact is, you can’t get traffic like that unless you blog like you mean it.

When you stop blogging for an extended period of time, your stream of organic traffic can dry up, which can obviously have some undesirable consequences.

More blogging equals more leads

The stat from Kapost, stating that brands with 15 blog posts per month average 1,200 new leads per month, and Ryan’s stat—stating that traffic to his contact page fell by 15 percent—show us just how intertwined blogging and lead generation really are.

This makes sense when you think about it.

No blogging means much less organic and overall traffic. In turn, fewer visitors are landing on your website, which means fewer leads.

Blogging, quite obviously, leads to more leads.

Notice this data from MarketingCharts.com. Their data shows that a higher blogging frequency is positively correlated with higher customer acquisition rates.

Quitting blogging is a conversion killer

The final and perhaps most alarming of Ryan’s findings was the drop in overall site conversions (28 percent).

I can connect the dots to see how this could happen.

Few people blog just for the heck of it. We blog because it makes a significant difference.

We blog because it builds conversions.

But how does this work? How is blogging so inextricably linked to conversions?

From my experience, I’ve found blogging to be an incredibly effective way to build rapport with my audience and get them comfortable with the idea of buying.

For example, before a prospect would want to go ahead and purchase Crazy Egg, there’s a good chance that they would first want to explore “The Daily Egg,” which is the accompanying blog.

I don’t sell anything on that blog. I just provide value, value, value.

In fact, two stats from Aabaco found that “60 percent of consumers feel more positive about a company after reading custom content on its site.”

It’s about fostering positive feelings, as vague as that sounds.

Furthermore, “78 percent of consumers believe that companies behind content are interested in building good relationships.”

Good relationships are built one blog post at a time.

Basically, blogging builds trust.

If you blog the right way, you can demonstrate transparency.

Transparency, in turn, creates trust.

There’s no secret here. If you want to truly influence purchases (conversions), you should be blogging.

Customers look to content to grow and sustain positivity and goodwill towards the brand.

This positivity and goodwill influences conversions. You’ll earn more conversions because you are blogging. It’s that simple.

I would also make the point that stopping blogging out of the blue can make you look a little flaky in the eyes of customers. Some may even wonder if you’re still in business.

No one wants to do business with a place that seems quiet and untended. You might still be in business, but if your blog isn’t buzzing with new content and activity, users might get the idea that you’re not around to serve them.

This will kill your conversions.

For these reasons, you can see how a lack of blogging can slowly trickle down to hurt conversions and eventually result in a considerable decline in customers.

Jeff Bullas provides an excellent explanation of how blogging builds credibility in this infographic:

These aren’t just random stats. These are concrete data-driven signals that your blog builds your credibility.

And your credibility as a business influences whether or not people will buy from you.

The takeaway

While I can’t say for sure that you would experience the same level of backlash that Ryan did, it’s fair to say that quitting blogging for an extended period of time isn’t going to help you.

Even going a single month without an update could throw a wrench in your SEO.

For this reason, I can’t stress enough just how important it is to be consistent with publishing blogs.

Everyone has their own opinion on what the bare minimum is, but most bloggers would agree that you should strive for at least one per week.

But to determine the ideal frequency, I would suggest checking out this post I wrote about determining how often you need to blog.

A blog such as the Huffington Post (yes, it’s a blog) publishes an article a minute. They can do that because they have a ton of semi-free and syndicated content being pushed out.

If you’re Forbes, you might publish more than 1,000 articles a month.

Obviously, you won’t be able to keep pace with Forbes or Huffpo, especially if you’re blogging for your personal brand.

Instead, you should focus on consistency. As this article shows, when you quit blogging, your traffic and conversions tank.

If you stay consistent, you’ll win.

Conclusion

Blogging accomplishes much more than simply demonstrating your expertise and building trust.

It plays a major role in SEO, and the frequency of your blogging can determine how much traffic you bring in, how many leads you generate, and ultimately how many conversions you make.

If you want to win at the game of online marketing, you’ve got to be publishing content.

And you can’t stop.

Internet marketing is a marathon, not a sprint. As a ten-year veteran of this sprint, I can attest to the fact that it gets ugly and tiring, and there are times when you want to quit.

But I can also attest to the fact that your hard work pays off.

Sure, at times you might feel like you’re banging your head against a wall, but all that work is doing something. It’s growing your audience. It’s building trust. It’s pushing up conversions bit by bit, day by day, month by month.

Don’t quit.

Have you ever tried a similar experiment, and if so, what were the results?

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This Woman Made $1,100/Month Growing Mini Veggies in Her Apartment

Stacey Cunningham was working as a guidance counselor in Tempe, Arizona, when her husband fell ill with cancer.

After $12,000 worth of treatment, he was in full recovery — but their finances weren’t.

To “wipe the slate clean of everything [they] owed,” they made the difficult decision to sell their house and move into an apartment.

Soon after, Cunningham toured an urban garden. Although inspired by the project, she left feeling dejected since she no longer had a yard of her own.

But, she couldn’t stop thinking about her experience — and five months later, she invited the gardener to her apartment.

Her question? Whether she could grow anything in her limited space.

Little did she know his response would change her life…

Falling in Love With Microgreens

Image from Stacey Cunningham

The only thing Cunningham could grow at a “decent volume” was microgreens, the gardener told her — which she’d never even heard of before.

In case you haven’t either, here’s a primer: Microgreens are “vegetables and herbs grown to just two weeks,” Cunningham says. “They’re four to 40 times as nutrient dense as the mature plants and are incredibly good for you.”

Research seems to support her claims.

Cunningham quickly fell in love with microgreens. She started watching videos, reading books and blogs and eventually growing her own.

She even started selling her produce at a local farmers market. Her earnings covered her expenses, but not much more — and she couldn’t scale without investing a significantly bigger chunk of time and money into the business.

Image from Stacey Cunningham

Risking It All on Microgreens

One day at school, she decided to take the leap.

“I was in my office and realized I was kind of a hypocrite because here I am telling [my students] to follow their dreams,” she says, “and I had some dreams I hadn’t followed yet.”

So she risked it all: She quit her job and maxed out her lines of credit, spending $2,000 on supplies. And she, along with her husband and teenage son, moved into a bigger house.

Although the business wasn’t their only reason for moving, she says,“Our priority — even before we unpacked all of our boxes — was to get the grow room built.”

For the next few months, she worked part time on her budding business, and part time in a job for the city.

A Growing Business

Image from Stacey Cunningham

It paid off.

Eventually, Cunningham was selling microgreens to catering companies, a Thai restaurant, a personal chef and farmers market customers.

She worked about 25 hours per week and grossed $1,400 per month. Her monthly expenses were about $300, which meant she brought home $1,100 per month working part time.

“But that was my choice,” she says. “I could’ve gone out and gotten more business if I wanted it.”

If she’d worked full time, she estimates she could’ve grossed about $2,400 per month.

“Anyone can do it,” she says. It’s a great way to supplement your income while working from home.

But, because it is a lot of work, she says, “You have to really care about the product.”

What You Need to Know About Growing Microgreens

Image from Stacey Cunningham

Interested in growing microgreens?

To start a small side business, you’ll need to make a one-time investment in a metal shelf and three shop lights (around $12 each).

As for recurring costs, Cunningham says they amount to approximately $3.08 per tray, including “the cost of the seeds, growing medium and containers to sell them in” — everything but electricity and water, which she estimates costs $20 per month.

With this setup, you could grow eight trays of microgreens per week, and sell them at a local farmers market for $20 per tray. Since this volume wouldn’t take up much room, Cunningham says it’s plausible even in a small apartment.

And microgreens grow quickly: Cunningham says they take “two weeks max” to be ready for harvest.

Here’s how that works out per month:

Gross profit: $640

• Utilities: $20

• Farmers market fee: $80

• 32 trays x $3.08 each: $98.56

Net profit: $442

Now let’s say you spend five hours at the market and an additional two hours planting and caring for your trays each week. That’s 28 hours a month.

You’d be making $15.78 per hour — for something you could do mostly on your own schedule and without much overhead.

And that’s just the bare minimum to get started. If you had more space and capital, you could grow a lot more — without investing much more time.

Here are Cunningham’s best tips for growing microgreens:

• Before getting started, check licensing restrictions in your state.

• When buying supplies, avoid “overpriced” hydroponic stores; try Walmart or online retailers instead.

• Give your plants 16 hours of light per day, which you can automate by putting your shop lights on timers.

• Keep the temperature between 60-80 degrees.

• Water them twice per day: Once in the morning and once in the evening.

• To maximize profits, focus on fast-growing varieties like bok choy, cabbage, arugula and broccoli.

Cunningham firmly believes in the power of microgreens, but eventually stopped scaling her business, preferring to focus on her current customers.

“I’m not a salesperson,” she says. “That’s why I stopped going out there and getting business. I didn’t enjoy it.”

However, Cunningham is “an educator at heart.” So she developed a website and app to teach other people how to grow microgreens.

It hasn’t turned a profit yet, but she hopes it’ll start bringing home the broccoli soon.   

Your Turn: Have you tried microgreens? Would you like to grow them?

Susan Shain, senior writer for The Penny Hoarder, is always seeking adventure on a budget. Visit her blog at susanshain.com, or say hi on Twitter @susan_shain.

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Planning a ‘Money-Free Month’ — and the Many Financial Benefits It Can Provide

For many families, the month after Christmas is a time where people feel the need to cut back on their spending and live lean for a little while to reset their financial balance. For us, it’s usually just after our family’s summer vacation, where we’ve spent a ton on gas (and car maintenance… and sometimes roadside emergencies) and food and admission fees and other such summer vacation expenses.

One way we sometimes respond is by putting a family moratorium of some kind on non-essential spending for a certain period of time. We call these “money-free” periods, like a money-free weekend or a money-free week. A real challenge, however, is a money-free month.

It’s simple, really. For a full calendar month – say, September – you spend no money on anything other than bare necessities or contracted bills. Other than your continuing bills, you spend no money on hobbies or entertainment or any extra expenses whatsoever.

Principles

Let’s walk through some of the principles you might apply to such a month.

No dining out or ordering takeout. Instead, you prepare meals at home with inexpensive ingredients and take leftovers or other simple meals to work with you. This is a great opportunity to bone up on your meal preparation skills so that the idea of preparing a simple meal in the evening no longer seems intimidating or using a crock pot no longer seems like a serious challenge (because, really, it isn’t).

Buy store brands. If there’s a store-brand version of an item you buy normally, purchase the store-brand version. You’ll often discover that store brands are functionally identical to the name-brand version and that there’s no real difference between the two, which means that there’s no reason not to continue buying those identical store brands and continue to save money.

Entertain yourself with what you have on hand or free community resources. “What you have on hand” can include services you’re already contracted to pay for, like your normal cable bill or home internet, but no buying anything new. This encourages you to find other avenues for entertainment, some of which I’ll discuss below.

Use items on hand for meal preparation as much as possible. The goal is to reduce the length of your grocery list – yes, you can buy groceries, but you shouldn’t buy groceries simply for convenience or to prepare new meals when you already have a bunch of stuff on hand to use. This encourages you to dig through your pantry and freezer and cupboards.

Attempt to repair things rather than just buying replacements. Have a minor problem with a shirt? Try fixing it instead of tossing and replacing it. Toilet on the fritz? Watch some YouTube videos and repair it yourself.

It’s really easy. Just don’t spend money on non-essentials or regular bills. That’s it.

Benefits

Pulling off a money-free month has a lot of great benefits.

You save a LOT of money. This is the most obvious benefit. If you spend nothing on entertainment, nothing on hobbies, and minimum amounts on food, fuel, household supplies, and other budgetary categories, your spending is going to drop by a significant amount for that month. You’re going to have a big wad of cash left over at the end of that month, which you can use for smart personal finance moves like paying off a credit card or making an extra payment on your mortgage or building up an emergency fund or even saving for retirement or your child’s college education.

You detach from your wants and have time to consider them carefully. When you intentionally say “no” to all of your wants for a period of time, you start to detach from them a little bit. Rather than just fulfilling a lot of little wants in your life, you’re forced to step back a little bit and ask whether or not a particular want brings genuine value into your life. Does that daily coffee from the coffee shop really bring any more value than drinking a free cup at work? Does buying these name-brand items really bring anything extra into your life? A money-free month makes you address questions like that.

You reconnect with other interests. Since you’re not spending money to entertain yourself, you suddenly have more free time and more space in your life for some of your other interests that you may have neglected. You now have time to read a book, for example. You now have time to pull the materials for one of your hobbies out of the closet and engage in that hobby again. You now have time to explore the trails at a nearby state park. Whatever your neglected interests are, by simply saying “no” to things like going out on the town and shopping socially, you’ll suddenly find yourself with a lot of new space in your life. Take advantage of it and reconnect to things you may have put aside.

You use more stuff you already have. Many American households have a pantry stuffed full of unused food items, a garage jam packed with scarcely used tools, bookshelves full of unread books, DVD racks full of movies watched just once or never watched at all… you get the idea. A home full of unused stuff is a home full of stuff that deserves your attention and use. So use it. Use that food in the pantry. Read those unread books. Use those unused tools. Watch those unwatched movies. You’ll quickly find that your home that you constantly overlook is actually a cornucopia of delights.

You build skills. One great tenet of a money-free month is a willingness to take on minor home improvement and repair tasks that you might have simply ignored until they got worse or paid someone else to do. By simply taking on some of those tasks yourself, you’ll build up a few basic home improvement skills: familiarity with tools, improvement of your ability to use some tools, and the confidence to take on little tasks like replacing a leaky faucet or fixing a toilet.

You learn about community resources. A money-free month provides a great motivation to look around your community and see what things are available for free. You might explore the library and discover that it not only houses a ton of free books, but a lot of free movies and other resources you never knew about. You might visit meetup.com and find that you community has a couple of really cool social groups that you never knew about. You might check out your city’s parks and recreation department and find that there are adult leagues and exercise classes that are completely free. Maybe you’ll look at your city’s community calendar and find out about a great free concert series that you were completely unaware of. If you’re afraid of being bored during a money free month, look around your community with your eyes and your mind wide open and you might just be stunned at what you find.

You make new kinds of social connections. Rather than just going out on the town with friends, you’ll invite them over for dinner and a movie at your home or apartment. This gives you a great opportunity to get to know those in your social circle in a different way and also helps you figure out which of your friends are actually friends with you or are just acquaintances who are more interested in going out than in hanging out with you. You’ll also have a bunch of new social opportunities through things you might find on meetup.com or in community groups you might find on the community calendar, the city website, or at the library.

Final Thoughts

A money-free month might sound intimidating at first. A whole month without spending anything beyond the minimum? It can seem like a massive challenge.

So, for your first step, try a money-free weekend. Go from the time you get off work on Friday until you go to work on Monday without spending any money at all. See what you can fill your weekend with that doesn’t involve spending money on activities or things that you want. You’ll find it more enjoyable than you think.

When you’ve done that, stretch it to a money-free week. Go from Monday to Monday without spending any extra money at all. Dabble in preparing weeknight meals for yourself. Take on some new routines. Enjoy a few things already around your home.

Then, give the full month a shot. See how much money you can save. Disrupt some routines and learn some new ones. Give your social life a gentle reboot.

What you’ll find is that it’s much easier than you think that it is, it saves you a ton of money, and it teaches you a few things about yourself in a gentle fashion.

Good luck!

Related Articles

• 102 Things to Do on a Money-Free Weekend
• How to Create a Bare-Bones Budget
• ‘I Make Myself Rich by Making My Wants Few’

The post Planning a ‘Money-Free Month’ — and the Many Financial Benefits It Can Provide appeared first on The Simple Dollar.

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How to Find a Work-at-Home Job That Isn’t a Scam

By Holly Reisem Hanna When you’re looking for work-at-home opportunities you’re bombarded with information, websites, and job leads that all claim to be the next best thing. They sound good — but are they legitimate? I know the uncertainty, because when I started my work-at-home search I was in the same boat. It’s why I […]

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This Simple Worksheet Will Help You Save Money on Groceries — Every Time

You probably already know food is one of the biggest expenses in your budget…

… and one of the most non-negotiable. You’ve gotta eat.

But if you’re a regular TPH reader, you probably also know there are myriad ways to save big on groceries, so long as you take the time to plan and strategize your shopping trips.

But no matter how many coupons you clip or rebates you scan into Ibotta, you’re overpaying for your groceries if you don’t shop at the right store.

But luckily, there’s a way around that cost, too. It just takes a little investigative footwork.

Save Money on Groceries — Every Single Time

Since prices can vary wildly between retailers, you can save a lot by switching to the store that charges least for your staples.

That’s what I discovered when I did my own grocery comparison a few months ago. I recorded prices for twelve common items at Publix, Trader Joe’s and Walmart.

For the purposes of the post, I tried to stick to common household staples you may have in your own kitchen.

But since everyone’s list is different, we created a supermarket comparison template for you to print out and complete yourself. This way, you’ll automatically get the most bang for your grocery budget buck — no matter what’s on your list.

Click for a larger version you can print out.

How to Use the Grocery Comparison Worksheet

So, here’s the thing.

Comparing grocery stores is going to take some time and effort up front. You’ll need to travel to several stores in your area, locate your staples, record their prices and compare costs.

But while doing your supermarket comparison may seem like a chore, it can actually be a lot of fun.

You’ll feel a little bit like a private investigator. And once you’re done, you’ll save money every time you shop — no further thought or effort required.

Automated savings? Yes, please.

It’s super simple! Here’s what to do.

1. List Your Staples

First things first: Make a list of your most commonly purchased items — those things you absolutely always have in the house.

You still want the best price on your one-off treats or occasional buys, of course.

But if the cookies or candy you buy every once in a while are a lot cheaper at a certain store — and all your staples are more expensive — you might not see the true winner. So to best automate your savings, stick with the stuff you always have on hand.

We’ve created some suggested categories in our sheet to help get you thinking, but if you don’t eat meat, for instance, no worries — just use those spaces for more veggies, or whatever else you buy!

If you purchase some of your items in bulk, like toilet paper, don’t include them — you’re almost definitely getting a better deal at your warehouse club store.

But if you wanted to do a comparison to figure out which club to join, guess what? This worksheet will work for that, too!

2. Choose Your Stores

Now that you’ve got your list, it’s time to choose which stores you want to compare.

Pro tip: Pick stores close enough to your home or workplace that you can see yourself actually traveling to them on a regular basis.

If some shop 50 miles away has awesome deals, great — but you’ll be cutting into some of your savings by driving so far, to say nothing of the opportunity cost of spending so much time on a weekly necessity.

Plus, when it comes down to a busy Tuesday night when you need to swing by the store because you’re out of milk or toilet paper or insert-essential-here, you’re not going to want to drag yourself all the way across town.

Do yourself a favor and only survey stores within a reasonable distance. Fill in their names along the top of the list — and get ready to figure out which one you’ll start seeing a lot more of!

3. Go Find the Prices

Here comes the time-intensive part.

You have to find time to head to each of your chosen stores, track down those items and write down their prices.

You don’t have to do it all at once, so take your time. Fit it in by doing your normal weekly grocery shopping at each store as needed — just remember to actually write down the prices when you go!

An important note: Remember to write down the amounts of the items, as well.

In some cases, stores won’t carry the same item in the same size. Even if the total sticker price is cheaper, you’re not getting a better deal if you’re getting less product!

By recording the actual amount of each item, you’ll be able to calculate the cost per unit or ounce, so you’ll know exactly how it’s priced.

4. Compare Prices

Once you have all the prices and amounts listed for each of your stores, start comparing those prices and figuring out which store has the best deal.

If it’s a one-for-one comparison (say $3.49 versus $3.09 for a pound of boneless, skinless chicken breast), it’s easy: Just record whichever store has it cheaper in the column on the right hand side.

But in some cases, you’ll have to do some math if two stores don’t package the item in the same amounts. For example, check out my sample math to figure out which deal for bacon is best.

Since Publix had 16-ounce packages marked at 2-for-$8, it technically won at 25 cents per ounce.

But if that sale wasn’t going on, Walmart would be the winner — so it’s not always an easy race to judge.

Which brings me to another caveat: Quality matters! Feel free to factor in cases where you’d rather spend a little bit more per ounce for a product you like better, or for fair trade, organic or humanely raised food items.

For example, the coffee at Trader Joe’s is more expensive, but in my comparison, I decided it won over dirt-cheap Walmart. I’d rather drink TJ’s delicious dark roast than Maxwell House, even if it costs a bit more.

And although in my comparison Walmart and Publix ended up tied, I’d probably still rather frequent Publix — even if I pay more for some items because I feel better about how the store treats its employees.

5. Name a Victor — and Start Shopping Smarter!

Now look at the right-hand column and count how many times each store’s name appears. Record the total number in the bottom of the store’s column (see my example above).

Whichever store’s name appears the most is where you should shop to save the most money on the bulk of your grocery purchases.

Congrats, you’ve just automated your grocery savings! You can rest assured you’re saving money every time you shop, even if you never clip another coupon.

Of course, markets and prices change, so you’ll want to revisit your comparison fairly regularly.

And besides — just try to tell me you didn’t have fun sneaking around the stores, recording their prices.

And if you really didn’t? I bet your kids would. So next time, recruit some help.

Happy saving!

Your Turn: Which grocery store is cheapest for YOU? Show us your completed comparison worksheets!

Jamie Cattanach is a staff writer at The Penny Hoarder. Her writing has also been featured at Word Riot, DMQ Review, Hinchas de Poesia and elsewhere. Find @JamieCattanach on Twitter to wave hello.

The post This Simple Worksheet Will Help You Save Money on Groceries — Every Time appeared first on The Penny Hoarder.

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House buyers skimp on building surveys

Hannah Nemeth

building-surveyor.jpg

More than seven million buyers don’t bother having a building survey of their new home, research has revealed. But this could put homeowners at risk of unexpected building work.

More than seven million buyers don’t bother having a building survey of their new home, research has revealed. But this could put homeowners at risk of unexpected building work.

Churchill Home Insurance asked 2,000 adults across the UK whether they had a comprehensive building survey completed on their current home and found that 14% never had one.

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A Guide to Renting Your First Grown-Up Apartment

College is over and it’s time to get your first real, grown-up apartment. Even if you’re still throwing parties and living with six other people, this may be your first apartment where your name is on the lease and you pay all the rent, and that’s a total game changer.

You’ll also be in a new legal situation as a bonafide lease holder. Before you wade into these wild waters of adulthood, here’s a beginner’s guide to renting your first real-deal apartment.

Where to Look for Rental Apartments

The first step in getting an apartment is finding one for rent. Some tried-and-true apartment-hunting sites include Craigslist (or try PadMapper, which packages Craigslist listings into a more usable format), Trulia, HotPads.com, Apartments.com, and RentJungle, among many others.

When you go visit an apartment, pay attention to what you see, and be ready with questions — take nothing for granted. Does the hot water work? Try the faucet. Do the windows open? Is there a second exit in case of a fire?

Sometimes, you may not even meet the landlord — many apartment owners simply list their apartments through a local real estate agent, who handles all the showings and other legwork. Depending on how competitive the rental market is, you or the landlord will have to pay the agent’s fee (usually one month’s rent), though this can be negotiated.

Consider Roommates

Splitting your housing costs with a roommate or three can save you buckets of money each month. But if you don’t have anyone lined up, many of the rental websites above (including Craigslist, but also CrashPad, Roommates.com, and others) are geared toward matching up potential roommates.

The ideal roommate will be different for everyone, but typically you’re looking for someone respectful, responsible, and clean (at least when it comes to common areas), who maybe shares some interests with you, too.

Of course, your social network is helpful, too. If a friend of a friend is looking for a roommate or moving out of a sweet apartment, you’ve just found an in. And if you don’t have the credit or references to land an apartment by yourself, joining forces with other renters or subletting the room of a departing tenant can be an alternative way in.

Have Your Application Information on Hand

When it comes to renting an apartment, most states have a simple rule: The first qualified applicant gets the apartment. This means you need to have your application information on hand so you can fill out everything on the spot.

For a new renter entering the market for the first time, that means having your basic information on hand as well as any written references you might want to include. Bank statements and pay stubs are two more weapons to have in your arsenal, to prove you can pay for the place. And a savings account with enough money in it to pay rent if you lose your job also helps.

If you find your dream apartment, be ready to fill out the application and cut a check right then and there.

References Can Go A Long Way

Oh yeah, references — since this is your first apartment, you might not have any yet. That can be a problem, especially when looking at big corporate apartments. At bigger buildings, renting decisions are going to be made in an office somewhere by people you’ll never meet. Your chances will be better with private landlords, to whom you can explain your situation in person.

Still, references will help either way. Even if you lived in the dorms for four years, you can still get a reference letter from your former Resident Assistant attesting to your reputation as a good neighbor. If you have rented in the past, get written references from your landlord. Your potential new landlord will still call to follow up, but having that letter will get your foot in the door.

Know the Neighborhood

Increasingly, young people just out of college are living in cities. That can be a lot of fun, but make sure that you’re picking the right neighborhood.

Safety can be an issue, so check out the neighborhood during the day — and again after 10 o’clock at night. Walk around to see what it’s like and whether it will fit your lifestyle. Are there bars, restaurants, coffee shops, and other nightlife? Is that a plus for you, or would you prefer peace and quiet at night to drunken sidewalk singalongs? Walking around will give you the best sense of what you’re getting into.

And even if you visit the apartment on a weekend, don’t forget to factor in your weekday commute. Is it near a train or subway station? If you’ll be driving to work, what’s the traffic like at rush hour? The desktop version of Google Maps allows you to plot a route and see how much longer it would take at different times of the day or week; try estimating your commute during Monday morning traffic and make sure it’s something you could live with.

Money Talks

Above we mentioned that being able to cut a check on the spot can go a long way toward getting you the apartment of your dreams. Having some extra cash can as well.

Landlords are able to check your credit score, and can deny you an apartment if it’s not particularly good. If you have no credit or even poor credit, being able to offer two months’ rent up front or a double deposit can make your potential new landlord more comfortable with renting to you.

That’s a card you should play before you mention a co-signer. It shows that you’re trying to take responsibility for yourself, rather than leaning on someone else to lend gravitas to your situation.

Good credit or not, you’ll a need a good chunk of money on hand. Landlords often require your first month’s rent, last month’s rent, and a security deposit (up to a full month’s rent), all up front. Provided you don’t break the lease (or the apartment), you’ll get that money back. But on a $1,000/month apartment, that’s $3,000 all at once, so start saving.

Read the Lease Carefully

Once you get the apartment, you need to carefully read your lease. Laws vary from one state to another, but some clauses may be illegal, invalidating the entire lease. That’s good to know in case you ever run into problems with your landlord.

Other clauses might be totally legal, but easily or unknowingly violated, such as no-smoking clauses — you don’t want to get fined or evicted because your buddy lit a cigarette on the porch on his way home. Either way, know what the ground rules are so that you can stay in your apartment.

Turn On Your Utilities

Find out which utilities are your responsibility — heat, electricity, phone, internet, hot water — then call the relevant agencies to get them turned on. Even if the heat and electric are working when you move in, you need to get them put in your name. If you don’t, you won’t get out of paying the bill — you’ll just be off to a very bad start with your new landlord, or out of electricity once the former tenants catch on.

Having your first grown-up apartment is really exciting, but to get it and keep it you need to act like a grown-up. The good news is, that’s a lot easier than you might think. And either way, you can still eat cereal for dinner if you want.

Related Articles

• Nine Things I Would Do Differently for My Finances and My Career If I Graduated Today
• The Best Renters Insurance for 2016
• 40 Ways to Save Money on Monthly Expenses
• How One Man Lives in His Truck to Turbocharge His Savings

The post A Guide to Renting Your First Grown-Up Apartment appeared first on The Simple Dollar.

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The Life-Changing Magic of Saying No to Free Stuff

It’s totally obvious.

You can see it at any baseball game, where fans jostle each other for oversized T-shirts…

Or any conference, where attendees eagerly fill their swag bags with pens and chip clips…

We love free stuff.

I’m sure there are evolutionary explanations for why we get so excited about things that don’t cost a penny, but I’m not here to examine those.

I’m here to look at what happens when we go against our innate desires — and start saying no to free stuff.

I started doing it a few years ago, and hard as it was (and still sometimes can be), I think my life is better for it.

Why I Stopped Accepting Free Stuff

Like the vast majority of other humans, I love getting free stuff.

But I also hate clutter.

I teetered along, living my life with those diametrically opposing views, until I read a book called “The Happiness Project” by Gretchen Rubin.

In it, Rubin employs a variety of strategies and experiments to improve her life.

One of them: “Stay on top of clutter.”

Though it may seem “trivial,” she writes, “I’ve found — and many people have told me that they’re the same way — that clutter weighs me down more than it should.”

And an easy way to reduce clutter? Stop amassing it in the first place.

“Because I’m focused on clutter-busting, I’m now very wary of anything that’s free,” Rubin explains.

“Now, instead of unthinkingly accepting a freebie, I ask: would I choose to buy this thing? If not, I probably don’t really need or want it, even if getting it feels like a treat.”

So just think: Would you pay for that free notebook? Or stress ball? Or beer koozie?

Probably not. But you’ll take it because it’s free.

Then, thanks to the “endowment effect,” it’ll become way harder to throw away than it ever was to accept.

“Once we own an object, we value it more,” Rubin explains in the New York Times.

“I may not have particularly wanted that ceramic beer stein emblazoned with a law school crest, but now that it’s on my shelf, I find it weirdly hard to give it up,” she writes.

“And the longer I own it, the more I value it. For this reason, it pays to be wary of hand-me-downs, tag sales and promotional swag. The innocent-looking gimcrack you pick up on a whim may root itself in your home for years.”

SO TRUE, right?

I mean, how many useless things do you have in your home that you’ve grown unreasonably attached to — simply because of the years they’ve been sitting uselessly in your home?

And it comes at a price: Being organized and clutter-free could help you save money, earn money or even fund your retirement.

Getting rid of stuff is hard, though — too hard for many of us. So, instead, the answer is to never accept it in the first place.

Of course, if it’s something you need and will use, take it, and revel in its freeness.

But all the extraneous junk? Nope, nope, nope.

My home — and my life — certainly don’t miss the clutter.

Your Turn: Do you accept free stuff? Have you ever thought about declining it?

Disclosure: Our friends stopped inviting us over because we were always digging for loose change between their couch cushions. We use affiliate links instead so we still get invited to a few parties.

Susan Shain, senior writer for The Penny Hoarder, is always seeking adventure on a budget. Visit her blog at susanshain.com, or say hi on Twitter @susan_shain.

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Will interest rates stay low forever?

Kyle Caldwell

It has been more than seven years since interest rates hit rock-bottom, and the consensus view following last week's cut to 0.25 per cent is that the general direction of travel has now changed to 'lower forever' as opposed to 'lower for longer'.

It has been more than seven years since interest rates hit rock-bottom, and the consensus view following last week's cut to 0.25% is that the general direction of travel has now changed to "lower forever" as opposed to "lower for longer".

read more

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Stroudsburg law firm marks 25th year

Divorce and custody cases can get very heated in court.Stroudsburg attorney Jeff Kash founded the Kash Fedrigon Belanger law firm, which handles primarily family court cases and is now celebrating its 25th year in existence."Custody cases are always the most emotionally challenging," Kash said recently at his 820 Ann St. office. "Parents are being forced into a reality where they'll now have less access to their children."I try to get my clients to see that their cases, [...]

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Rite-Aid on verge of major Lower Main St. project in Stroudsburg

Rite-Aid pharmacy developers are two steps closer to beginning construction of their lower Main Street relocation project in Stroudsburg.After reaching an agreement of sale with council for the borough-owned McConnell Street access near Third Street last week, developers received unanimous approval from the Planning Commission for requested modifications on Monday.Developers will meet with the zoning hearing board next week to request ordinance variance grants on a litany [...]

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Ask GFC 005: Do Tax-Deferred Accounts Make Sense if Tax Rates Will be Higher?

Welcome to another Ask GFC! If you have a question that you want answered you can ask it here.

If your questions get featured on GFC TV or the GFC Podcast, you are the lucky recipient of a copy of my best selling book, Soldier of Finance, and a $50 Amazon gift card.

So what are you waiting for? Ask your question now!

I might have been waiting my entire professional life for someone to ask this question, and someone finally has! GFC reader Ron M. asked the following question:

If we think taxes are going to be higher in the future, does it make sense to invest in tax deferred accounts? I like the idea behind the ROTH but contributions are very limited. How would you advise someone in that position?

– Ron M.

Thank you Ron, this is an outstanding question.

The general assumption is that we save money through tax-deferred accounts while we are working and in a higher tax bracket. We then withdraw the money in retirement, when we are in a lower tax bracket.

But that assumption may not be true, certainly not for everyone.

Taxes could actually be higher by the time you retire then they are right now. It could happen either because tax rates are increased in the future, or because you may find yourself earning more money during retirement than you are right now.

After all, right now you are living on paycheck, but when you retire there may be Social Security, pension income, income from retirement savings, and even some continuation of income from a job or business.

Either situation can put you into a position of dealing with higher tax rates in retirement than what you are facing right now.

If so, do tax-deferred accounts make sense?

Tax-Deferred vs. Tax-Free

On a day-to-day basis, I’m not sure that everyone fully comprehends the difference between the two. Tax-deferred means that the assessment and payment of taxes is put off until a later date. Tax-free means no taxes, ever. I’m not sure that that difference is fully appreciated when people are funding their tax sheltered retirement plans.

With the exception of the Roth IRA, virtually every other tax-sheltered retirement plan is tax-deferred. It’s a good deal, in that your contributions are tax-deductible, and the investment earnings accumulate in the plan without immediate tax consequence. But the day will come when taxes will be due on both your contributions and the investment earnings in the plan. That day will come when you retire, and you begin taking plan distributions.

The point is, again with the exception of the Roth IRA, no tax sheltered retirement plan actually provides you with true tax-free withdrawals when you retire. That means that you are actually backloading – or deferring – the tax liability to a future date.

When we assume that we will be in a lower tax bracket when we reach retirement age, we’re really speculating. In truth, we have no idea what tax rates will be by then, or even what our own individual income and tax situations will be.

Getting back to Ron’s question, we need to clearly establish the difference between tax-deferred and tax-free. Most retirement plans will merely be tax-deferred. They will not help if we’re in a higher income situation.

Accounts that Will be Taxable in Retirement

I believe that much of the confusion between tax-deferred vs. tax-free in regard to retirement plans is the result of the fact that most retirement plans are incredibly tax-advantaged while we are building them up. Not only are the contributions tax-deductible, but the investment income activity creates no immediate tax liability.

With that kind of scenario, it’s easy to confuse the ultimate tax status of such accounts.

But as I’ve already said, most retirement plans are tax-deferred, not tax-free. The list includes:

• 401(k) plans
• 403(b) plans
• 457 plans
• Traditional IRAs
• SIMPLE IRAs
• SEP IRAs
• Solo 401(k) plans

Traditional defined benefit plans are also taxable, though increasingly few people are covered by them anymore.

The point is, you can accumulate a considerable fortune in one or a combination of these plans. The tax deductibility of contributions and the tax deferral of investment income makes that even more possible. But if you retire with $1 million or substantially more, you could be looking at a hefty tax liability when you start taking distributions.

Complicating this is the fact that at some point you will be required to begin taking distributions from the plan. In fact, a provision known as required minimum distributions, or RMDs, means that you will be required to begin taking distributions from your plan once you turn age 70 1/2.

If you wait that long to begin taking distributions, your plan maybe even larger than what you imagine right now. Since the RMDs will be calculated according to a predetermined IRS formula, you’ll have no ability to reduce the distributions in order to lower your income tax liability.

It’s not an exaggeration to say that large tax-deferred retirement savings plans are potential ticking time bombs, at least in regard to income tax liability.

Accounts that Will be Tax-Free in Retirement

Fortunately, there are ways to save money for retirement that are actually tax-free, and not just tax-deferred.

Several times I’ve mentioned the Roth IRA as an exception, and it truly is. A Roth IRA works much like a traditional IRA, in that you can contribute up to $5,500 per year (or $6,500 if you are 50 or older), and the investment earnings on it are tax-deferred (this will matter only if you take early distributions, as the earnings will be taxable if you do).

But a Roth IRA departs from a traditional IRA in three very important respects:

1. The contributions you make to a Roth IRA are NOT tax-deductible,
2. Distributions from a Roth IRA are actually tax free, if you are at least 59 1/2 years old, and have participated in the plan for at least five years, and
3. RMDs are not required with a Roth IRA, meaning that distributions from the plan will not increase your tax liability (the Roth is the only tax favored retirement plan that is not subject to RMD’s)

If you anticipate having a very large retirement portfolio, a Roth IRA is a brilliant tax diversification, and a virtual must-have account.

Apart from a Roth IRA, you can also save money for retirement outside of dedicated retirement plans. This means saving up money in stocks, mutual funds, exchange traded funds, or real estate investment trusts, in a regular taxable investment account.

There will be no tax deduction for contributing to these accounts, nor are the investment earnings tax-deferred. But since the money accumulates on an after-tax basis, you can withdraw it any time – including retirement – without increasing your tax liability.

Best Strategy: Be Prepared for Anything!

Ron asked if tax-deferred accounts will make sense if tax rates will be higher in retirement. In my opinion, they will, but we also need to consider the this in the broadest sense possible.

Part of the reason I believe tax-deferred accounts still make sense even with the prospect of higher taxes is that we can’t know if that will be the outcome. We’re attempting to predict the future here, and that can never be done. Having tax-deferred accounts will see you well-prepared in the event your tax rates are lower. We can’t discount that possibility.

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Ultimately, the best strategy is balance, which means being prepared for either outcome.
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If you have tax-deferred accounts, you will be prepared for lower tax rates when you retire. But given the possibility that rates may be higher at that time, you should also include tax-free investments in the mix.

That should certainly start with a Roth IRA. Yes Ron, contributions to the plan are low, but you can always do a conversion of other tax-deferred retirement accounts to a Roth IRA, increasing the size of the account substantially.

You can also supplement your Roth IRA account with regular taxable investments that are held outside of a retirement plan. Yes, the earnings on those plans will continue to be taxable, but your withdrawals will not be. You can take money out of those accounts anytime you want, without creating a tax liability.

So the short answer to Ron’s question is be prepared for both higher and lower tax rates in retirement. That means having both tax-deferred and tax-free savings. With that strategy, you can’t lose no matter what happens.

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How Bloggers Can Make Money With Affiliate Marketing

By Holly Reisem Hanna One my favorite ways to monetize my blog is through affiliate marketing. In fact, it was the first method I utilized when I launched this site back in 2009. The great thing about affiliate marketing is you can start it at any time (you don’t need to have a ton of […]

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