Save Invest Retire

CNN Money had a nice article this morning on four ways to Fool yourself into saving smarter. It generally took a carrot-and-stick behavioral approach to saving. If you are already well on your way with your own system the behavior tips may not be helpful, but there were two tips that are great for anyone:

1. Put your savings on autopilot. No matter who you are, making saving an automatic process, by having money deducted from your paycheck or bank account is probably the best and least painful way to save real money. I have my ingdirect account withdraw a set figure from my direct deposit checking account every payday and I don’t even miss it because I never see it there to begin with. This method can be used for savings, investing in stocks, or investing for retirement, or even just saving a bit for a special purpose.
2. Invest in a Roth 401(k). A little twist on the usual Roth IRA advice, if your employer offers a Roth 401(k), take it instead of or in addition to a regular 401(k). There are a number of reasons why you may want to do this, so you will have to (1) see if your employer even offers it, and (2) look at your particular situation. Some reasons why you may want to use it are that you can effectively contribute more to a Roth 410(k) because you are using after-tax dollars and you can take advantage of tax-free growth if you will be in a higher tax bracket at retirement.

The secrets to building wealth are simple and embodied in the title of this site: Save-Invest-Retire. Paul Navone did just that, although instead of retiring he donated MILLIONS to charity after a lifetime of working for $11/hour.

Donor built millions on $11 an hour | Philadelphia Inquirer | 01/13/2008
RICHLAND, N.J. - Paul Navone worked in mills in and around Vineland for 62 years, never earning more than $11 an hour. He buys his clothes in thrift shops. He doesn’t own a phone. And he doesn’t have a TV: The last thing he recalls watching was Neil Armstrong walking on the moon in 1969.

Yet through a combination of frugal living and smart, disciplined investing, the 78-year-old retiree from nearby Millville was able to give $1 million to Cumberland County College last month.

In addition to that first million, he gave another million to a prep school for a swimming pool.

What was his secret? Well, it’s not rocket science, but it’s also not necessarily easy; he saved and invested. Navone saved while living with family before buying a dwelling where he could live in one unit and rent out the other. He bought some more properties and for decades steadily handed money over to his investment guy, avoiding touching it while letting it grow.

If Navone can become a multi-millionaire while making $11 an hour, what’s stopping the rest of us?

That’s right, you can save a lot of money by avoiding the replacement razor blade scam perpetuated on the shaving public. Let me explain:

First, I picked up an old-fashioned safety razor at the flea market for two bucks. The design is similar to this one:

This thing is pretty simple: you rotate the base and the top opens, allowing you to place a double edge razor blade inside. After closing it, you have a razor which allows you to shave with a different edge on both sides.

The razor itself is not where you save money, however. After all, the razor and blades business model has long dictated selling razors at a loss to make all their profit on the blades. Razor manufacturers, once the patents on their latest razor model run out, bring out a new model to keep a monopoly on their proprietary replacement blades.

The classic safety razor is the solution to the outrageously priced proprietary blades. I stopped at the local Walmart to pick up a pack of blades. I glanced at the 10-packs of the currently marketed razor blades from the big manufacturers and the prices ranged from around $15-$23 per ten blades. In other words, anywhere from $1.50 to $2.30 per blade. For me, at an average cost of $2 per blade, that means I used to spend maybe $50 or so a year just on shaving blades.

I bought a ten pack of double edge blades at a total cost of $1.54, or 15 cents per double-sided blade. That’s a new cost per year of less than $4, down from $50.

I gave them a test spin and found they did a fine job at a cost of less than 1/10th what I was previously paying. I did find that shaving with the safety razor requires you to keep your wrist more rigid, but other than that, everything went very smooth, including the final result.

For some tips on the old-fashioned shaving approach, try here.

It looks like competing advocacy groups are entering the frugality debate over the wisdom of using cloth napkins vs. paper paper products according to the Star-Telegram.

Earth911.org claims that napkin and paper towels cost a family of four approximately $260/year and an unspecified use of natural resources.

New American Dream, a consumer/simplify group in D.C. questions whether the savings would reach that amount, but does offer some tips if you go that route, such as buying organic cloth napkins, washing in cold water, and line drying.

Then the Star-Telegram pulled in a money editor at Suite101.com, an online article site, to attest to her experience in saving $8-$10 the first month of switching to cloth napkins.

My take on the issue: by the time you pay for the napkins and run repeated laundry loads every month, it seems like whatever savings that accrue are probably not worth it. Not only am I jealous of my time, but I dislike doing laundry. My main goal in living a frugal lifestyle is so that I can eventually gain the freedom to do the things I want to do instead of the things I must do.

The newspaper article did turn over a new stone for me becauseI checked out Suite101.com,  which happens to be a website hiring freelance writers. I’d rather explore the possibility of getting a freelance writing job and earning an extra few bucks than spend it laundering my napkins, but to each his own.

The 98th Festival of Frugality is up at Being Frugal. My interview with Carl Weathers is posted there. Carl wasn’t happy with the post placement and threatened to sue if we weren’t moved up the page, but I talked him out of it.

I checked at some of the other posts and saw some I liked and others that were less helpful.

The Frugal City Popcorn is for the win in my book. Short story is you take a paper bag, put some corn kernels in, fold the top, and microwave- presto change-o you gots yourself some popcorns. No need for an air popper, and no need for the waste of wrapping, extra cost, etc. of commercial stuff. You can even reuse the same bag and any unpopped kernels next time. Well done Money Changes Things, you get an official Carl Weathers’ salute.

The shopping at ethnic markets post by Cheap Healthy Good also looked like a winner to me. I further liked the kitchen-sink approach of Lasagna Without Recipes, but maybe all that’s because I haven’t had dinner yet.

Less useful was another debate about whether to make your own laundry detergent. No way in hell I’m making my own laundry detergent. If I want to save twenty eight cents per load I’ll buy a more efficient washer. Just not interested. Neither was Carl Weathers, he just gets everything dry cleaned for the price of a few signed glossy headshots now and then.

Anyway, there’s plenty more in the festival and it’s not all food-related, so go check it out.