In EMS we like automation, which is interesting because we also like control. The two don’t usually go hand-in-hand. We like our LUCAS devices to deliver CPR for us, our ventilators to deliver oxygen for us, our PCR’s to automatically update with our times and our heart monitors to automatically send vitals and ECG readings to our computer. We also hate being told what to do. We hate restrictive protocols, and we despise being told that we have to ask for permission to administer any treatments.
We may not realize it, but this mindset also carries over to our personal finances. Allow me to elaborate:
We often feel like we aren’t in control of our finances. We feel like we don’t make enough money and that we have too many bills. But, once again, we also like automation. We like our automatic payments, our payroll-deducted taxes with that big refund check at the start of the following year and our employer pension plan. What we tend to overlook is the large amount of money we are giving away each month that could be used to pay off debt or build our savings.By taking ourselves off financial auto-pilot, we can gain control of the money going out every month and start building up a decent savings for emergencies and retirement!
Here are 3 expenses that you might not realize are eating up your paycheck:
OK, so this one might be obvious to some, but you would be surprised how many people seriously over pay on their taxes. I don’t care what anyone tells you, tax returns are NOT a good thing! You have allowed the federal government to borrow your money and pay it back interest free. It’s the equivalent of handing your partner 20% of your paycheck every 2 weeks and asking him to give a portion of it back sometime next year when it’s convenient for him. I work with people that do these transactions with tens of thousands of dollars. It’s outrageous! In a lot of cases, people are overpaying enough to fund a VERY healthy retirement plan.
This is money that you’re already paying to the government! Take control and stop overpaying. There are plenty of tools to help you figure out the appropriate deductions to claim. “Tax Caster” by Turbo Tax is a good start. Do the math and figure out what you need to claim in order to either break even or owe / get back less than $200 at the end of the year. Once you figure out what you need to claim, go to payroll and have your deductions changed. Now, you can either have payroll deposit the difference in a savings / retirement account, or have it deposited to your checking and start throwing it at debt!
This is one of those things where people often find that they are paying entirely too much money. We tend to subscribe to the “set and forget it” mentality and it often results in thousands of dollars wasted every year!
Here are 2 ways that you can start saving on vehicle insurance:
Once you have your $1,000 emergency fund saved up, go in and raise your insurance deductibles to $1,000. This can often result in a significant lowering of your monthly premium! Remember, the purpose of insurance is to limit your exposure to expenses in the event of accident. If you have an emergency fund, you might not need a lot of the coverage that you are paying for.
This is huge. Every 6 months I like to shop around to see what I can find for insurance rates. The last time I did it, I wound up saving over $70 a month on my premium by switching companies. Don’t believe me? Try it. Try talking to an insurance broker or check out Zander.com and click on “auto / home”.
If you don’t have life insurance, get it. Like, RIGHT NOW. We are at a much higher risk for at-work deaths than most people, so we MUST make sure that our families are taken care of. I’m not talking about the little $20,000 free policy that many employers offer, I’m talking a policy for 10 times your annual income.
Why 10 times your annual income? Because your family could take that policy money and stick it in a good mutual fund or investment account and the interest would pay around what your annual income is. They would be covered for life. For most of us, this policy is going to cost under $30 a month….if you do it right.
Here are 3 things to look at when it comes to paying for life insurance.
- Term vs Whole Life / Cash Value Plans
I ALWAYS recommend using term insurance. I know some people are going to argue with me, but there is simply no reason to ever use whole life or “cash value” life insurance policies. They are ridiculously expensive and the rate of return on the money that you “invest” rivals the IRS tax return. Not to mention the fact that the “cash value” is more often than not kept by the insurance company after you die. There’s just no need to put any extra money into life insurance than what you need for a good term policy. Get term insurance and put the money you would be putting in a whole life policy into an investment / retirement account. You’ll get a better return on your investment and you can leave it to your family when you die. Of course, NEVER cancel a policy without getting a new one first.
- Pre-Tax vs Post-Tax
Some employers offer pre-tax insurance policies. Don’t do it. If you die, the payout on your policy can be subjected to income taxes. You would be much better off getting a policy on your own and paying the $30 premium with post-tax money as opposed to being slapped with a tax bill on a $500,000 payout.
- Check Premium Rates
Many employers offer term life insurance, and that’s awesome! However, you’re not always getting the best deal when you do it this way. Shop around. Head over to Zander.com and get quotes. If you find a deal that’s cheaper than what you’re paying now, go for it! I ended up saving a bunch of money by switching to my own policy. If you wind up saving money, put the difference into your savings or throw it at debt!
Can you think of anything I missed? What are some items that you have found ways to save money on?