Cheap Retirement Living

Posts Tagged ‘indirect savings’

Indirect Savings Are The Secret To Saving The Most Cash!

Indirect savings are the monies saved when you either buy something… or don’t buy something! Nobody can save 100% of their income except perhaps the President or a kept woman or ‘toyboy’! We need to spend money every day to live: to buy food, pay rent or mortgage or for utilities such as electricity and water.

While direct savings are the percentage of our income we put aside and don’t spend, this page and linked pages are all about saving money when we do spend it. Buying smarter in other words.

When you are on a fixed income as most retirees are, it is important to wring every cent of value out of each dollar that you can. When that fixed income also has the adjective ‘low’ included then it is even more imperative.

We can save a lot of money each year in many ways. Not buying something. Buying in bulk. Buying at the right time and only when items are on sale. But there is more to it than that. Asking for discounts and making it a habit to do so, every time you part with money and no matter to whom or where.

We need to switch on to how we can save when we spend and a little time and effort applied will reap rewards in the form of money. YOUR money. As the saying goes, it is better in your pocket than his! This is not rocket science but it is important to think before handing over your money.

Do you really need this item? Right now? Think it over for 24 hours and if you really need it tomorrow, then go back and buy it. You will be surprised how few times you actually return! The reality is that for most of us we impulse buy. We buy things we want or like but don’t need. Fine if it is just now and then but sadly we are conditioned to be consumers and we do it habitually.

Let those with the big pay checks keep the wheels of capitalism and industry turning. Cheap retirement living aficionados are not responsible for keeping the global economy afloat. For us it is often a case of plain old economic survival.

People who made it through the Great Depression and the Post-War years know all about tightening belts and getting by on less. They know it can be done and it can be fun doing it, too! We will look at lots of ways of saving money and enjoying the process. It will take some mindshifting but if you approach it as a challenge to meet then you will emerge not only financially better off but I think you will soon prefer living within your means and not beyond it. All the while contributing to the ecology of our planet. Even if you can’t be a part of the solution, don’t be a part of the problem!

Direct savings are any monies put away for the purpose of saving them, usually for the proverbial rainy day. These include 401k’s,superannuation and retirement funds, insurance policies which mature, savings accounts at banks and building societies, piggy banks, money in the mattress and so on.

The basic concept is simple: You put money you can spare from your day to day expenses somewhere that it will be both safe and make money for you in the form of interest. The more interest paid, the higher the risk although we are focusing more on saving rather than investing here.

This means the interest rates will be modest but there is little to no chance of losing your money, or at least of losing your initial investment.

Offshore accounts can keep your money away from the Taxman but these usually cost a lot and require large enough sums deposited to make the fees worthwhile. We also advise you don’t avoid or evade your tax obligations but you should do all you can to minimise the risk of paying a penny more than you legally are obliged to. Taxation in itself can be looked at as a form of saving. Taxes fund welfare and pension programs in countries where these are available and it also funds infrastructure you can avail of when retired; so pay your fair share but not a penny more.

We will look at not only saving money but moving it around at the minimum of cost and risk. When you retire, particularly if you relocate to another country, you will most likely have to move fairly large sums around and there are numerous laws in place (to deter money laundering by drug cartels and terrorist groups) as well as procedures that make things a little more complicated than they were even a decade ago.

The poorer countries of the world are attractive to many looking for an affordable place to call home. Somewhere that their retirement dollar will stretch to provide them with a decent standard of living, close to what they were used to back home when they were making a regular living. Sadly the burgeoning baby boomer retiree population is finding life in the First World a tad too expensive on what is left of their 401Ks, superannuation, pensions and what not.

So their attention turns to the third world where they can get more bang for their buck. The cost of living has risen in the Philippines just as it has everywhere else in the world. Risen sharply in many ways. I wonder how the average Filipino family manages, but then they have managed for generation after generation, so why should the current fiscal situation be any different?

If you want to live like a white rajah, then expect to pay for it! If you are happy living on a basic diet of dried fish and rice then you can get by on very little indeed. For most of us, though, we need to tread the middle path. You can live on US$500 a month in the provinces but it will be like camping in many respects. Forget airconditioning, driving your own car and going out to dinner all the time. This is you and the Filipina of your choice living in a small, rented house or apartment, shopping mostly at the local market and rarely buying supermarket items. You don’t travel around, you might have cable TV or internet access but perhaps not both and you don’t call home very often.

For US$1000 a month you get to enjoy some imported foods, turn on the airconditioning, drive a small, used car and go out a few times every month. For US$1500 you can live pretty much wherever you want to and live well and for US$2000 a month I’d say you can live in Manila and live well. Nice apartment, domestic helper, good food, lots of entertainment, everything you want.

How much do you live on now? How well do you live on that? How would you like to live in the Philippines?

SAVING MONEY – Not Quite The Same as Making It!

Saving money is important to all of us and more so to those who are keen to develop habits that facilitate their cheap retirement living. There are two ways to save your cash; directly or indirectly.

Directly means you take cash and you save it, either in a bank account or under the mattress or some other form of secure holding. Earning high interest and ‘making money’ from your savings is not the immediate goal here but it is something you should keep in mind. What is most important at this stage is to start the saving habit as soon as possible. When the time comes that you have enough saved to make it go to work for you, simply visit the pages of this web site that cover that topic.

Indirectly means not spending money. If you can avoid spending what you have worked so hard to gain then that is as good as saving it in a piggy bank for a rainy day. We will look at many ways you can save money by not spending it in the first place. You might be surprised how a few minor mindset adjustments can have you saving thousands of dollars every year and enjoying the process.