Amazing Money Tips

The business world has a term that’s music to every corporate leader’s ears: “found money.” It’s used to describe newly discovered dollars the company didn’t realize it had or cash that becomes available when a planned expense is no longer necessary. Found money is always a sweet surprise.

Found money happens in personal finance as well. Remember the day you vacuumed under the chair cushion and found a quarter, a dime, and half a tortilla chip? All right, if you’ve never vacuumed under the cushion, have you ever received a refund of an overpayment? Or a security deposit you forgot about?

If money has seemed tight lately, you may be wondering where the money’s going to come from to get out of debt, build your savings, and prepare for an independent retirement. My purpose is to assure you that you probably have more money than you think and to help you find it.

Empty Your Pockets

I don’t know about you, but I hate counting out change when I buy something. I’d rather save time and hand the clerk a dollar bill and let him make change. Most evenings I come home with enough loose change to fund all the parking meters in the city.

How about you? You probably accumulate plenty of loose change too. Let’s say that on a typical day you return home with three quarters, a dime, two nickels, and three pennies: 98 cents. Some days you’ll have more, some days less, so let’s consider 98 cents an average day.

Starting tonight, whenever you get home from work or shopping or an evening out, empty your pockets or purse of all the coins you’ve accumulated. Place them in a hermetically sealed mayonnaise jar and watch what happens. Ninety-eight cents per day adds up to $6.86 in one week. At the end of one month your 98 cents per day will have metamorphosed into a beautiful $30 or so. That adds up to $360 per year, before interest. Not bad for money which, till now, mostly fell through the cracks.

Once each month, take the heavy mayonnaise jar to your bank. Don’t be embarrassed – they have machines to sort and count change. Tell the nice teller that your lemonade stand is doing very nicely, thank you. Deposit the total in your checking account, then earmark the found money to monthly priorities such as savings, debt reduction, increased giving, and investments. It’s a painless, effective strategy. The only requirements are patience and loose change. Over time those little handfuls of pocket change can add up to thousands of dollars.

Stop Loaning to Uncle Sam

Have I got a deal for you. The XYZ Company is a huge organization in need of capital. If you loan them some of your money from each paycheck, whether it’s $20 or $200, they’ll take that money and put it to work. By the end of the year, you’ll have contributed hundreds, maybe thousands, to the program. A few months later, the XYZ Company will return your money to you. And to show their deep appreciation for the loan, they will also give you an exciting return on your investment: absolutely nothing. That’s right, you loaned XYZ your hard- earned money, they used it all year, and they paid you zero interest!

Now if someone approached you with this benevolent offer, I’m confident you’d give him a benevolent kick out the door. It just doesn’t make sense to give XYZ interest-free loans from each paycheck when you can invest those dollars yourself, realizing gains between 5 and 20 percent each year.

Would you believe the XYZ Company is a real organization? And that the majority of Americans unwittingly make that horrid interest- free loan from every paycheck? By now you may know which organization I’m talking about: the IRS. And if you received a tax refund last spring, you made that same zero-interest loan.

Now I realize it’s usually a nice feeling when a refund check arrives. But consider the big picture: A tax refund simply means you’re letting Uncle Sam overwithhold your taxes each payday. You’re paying him more than he requires of you. Each overpayment is a virtual loan of your hard-earned money to Uncle Sam at zero interest.

If last year’s refund was more than a few hundred dollars, you may be able to turn your zilch-interest loans into found money. The payroll specialist at your workplace has IRS tables to help you calculate a new withholding allowance. You can take up to ten allowances rather simply; more than ten requires tedious paperwork pledging your firstborn to assure Uncle Sam you’re not going to stiff him and flee to Argentina.

Increasing your withholding allowances is a simple, effective way to turn those going-nowhere IRS loans into found money. It can provide more dollars each pay period to direct toward investments that work for your benefit instead of Uncle’s. You won’t have a huge tax refund next spring, but that’s just the point. Your goal is to come close to break-even at tax time by putting your money to wiser use in the meantime.

Get Rid of Bad Life Insurance

If you’re among the millions who let a hungry insurance salesman sell you whole life insurance, you’ve stumbled upon a key source of found money. Unless you’re over 50 and a smoker, or suffer from a serious chronic illness, it’s likely that whole life (also called permanent life) is not a good insurance buy for you.

With whole life insurance and most of its derivatives, such as variable life or universal life, you’re paying an enormous premium for relatively little insurance coverage. The pitch is that in addition to life insurance coverage, you will build cash value in a sort of savings fund. However, almost all of your first year’s premium for whole life coverage goes to the salesman as commission. Little, if any, goes to cash value. In fact, it takes a few years for your cash value to begin showing signs of life at all.

The basic principle here is that insurance is insurance and investments are investments, and we shouldn’t heed the hype to combine the two. You’ll do much better shopping for inexpensive term insurance, which buys you far more insurance at a far lower cost-per-thousand of coverage. The difference between term and what you will pay for whole life could total hundreds, perhaps thousands, of dollars per year – found money you can invest on your own (without exorbitant commissions or fees) and come out far ahead.

More Along the Way

So, do you forgive me for finding you some extra money? These are just a few of the most obvious and accessible sources, but be assured: Found money doesn’t have to stop here. There are more good sources of money you didn’t realize you had, whether it’s from clearing debt, buying smarter, or saving and investing more diligently. Your found money could total thousands of dollars before you’re through.

Taken from 21 Days to Financial Freedom by Daniel Benson. © 1998 by Daniel Benson. Used by permission of Zondervan Publishing House.

This article is courtesy of Christian Single.

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