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The Simple Dollar

A gas pump is shown in Montpelier, Vt. Is it worth it to fill up with premium gas? (Toby Talbot/AP/File)

Should you fill up with premium gas?

By Guest blogger / 01.25.14

You’re standing at the gas pump. There are multiple fuel types available – a low-cost type that’s marked with an 87 octane rating that also has 10% ethanol, a medium priced gas that’s 87 but more expensive than the ethanol gas, and a premium fuel that has a 91 octane rating. (Note that you may or may not have the ethanol gas in your area, but it’s certainly prevalent here in Iowa.)

Which is going to get you the most miles for your dollar? I certainly want to be able to make a quick decision at the pump that will maximize my miles per dollar that I get from the gas that I purchase. ( Continue… )

A 1040 tax form along with other income tax forms at the entrance of the Illinois Department of Revenue in Springfield, Ill. (Aeth Perlman/AP/File)

Tax filing: six reasons to file online

By Mike JelinekGuest blogger / 01.24.14

I’ve been doing my tax filing online for the past seven years. During those years, I’ve lived in Wisconsin, Illinois, Florida, and Washington. I was employed by three different companies. I started and closed three different businesses. I was an independent contractor for at least five other companies and worked as a sole proprietor. I had investment accounts that made money, lost money, and eventually closed.

As you can see, my tax situation has been anything but simple. Yet I’ve never had to hire an accountant. I’ve never even been tempted to. After a recommendation from my brother, I started using TurboTax and I continue to trust it every year.

Just last year, I saved a significant amount on my taxes using online tax software despite the fact that I’m not up to speed on tax code and deductions.

Here’s an example of one major way I saved money:

I had no plans of taking advantage of my relocation costs but, as I was doing my taxes, this question popped up on the screen: “Did you move this past year?”

From there, I was led to a few more questions that had me calculate the total number of miles I moved. I also entered in all the costs of moving (luckily, I kept all my receipts) and the purpose of the move (new employment). I ended up saving over $1,000 on my taxes by deducting these relocation costs. I don’t know if this would’ve happened had I used an accountant or tax preparer, as they assume you’ll present all this information to them. ( Continue… )

Shoppers are seen at Macy's Herald Square on Thanksgiving Day in New York November 28, 2013. Some early U.S. shoppers headed to stores on Thanksgiving Day in search of discounted holiday gifts on a day long reserved for American families to bond over turkey and football. Macy's Inc and a slew of other stores are opening later on Thanksgiving for the first time ever in a bare-knuckle brawl for a bigger slice of holiday sales. (Eric Thayer/REUTERS)

How expenses can be costly in money and time

By Guest blogger / 01.23.14

When I buy a loaf of bread at the grocery store, I’m buying convenience. It would cost less to buy the ingredients for a loaf that I could make at home myself, but that would require a time investment.

That same phenomenon is true of many of the things we spend our money on. Everything from a wrist watch (it allows us to conveniently know the time) to a jug of fruit juice (it saves us the time and effort of juicing raw fruit) boils down to a convenience purchase.

Many of the things we buy are purchased to save time and energy, not because of the product itself.

The reasoning is obvious: buying things for the purpose of convenience enables us to fit more into our day. ( Continue… )

Tracy Millett sorts through her coupons while shopping at Choice Grocery in Gulfport, Mississippi, October 11, 2008. (Tim Isbell/Biloxi Sun Herald/AP/File )

Simplify a grocery list with one-time purchases

By Guest blogger / 01.22.14

Going to the grocery store is an exercise in frustration. Why? Almost everything you buy there is consumable.

You buy it. You eat it or use it. Next week, you have to go back to the store and buy more. It’s an endless funnel of money straight out of your pocket.

My solution to this problem was to start looking at the things I was purchasing regularly at the store and asking myself whether or not I could make some one-time purchases to eliminate that item from my grocery list. ( Continue… )

Dollar bills are counted at a foreign exchange shop in New Delhi in August. Hamm argues that money is best used as a tool to live a fulfilled life. (Tsering Topgyal/AP/File)

Making a high income mean high reward

By Guest blogger / 01.22.14

I receive emails quite regularly from people who are making well over $100,000 per year and yet are struggling to make ends meet. It doesn’t take much poking around on other personal finance websites to see that same story repeated many times over.

For a long time, I struggled to understand why this was happening. When Sarah and I were truly struggling with our finances, our combined income was substantially below $100,000 per year. I would simply think to myself that if our income were doubled back in our overspending days, we would have had plenty of resources to keep things afloat.

Here’s the problem: that daydream simply isn’t reality.

If I’m honest with myself about what we would have done with doubled income back then, the real picture would have involved a larger apartment, nicer cars, more gadgets, and more meals eaten out on the town. ( Continue… )

A 1040 tax form along with other income tax forms are seen at the entrance of the Illinois Department of Revenue in Springfield, Ill. (Seth Perlman/AP/File)

Tax forms: Prepare for tax season in five simple steps

By Guest blogger / 01.20.14

Like many Americans, I loathe tax season. Collecting documents, filling out forms, sending money to Uncle Sam – it adds up to a process that I frankly don’t really enjoy.

Still, it has to be done each year and the time to do so is nearly upon us. Here are a few steps to take well before actually filing our taxes that helps make the filing process that much easier. We do (or have done) each of these things and they’ve all helped greatly.

Securely save each and every tax form that arrives in your mailbox. Designate a specific place to put all of those W-2s and 1099s and statements as they arrive and, when they show up, put those forms in that place.

For years, we’ve simply put our tax documents in a single manila envelope and put it in a secure place with our other important documents. When a new tax document comes in, I just simply stick it in that folder.

Figure out how you’re going to prepare your taxes. Are you going to use software and do it yourself? Are you going to do it manually? Are you going to use a preparer? ( Continue… )

Using a slow cooker can save money at lunchtime. (Steve Marcus/Reuters/File)

Cheaper daily lunch with a slow cooker

By Guest blogger / 01.17.14

It’s pretty easy to understand the desire to eat out in the middle of a workday. It can be really inconvenient to prepare a meal before you go to work, after all, and many of the meals you can throw together in a minute in the morning are pretty bland.

The problem is that eating out for lunch can be expensive, even if you eat at an inexpensive place every time. If you spend only $5 on lunch – and that’s a pretty cheap lunch when eating out – that’s $25 a week.

That leaves us with the idea of taking leftovers to work, which is something that people often don’t like to do because it means eating more of what you already had the night before (or the night before that).

Thankfully, there’s a pretty simple approach that solves all of these problems. All you need is a slow cooker and a small pile of freezer-ready resealable and reusable dishes. One good solution is to just buy a bunch of them in bulk, like this set of 50 containers for $18.

All you have to do is turn on your slow cooker on a Saturday or Sunday morning, toss in the ingredients for a particular slow cooker recipe, and let it cook all day long. If you wish to have that food for dinner that night, you can do so, but it’s entirely up to you. ( Continue… )

Shoppers walk through the Friday morning Telluride Farmer's Market in July in Telluride, Colorado. Hamm's recommended strategy for maximizing dollars in the local economy is to buy all items (except those made locally) as cheaply as possible, then spend the rest of your budget on local services and purely local items. (Ann Hermes/Staff/File)

Can 'buying American' and being frugal go together?

By Guest blogger / 01.17.14

Mark writes in:

One of my biggest struggles with becoming frugal is that most of the inexpensive items aren’t made in the United States. I used to make an effort to buy as many products as I could from local places and tried to make sure they were made in the U.S. but doing that was expensive. Do you have to choose between buying local and buying cheap?

First of all, does it really help to “buy American”? This might seem like a really obvious question, but it’s not as obvious as you might think. Many economists, such as David Henderson, argue that it’s better for the economy to simply buy the “cheapest” item or best bargain item regardless of the source. At the same time, there are many compelling arguments for buying American. There are also many arguments for buying local, too.

The decision to pay more to buy American or buy local isn’t an automatic decision and it has a lot to do with your economic and personal beliefs. Regardless of how you feel about it, it’s worthwhile to get educated on the topic.

The next thing you need to decide is whether it’s more important for you to buy local – keeping as much of your money as possible within the state or county – or to buy American – buying as much stuff as you can that’s “made in the U.S.A.” Essentially, you’re choosing whether to use your dollar to support manufacturing jobs somewhere in America or service jobs in the local area, but the tactics you use for each are different. ( Continue… )

This graphic released by the WWE shows the logo for the new WWE network. The WWE Network launches Feb. 24, 2014 as a streaming service for $9.99 per month with a six-month commitment and will include all 12 pay-per-view events. (WWE/AP)

How the WWE Network will make sports television cheaper

By Guest blogger / 01.15.14

A few days ago, at the Consumer Electronics Show, an announcement was made that I think points toward a future, a few years down the road, of very inexpensive television service for anyone, regardless of their interests.

World Wrestling Entertainment – yes, the professional wrestling company – announced an online streaming service a la Netflix for $9.95 a month. The service includes a 24/7 schedule of programming, plus an on-demand library of their 100,000+ hours of archived wrestling shows. This is essentially Netflix for professional wrestling fans.

So, why does this matter?

First of all, this exact model makes a ton of sense for any media company out there with a lot of archived programming. Some media companies are already doing it – for example, HBO GO exists already for people who want to watch full archives of the various HBO original television series. Netflix essentially provides this for a bunch of different television and film companies, streaming their archives on-demand.

However, what this really points to – in my eyes – is sports programming. ( Continue… )

An Indian counts dollar bills at a foreign exchange shop in New Delhi. Households should work towards positive cash flow, because it allows for the freedom to do other things, according to Hamm. (Tsering Topgyal/AP/File)

Cash flow means spending less than you earn

By Guest blogger / 01.13.14

One idea I’ve mentioned regularly on The Simple Dollar is that of “cash flow.” It’s an accounting term that refers to the movement of money into or out of a business or project over a specified period of time.

I really like to use the idea of “cash flow” to look at the state of a family’s finances. Over the course of a month or a year, the “cash flow” of a household can tell you a lot about how the family is doing financially.

Here’s an example of what I’m talking about.

Let’s say that in December 2013, a family brings home $6,000. During that same month, the family spends $5,500 on their bills and other family expenses, both necessary and otherwise. This leaves the family with a cash flow of +$500.

First of all, a positive cash flow is a good thing. That means the family is spending less than they’re bringing in. At least some of their income is sticking around, going into savings or investments or toward debt repayment. ( Continue… )

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