Pros and Cons of Universal Basic Income

Pros and Cons of Universal Basic Income

Universal basic income, or UBI, is a modern-day concept under which the government distributes cash payments to all. This concept has been around since Thomas More proposed a basic income to everyone in Utopia, written nearly 500 years. Once a radical plan, UBI has many advocates from the political left and right in the US and globally. The  Advance Child Tax Credit Payments in 2021 may be the best example of Universal Basic Income.

From Thomas More to now, many people, from Thomas Paine to Andrew Yang, have been closely associated with UBI in various forms.

Two historical efforts of universal basic income stand out.

“The Freedom Budget For All Americans”

Dr. Martin Luther King Jr. worked with A Philip Randolph and 200 prominent economists on “The Freedom Budget For All Americans,”  which advanced as a published document in 1967. This ambitious step-by-step plan’s primary goal was to stamp out poverty over the next ten years.

The program would raise higher Federal income taxes of $200 (1967 dollars), a portion to create jobs. As such, there would be a job guaranteed to everyone ready and willing to work. Alternatively, those who couldn’t work would receive guaranteed income to lift them out of poverty. The plan was estimated to cost $185 billion (not a typo) over ten years.

The plan outlined seven goals: providing and sustaining employment with full production and high economic growth; decent and adequate wages; decent living standard; wipe out slum ghettos; proper medical care and educational opportunities; and purify air and water.

The Freedom Budget had significant merit, but it lost substantial momentum after MLK’s assassination in 1968. In recent years, this concrete guaranteed income model had received new attention.

Nixon’s Family Assistance Plan

In 1969, President Nixon proposed a Family Assistance Plan that guaranteed families of four would receive $1,600 ($10,000 in 2016 dollars) annually in household income, still below the average of $7,400 at that time. The plan required “suitable” work or training for the head of the family.  By the way, Richard Nixon would not necessarily be the President to consider such a program. However, he followed President Johnson, who initiated the “War on Poverty.”

Nixon set a trial with 8,500 Americans in several states, notably New Jersey, Pennsylvania, Iowa, North Carolina, and Indiana. The study would be among the first guaranteed income pilots with experimental and control groups. Nixon was motivated to do this plan to garner blue-collar votes in the 1972 election. Nixon’s program resulted in proposed laws and revisions, but political pressures hurt, and Watergate killed any hopes of legislation in Nixon’s second term.

I found a great article that provides more insight into Nixon’s plan and what happened behind the scenes here.

The 2021 Advance Child Tax Credit: An Example of Universal Basic Income? 

Interest in universal basic income has increased. Indeed, the child tax credit may be an example of decreasing income inequality. Black families are in poverty disproportionately. Rather than a credit to deduct against income, the IRS will pay half the total credit amount in advance monthly payments to many families beginning July 2021. Families can then claim the other half when they file their 2021 tax returns.

The child tax credits are an effort to decreasing child poverty in the US, with 39 million families and 65 million children receiving money directly deposited into bank accounts. The IRS will send out monthly payments of $300 for children under six years and $250 per month for children between ages six and 17. There will be six payments in 2021 and one payment in 2022 for each child in the household.

Families will receive up to $3,600 per child under age six (or $3,000 for six-17 years) well above the $2,000 per child, ages 0-16). The credit begins to decrease at certain income levels ($112,500 of income for single parents and $150,000 for married couples).

The child tax credits are being distributed to families in need based on capped income levels. It remains to be seen whether these will be a one-time event or an ongoing tax change. The IRS simply says “These changes apply to tax year 2021 only.” At the very least, we hope it will be a positive event for families in need.

Reasons For Universal Basic Income


Income Inequality

Income inequality has been on the rise over the past decades. The highest-earning 20% of US households have steadily brought in a larger share of the country’s income. The US ranks highest in income inequality of all G7 nations, according to the OECD.

Wealth Gap

The net worth or wealth gap between America’s wealthiest and more impoverished families has more than doubled from 1989 to 2016. At the same time, middle-class incomes have grown at a slower rate and represent a slower group. The rich are getting richer, the middle-class is shrinking, and the wealth gap is growing.


The poverty rate in 2019 was 10.5%, or 34 million in the US. This rate was the lowest since 1959 and had been on the decline for the past few years. However, looks can be deceiving as Blacks (18.8%) and Hispanics (15.7%) were far higher. The poverty level was $26,172 for a  family of four.

The Pandemic Effects

The coronavirus pandemic caused a severe economic downturn with high unemployment, which remains at high levels. Any improvements in poverty rates quickly reversed. Researchers headed by Zachary Parolin found monthly poverty rates rose to a high of 17.3% in August 2020. That rate would have been higher if not for the CARES Act, which provided essential financial support to those in need.

Automation May Displace Workers

There have been rising worries that artificial intelligence and robotics can displace workers in the future. As many as one-third of the US workforce may have jobs susceptible to automation and need new skills and retraining.

What Is Universal Basic Income?

Universal basic income or UBI is, in theory, a government program that distributes periodic cash payments to all citizens without conditions or strings attached. There have been various pilot programs in the US and other countries. However, there is no permanent program implemented as of yet. Once thought radical, its idea is less farfetched as a potential replacement for other social programs. Even President Nixon came close to developing a UBI-like plan.

There have been disagreements as to the components of Universal basic income.

To All Or Only Those In Need

Distribution of basic income universally would mean everyone, including the wealthy, would be getting cash payments or only those in need? What income level should the cutoff be?

Should distribution be aimed at an individual or a household and include the same amount for minors? The CARES Act implemented a government financial support program for those facing hardship due to the pandemic. The plan used income caps amounts to moderate financial support levels. Also,  families received additional amounts for children under 18 years.

How Much Money Would People Receive?

Income estimates have ranged from $1,000 to $5,000 per month. The essential question is whether this goes to everyone or those in most need, and it would be ongoing, or until that person gets a stable job.

One of the greatest fears opponents of UBI point to is whether those who receive guaranteed income will have enough incentives to work. It is a fundamental question and may drive the stipend distributed to a lower level, so work motivation is not lost. We feel strongly about the virtues of work and how working goes beyond sole compensation.

What Is The Cost And How Would It Be Paid

In recent years, estimated costs ranged from $2.5 trillion to $3 trillion. The pandemic has driven up our budget deficit. Those who are unemployed or own small businesses still need more financial support in the near term. Of course, to figure out what UBI would depend on a few factors:

How large is the recipient base? Andrew Yang, 2020 Presidential candidate, had worked on a $2.8 trillion plan in which every US citizen would get $1,000 per month (or $12,000 annually). Yang’s plan uses higher taxes and costs savings from reducing an existing government plan to finance the UBI.

Does UBI replace the current welfare social program and other programs, and could there be cost savings? Many point to eliminating the federal welfare program at an annual cost of $1 trillion.

Incentive tax credits or higher taxes for the wealthy and corporations can contribute funds for the program.

Pros of Universal Basic Income


Fulfill Basic Needs, Reduce Poverty And Gaps

Universal basic income aims to provide money to people with more significant difficulties in covering the basic needs of food, shelter, clothing, and healthcare. Over time, UBI can make inroads to reducing poverty, narrowing income and wealth disparities. Gender and racial gaps tend to be widest between white men and women of color.

A more level playing field would enhance the workplace, could potentially reduce hiring discrimination and pay gaps. Everyone should have an opportunity to have a good job and financial security, especially those who are poor and don’t have a chance without changing our system.

Stimulate The Economy

When disposable personal income increases, households have more money to either save, invest, or spend. More money in people’s wallets means increased consumption of goods and services. Generally, higher consumer spending would lead to more substantial economic growth.

Increased Standard of Living

The US has a higher standard of living than many countries. However, not all Americans share that same standard. A guaranteed income would help more people to rise to better levels than they are living now.

More Freedom To Make Changes

There may be a more remarkable ability for some people to have the freedom to pursue a different job or career if they can depend on a guaranteed income. Many people work at a job they hate or have non-paid caregiving responsibilities. Getting income would help people make changes without fear rather than feeling stymied at a job they dread. Those who need to take time off to provide caregiving to an aged parent or child can do so more efficiently.

Cons of Universal Basic Income


It’s Costly and Complicated

Universal basic income has its merits. It is a simple topic in theory, but its components are very complicated and political. Also, the timing is off. The final tally for the budget deficit in fiscal 2020 exceeded $3 trillion, triple the year-ago amount due to the pandemic needs. Throwing trillions of dollars around as estimates for an uncertain program during a costly pandemic is not a way to get fans for UBI. However, the economy has been stronger in recent months. 

Fear of Handouts Without Incentives To Work

Guaranteeing a basic income to all without requirements reeks of handouts. Many people fear that UBI will increase laziness by reducing motivation to work or spending the guaranteed income on “temptation goods” such as alcohol or drugs. A study by MIT/Harvard programs found “no systemic evidence that cash transfer programs discourage work.”

An 18-month experiment took place with 125 people in Stockton, California, and is still ongoing. They are each receiving $500 per month with no strings attached. The working part or full-time participants are making at or below the median income of $46,000. Instead, the researchers found that people are reasonably spending their guaranteed income on food, clothing, utilities, and car repairs.

Doesn’t Necessarily Abolish The Need For Welfare

There are several pilots ongoing around the world. Without a permanent guaranteed plan in place, there are no results to assess if one plan simply replaces another social program. What are the benchmarks for the success of universal basic income?  On paper, universal basic income sounds like it may guarantee payment indefinitely. Is there accountability for those who are part of the plan and truly no strings attached? My two cents here are that there should be a consideration to add work requirements for those who can.

Final Thoughts

Universal basic income or UBI is controversial. However, it has been gaining attention as gaps in income equality and wealth have widened. It is difficult to assess its merits as a potential government program with more questions than answers. Universal basic or guaranteed income should be piloted, studied, and addressed comprehensively in a serious manner.

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Ten Commandments of Saving Money

Ten Commandments of Saving Money

“Do not save what is left after spending, but spend what is left after saving.”

Warren Buffett

Warren Buffett’s quotes are timeless, reflecting his wisdom. His words on saving and investments are inspiring. Saving money is the cornerstone of a sound financial plan. Through discipline and hard work, we can save money to reward ourselves with financial flexibility. By making saving a priority and making your money work for you, you are more likely to achieve financial success.

Key Reasons To Save Money

  • Help to achieve our financial goals.
  • Pay our bills on time and entirely, so we don’t need to carry costly debt.
  • Provide an emergency cushion for unpredictable costs.
  • Set aside funds for our children’s college tuition and our retirement.
  • Make investments, the best way to build wealth.

I like to revisit ancient views of saving money from timeworn texts and stories. There is a common thread across varying beliefs on saving, avoid overspending, and investing for a better financial future. Surveying these words adds a different perspective on finances. In the companion Ten Commandments of Personal Finance, we look at home ownership, investing,  retirement, and debt management.

Ten Commandments of Saving Money:


1. Spend Within Your Means

Saving money is an essential financial habit. According to a CareerBuilder report, 78% of American workers are living paycheck-to-paycheck.  Even those with higher incomes of at least $100,000 (nearly 10%)  are having trouble making ends meet.

I grew up in a modest household that saved diligently. As a young girl, I didn’t always understand why we were having financial problems. My mom reminded us often that our needs exceeded our wants, and we had to be careful about spending. Later on, I learned that my parents set up a small retail business that took a long time to get off the ground. Savings became part of our mindset from then on.

Control thy expenditures.”

To set aside money for saving and investing, you may need to cut some costs. To control your expenses, assess what your necessary living needs are. These are predictable monthly fixed costs such as mortgage payments or rent, property taxes, utilities, car loans, typical grocery bills, credit card payments, and any expenses you pay monthly. Remember, these costs are for our needs rather than for our wants and desires.

Be reasonable about satisfying your every want. A rise in earnings may not fully accommodate every gratification we seek. For example, that 10% raise on your $80,000 salary may not significantly help you to buy that luxury car (or chariot in ancient times), you have been eyeing.


2. Build A Healthy Emergency Fund

As a result of the coronavirus pandemic, record jobless claims caused a dramatic slowdown of the economy. Although federal stimulus packages have added to state unemployment benefits, there is no guarantee this government aid will be ongoing. 

 Economic downturns are cyclical events you can’t time. They cause substantial financial stresses. Recessions remind us of the need for savings on hand. Having an emergency fund is necessary to pay for basic living expenses for at least six months, if not a year. Having readily accessible funds in liquid funds such as money market securities helps you avoid borrowing money.

Joseph’s Emergency Funds

Emergency funds as a prudent strategy appear in Genesis 41:34-36. In this passage, Joseph interprets Pharaoh’s dream about seven fat cows grazing by a river swallowed up by seven skinny cows. Joseph views the seven fat cows as seven prosperous years for Egypt, followed by seven years of famine. As a result of planning for this disaster, Joseph advises Pharaoh to store grain during the good years to use for more challenging years. Save when you have more for those times you have less due to job loss, illness, or crisis.

Adopting a habit of saving more provides you with more flexibility to allocate into investment and retirement savings. Begin by setting aside small amounts of savings of $1,000 but don’t stop there. Tough times prove that amount is inadequate. Don’t think of these savings as wasteful assets. Instead, it is a means to avoid higher debt levels. As Proverbs 13:11 tells us, “Dishonest money dwindles away, but whoever gathers money little by little makes it grow.”

Having Liquidity is Key

Liquidity refers to your ability to quickly convert assets into cash with little to no loss of principal. When your resources are liquid, you have the financial ability to pay for unexpected costs such as a loss of job, death in the family, or your roof is leaking. Monitor your liquidity levels periodically. 

Monetary assets are among the most liquid of holdings. These assets include cash, cash-equivalent securities or money markets, treasury bills, savings bonds, savings, and checking accounts. True, you won’t earn much income as interest rates are still low, but you avoid having to use your credit cards with borrowing rates in the mid-teens.  Use liquid assets to support your fixed monthly expenses for six months or more. Here are two benchmarks to use:

Liquidity Ratio= Monetary Assets/ Monthly Expenses

Your monetary assets should support your fixed monthly expenses such as groceries, rent or mortgage, utilities, and a car loan for six months. A ratio of 6 means having six months of monetary assets to pay for your basic needs of food, rent, utilities, and car loan, if necessary.

 Emergency Fund Ratio

The liquidity ratio is linked very closely to emergency funds. This ratio is essentially a cash fund for emergencies in unforeseen events such as job loss, death in the family, unexpected surgery, or immediate house repair. It works by using a targeted number of months that you believe is ample to support you through emergencies. If you are looking for six months or higher (and this is highly recommended) to set aside money in a high yield savings account or money markets account, then:

Emergency Funds Ratio= 6*Monthly Expenses

This ratio will give you a targeted amount of monetary assets needed to be comfortable for a possible emergency. If your household generates less predictable income, you need to set aside more than six months for a more significant cushion. You can use personal finance ratios as benchmarks to see how you are doing.

3. Pay Yourself First

Start thy purse by fattening

George S. Clason, who wrote The Richest Man in Babylon, is believed to have coined the term “pay yourself first.”  That means you should put away at least 10% of every paycheck into savings. Start to save small amounts working your way up to 20% of income to allocate into retirement savings investment accounts. You can distribute the initial savings to an emergency fund amounting to at least six months’ coverage for essential living costs. Unforeseen events are unpredictable and undesirable but do your planning.

Once establishing this fund, use some savings stashes to invest for retirement and taxable investment accounts. Putting away some money may be difficult at first, depending on your spending habits.

Savings should be one of the most essential parts of your household’s financial goals. Adopt a “Pay Yourself First” attitude. Your monthly budget should call for savings to be at least 10% of gross income.

Savings Ratio = Savings/Gross Income

Savings refer to money in the bank, liquid funds, deposits, money markets, and other liquid funds, such as your emergency fund. Gross income is your total source of income on your budget and includes what you earn, side businesses, bonuses, dividends, and interest income.

Your savings rate should be at least 10% of gross income. It may be challenging to do when you first start to work. As your salary or what you make rises, it should get easier to put money away for savings. A healthy savings ratio of 20% would be a bonus (pardon the pun).

4. Track Your Spending By Budgeting

Spending more than your means is a bad recipe that leads to borrowing more. It is far more profitable to save money and allocate to investments that yield 5% returns or more than having to borrow at mid-teen rates with credit cards to pay for your overspending habits. “Whoever works his land will have plenty of bread, but he who follows worthless pursuits will have plenty of poverty.” (Proverbs 28:19).

Track your spending carefully by budgeting according to your priorities. Bava Metzia 42a instructs us, “A person should always divide his money into three: one-third in the ground (for the future), one-third (invested) in business, and one-third in possession.” That may be an ancient way of splitting your funds. There are several ways to budget, such as tracking your expenses, creating a monthly budget, or using the 50/30/20 rule. The 50/30/20 budget uses 50% of aftertax or net income for your needs, 30% of net income for your wants, leaving 20% for saving money and paying off debt.

Budget In Any Reasonable Manner

Budget in any reasonable way that allows you to control your spending. It is easier now than ever to track your spending using various (free or fee) apps such as Mint, Personal Capital, PocketGuard, and YNAB for zero-based budgeting.  Alternatively, scrutinize your credit card bills and build your own excel spreadsheet.

Our spending changed dramatically during the pandemic. Our bills for grocery and household goods were higher than usual. On the other hand, we saved more from cutting out retail shopping, dining except for occasional outdoor places, hair salon appointments, gas, tolls as we stayed closer to home. While I appreciated the extra cash, I like the return to normal, even as Covid cases are rising.

5. Avoid Lifestyle Inflation

As our income grows, we often increase “essential costs,” leading to lifestyle inflation. While we are allowed the occasional latte and extravagant dinners, we need to keep our spending in check. You shouldn’t deprive yourself of everything. However, fulfilling every desire is no longer a special treat.

“Keeping up with the Jones”  and conspicuous consumption often refers to material goods we may accumulate to fit within a particular social class we admire.  We compare ourselves to our neighbors or colleagues at work.  As a result, people fall into the trap of spending on a better car or house simply to enhance their prestige and social standing. Targeting social status may be costly and divert resources better used for investing your money for more incredible long-term wealth.

It is pretty common for people to spend their raise and bonus as soon as they receive it. Temptation runs high to buy something special upon getting a raise and bonus after a year of working hard. I often bought something special to reward myself for hard work. However, you soon realize your pay hike is pretax and shrinks on an after-tax basis. If you need some things, make a list of what you believe is essential if you had some extra cash.

Overspending And Materialism

Overspending leads to materialism and lifestyle inflation that is hard to maintain. Mishlei Proverbs 13:7 tells us, “There is one who feigns riches but has nothing; one who feigns poverty but has great wealth.”  According to Psalms 128:2 “You shall eat the fruit of your effort–you shall be happy and it shall be well with you.” This text reminds me of another favorite book, “The Millionaire Next Door: The Surprising Secrets of America’s Wealthy by Thomas J. Stanley and William D. Danko.

Stanley and Danko profiled and compared millionaires in two categories: those under accumulators of wealth (UAW) and the prodigious accumulator of wealth (PAW). The UAW’s were individuals who had a low net wealth compared to their high income because of spending to maintain their status. On the other hand, PAWs managed their wealth better, often living in blue-collar neighborhoods and buying used cars. It is an eye-opening account of the good and bad money habits of the wealthy.

 6. Bargain hunting or Shopping Addiction?

Shopping is often a fun activity to do with friends or on our own. Marketing experts count on our emotions when we shop. Be aware of the biases we wear when shopping. Retail expert Mark Elwood has written about the psychological benefits of seeing bargains. He points out that stores like Best Buy use Goldilocks pricing or three-tiered pricing from low to high prices. The store hopes you will buy the middle option with higher pricing than the low-end but not necessarily feature-worthy enough to pay more.

We should not pay the list price for anything but make sure it is a real bargain. There has been a lot of worthwhile academic research about bargain hunting being a form of shopping addiction. 

There is the thrill of getting a deal,  even when we may not want that item.

Impulse Shopping vs. Compulsive Shopping

Overspending can cause financial difficulties if you are subject to impulse or compulsive shopping. There is a difference between the two though often seen interchangeably. Impulse buying happens more frequently when a consumer has a sudden urge to buy on the spot without much deliberation. We all do this from time to time. Compulsive buying, on the other hand, happens where one experiences an uncontrollable urge to buy. We may trigger negative feelings relieved by that purchase. This kind of shopping may be more like a shopping addiction that potentially needs therapy before financial hardship occurs.

7. Compounding Growth

Start saving for retirement in your 20s through your employer’s sponsored 401K plans. Deposits in small amounts in retirement accounts regularly benefit from tax advantages and compound growth over a long horizon. Automate these savings out of your paychecks. As such, your contributions are tax-deferred. Employers often match a portion of your contributions. Match contributions are extra money you can earn from your company. Separately, establish an IRA (Roth IRA) for further retirement savings. Target your contributions to amounts capped by the IRS for maximum growth for retirement. Avoid withdrawing from these accounts as you may then trigger penalties and taxes you will need to pay.

As a goal, try to contribute to your 401K plan to the maximum level, which is $19,500 in 2021.  Some years it may be hard to do, especially when you are experiencing a job loss. Resist withdrawing money from your retirement account as there is usually a 10% penalty and taxes to do so before you turn 59.5 years. Withdrawing retirement money will put a dent into your retirement fund that will be painful longer term.

One of my favorite quotes in The Richest Man is this: “It behooves a man to make preparation for a suitable income in the days to come, when he is no longer young, and to make preparations for his family should he no longer be with them to comfort and support them.”

Compounding Works Best When Investing Early

The power of compounding interest, linked to the time value of money, will benefit you the most if you save and invest early. Let your earnings accumulate and grow rather than withdraw cash from your accounts. It makes a big difference if you start saving for your retirement ten years later than your friends or if you invest for ten years and then stop contributing to your 401K retirement account. It is difficult to catch up by doubling the amount if you start investing later on.

As soon as your child is born, start saving for college through a 529 plan. These plans vary but are available in virtually every state. Like retirement accounts, they have deferred tax benefits and may have contribution limits. Check with your respective state program for details.

 8. Make Savings A Priority

Saving money is hard work and not necessarily natural for many of us. To make it a good habit, take steps to automate your savings. Most banks will allow you to automatically transfer a set amount of money from one account to another account. Your employer will be able to automatically deduct a percentage or a set amount of your paycheck to deposit into accounts such as retirement or investment accounts. Essentially, you are adopting a “pay yourself first” attitude so that you can allocate money into different buckets, especially for unforeseen expenses.

In recent years, there have many headlines about insufficient savings by Americans for years. As the outbreak of the virus caused lockdowns, most of the country stayed home. The personal savings rate rose dramatically to an unusual 32.2% in April 2020 as consumer spending dropped significantly. Over time, it will likely come down to the more normal 7%-8% range. Spending versus saving is a common trade-off with lots of tension. Motivate yourself to save by setting short-term and long-term goals proactively. Reduce spending you can’t afford. Money trade-offs require you to consider the best balance for you and your family.

Saving As A Good Habit. How Long Does It Take?

I had always heard that it took 21 days to break a bad habit. As a member of Weight Watchers, which is ALL about breaking bad eating habits (and it works for me as I am down 30 pounds and declining!), they always refer to the 21 days. However, I did not know of the 21-day origin.

Dr. Maxwell Maltz, a 1950s plastic surgeon, found that it would take his patients about 21 days to get used to seeing their new face, or post-amputation, they would still sense a phantom limb. The 21-day time frame dates back to nearly 70 years. Dr. Maltz wrote about his adjustment period to changes and new behaviors to form a new habit….”.it requires a minimum of about 21 days for an old mental image to dissolve and a new one to jell.”

More research indicates that it takes a longer time to form a new habit than 21 days. A 2009 study published in the European Journal of Social Psychology by Phillipa Lally, a health psychology researcher at University College London, indicated it took 66 days on average (in a range of 18 days to 254 days) to form a new habit.

Whether 21 days or 66 days, it takes significant time, effort, and determination to create a new habit

What About A Savings Challenges?

I have been skeptical about savings challenges. Like diets, they work for many and can be fun, especially if you do so with others. The question is whether the challenge can result in having long-term effects. I think any challenge that can motivate someone towards a good habit with lasting results has my endorsement. There are so many good savings challenges to consider. I tend to favor the 52-week challenge, which may help you build some money along with good habits. On the other hand, the no-spend month reminds me of a fasting diet and seems too difficult to attempt for most people with families or busy lives.

I often have turned to using cash only and leaving my credit cards behind. Paying for meals at restaurants or window shopping without cards has rewarded me by limiting my consumption to cash. I am not a big shopper or enjoy going into stores unless I am going purposefully for a specific outfit or electronics. My daughter, Alex, is often upset with me, encouraging me to buy something for myself. She wonders why I don’t love shopping as much as she does. Now that she is working two jobs that she loves this summer, she has become quite a hoarder herself and has asked me about my stock picks. (Okay, I am proud of her!).

9. Don’t Obsess About Money

Maintain balance in your life, and don’t just focus on wealth accumulation. According to Proverbs 21:20, “Precious treasure and oil are in a wise man’s dwellings, but a foolish man devours it.”  While no one seeks to become poor, there are dangers of solely wanting to be rich. “Keep your lives free from the love of money and be content with what you have.” Hebrews 13:5

Martin Luther King Jr. worried about the obsession with money in his famous speech called False God of Money. He said, “We attribute to the almighty dollar an omnipotence equal to that of the eternal God of the universe. We are always on the verge of rewriting the Scriptures to read, ‘Seek ye first money and its power and all these things will be added unto you,’ or ‘Money is my light and salvation, what shall I fear.”

King himself lived frugally, leaving little money for his family. However, he saw other goals like working hard, investing in education and having faith as far more critical.

Price Versus Quality

Being financially secure is important. The alternative is stressful. However, don’t be frugal for frugality’s sake. Consider price versus quality in your buying considerations. The cheapest thing may not be of the best value. Indeed, there are some items where quality doesn’t differ, and I  will pay the best price. I like buying private label products such as Kirkland sold in Costco, discounted from the branded items.

However, quality matters more when buying furniture, mattresses, a car, or a home. We have been burned by looking to get a bargain and not balancing quality. Buying solely on a price basis is foolish for these products or services that I intend to use for a while. That doesn’t mean I am averse to getting a bargain by negotiating.

10. Be Charitable

According to Jewish law, one cannot impoverish oneself by distributing all of one’s wealth to charity. However, one can leave one-third of his estate to charity in their will. A minimum of one-tenth of one’s income belongs to God per measure handed down from the Patriarchs as Jacob himself said to God, “Of all that You give, I will set aside a tenth to You” (Genesis 28:22). Giving 10% of your net income a year is a virtual goal—those who can.

According to HW Charles in The Money Code: Become A Millionaire With The Ancient Code, “Those who love people acquire wealth so they can give generously, after all, money feeds, shelters and clothes people.”

We should strive to be as generous as possible to those in need.

Final Thoughts

I found inspiration from timeless scriptures when writing this article.  Sometimes ancient words remind us that money management was always a challenge to overcome.  Choose success by your actions in saving money. 

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15 Ways To Save Money In The Summer

15 Ways To Save Money In The Summer

“Summertime and the livin’ is easy.” 

George Gershwin (Porgy and Bess), sung by Ella Fitzgerald

Summer is here!

It is an excellent time to spend more time outdoors.

Don’t miss an excellent opportunity to save money this season while spending time with your family. I spend a lot of time in Litchfield County and the Berkshires, essentially our local environs in the summer and year-round. However, you can find our recommendations in many parts of the country.

When it comes to saving money, get your whole family involved. It is always a good time to speak to your children about family values, particularly budgets, wants versus needs, spending, and saving. Being frugal about saving time and money can be very fulfilling. 

15 Ways To Save Money In the Summer:


#1 Eat more fruit and vegetables

It is always a good time to eat healthier with better choices at your local grocery. Better yet, go to the nearest farmers market. Fruits and vegetables are even more plentiful in the warmer months. Go to a farmers market near you or visit a local farmer who would be happy to show you around. 

Farmers bring their produce into urban markets, or you can order online from different farms. Healthiest picks at lower prices.

Connecticut has over 100 farmers’ markets seven days a week. We find them in virtually every town in the Northwest corner of the state.  There, you can pick among locally produced seasonal fruits and vegetables from the region. Many carry specialty bread, cheese, honey, syrup, flowers, herbs, sausage, jams and jelly, chocolates, and mushrooms.

#2 Have A Picnic

Drive around and find scenic places to roam around, like parks, waterfalls, hills, and mountains. 

Bring a blanket, some wine, cheese, and other delights you may find at the farmers’ market. If you don’t like sitting on a blanket, then find a picnic table. Enjoy the outdoors, scenery, and birds. As I grow older, I have been enjoying bird-watching for their colors and sounds.  

 Go with your family, significant other, or friends. Many state parks are free, have hiking trails, fishing, and sitting by waterfalls, like Kent Falls State Park. Save some money as you go to fewer restaurants in the summer.

#3 Garage/Yard Sales

Declutter your home and organize a sale with your family. Consider combining with homes in your neighborhood. I recommend having these events, starting on Friday, rather than Saturday and Sunday, typically the more crowded days. Avoid July 4th and Labor Day when people have more BBQs and families visiting.

Advertise with large signs so people riding by can see the dates and location at 30 miles an hour. While you can advertise in your local paper, a few social media sites try like and

When holding your event, label prices. Consider lowering prices late in the day to sell off what you have left. Experts have said these sales can net $500 and up if thought out properly. Aaron Lapedis is respected in this area and has written “The Garage Sale Millionaire.” 

#4 Outdoor (and Indoor) Entertainment

Post pandemic, our country is slowly moving back to normalcy. I have always enjoyed outdoor entertainment. There are many cheap and free music festivals, film festivals, country fairs, theater, and wine tastings. Try to look for summer events in your area from sources like Cheapism

Locally, we have a robust calendar with tickets starting as low as $5.Locally, we have a Connecticut Wine Festival, Podunk Bluegrass Music, and Litchfield Jazz Festivals. There are plenty of choices on, providing far more than I can list. In Massachusetts,  Tanglewood Music Center and Shakespeare & Company have superb offerings at a great value.

#5 Earn Extra Money As A Side Hustle 

If you are off from school this summer, you may apply to be a driver, whether a student or a teacher. Demand may be less in your area, so strategize by waiting in a queue at the airports or busy areas. Make sure that the air conditioning works well in your car. According to MarketWatch, you can pick up $364 per month on average. 

Consider doing this as a side hustle in the fall if your schedule permits. There are “help wanted” signs in storefronts, offices, and online across America as people get back to work. Small businesses who laid off people during the pandemic or not necessarily getting their workers back. There are jobs out there. You just have to look around you.

#6 Staycation or Vacation or Both

Vacationing is exploding as rising COVID vaccinations are making more people comfortable about traveling this summer. There are more ways to go away with your family at many different price points. Be mindful of travel restrictions that differ by state.

The benefits of a staycation are to be a tourist in your backyard, returning to your bed at night, and not having to pack and unpack. It can be cheaper but requires planning, so your family doesn’t just laze around. Make day trips or enjoy your local environment.

Everyone should have input, and it should be a mix of play, fun, adventure, and sightseeing. Find adventure beaches, lakes, and parks on lovely days. Consider museums and theaters, if open, on rainy days.

Vacations Can Be Cheaper At The Last Minute

To save money on vacations, consider booking flights last minute when tickets are often cheaper. You can book early morning flights. Your kids may hate you (mine have and still recall these times), but they can sleep on the plane. Last-minute trips work if you and your family are flexible and will several alternative places in mind.

Someone told me to search flights via an incognito window and a regular window. You sometimes get two different prices. Before you officially book, consider if there are available accommodations.

Airbnb may help in finding attractively priced rooms to stay. It is an excellent way to save money when traveling with kids, and one hotel room will not cut it. Booking a last-minute cruise may also work well.

Driving Vacations

If you have more than one driver in your car, driving vacations works if everyone is comfortable in a car for hours at a time. It works well when everyone enjoys the ride, and it’s a “spur of the moment” adventure. Planning stops are vital for breaks. 

Our kids easily slept in the car, so it often defeated the purpose of going on scenic routes. When we woke them, they were often crabby. We haven’t gone away together in a long while. When we do, we plan to visit colleges soon. 

Consider the costs you are willing to spend and stay within your budget. A visit to a Disney park is far more expensive than going to a National Park.

# 7 Disney Parks

The one-day tickets for Disney per family member over ten years old range from $109-$159 for regular or peak prices, whether you are going to one park or hopping to their other parks on site. Food and beverages are super expensive in the park. Summer is peak season and there has been pent-up demand.

There are slight discounts if you buy multi-day packages, but you will need to book your hotel stay, which is expensive if you stay within the park. If you are going this summer, try to target August when it is off-peak and less crowded (but scorching!).

#8 National Parks

There are so many parks to visit with families in the US. There are more than 2,000 Federal recreation sites. Certain parks mainly cater to children and are clustered so that you can drive to like those in Utah. Families can enjoy hiking, fishing, and rafting. You can stay in hotels not far from entrances, and your kids can use the pools. Annual passes per vehicle are $80 per year, valid through July 31, 2022. At $80 for entry, this is quite a bargain and national treasure.

# 9 Raise Your Thermostat

Setting the thermostat a few degrees higher in the summer will not likely be noticed by your family (maybe the dog, though), but it does save money. By some accounts, 

Each degree raised over 72 degrees saves 1-3% in energy costs by some accounts. We increase the thermostat in rooms we don’t occupy and have ceiling fans that help with cooling. The nights are breezy, so we rarely use air conditioning.

Unplug less frequently used appliances. Most homes run more than 40 appliances. These account for about 10% of our energy bill. You will not only save costs, but plugged appliances can be a fire hazard.

#10 No More Plastic Bottles

We have not used plastic bottles for a long time, especially in the summer. They never stayed cold enough, and the suspicious bubbles worried me. I have the 32 ounces steel insulated bottle by Takeya, which keeps the water cold significantly longer. I bought one for each of my family members, but they prefer smaller bottles to fit our car. I am happy with mine.

#11 Have Lattes,  Even Iced Ones If You want

I was a latte and espresso freak during law school and studying for the bar in Starbucks. At $5 per latte, it felt like an investment.  I still enjoy iced lattes in the summer. You don’t need to eliminate all your pleasures. I have stopped drinking carbonated water and soda in restaurants, but I prefer the water, wine, or martinis.  

#12 Lawn Care

Keeping your grass healthy and green is expensive. A sprinkler system is generally can be used to save water costs. If it rains, you don’t need to put it on the sprinkler. You can reuse your rainwater by installing a collection system near your roof or gutter system. If you are planning a garden, consider planting low-water perennials which are drought-tolerant and use more wildflowers.

#13 Visit Your Library

Use your local library for books, online music, and audible books. I enjoy going to our excellent small-town library in Goshen, especially in the summer, and walking out with my arms. We own many books, always a treat for me, but they take up a lot of space.

I confess to being a bit of a nerd. My mom, my brother Mark, and I went to our library on the last day of school with summer ahead. It was our ritual to take 12 books each and put them in my mom’s shopping cart. They were due the day after Labor Day. It was the only time of year we were able to keep them longer than four weeks.

#14 DIY Projects

Learn how to do more things on your own without outside help. Our kids tend to be far handier than my husband or me. They are also more willing to watch videos to learn how to repair, clean, and make things in our homes. We bathe our dogs more often in the summer because they roll around in the dirt and mud. The fewer trips to the groomer help our wallet.

#15 Delay Purchases You Want

Don’t buy everything you want immediately. You should practice delaying the gratification of buying things you don’t need. Give yourself time to research and decide if you want it. You can even put it into your shopping cart online for a few days. You may even find a coupon there that provides a few dollars off your purchase.

Final Thoughts

It is often fun to save money by reducing costs, spending less, or making some extra money from a side hustle. It is gratifying when your kids participate in the endeavor. My daughter Alex has particularly shown an interest in recent years. She keeps coming up with ideas. She has shared these thoughts with her teen friends on social media.

I am sure I have missed some ways to save money. It feels good to experience having extra money for investments, a vacation, a car, or something of value. How are you saving money these days?

Thank you for reading! Please share your experiences and thoughts with us. We would like to hear from you!
















Best 43 Quotes On This Independence Day

Best 43 Quotes On This Independence Day

Originally published on July 2, 2019, updated on June 30, 2021.

The Fourth of July is approaching, with images of fireworks, hot dogs, hamburgers, and apple pie. It is a favorite time in our household, sans the apple pie as my husband is allergic to apples. Last year was very different. Fireworks were silent due to social distancing associated with the coronavirus pandemic. Thanks to vaccinations, we are free to celebtate once again Typical events like baseball, concerts, and family reunions are back this year.

Our Fault Lines Are Very Visible And Needs Fixing

This time of year is a particularly good time to be proud of being an American despite our country’s faults. When you are raised by immigrants who loved their chosen country, freedom, security, and independence were always privileges. My mom valued being a citizen in America in her adopted country and fiercely taught me about financial freedom and independence, especially for women. 

However, fault lines have widened as realizations have sunk in that racial inequalities have not narrowed as hoped. in fact, they are reemerging and threatening our union. Peaceful protests are giving voice to needed change.

To help celebrate Independence Day this year, and every year (why not every day?) I am sharing some of my favorite quotes. You may notice that many of these quotes are apt for financial freedom and financial independence. So I took the liberty of sharing those as well. I have added new quotes to represent those who need to be heard.

Freedom and independence mean different things to different people. Today, and forever, our country needs to fix our faults. If we are to have another 244 years, we need to wipe out all our inequalities. Then we can say we are truly free as one.

America, The Beautiful

“It will be celebrated with pomp and parade, bonfires and illuminations from one end of the continent to the other.” –John Adams, Second US President

“Liberty, when it begins to take root, is a plant of rapid growth.” –George Washington

“How important it is for us to recognize and celebrate our heroes and she-roes.”  -Maya Angelou, poet and activist


“Where liberty dwells, there is my country.” – Benjamin Franklin

“May the sun in his course visit no land more free, more happy, more lovely, than this our own country!” – Daniel Webster

“There can be no true home without liberty.” – Harriet Beecher Stowe


“America means opportunity, freedom, power.” – Ralph Waldo Emerson

“It does not take a majority to prevail, but rather an irate, tireless minority.” – Samuel Adams

“America…it is the only place where miracles not only happen, but where they happen only the time.” –Thomas Wolfe, Of Time and the River, 1935 

“The essence of America-that what really unites us–is not ethnicity, or nationality, or religion. It is an idea–and what an idea it is: that you can come from humble circumstances and do great things. That it doesn’t matter where you came from, but where you are going.” – Condoleezza Rice, Republican National Convention, 2012

Let Freedom Ring!

“Those who expect to reap the blessings of freedom must undergo the fatigue of supporting it.” – Thomas Paine

“In the truest sense, freedom cannot be bestowed; it must be achieved.” Franklin Delano Roosevelt

“For what avail the plough or sail or land or life if freedom fail?” – Ralph Waldo Emerson

“All we have of freedom, all we use or know, This our fathers brought for us long long ago”. – Rudyard Kipling

“Freedom lies in being bold.” – Robert Frost

“Freedom (n.): To ask nothing. To expect nothing. To depend on nothing.” – Ayn Rand

“We must be free not because we claim freedom, but because we practice it.” – William Faulkner


“Education is the door to freedom.” – Oprah

“Lock up your libraries, if you like; but there is no gate, no lock, no bolt that you can set upon the freedom of my mind.” – Virginia Woolf, A Room of One’s Own

“Freedom is never voluntarily given by the oppressor; it must be demanded by the oppressed.” – Martin Luther King, Jr.

“Freeing yourself was one thing, claiming ownership of that freed self was another”. – Toni Morrison

“Freedom is not worth having if it does not include the freedom to make mistakes.” – Mathatma Gandhi

“Freedom’s just another word for nothing left to lose.” Janis Joplin, Me and Bobbie McGee

“For to be free is not merely to cast off one’s chains, but to live in a way that respects and enhances the freedom of others.” Nelson Mandela

“He who has overcome his fear will truly be free.” Aristotle

Our Basic Rights

“Liberties aren’t given, they are taken.” – Aldous Huxley

“It is by the goodness of God that in our country we have three unspeakable precious things: freedom of speech, freedom of conscience, and the prudence never to practice either of them.” – Mark Twain

“If I follow the inclination of my nature, it is this: beggar-woman and single, far rather than queen and married.” – Elizabeth I, Collected Works 


“I do not wish them [women] to have power over men; but over themselves.” – Mary Wollstonecraft

“My own sex, I hope will excuse me, if I treat them like rational creatures, instead of flattering their fascinating graces, and viewing them as if they were in a state of perpetual childhood, unable to stand alone.” – Mary Wollstonecraft, A Vindication of the Rights of Women

“I’ll walk where my own nature would be leading, it vexes me to choose another guide.” – Charlotte Bronte, Jane Eyre

“People have only as much liberty as they have intelligence to want and the courage to take.” – Emma Goldman

“I think the girl who is able to earn her own living and pay her own way should be as happy as anybody on earth. The sense of independence and security is very sweet.” Susan B. Anthony 

Financial Freedom and  Independence

“The highest pleasure to be got of freedom and having nothing to do, is labor.” – Mark Twain

“Everything that is really great and inspiring is created by the individual who can labor in freedom.” – Albert Einstein

“For it is in your power to retire into yourself whenever you choose.”  – Marcus Aurelius, Meditations

Erasing Inequalities For Once And For All

“To bring about change, you must not be afraid to take the first step. We will fail when we fail to try.” Rosa Parks

“Prejudice is a burden that confuses the past, threatens the future, and renders the present inaccessible.” Maya Angelou

“Without a struggle, there can be no progress.” Frederick Douglass

“There is no such thing as race. None. There is a human race–scientifically, anthropological.” – Toni Morrison

“Not everything that is faced can be changed, but nothing can be changed until it is faced.” – James Baldwin

“To suppress free speech is a double wrong. It violated the rights of the hearer as well as those of the speaker.” – Frederick Douglass

“I see what’s possible when we recognize that we are one American family, all deserving of equal treatment.” – Barack Obama


“Let not your mind run on what you lack as much as on what you have already.” – Marcus Aurelius

“All good things are wild and free.” – Henry David Thoreau

“Men spend the best of part of their lives earning money in order to enjoy a questionable liberty during the least valuable part of it.” Henry David Thoreau

“Someone’s sitting in the shade today because someone planted a tree a long time ago.” Warren Buffett

Related Post: Gratitude Can Lead To Better Finances


America’s Greatness

“It’s never paid to be against America. We come through things, but it is not always a smooth ride. Warren Buffett

“From a standing start 240 years ago–a span of time less than triple my days on earth– Americans have combined human ingenuity, a market system, a tide of talented and ambitious immigrants and the rule of law to deliver abundance beyond any dreams of our forefathers.” Warren Buffett, 2016 Shareholder Letter to Berkshire Hathaway Shareholders

I have as big an obsession as Warren Buffett appears to have when it comes to prosperity and his gratitude to our country.

Thank you for reading! Do you have any favorite quotes on Independence Day? Please share them with us! Enjoy your holiday! Stay healthy!





















What You Need To Know About A Sinking Fund

What You Need To Know About A Sinking Fund

We all have something special we’d like to buy for our home or in life. That old couch that has seen better days in your living room begging for a replacement or a vacation you thought about for a long time but keep pushing off because it is too costly. Paying for these significant expenses can be challenging for us, but a sinking fund may pave a better way.

Sinking funds can be a gamechanger for individuals and households. It is a valuable tool to add to your financial toolbox for savings. This strategy helps those who want to manage their finances better and gain peace of mind.

The timing for setting up sinking funds could not be better. Americans have been saving more, as illustrated by the US personal savings rate of 14.9% for May 2021. The unusually high rate due to pandemic-related spending constraints compares to 7.6% at the end of 2019. So why not make your savings work better for you?  Setting up a sinking fund is easy to do and enhances your ability to save money for large purchases you will make in the future.

What Is A Sinking Fund?

Sinking funds have long been helpful for companies and bondholders to minimize risk. For example, when corporations need to raise capital, they may issue a bond that matures in 20 or 30 years. Bondholders receive coupons semiannually and the principal (their investment) at maturity.

Many bonds now have a sinking fund managed by a trustee who oversees the fund. Money is set aside periodically with a trustee for repayment of the portion of the principal. This action eliminates the need for a significant cash outlay for the company at maturity.

There is less risk of the company defaulting by using the fund if it doesn’t pay back the principal to bondholders. The fund adds protection and security for the bondholder that the company can pay off their debt. A sinking fund allows a company to raise capital with a lower interest rate to bond investors. As such, it improves a company’s creditworthiness.

A Sinking Fund For Your Household

Similarly, you or someone in your family can create a sinking fund, dedicating a savings account for a specific household expense that may be too large to handle without borrowing the money. We will explain later how your sinking fund differs from your emergency fund.

Once you determine what you want, say a new couch for $1,000-$1,500 for your living room, your sinking fund is for the sofa, not for another expense. You intend to save money to buy a couch, making monthly contributions to the “couch” sinking fund. Everyone has their budget, lifestyle, and timeframe for getting the couch or whatever it is you are targeting.

With a bit of planning, you can have what you need or want in your life without guilt. If you have your heart on a particular $1,500 couch within a year (i.e. 12 months), your monthly savings goal is to contribute $125 to the sinking fund each month.  Break the estimated spending amount into the monthly savings you plan to deposit into the respective savings account.

Without a fund, there is a greater temptation to pull out your credit cards for these large purchases. Your challenge is that you would have to pay your card balance in full or face a card balance growing on a compound basis at high-interest rates. There are more benefits to setting up a sinking fund for purchases than the downside of adding to your debt.

Sinking Fund Vs. Emergency Fund

Both your sinking fund and emergency fund are safety nets but for different purposes. An emergency fund is for the money you set aside in a savings account for unexpected costs you may face when losing a job, boiler breaks, a medical necessity, or pet surgery. Emergencies, by definition, are unknown as to timing and amount needed. You still have to pay bills, rent, or mortgage. Unplanned events happen, upsetting your finances. We recommend having your emergency fund cover six months of your basic living needs. You want to have access to liquid assets quickly.

The sinking fund is for saving money for a known purpose you expect to purchase in the future. Typically, your sinking fund is for a specific planned amount. You know its timing and have been saving for it. The point of having a sinking fund is not to tap your emergency money or a general savings account.

Just like you have loans for a house, car, and college, you are earmarking savings for larger items you want to purchase. Dollars are fungible and can go into a “car or house down payment” sinking fund. You can have a sinking fund by categories such as a house, car, vacations, Holidays, Christmas gifts, or charities. Alternatively, you can name these reserves by being more specific:

  • Kitchen remodeling
  • Sofa
  • Flat-screen TV
  • Refrigerator
  • Car maintenance and repairs
  • Down payment for Car
  • Down payment for House
  • Pet bills
  • Taxes
  • Vacations

Labeling the sinking funds is a personal decision based on your household and its relevant savings goals. 

How To Set Up Your Sinking Fund


1. Review Your Budget

Before setting up your sinking fund, you should a good grasp of your household’s budget. Budgeting is an essential tool for understanding your income sources less fixed and discretionary expense categories. Fixed living costs include your rent or mortgage, utilities, loan payments, and savings. You should have “savings” on your budget for when you are paying yourself first. Depending on how granular your budget is, you should separate line items for an emergency fund and the sinking fund. Pick a budget method that works for you.

When it comes to fixed costs,  you have less flexibility to reduce amounts. On the other hand, discretionary spending varies based on money left over.  You can learn more about different budgeting approaches here.

2. List Your Planned Purchases

Make a list of fund categories, break them down into more specific items. Then determine the target amounts for each. Name your sinking fund by its discreet type. Some funds may have higher amounts and longer timeframes. Divide each type total by the numbers from the planned purchase time. For example, if you are saving up for a new car’s down payment in two years, estimate the cost of the car is, say, $38,000, so you would want around a down payment of  $4,500. That equates to about $190 of the planned monthly contributions for two years or 24 months.

There is no set number of sinking funds though I would caution you about having too many sinking funds to manage.  This process is about organizing your finances to make things more effective and efficient for you. As in the sinking bond for businesses, you are the trustee or manager of the funds.

3. Where Your Savings Will Go For Purchases

You can open an FDIC-insured saving account for each type or have one large sinking fund with named sub-accounts. Keep in mind that the sinking funds are separate from your emergency fund and savings accounts. The type of accounts you should look for should be readily accessible and liquid, similar to the account you use for an emergency fund.

When you open a sinking fund for each type, each of your accounts differs from target amounts and timeframe. For example,  when you are saving money for a house makeover or a down payment for buying a home, you probably are looking to build a five-figure money chest. If so, you can look for higher-yield savings or a money market account. For smaller purchases and shorter timeframes, avoid accounts that require minimums that penalize you with fees for not maintaining a specific balance.  Essentially, you want safety and liquidity for the sinking funds.

Use Sub-Savings Accounts

Some banks, such as Ally, allow you to have a savings account and sub-savings accounts when you have multiple savings goals for concrete purchases.  You can automate transfers to each of your sinking funds based on varying monthly contributions. Having the ability to transfer money can ease the process for you. However, you will be receiving more monthly statements.  Consider the account details regarding fees, minimums, if APYs are different, and whether this works for you.

4. Need An FDIC-insured Account

Whatever you decide to do, each sinking fund should be in an FDIC-insured savings account that is readily accessible. For longer-term purchases, look for higher yields and minimize fees you may have to pay.

Benefits of A Sinking Fund


1. Better Budgeting

When you have a good understanding of your budget, your fixed living costs, it is easier to plan for discretionary spending. You can decide what amount you can contribute to your specific sinking fund each month without becoming a hardship.

The better your budgeting, the better you can plan for your savings goals and spending. It is easier to save money when you have an intended target to set money aside for that purpose.

2. Conscious Spending

When you set up your sinking fund, you essentially are planning to buy something you need or want for your home or life. It is an act of conscious or mindful spending when you are intentionally saving for something. You know the specific couch you will buy, have a plan, and focus your attention on that couch.

By taking time and doing comparison shopping, it is less stressful and more enjoyable anticipating the arrival of something new that you specifically want to get. You are not at that stage where salespeople will push you into an impulsive purchase you’ll regret. You are more in control of your spending and more likely to negotiate where and when possible.

3. Delays Instant Gratification

The need for instant gratification is all around us, with social media ads tinkering with our brains. The present bias plays a significant role in our leaning toward immediate pleasures. It causes us to favor the present over the future with immediate rewards. With effort, you can counter tendencies to overweight decisions that can cause overspending with planning.

With your sinking fund in place and growing closer to your spending goal, you can delay instant gratification. You have your mind not just on your expected purchase but on other things as well. Setting goals for one part of your life makes you more purposeful about your needs and wants. Achieving something on your list can be very fulfilling.

4. Avoids Adding Debt

Overspending can lead to higher debt, significantly rising credit card balances. Card balances are especially higher cost and challenging to handle. As in the sinking fund for corporate bonds, a household sinking fund can help us avoid reaching for our credit cards to pay for large ticket items. Increasing our monthly savings by earmarking money to contribute to a specific account that earns interest is the path to better financial health.

Saving first, spending later, and avoiding debt where we can, can improve our creditworthiness.

5. Peace of Mind

Having peace of mind is priceless. While you may not be able to get rid of every stress you have, planning out expenditures for important things you want to get or do can help your mindset.



1. Don’t Have Too Many Sinking Funds

You may get good at organizing your finances. The next thing you know, you have too many sinking funds, overlapping purposes. That reminds me of an ad for Post-It notes, stating that they should be used “for the little things you’ll forget,” and then you see yellow Post-Its all over people’s foreheads. You get the picture. You don’t want to create chaos. The sinking fund process should help to organize where your savings should go.

2. Sinking Funds Are Not Interchangeable

When creating sinking funds, they are separate from each other. Keep contributing to each based on the estimates you determined. Try to label them as discreetly as possible, so it is not confusing to you. If you wanted a couch and estimated $2,500 for it, but found the one you love for $1,800, then you can reallocate your savings to other areas. Sometimes you under or overestimate the expected cost, so make changes but don’t blur the lines.

3. Keep Emergency Funds Separate

Having an emergency fund is essential, and its purpose is different from any sinking fund. Don’t transfer funds from your emergency account to your vacation account. That’s cheating, and if an emergency arises, you want that fund to be there for you in its safe and sound place.

4. Don’t Forget Savings For Other Goals

Saving for retirement and investment accounts is vital for your long-term future. Make sure to automate contributions to your 401K retirement plan, if sponsored by your employer, and for your Roth IRA. You should contribute some of your savings to investments, whether you are managing the account or you have a financial adviser to do so.  Over the longer term, these accounts grow faster than savings bank accounts, depending on your respective investments (i.e., stocks, bonds, real estate), and benefit from compounding growth.

Final Thoughts

Establishing sinking funds by saving for large purchases can be beneficial. It is a terrific organizational tool that enhances your mindfulness. By being thoughtful about your spending, you will reduce your need for instant gratification while reducing your buyer’s remorse.

Thank you for reading! If you enjoyed this article, please visit The Cents of Money for more articles of interest and subscribe for freebies, including our newsletter.






Benefits Of A Generator When Outages Impact Your Home

Benefits Of A Generator When Outages Impact Your Home


“We Have Power!”

Craig, my husband

How precious those words were when we regained utility services.  Our family, among many, endured a multi-day outage caused by Hurricane Isaias. It is truly one of the more disruptive events that can happen. Typically, you don’t get a lot of warnings when outages occur. The best you can do is be patient and go with the flow (pardon the pun!). Then hope your electric utility company is on the ball.

The benefits of a generator are significant when outages impact your home.  With two houses in different locations, I thought we would finally reap the benefit of having two locations despite having dual outages. We quickly relocated our family to the rented house, which had a standby generator. Little did we know that the owners’ generator wasn’t working. It only sputtered out error messages. At least the rented house had water but nothing else. I soon realized that we would have to empty our two stuffed refrigerators filled with fresh and frozen food, including meals I always prepare ahead of time. What an unfortunate waste! Suddenly buying things on sales didn’t feel like a bargain anymore.

Power Outages Are Pains In The A** But Keep Your Perspective.

Yes, we had candles, flashlights, and other supplies. It was our first outage, not counting brownouts. I was proud of our teens as they handled themselves quite well in the initial days. However, by the fourth day, they were getting anxious about being out of touch with friends and schoolwork. Having a puppy made things a bit harder for us, especially feeding time when we didn’t have yogurt for him.

However, it was essential to keep our perspective. Falling trees hurt no one. People go through a lot more worse conditions as a result of emergencies. We were safe with temporary inconveniences like no toilets or showers, no wifi, TV, or lights. However, I wanted to understand what we can do about this in the future as we did have some costs to bear. Both Craig and I work from home with deadlines to meet, but the power outage silenced our computers.

We received a modest amount of recovery from our respective utility companies. Our budget took a hit as we had to spend more money dining out for all our meals, bought water and jugs to flush our waste, and gas for the generator we borrowed. The banks were closed during the first few days of the outage though we had cash on hand. An emergency fund is particularly important to have for events like this. We suffered no damages to windows or the house from falling trees.

Aging Electric Infrastructure Means More Outages Are Likely

When a power outage occurs, whole communities as retailers as well as businesses overall get impacted. No one cannot operate without electricity. Experiencing a power outage has become far more common in the US in the past decade due to our aging infrastructure. The US electricity grid was built in the 1890s and updated piecemeal as new technologies became available. However, electricity is still our primary power source.

According to the Department of Energy, 70% of our transmission infrastructure is over 25 years old. Gretchen Bakke, who wrote The Grid, said in a 2016 NPR Interview said that our electricity grid has become increasingly unstable and underfunded.  Significant power outages averaged fewer than 5 per year from the 1950s to the 1980s. Since 2010, there have been more than 100 major outages annually. Bakke pointed out that renewable power sources have grown dramatically, but our aging infrastructure cannot integrate them into energy sources.

Our electric grid cannot be fixed quickly and will require significant capital expenditures. Yet, not doing so will guarantee that outages will become more commonplace. Moreover, the modernization of the grid is key to the future of our economy. If we don’t update our grid, we will lose efficiencies, cost savings, the ability to fully integrate wind and solar technologies, and provide better broadband internet to rural and poor areas. On the latter point, the pandemic has highlighted the digital divide that has existed for years.

Severe Weather Causes Outages

While hackers can impact our power systems, severe weather conditions such as hurricanes cause a significant percentage of power outages. As if the year 2020 wasn’t challenging enough with the coronavirus pandemic and a severe economic downturn, the hurricane season was historic. On June 9, 2021, the National Oceanic and Atmospheric Administration (NOAA) reported that the record-breaking Atlantic hurricane “..draws to an end.” The NOAA predicts an active 2021 hurricane season in the likely range of 13 to 20 named storms, of which six to ten could become hurricanes—just saying.

Should We Get A Generator?

The sad state of our infrastructure is a big problem that needs fixing on a broad scale. Unfortunately, Biden has not yet signed the infrastructure bill.l So besides using our voice and vote to get our grid in better shape, what can our family do to better prepare for more outages?

Towards the end of the ordeal, our friends, who had their power restored faster than ours, lent us their portable generator. It provided some relief. The wifi allowed us to communicate again and we had one of our refrigerators turned back on. Of course, Tyler made sure that he could use one of the large screen TVs for his video games. Having some power back got us thinking about getting our generator for our rural home.

Was this power interruption a once-in-a-lifetime experience, or could it happen more often? If the latter, does getting a generator make sense for us? We had to throw out a lot of food in two refrigerators and freezers that we had recently acquired and supplies and dining out the whole week for a family of four. Suddenly a $750 portable generator starts to make sense. It fits into our budget and may give us peace of mind.

Related Post: Steps To Buying A Home Through Closing 

Benefits Of A Getting A Generator


1. Staying Comfortable And Safe During Emergencies

Having a generator would restore some of our daily routine activities quickly and potentially automatically. You can remain in your home rather than having to pay for a hotel. Determine the size and type of generator and what are your basic needs assuming you can’t have it all. 

 For example, there are tradeoffs you need to consider. For us, we want to keep the heater or AC working, power for the bathrooms (this is the hardest to lose), TV and cable connections, security systems, refrigerator, a few lights, and being able to use your computer.

 A generator is essential for families with health problems that may require the use of medical equipment. Simple things like opening your garage door and having a coffee are tiny benefits are pleasant but not vital. In addition, having a backup generator provides some peace of mind. When you are without power, it is very stressful for you and your family, including your pets.

2. Maintain High Indoor Air Quality

Without a generator, the indoor air quality deteriorates as open doors and windows will let in pollen, dust, dirt, and such. A generator is beneficial to keep your HVAC (heating, ventilation, and air conditioning) system running. HVAC systems bring in fresh air from the outside to provide better indoor air quality. Fresh air is an essential comfort for those with asthma or severe allergies. Within 48 hours, your food spoils and smells up your home. Also, high humidity can cause mold in your home.

3. Preventing Damage To Your Home

A generator allows your sump pump to keep working. This helps to prevent possible flooding in your home when there are heavy downpours or snowstorms. It can prevent pipes from bursting by maintaining power to your boiler to heat the house.  When power comes back on after a few days, clean your refrigerator of its spoiled food. It is a lot of work, and you may feel like you need to buy a new refrigerator. It keeps the water flowing for homes with private wells. In rural areas, generators are more commonplace to maintain electrical farm appliances and gardening.

4. Add Value To Your Home

Depending on the type of generator you get, it can add value to your home and help you rent it out. Typically, you will receive the most significant benefit from a system that provides coverage for your whole house and is a standby generator rather than a portable generator. In addition, some insurance companies may give discounts on the homeowner’s premium if you have an automatic standby system.

Portable Generators versus Standby Generators

In 2020, less than 3% of American homes had standby generators, while 12% had portable generators. Generac has 70% of the residential generator market, although several other providers of these units.

Portable Generators

The cost for portable generators is significantly less than the standby generators, likely accounting for the higher percentage in US homes. The national average cost is $750 (ranging $200-$2,000)  for the gas-powered with about 5500 wattages.  These units vary by wattage, with gas being the most common fuel type over natural gas, liquid propane, and diesel. The portable unit requires manual hookups using several extension cords that may add cost. An electrician can provide a transfer or switch to connect your appliances to the generator for $500-$800. There is no other installation as your unit should operate 20 feet outside of your home.

It is a manual system, easy to operate as our son, Tyler, actually put it together for us.

Some portables have automatic shutoff features if it detects too much carbon monoxide.

How Many Watts Do You Need?

Power output is measured by wattage. The amount of wattage you should get is determined by how much coverage of your home and the respective appliances you need. Consumer Reports says that 5K watts will cover the basics of a typical home though it really should be based on your family’s needs. Some units go to 10,000 watts or more. The most significant portable I saw was 17,500 watts. To give you an idea of respective wattage, here is the required wattage:

  • Refrigerator – 600 watts
  • Sump Pump – 750-1500 watts
  • Portable Heater – 1500 watts
  • Window air conditioner – 1000 watts
  • Lights vary from 60 – 600 watts
  • Computers 60-300 watts

A portable generator can do the trick for some, but likely not for all of your needs.

You need to refill the smaller units that hold 3-6 gallons of gas often. According to Motley Fool, it takes about 34 gallons of gas for an average portable generator size for two days use. A gallon of gas price of a gallon is higher in 2021 at about $3 now (versus $2 a year ago). When the unit runs out of gas, it stops working. Running out of gas could be a problem as you don’t want your refrigerator to stop working.

The Drawbacks of A Portable Generator

While we find the portable generator is probably the way to go for our family, you should know a few negatives. First, as mentioned, portable generators will not restore every inconvenience, so you need to figure what is most important to you. Second, your mobile unit may use many extension cords all over the house unless you have a transfer or switch. Third, these lines may be unsightly for some people and pose a danger if you aren’t careful walking around.

You need to monitor the system periodically to run out of gas and stop running your appliances. The portable unit is not a good choice if you travel a lot. You don’t want to leave it running outside your home unattended. As it is noisy, your neighbors probably won’t appreciate you leaving it on either.

Standby Generators

These units are far more comprehensive in their coverage of your entire home during an outage. They are automatic and will turn on upon the outage and off when power is back on. That means there should be no power interruption. The automatic feature eliminates the need for fuel storage as it is hooked up to an existing gas line. It has the potential to increase your home’s value and possibly to get discounts on homeowner insurance. On a personal note, the fact that the standby generator did not work as hoped in our rented home makes me a little biased against this kind of unit.

The Drawbacks For Standby Generators

For these reasons, standby generators are more expensive, ranging from $7,000 to $9,000 for an installed 10,000-watt generator. According to Remodeling magazine, comparing cost versus value, a $12,860 standby generator increases the value of your home by $6,940. That is a 54% recovery of your generator’s cost. The unit may take up significant outdoor space, require regular maintenance, and an inspection after installation. Like the portable unit, it is noisy when operating as well. You will have to run it periodically.

Final Thoughts

Our first major power outage last summer that lasted a week was a drag on our family, as it has been for many others. Unfortunately, we will likely see more power outages in the future. The benefits of a generator when outages impact your family are significant.  As a result of our experience, we prepared our home to purchase a portable generator as insurance. Losing food, dining out for every meal, and inconveniences were annoying in this challenging year. The more significant issue is the aging infrastructure plaguing our country. It is partially the cause for outages and inefficiencies and the lack of broadband internet for many Americans. That has been part of the lesson learned I wanted to share in this article.

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