How To Save On Gasoline
Q: Gasoline prices seem like they have a mind of their own these days. Other than giving up my car, is there anything that I can realistically do to try to save on gas?
A: The rise in gasoline prices is really putting a hurting on the economy and the average American’s pocket book. Years ago General Motors converted their factories that made large rear well drive cars into places that would make nothing but trucks because the SUV market was the next “big” thing. Ask GM how many Denali’s they are selling now and they would probably tell you that they can’t give them away!
So what can you do to ease the pain at the pump? Here are some tactics that can help you fill up less often and hopefully reduce the overall amount you pay for gasoline.
1. Ask yourself every time you plan to use your car, truck, SUV, or van, “Is this trip really necessary?” Every mile you drive your vehicle will cost you at least an average of 36 cents. If the trip is not necessary, think twice before using your vehicle.
2. Drive at a conservative speed on the highway. According to the U.S. Department of Energy, most automobiles get about 20 percent more miles per gallon on the highway at 55 miles per hour than they do at 70 miles per hour.
3. Decrease the number of short trips you make. Short trips drastically reduce gas mileage. If an automobile gets 20 miles per gallon in general, it may get only 4 miles per gallon on a short trip of 5 miles or less. The U. S. Department of Energy says that trips of 5 miles or less make up 15 percent of all miles driven each year, but these trips burn 30 percent of the gasoline.
4. Cut down or combine the number of shopping trips you make. Try to plan your shopping so that you can run all of your errands in fewer trips. Driving to run errands many times a week can become very expensive. So if possible, try to run necessary errands on your way to and from work or get them out of the way during your lunch break by walking to nearby stores, the library, and other places.
5. Don’t drive all the way across town to save five cents on an item. As pointed out above, ” it costs an average of at least 36 cents a mile to own and operate an automobile.” If you drive 10 miles, it will cost you $3.60 or more.
6. Turn off your engine if you stop for more than one minute (this does not apply if you are in traffic). Restarting the automobile will use less gasoline than idling for more than one minute. Also, don’t wait until you unbuckle your seat belt, turn off the lights, turn off the air-conditioner, and gather items from the seat to take with you, etc. before you turn off the engine when you finally arrive at your destination. When you turn off the ignition, your gasoline costs stop.
7. Run your automobile air-conditioner only when really necessary. Alternatively, use the economy vent. Running the air-conditioner results in more fuel consumption and fewer miles per gallon of gasoline.
8. If your automobile is equipped with a cruise control, use it when possible. It helps you get better gas mileage. Most automobile manufacturers recommend, however, that the cruise control not be used in heavy traffic or on wet roads for safety reasons.
9. Keep your vehicle in good working order. Have your automobile tuned-up as recommended in your owner’s manual or as needed. A poorly tuned engine could consume three to nine percent more gasoline than a well-tuned one. The tune-up will pay for itself in gasoline savings and performance. Likewise, check your tire pressure regularly and keep your wheels in good alignment. Tire pressure that is too low will increase rolling resistance and reduce gas mileage. You can lose about two percent in fuel economy for every pound of air pressure under the recommended pounds per square inch.
10. Shop around for the best price on gasoline. There could be as much as 20 cents or more per gallon difference in price at different places that sell gasoline. Also, when you do find the best deal, don’t overfill your gas tank. The gasoline draining down the side of your automobile is expensive and may also damage the finish on your car.
11. Consider purchasing a shopping card offered by such places as Wal-Mart that gives you a three cents-per-gallon discount at their pump if you use the shopping card when paying for the gasoline.
12. Vacation near home this year. Most of us fail to see and enjoy the attractions in our own city or state. Instead, we tend to drive long distances for a vacation. People hundreds or thousands of miles away from us drive to see our attractions, and we drive to see their attractions even though we haven’t seen our own nor have they seen their own. Discover some exciting things close to home this year and save hundreds of dollars in transportation costs, including gasoline.
13. Consider taking public transportation or biking to work. This city has an incredible infrastructure in place that not all cities enjoy. You can get from one side of the city to the other in about two hours via the CTA, RTA or Metra. If you bike around this city during the summer, not only will you save on gasoline, but you can also shed a few extra pounds! All in all, think outside of the box for gas savings because it will probably get a lot worse before it ever gets better.
Terms Everyone In Business Should Know
Q: I’m a little new to the business realm and just recently hired an accountant. When we talked about how my company made money, I was a little stumped by some of the terms he used. What’s the best way to brush up my “business acumen” so to speak?
A: At the core of every successful business, from a global giant to a corner store, are the same fundamentals of moneymaking: cash flow, margin, velocity, return and growth. Additionally, at the core of every successful business leader is an intuitive understanding of the relationships among them.
When you have business acumen, you realize the importance of every job within the company. A mailroom clerk with business acumen knows that getting checks to the accounts receivable department more quickly will ease the company’s cash flow. Likewise, a sales rep with business acumen knows that higher-margin products will increase the company’s return.
However, when you are starting a business or the complexity of your job increases, it’s easy to lose sight of the fundamentals. So the following are the most basic financial terms/concepts that anyone in the business world should be familiar with:
Cash Flow. No business survives long without it. You should know how much cash your business generates and how much cash it consumes. What are the sources of it? What drains it? What’s the timing of the inflows and outflows and how is it changing? More revenues (sales) often means more cash. But growing a business consumes cash. How fast can the company expand without straining its cash flow?
Margin. When people talk about the bottom line, they generally mean net profit margin – the money the company earns after paying all its expenses, interest, and taxes. But gross margin is important, too. Gross margin is the difference between a product’s selling price and what it costs to make the product (the “costs of goods”), expressed as a percent of the selling price. Changes in it can signal important shifts in a business. When PC makers saw their 32 percent gross margins decline to 20, they knew (or should have known) the competitive landscape had changed.
You have to know how changes inside or outside the business affect gross margin. Are there new entrants in the market who are winning customers? A competitor who’s found a clever way to reduce costs and prices? A change in the pricing power of suppliers?
Velocity. Velocity refers to speed, turnover, or movement. How much revenue do you turn over, or generate, for each dollar of inventory? If you have $1 million in inventory for the year and revenues of $10 million, your inventory velocity is 10. This tells you how fast you’re moving raw materials through the factory, turning them into finished products, and moving those products off the shelf to customer – the faster, the better.
Service businesses can track velocity, too. For banks, velocity of equity – how much revenue is generated per dollar of equity – is a useful measure. The concept applies to every business.
Return. Return is the ratio of money gained or lost on an investment relative to the amount of money invested. The amount of money gained or lost may be referred to as interest, profit/loss, gain/loss, or net income/loss. The money invested may be referred to as the asset, capital, principal, or the cost basis of the investment. Return is important because it’s one of the “true” indicators of how your business’ assets are performing – which is imperative when comparing one year to the next.
Growth. Growth is just a measure of the increase/decline from one time period to the next. Every business needs to grow revenue, cash and assets to stay in business. How do you grow in a way that keeps the other aspects of money making in balance? There’s no formula – people with business acumen figure it out. Street vendors in villages around the world use business acumen every day. They have to – their next meal often depends on it.
Hopefully the above gets you started in your quest to increase your financial understanding of business. Yet, the best way for you to improve this is to just get out there, study and read as much financial literature possible, learn from what occurs in your business and read the case studies from other businesses.
The Importance of Networking or Self Investment
Q: In Corporate America, one often hears that they should network. I do a good job and always receive good marks on my performance reviews. Why should I have to network on top of this, especially when I have limited free time?
A: Unfortunately, we as employees tend to think that “doing a good job” is the key to getting ahead. The startling reality in today’s economy is that doing a good job is just the base line to be considered for a position. I mean, as a manager you wouldn’t try to hire someone who couldn’t do a good job would you? Likewise, things such as past work experience, professional credentials and educational experience (e.g. bachelors, masters, PhD) are only keys that open the door so that you aren’t excluded from the party.
If you’re doing it right, networking isn’t something that takes lots of extra time in your life. If you see everyone as a potential associate or friend, you can network during any mundane daily activity, from waiting in line at the cafeteria to peddling at the gym to commuting on the train. “People think of networking as going to a function,” says Karen Susman, a Denver-based coach and speaker on networking. “You need to realize you are building your network everywhere all the time.”
Some conversations will be fleeting while others will lead to the people you meet becoming a part of your circle. The key is being open to – and staying in touch with – those who cross your path. This is the essential ingredient in creating your own luck. At some point, you may learn about something that can benefit you professionally before the rest of the world finds out. For Mr. Rogers, it was a work colleague that led to him filling their position when they took another role within the company. Had they not had a relationship, he would not have had the opportunity to put his name and face in front of the hiring manager before others were even aware the position would be opening up.
While it is true that some networking tactics do take time, many don’t actually take too much. Busy executives who excel at career management say they set aside only a few extra minutes a day to touch base with professional contacts. Tim Ayers, Director of Global Services Marketing for Tellabs, a communications company in Naperville, devotes about five minutes daily to call or email some of the approximately 900 people in his computerized database. They include colleagues, vendors and others he’s worked with in the past.
Mr. Ayers notes the benefits: When he lost his job in Chicago during the telecommunications meltdown, he found a new position through a networking contact. Talking with others regularly also helps him do his job better because it keeps him informed about trends and potential candidates for Tellabs openings, he says.
Here are five simple tips to make networking an easy, time effective and potentially career enhancing part of your typical workday:
Show interest in others. When working with fellow colleagues, ask questions and get them to talk about themselves and their business experience. The more you know about someone, the more you’ll know about how they may be able to help you in the future.
Build relationships. Strangers won’t put their reputations on the line for you. Consider dropping an email or going out to lunch with any new person you meet. The stronger the relationship becomes, the better your chances of creating an ally in your career development.
Don’t be selfish. Remember, networking is a two-way street. You have to be willing to give to the other person in order to receive. If you become aware of some helpful information, make sure your network contacts are aware of it.
Prepare an “elevator speech.” Write a summary of what you want people to know about you that can be delivered in less than 30 seconds. You never know when that VP may bump into you in the hall and ask you “so what do you do?”
Maintain your network. Keep in touch with those in your network. Remember, the majority of jobs go unpublished or the candidate is “identified” by the time it is. Your next exciting opportunity may come from a network contact that thinks it would be perfect for you!
Innovative Ways To Save Money
Q: I am getting married this year and really need to stash some cash away. I’ve got some time before the big day, but what is the fastest way to save up a few thousand dollars?
A: Usually when we stress the importance of saving money, people start to moan and groan. Well, we’re hear to tell you from experience, saving a few extra pennies a year is not as hard as it sounds. You just have to piece some things together, kind of like a jigsaw puzzle, to get to the big picture. Combine a few of these ideas and we’re positive you will be able to stash away $2,000 or more this year:
Collect Coins. The ones in your wallet, purse, coat, etc. that is. Every time you spend cash and get change back, take it and put it in a jar or something. Doing this for a month typically can add up to $20 to $60 depending on your spending habits. Annual Savings = $240 – $720.
Put Your Insurance Company on Trial. Some may notice that their insurance rates have gone nowhere in the past 5 years despite them getting older – which is extremely annoying. So why not look at changing companies? Also, look at that deductible you are obligated to pay in the event of an accident. If changing companies or your deductible from $500 to $1,000 can save an extra $40 a month it may be worth it. While you’re at it, see if you can bundle the companies that provide your insurance if you currently have more than one. You may be able to get another 15% discount just for doing more business with them. Annual Savings = $300 – $400.
Create a 45-Day Month. If you have a bi-weekly or monthly recurring expense, why not do it a little less often? By putting some time between how frequently you perform activities like haircuts, messages, manicures, etc. you will cut down on their annual frequency. With 3 less hair appointments at an average of $20 for the men and $50 for the ladies, the savings add up. Annual Savings = $250 or more.
Cut the Landline. Some people still have both a cell phone and a landline. Why not drop the home line and just go cellular? For an extra $10 a month you could add some minutes to cover yourself and ditch the home phone. This is only advisable if you are not extremely ill, accident-prone or need the line for DSL or home alarm, but for most it is a possibility. Annual Savings = $300.
Flex Those Benefits! Using pretax dollars always has an advantage in that it cuts your taxable income. By using a Flexible Savings Account (FSA), you can use pre-tax dollars to save for medical expenses. It’s really easy for a person who puts $2,000 into an FSA to see a $600 reduction in their tax liability if you are in the 25% tax bracket. Where does that $600 reduction wind up? In your tax refund of course! The only downfall is that FSA’s are a “use it or lose it” program – meaning any money not used at the end of the year is forfeited. Thus, estimating how much you will spend on medical expenses is crucial. Annual Savings = $600 or more.
Stop Drinking Like A King. While the Remmy, Chris and Henn-o taste good, they are definitely not for the weak of financial heart. Neither are those $12 martinis! So why not scale down the liquor to some wine or less expensive brand of liquor and help both your body and your wallet? This can shave at least $50 a month off your bar tab if you are a frequent drinker. Annual Savings = $600.
Stop Paying A Premium. The truth be told, most cars will run on just about any grade of gas you can find, including that ethanol blend you find in the sticks of Southern IL. Unless you have a “high performance” engine that will not run properly on premium gasoline, ditch it in favor of some cheaper go juice. By switching to a lower octane gas, you can easily save 10 to 20 cents per gallon. While this may only equal $2 to $4 per fill up, it can equal close to $50 a year. Annual Savings = $50
Punch A Gift Horse In The Mouth! We often mention this around Christmas time but we’ll mention it here and now. We all like to give things to our friends and family – sometimes we even feel obligated to do so. But don’t feel obligated to spend more on gifts than you can afford to. The average outlay on gifts during the holiday season of 2011 was close to $1,000 per household. Add in some birthdays, weddings, anniversaries, valentine’s days and that number can quickly get out of control. So, scale back a little, give within your means and don’t worry about the rest. People who really care about you place more importance on you being in their life then they do on what gift you give them. Annual Savings = $750.
10 Ways To Make Next Tax Season Better
So tax season has come to an end, but the memories of the last minute filers still burn brightly in our dreams. The filers who waited because they KNEW they owed. The taxpayers who had to go on extension because of missing documentation. The people who cried because there was nothing we could do to help their situation. Well, this post is for all of YOU!
Next tax season doesn’t have to be like this year. Nothing pains us more than not being to help someone out of their situation. To that end, here is our list of the top things you should do right now so that next year is less painful and hopefully easier on your pocketbook:
Start a filing system. Ask any attorney what the golden rule is and they will tell you “he who has the most paper wins.” This is the rule that the IRS goes by as well. Most taxpayers pay more in taxes than they should because of inadequate documentation. If you give donations to charity, drive your personal vehicle in connection with work, real estate, a medical condition or charity; it’s important for you to log these items. Unreimbursed business expenses are another area where documenting expenses is crucial. To ensure nothing is missed come next year, start a filing system to keep all of your paperwork. This can be as simple as a drawer where you dump everything until January 2013 or as elaborate as a spreadsheet. The point is make sure you keep all your documentation in one place that is easy for your to find.
If you owed, adjust your withholdings NOW. The amount of the refund you receive or balance due to the government is simple arithmetic. Withhold enough and you’ll get money back; fail to do so and be prepared to write Uncle Sam a check. If you owed last year, talk to the fine folks in your HR or payroll department now and have your withholdings adjusted on your W4. It’s already April, which means you’ve missed out on four months of withholding at the correct rate. The longer you delay, the greater the probability will be that you’ll owe again next year.
If you recently got married, change your withholdings. Newlyweds often forget to adjust their withholdings, but doing so can sometimes be detrimental to your bank account. Married couples sometimes find that their combined income pushes them into a higher income bracket. However, if you fail to make the necessary adjustments, you’ll quickly learn that you didn’t have enough withheld to cover your tax obligation. Follow the steps listed above to avoid this painful lesson.
Manage your pre-tax benefits. The easiest way to pay less in taxes is to reduce your taxable income. The best way to achieve this is to take advantage of all the pre-tax benefits that your company offers. This includes 401(k) contributions AND associated match, utilizing pre-tax transit and parking benefits as well as contributing to a Flexible Savings Account (FSA) or Health Savings Account (HSAs). Money is contributed to these items before your take home pay is calculated. As your pay will be reduced by these items, so will the corresponding amount for which the associated taxes are calculated upon. The result? A reduced tax base and less money paid to Uncle Sam.
Begin contributing to a retirement plan. If you’re not contributing to a 401(k) or other retirement plan, you’re passing up some of the best tax savings available. Contributions to 401(k) plans are not subject to federal or most state income taxes. Your contributions and employer match will grow tax-deferred until you withdraw them during retirement. You could save between 20 and 40% of your contribution in taxes. If you’re already contributing to a 401(k) or other employer-sponsored plan, increasing your contributions early in the year will increase your tax savings and your earnings over time.
Start contributing to an IRA. If your employer doesn’t offer a retirement plan, contributing to an IRA each year can get you some of the same tax savings. For instance, if you make eligible contributions to a qualified IRA, 401(k) and certain other retirement plans, you may be able to take a credit of up to $1,000 or up to $2,000 if filing jointly. The credit is a percentage of the qualifying contribution amount, with the highest rate for taxpayers with the least income. For increased earnings on your IRA, don’t wait until April 15th to open it. The earlier in the year you make your contribution(s), the faster it will grow.
Schedule a midyear evaluation. There is nothing that your tax preparer can do for you regarding your tax liability once December 31st rolls around. June will be here before you know it which means that half the year will already have passed. Schedule some time with your preparer to discuss your situation and any changes that you think may impact your tax bill next year (e.g. marriage, new child, job change or loss, etc). That way you all can begin to plan accordingly and make the necessary adjustments so that neither of you are get surprised with a big tax bill.
Run a tax projection. Once you’ve had a chance to get your tax situation reviewed, have your tax preparer run a tax projection. Make sure that you incorporate things such as capital gains from stock sales, mutual fund trades, execution of stock options, bond redemptions, unemployment compensation, medical expenses, etc. It’s easy for taxpayers to make a few decisions (such as pulling out money early from a 401(k)) and not realize that there are multiple tax consequences (like the 10% early withdrawal penalty). By having a tax projection run, you can see what those consequences are and prepare for any unintended ramifications.
Shift income if you make over $70K. If you are single and make over $70K, consider shifting your income via some of the following strategies to reduce the amount of taxes you pay:
- Rearrange your investments to reduce taxable income. You want investments that generate interest income inside retirement accounts, and investments that generate capital gains and losses outside of retirement accounts.
- Realize capital losses to offset capital gains.
- Bundle expenses to maximize itemized deductions.
- Increase retirement plan contributions as limits rise. Each October the IRS announces the new contribution limits for 401ks, IRAs, and other retirement plans. Check the 2012 contribution limits, and be sure to adjust your payroll contributions to put the maximum amount into your plans.
If nearing retirement, check to see if your retirement income will be taxable. The downfall for most retirees is that they begin to start receiving income from their investment vehicles but aren’t necessarily having taxes withheld (due to how the accounts work). If you are nearing retirement, be aware that the following income is typically taxable:
- Withdrawals from Traditional IRAs, 401ks, or other retirement plans. If a plan was funded with pre-tax dollars, whether by you or your employer, it will result in taxable retirement income when withdrawn.
- Pension income. Most pensions are a source of taxable retirement income.
- Interest income, dividend income and capital gains inside of after-tax accounts. Interest, dividends and capital gains that occur within tax-deferred accounts, such as IRAs, 401k plans or variable annuities, are not taxable in the year they occur. Instead, all gains are deferred and you only pay tax when you take a withdrawal.
- Withdrawals from an annuity. When you take withdrawals from a fixed or variable annuity (one that is not owned by an IRA or retirement account) the IRS rules say any gain must be withdrawn first, and this gain is taxed as ordinary income. Once all gain has been withdrawn, you would be withdrawing your basis, or principal. Withdrawals of basis are not counted as taxable retirement income.
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