The art of salary negotiation is a touchy but crucial matter that rarely receives adequate attention. With all the economic certainty that we’ve been facing, many people have increasingly focused on reducing expenses and leading a frugal lifestyle. There are, however, two sides to the “spend less than you earn” coin…

When is the last time you stumbled across proper techniques for negotiating your salary and increasing your top line? While frugality is an important component of a healthy financial lifestyle, salary negotiation is also an important skill to master.

Think about how much time, money, and energy you’ve spent earning a college degree, sculpting the perfect resume, seeking employment, and interviewing for countless positions. Given this investment, why not spend a bit of time properly preparing to negotiate your pay?

Consider the following scenario…

You walk into a prospective employer’s office. You’re dressed to impress, portfolio and resume firmly in hand. You meet Mr. Employer, make some small talk, and answer the typical cheesy interview questions to ensure you’re the best candidate for the position. And then…

WHAM! You’re asked, “So… What sort of salary are you looking for?”

What do you do?

Rather than freeze and stumble around for the right number you should follow the first rule of salary negotiations which states: there is one time and only one time to discuss your salary expectations, and this IS NOT IT! Sidestep the question like your life depends on it!

Jack Chapman, leading career consultant and author of “Negotiating Your Salary: How to Make $1000 a Minute,” suggests two essential rules.

Two must-follow rules for salary negotiation

1. Discuss money only after they’re ready to hire you.

This rule applies to the Human Resources screening interview, as well as the main interview(s). Anytime someone asks something like “What is your current/previous salary?” or “How much do you want to make?” — dodge them.

Why? If your past salary was too low, you run the risk getting a lowball offer. Conversely, if it was too high, you might blow past what they’re willing to pay. A premature disclosure of your previous salary undermines your bargaining power.

FYI: Focusing on salary during the interview process is the employer’s way of getting the most competent person for the least amount of money. Don’t relinquish key information early in the process.

In order to evade the question, you need to respond confidently, but remember… There’s a fine line between confident and cocky — make sure you don’t cross it!

Here are a few examples of what to say:

• “I’m sure we can come to a good salary agreement if I’m the right person for the job, so let’s make sure I am!”
• “Well, so far the job seems to have the right amount of responsibility for me, and I’m sure you pay a fair salary, so let’s hold off on the salary talk until you know you want me. What other areas can we discuss?”

Do this for the first and second requests alike, but if they continue to probe, you’ll have to defuse the situation. If things get tense or awkward, try softening your statements with one of the following:

• “I get anxious when talking about money.”
• “When we discuss money, I’m afraid that I’ll be screened out or boxed in so could we hold off on that?”
• “I’ve noticed that we’ve come back to salary again. While I’m happy to talk about money, I’m not sure why we need to discuss it now.”

If this doesn’t work, and they insist that you divulge your salary requirements, you can cave in, but it’s not recommended.

Now that you’ve positioned yourself for optimal negotiation by side-stepping their requests, you’ll want to make sure you follow the second rule…

2. Make them go first!

Because you’re so awesome, the job offer is now on table and — if you exercised your skills from above — your salary requirements are still unknown. After the job has been offered, the salary talk could come next, last, or somewhere in between.

Regardless of when the topic comes up, as soon as Mr. Employer asks “How much would it take to get you to come aboard?” Do whatever you can to avoid answering with a number!

Instead… Make them go first! Once again, why would you want to risk being too high or too low. You never want to price yourself out of the job, nor do you want to undercut your true value.

Nine times out of ten, they’ll already have a budget set aside for the position. In most cases, it will actually be a range, and you want to land at the high end. At this point, your goal is to find out exactly what that range is!

Reply with one of the following:

• “I’m sure you have something budgeted for this position, what’s your range?”
• “I have an idea of the market, so let’s start with your range.”

If you can get them to divulge their range, then you have them exactly where you want them. As soon as you know your target, start giving them solid reasons why you should be near the top of the range. And remember… If they’ve offered you the job, chances are they think you belong there too!

One final strategy

I’ll leave you with the most surprising and unnatural yet most effective tactic:

SILENCE.

For example: Let’s say they extend an offer, saying “We can offer you $XX,XXX/year and would like for you to start as soon as possible.”

What should you do?

NOTHING! Repeat the offer in a quizzical tone “$XX,XXX?” and sit in silence for 30 seconds or so. This could very likely make them squirm, wiggle, or feel uncomfortable enough to up the ante without your ever really responding to the first offer.

I actually gave this advice to my buddy Fred when he was on his way to an interview a few years back, and it worked! Fred was offered the job, but remained silent when the first number was given. He said that after about 10 seconds of silence, the prospective employer came back with, “Well, we could go higher if that isn’t going to work for you.”

Fred ended up getting $5,000/year more than originally offered! I’m still trying to get him to give me a cut of that since it was my advice that got him the money!

Closing thoughts

Remember… I’ve only highlighted a few of the most powerful concepts introduced in Chapman’s book. He actually covers much more, including how to get raises, and how to arm yourself with industry salary standards to justify the salary you deserve.

I highly recommend this book. It has empowered me tremendously, and I’m confident that it can do the same for you. It’s an easy read, and if you insist on working for other people, it will be a very helpful tool.

What are some of the salary negotiation tactics that have worked for you?

Follow me on Twitter!

---
Related Articles at fivecentnickel.com:

» You’re Doing Better Than You Think
» How to Haggle: More Tips on Haggling
» Weekly Roundup: Geocaching Edition
» 403(b) Contribution Limits for 2007
» Online Cost-of-Living Calculators
» Opening an Optional 403(b)
» My Best and Worst Money Moves
» One Year Ago This Week (June 11th – June 17th)

The Pareto Principle holds that, for many events, 80% of the effects can be attributed to 20% of the causes. Also known as “the 80/20 rule,” or “the law of the vital few,” the Pareto Principle has been found to apply to a surprisingly wide variety of things in everyday life.

Examples of the Pareto Principle

The Pareto Principle is named after Italian economist Vilfredo Pareto (1848-1923), who observed that 80% of the land in Italy was controlled by just 20% of the population. Intrigued, Pareto looked to other countries and found similar ratios. More recently, a 1992 United Nations study revealed that 80% of the world’s wealth (actually 82.7%) is controlled by 20% of the population.

Looking more broadly:

• It’s been long recognized, or at least assumed, that 80% of sales come from 20% of clients (or 20% of salespeople).
• Microsoft has noted that, by fixing the top 20% of bugs, they could squash 80% of errors and crashes. (Note: I wonder when they’re planning on doing this…)
• In 2000, 20% of taxpayers paid 81.2% of US income taxes. (Note: This is perhaps not surprising given the large share of wealth that they control.)
• 20% of employees account for 80% of absenteeism.
• It appears that fellow blogger J.D. Roth wears 20% of his shirts 80% of the time (if not more).

And the list goes on.

Why the Pareto Principle matters

To see how this principle can help you in everyday life, it might be best to turn it around…

What would you do if I told you that 80% of your efforts are (in many cases) largely wasted, producing only 20% of your results? I’d be willing to bet that you’d take a closer look at how you spend your time and make some changes.

While it’s arguable whether or not the numbers really work out to 80/20 in any particular case, the larger point still stands… The majority of your productivity typically comes from a minority of your efforts.

By looking critically at how you spend your time/effort, you can dramatically improve your productivity. Try to identify the things that produce the most results and focus on doing them. Likewise, try to shun (or at least streamline) activities that don’t produce much in the way of results.

The same principles can, of course, be applied to things like spending. While you may have certain critical things that are indispensable, yet only used rarely, I’d bet that you only regularly use a small fraction of your “stuff.” If you can learn to look at your purchases with a more discerning eye, your money will go further, and you’ll wind up with far less clutter.

Have you ever evaluated how you spend your time/efforts/money in this way? If so, what did you find? And what (if any) changes did you institute?

Follow me on Twitter!

---
Related Articles at fivecentnickel.com:

» Is WaMu on the Cusp of Failure?
» Adjustable Rate Mortgages (ARMs) – A Positive Perspective
» Pay Off Debt or Invest?
» Ally Bank Ten Day CD Rate Guarantee
» One Year Ago This Week (April 15th – April 21st)
» Coupons are a Waste?
» Monday Roundup – Speeding Ticket Edition
» Weekly Roundup – 04/17/06

I’m a huge fan of taking control of my own situation. I don’t like giving mediocrity a place in my life because it gives others power over me, and leaves me less able to steer my own ship. Given the tough job market, there’s never been a better time to set yourself apart from the rest of the worker bees.

Today I will outline a few simple and concrete ideas that aim to help employees gain a better foothold on their career, strengthen their likelihood of maintaining employment — and income, and even creating the possibility of a raise or bonus.

Being able to impress your boss by standing out in a crowd is one surefire way to achieve job security. Just like any other worthwhile goal, it won’t be easy, but it will be rewarding.

Ask how you can improve

When was the last time you considered approaching your boss to ask how you can improve? I suggest asking him/her to answer the following questions in an effort to help you support him and his company more effectively:

• Please list the top three things that I do well. It’s important to be aware of the things you are already doing well, so you can continue to do those things.
• Please list the top three ways in which I could improve. Being able to take constructive criticism properly is a true mark of a good employee.
• Please share one short-term and one long-term company goal. This will help you to fix your gaze upon the goals of your employer, and will provide valuable insight into what the company’s strategic plan is going forward.

Align your goals

You cannot sustain a successful career if you don’t believe in what you’re doing. Likewise, you’ll be much more successful if you’re on board with your employer’s goals. If you’re not on the same page, then maybe it’s high time you re-evaluate your position and consider a new company or career. Otherwise, jump on the company train and don’t look back!

• Use the feedback you’ve received. Take the answers your employer gave to your goal questions and develop a few concrete things you can do each day to promote and help reach these goals.
• Formulate your own short-term and long-term goals. I liken corporate goal setting to running a relay race – the team is only as strong as their weakest link. DO NOT be that weakest link. Instead, strive to be the strongest link! Your efforts will not go unnoticed!

Put yourself in your employer’s shoes

If you were running the company, how would you want the person in your position to behave/perform? This is a very powerful concept that, when properly employed, will always yield the peaceable fruits of success and improved relations.

Be painfully aware of these “boss pet peeves” that breakdown the relationship between you and your boss on a daily basis:

• Don’t fake sick days. If you’re legitimately sick, then by all means… Use your sick time, that’s what it’s for. But do not abuse this benefit. Better yet… If you’ve been out sick, provide your employer with a doctor’s note. This will put the issue to rest for good and will build trust between you and your boss.
• Always be punctual. When I hire people, this is one of my big concerns. I don’t want to worry that you might be late, or wonder if you’ll show up at all. If you have trouble being on time, change your targeted arrival time by 15 minutes so you’ll have some leeway.
• Don’t make excuses. Excuses are like belly buttons… Everybody has one! How would you feel if you were affected by a co-workers poor performance only to have them come back with a pile of excuses. Let’s be honest, nobody likes being put in this position, so don’t be that guy!
• Don’t just go through the motions. One of the single most useful pieces of advice I can give is to under-promise and over-deliver! Don’t just do the bare minimum. Go the extra mile. If you’re continually surpassing the expectations of your superiors, it’s only a matter of time before a bonus or raise will come your way.

Another good strategy is to identify daily frustrations that your boss has to deal with and then go out of your way to not only avoid them, but to prevent them. This will REALLY put you in good graces of the people that sign your paycheck. Beyond this, you’ll feel better about yourself as your performance improves.

What about you?

I think it’s safe to say that we have all been the “bad employee” at least once or twice. So why not take this opportunity to shed any bad habits that you’ve picked up and start building the simple foundations of success that I’ve outlined above. How do you set yourself apart? What are you doing to build credibility with you employer?

Follow me on Twitter!

---
Related Articles at fivecentnickel.com:

» Avoid Lifestyle Inflation: Create an Artificial Sense of Scarcity
» Ratcheting up our Roth IRA Contributions
» Money Moves for 2006, Part 3: Your Job
» National Tax Advice Day
» The Least Safe Cars of 2006
» My Best and Worst Money Moves
» The Bogleheads’ Book Project, Chapter Two
» Money Poll #9: Retirement Savings Rate

This is a guest post from Bob of ChristianPF. If you like what you see here, please consider subscribing to his RSS feed.

I’m currently reading “Your Money or Your Life,” a true personal finance classic. As great as it is, however, I won’t be reviewing it here. Instead, I wanted to share their take on calculating your real hourly wage.

While calculating your hourly wage might seem straightforward, it’s a lot more complex that simply saying, “I make $400 a week and work 40 hours, therefore I make $10/hour.”

When you factor in all the additional expenses associated with your job (some of which may not be obvious), you begin to see the value in this calculation. In my case, my old corporate gig paid a reasonable wage, but when I added up all the additional time spent and expenses required, it really didn’t pay that well.

Adding up the hours

In my case, I used to drive 18 miles to work each day, requiring an extra 60-90 minutes of drive time. The process of getting ready for work each morning required another half-an-hour.

My lunch time, while a break, was still time that I was not entirely “free” to do what I wanted. Since I was not paid for this time, it needs to be accounted for.

The book mentions some other hours that you might also want to consider…

• Decompression time: How long does it take you to get back into the swing of your “non-work” life each evening?
• Job-related illness: Factor in time lost due to illnesses resulting from the stresses of work, etc.

Adding up the costs

Expenses are the other part of the equation, as they reduce your effective take-home pay. While it can be hard to identify all of your work-related expenses, you can bet that it’s a lot more than gas money and parking. For example, wear-and-tear on your car is a very real expense that many people don’t factor into the equation.

Like many other people working in corporate America, I also had work clothes that I had to buy and keep looking nice every day. Even if I brought my lunch from home, I was limited to certain items based on the time and tools I had available to eat my lunch each day.

Now that I am blogging full-time, I’ve realized that I’m avoiding a lot of the expenses that I used to incur on a regular basis.

You can be as conservative or as liberal as you want with this equation, but the book has many more ideas…

• After a hard day, do you ever go out to dinner/dancing/the mall as a reward?
• Do you own a more expensive car/house/clothes/etc. than you otherwise would, in order to help sales or your career?
• Are there expenses that you are paying others to do that, if you had more time, you could do yourself? (e.g., gardening, repairs, cooking, cleaning, etc.)
• Are there foods that you buy because you’re too tired to cook dinner? Weight loss programs you enroll in because you’ve been too busy at work to lead a healthier life?
• Do you have escape entertainment or vacations you take part in that you wouldn’t if you didn’t have a stressful job?
• Are there childcare expenses that could be avoided without your job?
• Are there career-related books, seminars, videos, etc. you use and pay for out of your own pocket?

I think there should be a balance when adding up these costs. Don’t get carried away blaming everything on your job. Regardless, it’s always a good idea to re-evaluate each expense.

Why should you care?

Retirement

Calculating your real hourly wage is an extremely valuable exercise for people nearing retirement. It can be very eye-opening to see how many expenses could be avoided by simply NOT having a job. My hunch is that a lot of people would realize that they can survive on a much lower income if they looked closely.

Stay-at-home-spouse

Many parents want to stay home with their kids, and this exercise might make that decision easier. Is an effective wage of $3/hour worth having a job you don’t like and sending kids to daycare rather than being at home with them?

Career/employer change

I used to work with a woman who drove something like 60 miles to work each day. She didn’t really like her job, and ultimately realized that she could take a $6/ouhr paycut doing something she enjoyed and still come out ahead.

A lot of jobs, especially if you stay in the same industry, have similar expenses. After calculating your real hourly wage, however, you might just be willing to take a chance on that dream job you’ve always wanted.

What’s your real wage?

Have you ever run the numbers? If so, were you surprised by the outcome? Disappointed? Have you made any lifestyle changes as a result of what you learned?

Follow me on Twitter!

---
Related Articles at fivecentnickel.com:

» Money Math: Quick and Dirty Financial Equations
» Howard Stern is Underpaid
» The Federal Minimum Wage: Looking Back Over Time
» Late Monday Roundup – Guitar Hero Edition
» What are the FICA-HI and FICA-OASDI Taxes?
» Net Worth vs. Net Investable Assets
» UPS Holiday Shipping Projection
» Standard Mileage Rate Increases for 2007

According to a recent study out of Australia that was published in The Economic Record, taller men earn more money than their shorter brethren. In fact, a two inch height difference corresponds to an average income difference of nearly $1000/year.

The reason for the height effect remains unknown, but it’s been suggested that being tall boosts self-confidence, thereby making people more successful. Interestingly, while the authors initially set out to test whether or not overweight people are paid less, there was no corresponding effect of body mass index (BMI) on earning power.

Source: The Economic Times

Follow me on Twitter!

---
Related Articles at fivecentnickel.com:

» Money Saving Tip: Live Next Door to Someone Who’s Moving
» Size Matters: Thoughts on Product Packaging
» What is the Bid-Ask Spread?
» Five Frugal Shopping Tips
» Hotties Make the Big Bucks
» Tax Stimulus Rebate is Now Law
» Don’t Believe Everything that You Read
» Thanks For Your Support – December 2007

This is a guest post from Kevin Mercadante of Out of Your Rut. Kevin is also author of Lighten Your Load, an e-book focused on reducing living expenses while still maintaining a comfortable lifestyle.

If you lose your job, hear rumors of layoffs at your company, or pick up just about any other indication that you job may be in jeopardy, you’re gut reaction may be to launch a job search. While doing so makes sense, you should direct some of your efforts to other areas, as well. In fact, you may even want to do this if your job is “secure” (whatever that means nowadays).

The nature of employment is changing, and you need to adjust with those changes. Three areas which should be at the center of your efforts going forward are skills development, networking, and pursuing opportunities.

Skills development

One disadvantage to having the same job for a long period of time is that your skill set can get rusty. The longer you’re with one employer, the more likely you are to have skills that are of value to just that one company. If you lose your job, that custom skill set can become excess baggage.

Start by inventorying the skills you have, including those that have gotten a bit stale from lack of use, and work on getting yourself back up to speed with them. At a minimum, make sure that you know what you know.

It’s also important to add in new skills whenever possible. While we should all be doing this all the time, life sometimes gets in the way. In an economy such as the one we’re now in, however, you need to make learning new skills a top priority.

If you’re currently employed, try to arrange your schedule to create regular blocks of time for this sort of learning. If you’re already unemployed (or under-employed), this effort is worthy of equal time alongside your job search efforts.

What kind of skills you need to develop will depend largely on what field you work in, or would like to enter in the near future. Some common skills include public speaking, HTML/web design, accounting, customer relations, general business software (Excel, PowerPoint, etc.), industry specific software, foreign languages, repairs, web marketing, and interviewing skills. Start by picking one or two, work to master them, and then add more over time.

Fortunately there are all kinds of how-to programs available on the web as well as at the bookstore. You can engage in self-study with a book, software system, or web download. All of these are relatively inexpensive, and you can do them on your own time. For more challenging skills, consider taking a class as a local community college. An alternative approach would be to work a part-time job that will allow you to hone your skills while you’re getting paid.

Remember… You don’t necessarily have to be an expert — just having working knowledge in a particular area can shift the job selection process in your favor.

Networking

Most of us are pretty good at networking within our own field, but it pays to get outside your usual network. Being active in networks that aren’t directly related to your own field can give you access to new opportunities, especially since your skill set will be somewhat unique amongst your peers.

Fortunately, the internet has made networking in virtually any career or business area easier than ever. There are thousands of blogs and forums covering just about any industry, and a large number of these are very welcoming to outsiders. You should also consider joining local network groups and/or general business networks, as face-to-face networking can be even more effective than joining web groups.

When interacting with others, be prepared to share your story and let other know what you’re looking for; in sales, this is called “asking for the order.” Just remember that networking works both ways. Be sure to offer support and relevant leads to others. After all, the more value you can offer, the more value you’ll receive.

Pursuing opportunities

Consider dropping the word “job” from your vocabulary, and replacing it with “opportunity.” After all, that’s what you’re really looking for.

What’s the difference? A job is typically a full-time, fully-benefited source of permanent employment that represents a clearly defined place on a company organizational chart. This version of employment is gradually disappearing, a trend that was developing even before the recession.

Nowadays, many employers are scaling back their employee benefits, including 401(k) plans and company paid health insurance. Many other employers have switched to the heavy use of contract employees. With traditional jobs disappearing, it’s to your advantage to seek opportunities whenever and wherever you might find them.

Be open to contract work, even if you’ve never done it before. Likewise, consider part-time work, partnerships, affiliate arrangements, and temporary situations. None of those are jobs per se, but all provide you with an opportunity to earn income, learn new skills, and develop valuable new contacts.

You might also consider the possibility of balancing two or more opportunities. For example, a contract arrangement combined with a credible business venture might get you back to the level of pay you’ve had in the past, even though you haven’t been able to find an equivalent job in your field.

Follow me on Twitter!

---
Related Articles at fivecentnickel.com:

» How to be Sure Your Money is FDIC Insured
» HSBC Drops APY, FNBO Direct and WaMu Hold Steady
» Online Savings Account Rate Changes
» The Recent History of Bank Failures
» WaMu Drops Interest Rate, Alternatives Abound
» FNBO Direct Review and Account Opening Process
» Can You Trust Bankrate’s Bank Safety Ratings?
» Bank Failures: Two More Just Bit the Dust

In early 2009, the Bureau of Labor Statistics noted that over 40 states recorded an increase over last year in the number of layoffs. In February alone over 600,000 workers were caught up in layoffs. If you and your family have found yourself in this position, here are some steps to help you cope with this painful change.

1. Don’t panic — assess where you stand

When you lose your job, you should try to remain as calm as you can and see exactly what the situation is. Ask yourself:

• How much money do we have in the bank?
• How much are our monthly bills?
• How much am I receiving for severance?
• What do we need to modify in the budget?

2. Update your friends and family about the situation

You may feel embarrassed or ashamed by what happened. Do not let that negative thinking stop you from getting emotional support. Ask your network to please keep their eyes and ears open for any employment opportunities that they might hear about.

You should also ask your family to help you come up with ideas to earn extra money and/or decrease your expenses. Having everyone on the same page will allow you to work through this challenge together as a family.

3. Open your mind to different jobs

You need to cast a wide net, so don’t just look for jobs exactly like your last one. Being too focused on one particular job may decrease your chances of finding work. You might also consider taking on part-time work to keep you from hemorrhaging financially. Until you find a suitable job, working part time can generate income and provide you with a schedule that allows you to go on job interviews.

4. Update your budget

At this point you should try to focus on cutting any nonessential expense from your budget. Living within your means is going to be tougher as you make this transition. Update your budget with the new income amount and see where you can adjust accordingly.

If you can’t pay all your bills, then prioritize where your money goes. First and foremost, your money should go to housing and food. Utilities such as electricity are also important so focus on those next. You should also give priority to medical bills and expenses when updating your budget.

5. Stay away from credit cards

You might be tempted to put your expenses on a credit card until you can find a job. Don’t do it. Credit cards should be a last resort. Instead, see if you qualify for any sort of government assistance to help make ends meet.

This could mean filing for unemployment or applying for state insurance. Remember, this is only temporary — you’ll eventually get out of this predicament. Relying on credit cards can put you in an even deeper hold given the high interest rates and fees associated with them.

Now it’s your turn…

Losing a job can be a very painful experience, especially if you have a family. Remember, you can’t do this alone. Rather, you should seek the help of others when getting back on your feet.

Do you have any tips for dealing with job loss? What’s the most important step?

Follow me on Twitter!

---
Related Articles at fivecentnickel.com:

» Playing the Percentages: The Effect of Gains and Losses
» Carnivals – Week of 10/08/07
» Weekly Roundup – Festivus Edition
» Use Weight Loss Strategies to Get Out of Debt
» Xbox 360 Followup
» Five Tips for Fighting an Audit
» Carnivals – Week of 04/07/08
» Happy 4th of July!

This is a guest post from WC of The Writer’s Coin. If you like what you see here, please consider subscribing to his RSS feed.

I don’t know why, but I’ve been getting free issues of a magazine called Time Out Chicago for the past few weeks. It sums up what’s going on in the city, things to do, good deals to be had, and other stuff.

This week, the cover feature was “Make Money: 44 Ways to Score Cash Fast.” I figured I’d thumb through it and find a bunch of tried and true tips for earning extra money, or maybe some money saving ideas — the kinds of things that you see on personal finance blogs all over the ‘net.

Instead, I found some ideas that I had never heard of before, and I wanted to highlight them here. Some are wacky, some are kinky, and some are downright ridiculous. But who knows, if these people are doing it, maybe you can too:

• Polish your acting skills. Head to the hospital and pretend that you have a ruptured spleen or a busted johnson (my personal favorite). Hey, Kramer did it on Seinfeld, and all he had to do was get gonorrhea. $14–$35/hour.
• Sell your underwear on online. Hey, if people are willing to buy chewed-up gum and potato chips that look like the Virgin Mary, why not panties? $15 apiece.
• Sex talk. Phone sex operators can make some pretty good money and all you need is a landline and your imagination. This reminds me of poor Adam Sandler in Punch Drunk Love… Scamming potential clients would probably be more lucrative. $9–$20/hour.
• Take off your pants and jacket. Donating sperm is still in vogue, and can net you $25 per deposit. For the ladies: you can donate your eggs for $7,000–$10,000… But you’ll have to go under for it. Scary.
• Sell plasma. Giving blood is always fun, but at $20–$30 for two hours, I don’t know if it’s worth it. Plus the needles and the blood…
• Be a script writer. This one appealed to me because I’m a writer, but this is simply transcribing stuff. If you can type and have your own equipment (a PC should suffice) then you can rake in $16–$20/hour. The pros can charge from $110–$165, so make sure you underbid them.
• Special delivery. One guy runs a site called The Kinky Llama, and he delivers sex products on his bike. Anywhere, anytime. Sound crazy? He probably is, but he makes about $1,500/week. Not bad… Let’s hope he doesn’t drop his cargo all over the street though — it could be scary.
• Get hitched. Marrying for money has a price tag, and apparently it’s between $5,000 and $50,000. Of course, you have to go through all the hassle, and maybe even kiss the person to convince the authorities, but if you’re desperate I guess it’s an option.
• Get naked. This is probably the easiest tip of all. Nude models just have to stand there and hold a pose while ersatz painters ogle them. You can make $15/hour, but I don’t know if I could stand still long enough to make it worth my while. At least it would motivate me to go to the gym more often.

I’m curious how many people out there would actually try out these tips. If you’re interested in any of them, just do a little research and I’m sure you’ll find something similar in your area. If you do, then be sure to come back and tell us how it went… As long as it isn’t too embarrassing.

Follow me on Twitter!

---
Related Articles at fivecentnickel.com:

» How Much Should You Pay a Babysitter?
» Weekly Roundup – 02/02/07
» Make Extra Money With CashCrate
» Save Money by Renting Out a Room
» Earn Interest on Your PayPal Balance
» HSBC Direct is Trying to Attract New Money
» The Best Dollar(s) that I’ve Ever Spent
» A Penny Saved is Two Pennies Earned

With all of the layoffs that are currently taking place, I thought I’d spend a few minutes talking about whether or not unemployment benefits are taxable. In short, they are. Because unemployment payments are technically classified as income, you have to pay income tax on them. Sucks, huh?

Here’s the answer straight from the IRS (see Topic 418 for more details):

Unemployment compensation is includible in gross income. You must report unemployment compensation on line 19 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040EZ.

If you receive unemployment at some point during the year, you should received Form 1099-G showing how much you were paid. Oh, and if you don’t make a “voluntary withholding request,” you might have to make estimated quarterly tax payments to avoid an underwithholding.

Follow me on Twitter!

---
Related Articles at fivecentnickel.com:

» Have You Filed Your Taxes Yet?
» Making Every Dollar Count at Tax Time
» Congress Extends $8000 Homebuyer Tax Credit, Adds New $6500 Credit
» New Economic Stimulus Package Delayed
» Do You Need Disability Insurance?
» Taxpayer Benefits in the Economic Stimulus Package
» Thoughts on Long Term Disability Insurance
» Avoiding the Gift Tax via Direct Tuition or Medical Payments

Did you know that a layoff could jeopardize the funds in your flexible spending account (FSA)? In most cases, when an employee is let go, they are claim reimbursement for qualified medical expenses that are incurred while they’re still covered by their employer’s benefits plan. But once that expires, you may be out of luck.

Given that benefits coverage often ends at the end of the month during which the layoff occurs, you might have to act quickly. Alternatively, you may be able to extend your health coverage under the Consolidated Omnibus Reconciliation Act of 1985 (commonly referred to as COBRA coverage) which should extend your FSA eligibility.

On the flip side, you’re allowed to spend money out of your FSA faster than you put it in. Thus, you may have a negative balance in your FSA upon termination. While it’s possible that your (former) employer will ask for reimbursement of the overage, we’ve discussed this here before, and it’s not clear that you have to comply.

Follow me on Twitter!

---
Related Articles at fivecentnickel.com:

» Flexible Spending Account Maxed out for 2006
» Flexible Spending Closed out at a Profit
» Flexible Spending Account Spent Out for 2007
» Creative Use of Your Flexible Spending Account
» Flexible Spending Accounts Under Attack?
» Open Enrollment and our Flexible Spending Account
» Flexible Spending Account Improvements
» Help a Reader: Flexible Spending Account (FSA) Overspending

We’ve all heard it a million times before… The key to getting ahead is to live below your means. It’s so simple. In fact, even our eight year old knows how to become a millionaire. So why is it so to spend less than you earn? I think that a big part of the problem is that spending less money isn’t much fun. But guess what? There’s another side to the equation. With that in mind, I thought I’d compile a list of ideas for earning extra money.

Earn more money from your current job…

A logical place to start when trying to improve your lot in life is to focus on your current line of work. Here are three different ways to get more from your job:

• Ask for a raise. One of the easiest ways to earn extra money is to get more for what you’re already doing. With that in mind, you should work to excel in your work, build a case, and then ask for a raise.
• Position yourself for a promotion. Another great way to earn more from your work is to get promoted to a higher paying position. Do whatever you can to excel. Go above and beyond the call of duty around the workplace and consider taking advantage of any training opportunities that you can find.
• Find a new job. A great way to increase your earning power is to get a job offer. Even if it’s a lateral move, and especially if it’s not, switching jobs is a great way to increase your salary.

Unfortunately, now that the economy is in the crapper, it’s probably not the best time to ask for a raise, push for a promotion, or angle for a new job. While it can’t hurt to try, you may need to look elsewhere in hopes of generating extra income.

Earn extra money on the side…

There’s an almost infinite number of ways to generate a bit of extra cash. Whether it’s picking up a second job, doing odd jobs around the neighborhood, or selling stuff, you’re really only limited by your time and imagination. Here are 30 33 more ideas for earning extra money on the side.

• Get a second job. While the job market is tight and getting tighter, picking up a second job is a surefire way to earn extra money.
• Take on a paper route. Paper routes aren’t just for kids anymore, and you can usually knock it out during the pre-dawn hours, so it doesn’t interfere with work.
• Deliver phone books. Over the weekend, we got the latest edition of “The Real Yellow Pages” delivered to our doorstep. You won’t get rich, but it’s not particularly difficult, and you can do it on your own time.
• Do yardwork/lawncare. More and more people are outsourcing their lawncare. Why not get a piece of the action? You can make a few bucks and get some exercise all at once.
• Shovel (or plow) snow. For those in cold climates, you can make good money removing snow. Here again, you can also get some good exercise. Sure, snowfall isn’t as predictable as grass growth, but it’s a great alternative during the winter months.
• Clean homes or offices. Just like lawncare and snow removal, there are a ton of people out there looking for help around the house.
• Do tax prep on the side. Companies like H&R Block are always looking for temp employees during tax season. Thanks to Miss m for the tip.
• Become a golf caddy. Sure, this is a job that is often done by teenagers, but there can be good cash in it.
• Start babysitting. Babysitting can be quite lucrative — check out how much people pay babysitters — and it’s also very flexible.
• Start pet-sitting. I know from personal experience that there’s good money in pet sitting… Whenever we travel we need to find someone to board our bearded dragon (seriously), and we always spend way more than we should.
• Become a tutor. Do you live near a high school or college? Are there any subjects that you’re particularly good at? If so, then consider tutoring in your spare time.
• Teach a language. For those that are fortunate enough to be fluent in a second language, you can make money teaching it to others. In some cases, people will even pay to chat over coffee with a “conversational partner” who is fluent in that language they’re learning.
• Become a substitute teacher. Depending on your educational background, this can be a good source of cash, especially for at-home moms that want to get back into the work force, but want hours that accommodate their kids.
• Become an ump/ref for a local sports league. Around here, sports leagues are always looking for competent refs. Games are usually scheduled around business hours, and it pays pretty well.
• Do freelance web design. If you have the skills, there are a number of online resources for finding web design gigs. If that doesn’t work, pound the pavement in your community. A lot of small companies don’t have much of a web presence, and could use your help.
• Do some freelance writing. As is the case for web design, there are a number of online resources for finding writing gigs. Dig around a bit and see if you can find anything that suits your interests.
• Start a weblog in a lucrative niche. This site is a prime example of the fact that you can make money blogging. It’s not easy, but it can definitely be done.
• Become a mystery shopper. Here again, there’s tons of info on online, and there are even books about it.
• Get paid to take online surveys. There are a number of reputable companies that pay people to take surveys online. While they’re not always accepting new members, you should check out Pinecone Research.
• Participate in marketing focus groups. I actually did this a bit as a kid because we lived near a toy/game company. Thanks to Ashley for the tip.
• Get paid to signup for trial offers. Sites like Cash Crate pay you to sign up for free trials — you can always cancel them so it’s truly free cash.
• Maximize your credit card rewards. As long as you keep a lid on your spending, reward credit cards are a great way of generating a bit of spare cash on everyday expenditures.
• Take advantage of signup bonuses. You can easily snag signup bonuses ranging from $25-$250 when you apply for a credit card or open a bank or brokerage account.
• Play the 0% balance transfer game. Simply sign up for one or more 0% balance transfer credit cards and profit by plunking the proceeds in an high-yield savings account while you make the minimum payments.
• Make the most of the money that you already have. Move your money to a high-yield online savings account or build a CD ladder in order to maximize your interest earnings.
• Sell extra stuff from around the house. Clearing our extra stuff is not only a great way to make a bit of money, it’s also very cathartic. If you’re interested, be sure to check out my list of garage sale tips as well as my tips for selling stuff on eBay.
• Sell your used textbooks. There are a number of sites online that will buy your books back from you directly. Thanks to Nick for the tip.
• Take and sell digital photos. If you have a knack for photography, you might be able to generate some side income by selling stock photos.
• Make and sell crafts. Here again, if you have a knack for it, you can make generate some income on the side by making and selling crafts — either at local shows or on eBay.
• Sell craft designs. Instead of making the crafts yourself, why not work up some nice plans and sell those instead?
• “Donate” (i.e., sell) plasma. When I was in college, a popular way to get beer money in certain circles was to sell plasma. It’s not really my thing, but it’s a viable option if you need cash in a pinch.
• Collect and recycle aluminum cans for cash. While there’s not a huge amount of money in this, it’s a pretty easy thing to do, and it cleans up the environment. This is the very definition of a win-win.
• Sell ad space on your car. Depending on your location, the make and model of your car, and your daily commute, you can actually make a decent amount of money by letting an advertising agency “wrap” your car with advertisements.
• Rent out a spare room. Got an extra room in your house/apartment? Consider renting it out. You’ll not only defray your rent, but you’ll also be able to recoup a part of your utility costs.

If you have any ideas of your own, please leave a comment.

Follow me on Twitter!

---
Related Articles at fivecentnickel.com:

» How Much Should You Pay a Babysitter?
» Make Extra Money With CashCrate
» Save Money by Renting Out a Room
» Unorthodox Ways to Earn Extra Money
» Homemade Christmas Gifts: 18 Do-it Yourself Ideas
» Five Tips for Dealing With Job Loss
» Welcome to FiveCentNickel…
» Navigating the Recession

Wow. November’s (un)employment numbers are now out, and they’re considerably worse than expected. Employers cut 533k jobs during the month, compared to the expectation of 320k. This is the largest monthly decrease in 34 years. Apparently the numbers would have been even worse, but 422k people left the workforce. Jobs losses were the worst in factories, construction, finance, retailers, and the leisure/hospitality industry. Sprinkled amongst the bad news were job gains in a handful of apparently recession-proof careers, including positions in the government, education, and health services.

Source: Yahoo! News

Follow me on Twitter!

---
Related Articles at fivecentnickel.com:

» Are Unemployment Payments Taxable?
» One Year Ago This Week (November 5th – November 11th)
» Ten Most Reliable Cars
» Congress Extends $8000 Homebuyer Tax Credit, Adds New $6500 Credit
» From the Archives (November 4th – November 17th)
» Expensive Hotels and Costly Internet Access
» New Economic Stimulus Package Delayed
» Taxpayer Benefits in the Economic Stimulus Package

Given that the economy is now officially in a recession (whoulda thunk it?), I though it would be worth talking a bit about recession-proof careers. I’ve written in the past about this topic, but I actually just ran across another article on the topic, and decided to highlight it here.

Health Care

The health care industry is expanding rapidly as our population ages. Jobs with particularly stable prospects include doctors, nurses, pharmacists, physical therapists, and physician’s assistants. For those without a 4-year degree,

Education

Teachers in high-demand fields such as math, science, or bilingual education should have a relatively easy time finding and keeping a job, especially in high-growth areas of the country. College enrollment is also on the rise, which is good news for college instructors.

Security

Layoffs in this industry are rare, meaning that police officers, detectives, private security guards, and other types of security workers have very stable job prospects. And even if you do lose your job in one of these areas, it will be relatively easy to find a new position regardless of the economic climate.

Environmental Sciences

The Bureau of Labor Statistics expects opportunities in environmental careers, including positions for ecologists, hydrologists, and environmental chemists, to grow 25% over the next decade, well ahead of the average for other fields.

Government

Firings and layoffs are much rarer in the federal government that in other sectors of the job market. Even when the economy hits the skids, the government doesn’t typically downsize.

Other Options

For those without a four-year degree, look for jobs that can’t easily be outsourced. In the health care industry, jobs as a health aid, or medical or dental assistant are solid bets. Becoming an electrician or mechanic are also solid choices.

Source: Kiplinger.com

Follow me on Twitter!

---
Related Articles at fivecentnickel.com:

» Unemployment Jumps, Worst Month in 34 Years
» U.S. Economy Officially in Recession
» Best Jobs in a Bad Economy: Recession-Proof Careers
» Carnivals – Week of 04/28/08
» When Will the Recession End?
» Greenspan Speaks: U.S. Economy in a Recession
» The Top (and Bottom) Jobs in the US
» The Recession is… Over?

The federal minimum wage was first enacted under Franklin Roosevelt in 1938. At that time, the minimum acceptable pay rate was set at $0.25/hour, though it’s increased gradually over the years. In fact, just yesterday the federal minimum wage increased by $0.70, from $5.85/hour to $6.55/hour. As it turns out, however, just over half of all states were unaffected by this change since they already have state minimum wages in excess of the federal level.

While this increase in the minimum wage was a welcome change to some, other have argued that it’s not enough, and still others have argued that the government shouldn’t be setting the price of labor in the first place. Given the controversy, I thought that it would be interesting to look at minimum wage levels over the years to see how much things have really changed.

What follows is a graph of the federal minimum wage from 1938-2008, expressed both in terms of actual dollars and inflation-adjusted 2008 dollars*.

As you can see, while the minimum wage has increased just over 26-fold since its inception, actual buying power has fluctuated considerably over time. The real-world value of the minimum wage (expressed in 2008 dollars) peaked at $10.06/hour in 1968, and has been gradually tailing off in the years since then. That being said, it’s still hasn’t reached the levels seen back in the 1930s and 1940s.

As an aside, you can really see the insidious effects of inflation right around 1980, when actual wages were increasing every year, yet buying power was falling at the same time.

Another interesting way to look at these data is in the context of projected annual incomes vs. the federal poverty level. What follows is a graph of the annual income of an individual working full-time (2080 hours/year), again expressed in 2008 dollars. The dashed line reflects the 2008 poverty level for a family of three (e.g., a single parent with two kids).

As you can see, the full-time income of a minimum wage worker eclipsed the current poverty level back in the early 1960s and hung on until the late 1970s, at which time it went into a prolonged slide.

So… There you have it. A brief history of the minimum wage. As always, please feel free to share you thoughts on these data, or the minimum wage in general, in the comments section.

*Inflation adjustments were done using this CPI calculator.

Follow me on Twitter!

---
Related Articles at fivecentnickel.com:

» Weekly Roundup – 03/10/06
» Money Math: Quick and Dirty Financial Equations
» Weekly Roundup – 08/04/06
» Calculating Your Real Hourly Wage
» What are the FICA-HI and FICA-OASDI Taxes?
» Weekly Roundup – You Can’t Go Home Again Edition
» Congress Passes Temporary Fix for the Alternative Minimum Tax
» My First Encounter with the Alternative Minimum Tax (AMT)

While we haven’t officially in a recession, we’re still standing on pretty shaky economic ground. As such, I thought I’d post a recent list of the best careers to have in a recession from Money Magazine. In general terms, this list reflects the careers with the best combination of pay and expected growth rate over the next decade.

1. Financial adviser – 47% growth rate – $74,000 median income
2. Software program manager – 29% growth rate – $103,000 median income
3. Database administrator – 29% growth rate – $77,000 median income
4. Physical therapist – 27% growth rate – $67,000 median income
5. Physician’s assistant – 25% growth rate – $84,000 median income
6. Environmental specialist – 25% growth rate – $53,000 median income
7. Hydrologist – 24% growth rate – $59,600 median income
8. College professor – 23% growth rate – $79,000 median income
9. Certified public accountant – 18% growth rate – $64,000 median income
10. Teacher – 12% growth rate – $48,000 median income

Looking at the list, it’s largely comprised of white collar service-type postitions, presumably in response to a growing (and aging) population. Honestly, I was a bit surprised that there weren’t more medical professions on the list — what about doctors and/or registered nurses? I would think that those that specialize in non-elective procedures would fare quite well in an economic downturn. Yes, they’re getting squeezed by insurance companies, but people aren’t going to stop needing medical care.

Follow me on Twitter!

---
Related Articles at fivecentnickel.com:

» Unemployment Jumps, Worst Month in 34 Years
» U.S. Economy Officially in Recession
» Recession-Proof Careers
» Carnivals – Week of 04/28/08
» Greenspan Speaks: U.S. Economy in a Recession
» When Will the Recession End?
» Weekend Roundup – Concept2 Edition
» The Top (and Bottom) Jobs in the US

I received the following question regarding flexible spending accounts (FSAs) from a reader the other day:

“My employer is asking me to sign a form to reimburse them for FSA funds distributed but not yet set aside (I’m leaving before the plan year ends). I have refused. Is there a regulation that states I do not have to repay them?”

I’ve written about this general topic several times in the past. In fact, twice in my life I’ve left a job having spent out my full FSA allotment by mid-year, and I walked away with the difference in my pocket. At first I felt like I was doing something wrong, but I later learned more about how FSAs works…

In case you’re not aware, FSAs are a use-it-or-lose-it proposition. In other words, that you lose your unspent funds at the end of the year. Well, guess who gets to keep that money? Your employer. So before you lose too much sleep over coming out on the ‘winning’ side of equation, keep in mind that your employer is likely offsetting those losses by pocketing a ton of money from underutilized FSAs. It’s far from a perfect system, but it is what it is.

Now, setting aside the issue of whether it’s right or wrong to keep the money…

Can an employer can legally compel an employee to give this money back?

I’m not sure, but I thought that one of you might happen to know.

Beyond the issues of legality and right vs. wrong, however, you also need to consider the value of that money relative to the value of your relationship with your former employer.

If your employer asks for this money back, is it worth burning bridges to keep those funds?

If either of my former employers had asked for the money back, I’m sure I would’ve given it to them. But they were dealing with tens of thousands of employees, and they just seemed to consider it the cost of doing business. In fact, had I decided to pay it back on my own, I wouldn’t have had a clue where to start (though I must admit I never asked).

Follow me on Twitter!

---
Related Articles at fivecentnickel.com:

» Your Flexible Spending Account (FSA) After a Layoff
» Flexible Spending Account Maxed out for 2006
» Flexible Spending Closed out at a Profit
» Flexible Spending Account Spent Out for 2007
» Creative Use of Your Flexible Spending Account
» Flexible Spending Accounts Under Attack?
» Open Enrollment and our Flexible Spending Account
» Flexible Spending Account Improvements

I’ve always subscribed to the notion that you should insure that which you cannot afford. Thus, we’ve been very good about doing things like keeping our life insurance coverage up to date and otherwise protecting our assets. Recently, however, I’ve been thinking more and more about long term disability (LTD) insurance as I’m concerned that we don’t have enough.

First, a bit of backstory… We have four young children, and my wife stays at home with them. Thus, I’m currently the sole source of financial support for our family. I have decent LTD coverage through work, but it really wouldn’t be enough to comfortably support us if I were disabled for a long period of time…

There’s a 60 day waiting, at which point the LTD coverage kicks in and replaces up to 60% of my salary. So if I’m not eligible for Social Security disability payments, the insurance will pay 60% of my income. But if I am eligible for other benefits, the insurance will top us off to provide a total of 60% income replacement.

The good thing about about this coverage is that it’s cheap, and it’s a good start. The bad thing is that it, like I said above, I’m the sole source of financial support for our family, and this coverage would leave us well short of a comfortable lifestyle if I were out of commission for an extended period of time. Moreover, it only applies to my “regular” income, and thus wouldn’t help make up the additional shortfall if my self-employment were adversely impacted.

So… I’m in the market for a supplemental LTD policy. Unfortunately, I know very little about what to look for, how much I can expect to pay, etc. Thus, this will be a major learning experience for me.

One interesting tidbit that I’ve run across thus far is that, because my employer-provided LTD is paid out of pre-tax dollars, the LTD income replacement will be taxable (further diminishing the value of 60% income replacement). In contrast, private policies are paid out of your pocket (with post-tax dollars) and the benefits are typically tax free.

Follow me on Twitter!

---
Related Articles at fivecentnickel.com:

» Do You Need Disability Insurance?
» Tips for Buying a Long Term Disability (LTD) Insurance Policy
» Ten Simple Ways to Cover Your Ass(ets)
» Open Enrollment and our Flexible Spending Account
» 2008 Resolutions: Are You Still on Track With Your Goals?
» Buying Term Life Insurance, Part II
» Buying Term Life Insurance, Part IV
» Buying Term Life Insurance, Part V (Epilogue)

Unless you live in a cave (and maybe even then), you know that your credit score is incredibly important when it comes to securing credit. But did you know that it’s also used for much more than that? What follows is a list of five other areas of your life that can potentially be impacted by your credit score…

1. Renting property – Many (if not most) landlords now run credit checks on prospective tenants. Think about it… They’re essentially giving you a credit line when you sign a year long lease, but are allowed to pay it off in monthly installments. In many cases, bad credit = no apartment (or house, or whatever).

2. Cell phones – Cell phone companies typically check your credit before signing you up for service. Here again, they’re essentially extending you a credit line and they want to be sure you’re good for the money. Not only are they concerned that you might rack up a bunch of airtime charges and be unable to pay for them, but they’re also letting you walk out the door with a shiny new handset at a (sometimes steep) discount. They want to be sure that you’re good for the standard monthly charges. Crappy credit might result in you being shunted over to a pay-as-you-go plan, and the hardware deals might not be as good.

3. Future credit card agreement changes – It’s not uncommon for credit issuer to run routine credit checks (so-called ’soft pulls’, which don’t show up as credit inquiries on your credit report) on existing customers. If your credit score takes a nosedive, you represent a bigger risk, and they might change the terms of your agreement (e.g., increase your interest rate) to reflect that.

4. Car insurance – Car insurance issuers are increasingly looking at credit scores as a way to gauge risk. If you’re reckless in one area of your life, you might not be a good bet in other areas. This can result in higher premiums, or they might simply decide not to cover you.

5. Employment opportunities – I’ve never experienced this one first hand, but I’ve heard that it’s increasingly common for employers to include a credit check when looking into the background of prospective employees. In short, they’re looking to see if you’re responsible. Credit reports also provide an employment history. Of course, they can only do this with your permission, so hopefully you read all of that paperwork that they give you when you apply before signing anything. Then again, if you decline they’ll more than likely show you the door.

If you want to check your FICO score, you can use this myFICO discount code to save 20%, or you can get a free credit score from FreeCreditReport.com.

Follow me on Twitter!

---
Related Articles at fivecentnickel.com:

» Another Reason to Value Your Credit Score
» Yet Another Reason to Value Your Credit Score
» Do You Care About Your Credit Score?
» Carnivals – Week of 09/23/07
» Capital One – Intentionally Harming Credit Scores?
» MyFICO ScoreWatch: Free Access to Your FICO Credit Score
» Five Ways to Get Your Credit Report for Free
» How is Your FICO Credit Score Determined?

This article is a guest blogger submission written by ‘frugal’ and first published at 1stMillionAt33. If you like what you see, why not subscribe to his RSS feed?

I am not sure how many people pay attention to the physical location of their workplace, but in the long run, the geographic location often exerts an effect on your money. As a general rule, salaries are lower at places where living expenses are lower. There seems to be zero advantage to living in bigger cities with all the traffic jams and polluted air when all of your additional earnings simply go to taxes and higher expenses. However, zero advantage is only true if you rent, and also if you cannot save any money. In other circumstances however, higher earnings with higher expenses is advantageous for the following reasons:

1. If you are able to make quality of life sacrifices, you will be able to save more money simply because the total amount of your expenses is bigger in cities rather than in countryside. Cutting 10% out of a $2000 budget is $200 while cutting 10% out of a $1000 budget is only $100.

2. If you are able to buy a home (in a normal housing market, where the mortgage payment is closer to the prevailing rent), all of your higher rent money now goes into paying off your home. Now at the end of the 30 year mortgage term, instead of paying off a $250K home, you pay off a $500K home instead. Your networth in housing assets over a 30 year period is now twice as what it would be.

3. In a big city, there are other side financial benefits in terms of more career and networking opportunities besides your regular job. And if your wife works, she can also have better job opportunities.

Here are a couple of circumstances that it will work against you instead of for you:

1. It is financially worse to live in a bigger city when you are already running up your debt month after month. Why? Same reason. Instead of running up $100 debt in smaller cities, you will run up $200 debt instead.

2. Buying homes at the height of bubble will hurt you more because the absolute number is bigger. Especially when you cannot make the mortgage payment, you will lose a bigger amount of down payment (if there is any) that you put into the house purchase.

Finally, one of the biggest advantage of living in a big city is that usually you can move to a cheaper city while maintaining the same living standard, but not vice versa. Knowing this, you can work in a big city when you are young, and retire to the countryside when you are old. The money that you saved will go much further in countryside for your retirement. Your wealth will actually increases after the move, even though the amount of your money doesn’t change. And the wealth effect is much bigger if you are willing to consider international moves.

Of course, money is not always the first priority. But if you are able to tolerate city life, and are willing to make some sacrifices to save more money for later, taking a job in a bigger-pay-bigger-expense city is probably good for your money in the long run.

Follow me on Twitter!

---
Related Articles at fivecentnickel.com:

» From the Archives (June 17th – June 23rd)
» The Foreclosure Crisis, Revisited
» Online Cost-of-Living Calculators
» Middle-Class Millionaires?
» TurboTax and Quicken Giveaway
» links for 2007-01-22
» The Foreclosure Crisis: Location, Location, Location
» Weekly Roundup – 10/20/06

Based on the results of a recent survey, millions of Brits go to work drunk (or get drunk while they’re there, I guess). More specifically, one in six Brits admit to having been “under the influence of alcohol at work in the last six months.” And to think that the World Cup hasn’t even started yet!

[Source: The Register]

Follow me on Twitter!

---
Related Articles at fivecentnickel.com:

» From the Archives (May 27th – June 2nd)
» From the Archives (May 4th – May 31st)
» Weekly Roundup – 07/07/06
» The Salary Theorem
» UPS Holiday Shipping Projection
» The Future of Retirement?
» Unorthodox Ways to Earn Extra Money
» Wasting Time at Work

The other day I wrote a bit about the home office tax deduction, and today I thought I’d expand on it a bit by talking about ‘regular and exclusive’ usage, as well as how you can substantiate your claim to the IRS…

What constitutes regular and exclusive usage?

Regular use. The IRS doesn’t offer a clear definition of regular use — only that you must use a part of your home for business on a continuing basis, not just for occasional or incidental business. You can probably meet this test by working a couple of days a week from home, or a few hours each day.

Exclusive use. Exclusive use means that you use a portion of your home only for business. If you use a room of your home for your business and also for personal purposes, you don’t meet the exclusive use test. However, you can set aside a portion of a larger room to be used only for business, as long as your personal activities don’t stray into it.

How do I substantiate my claim?

Be ready to prove to the IRS that you are entitled to take the home office deduction. Here are some steps you can take to help establish your legal right to deduct home office expenses:

– Photograph your home office and draw a diagram showing the location of the office in your home. Keep this information in your tax folder.
– Have your business mail sent to your home.
– Use your home address on your business cards and stationery and in all business ads.
– Get a separate phone line for the business.
– Have clients or customers visit your home office and keep a log of those visits.
– Keep track of the time you spend working at home.

[Source: Nolo.com]

Follow me on Twitter!

---
Related Articles at fivecentnickel.com:

» The Home Office Tax Deduction
» The Best of FCN — Selections from 05/06
» From the Archives (May 20th – May 26th)
» Carnivals – Week of 07/24/06
» Carnivals – Week of 05/29/06
» From the Archives (May 27th – June 2nd)
» From the Archives (May 4th – May 31st)
» Renting a Post Office Box

As this site has grown, I’ve gotten interested in the possibility of taking a home office deduction on my federal taxes. The problem is that I know virtually nothing about doing so. According to the IRS, if you use a portion of your home for business purposes, you may be able to take a home office tax deduction. But here’s the catch… You can claim this deduction only if you use your home office regularly and exclusively as your principal place of business, or as a place to meet or deal with your patients, client, or customers in the normal course of your trade or business. What follows is a (very) quick summary of a few things that I learned while conducting a bit of preliminary research…

What types of things can you deduct?

Expenses that you may be able to deduct for business use of the home may include the business portion of real estate taxes, mortgage interest, rent, utilities, insurance, depreciation, painting and repairs.

How much can you deduct?

Generally, the amount you can deduct depends on the percentage of your home that you used for business. Your deduction will be limited if your gross income from your business is less than your total business expenses.

How do you do it?

If you are self-employed, use Form 8829 to figure your home office deduction and report those deductions on line 30 of Schedule C, Form 1040.

If you’re an employee, you have additional requirements to meet… The regular and exclusive business use must be “for the convenience of your employer” (e.g., your employer doesn’t provide office space, so you have to use your home office). Another thing to think about is what effect this deduction might have on your standing with respect to the Alternative Minimum Tax (AMT) — depending on your income level, too many deductions can trigger the AMT.

See also: More on the Home Office Tax Deduction

[Source: IRS.gov]

Follow me on Twitter!

---
Related Articles at fivecentnickel.com:

» More on the Home Office Tax Deduction
» The Best of FCN — Selections from 05/06
» From the Archives (May 20th – May 26th)
» Carnivals – Week of 07/24/06
» Carnivals – Week of 05/29/06
» From the Archives (May 27th – June 2nd)
» From the Archives (May 4th – May 31st)
» Renting a Post Office Box

This week I’ve decided to deviate from the “just the facts” nature of past polls, and to take a somewhat more philosophical slant… Without further ado, here’s the question of the week: “What’s more important when it comes to improving your bottom line, earning more or spending less?” Given the nature of this question, I’d love for you to leave a comment adding a bit of context to your answer. And with that, let’s kick off Money Poll #12…

Follow me on Twitter!

---
Related Articles at fivecentnickel.com:

» Earning vs. Saving Poll Results
» Money Poll #9: Retirement Savings Rate
» Retirement Savings Rate Poll Results
» Retirement Savings Poll Results
» Midweek Roundup – Winter Weather Edition
» IKEA Poll Results
» Top Financial Goals for 2008
» TV Service Poll Results

I’m not sure why, but this past weekend I got to thinking about the worst job that I’ve ever had. I’m going to write a bit about it below, but first I’d like to invite you to join the fun… If you have your own website, feel free to write up your worst job ever and send me the link so I can compile a list below (a link back to this post would also be greatly appreciated). Otherwise, please chime in by leaving a comment. Okay, with that said, let’s get to it…

I haven’t had an truly horrendous jobs, but I’ve had my fair share of below average employment opportunities. Perhaps the worst one was a janitorial gig that I had (for a very brief time) one summer during college. I happened upon this job while looking for a second job to make a few extra bucks in the evenings after I got off work at my ‘regular’ job. I was supposed to be running a vacuum through some offices for a few hours each night, during which time I had planned on throwing on some headphones and listening to baseball on the radio.

As it turns out, however, my supervisor (a vertically challenged elderly gentleman) was so impressed by my height that he promptly changed my assignment… I’m willing to bet that you didn’t know this, but tall people make great bathroom cleaners (or at least that’s what he said). I’m still not sure why this is the case, but I think it has something to do with my ability to clean way the heck up the walls (which really don’t need to be cleaned all that often in the first place, but apparently that’s beside the point).

Anyway, I’m sure that you can imagine my pleasure when he took me through the bathrooms for the first time and peppered me with helpful little tips, such as reminding me to wipe down the bottom of the trap under the urinal, as that’s where drips tend to collect. And crystallize. Nice. Thanks for the tip. And hey, wouldn’t a short guy be better for that sort of work? Apparently not.

As it turns out, I didn’t need the money that badly, so I soon reclassified myself as a former lavatory hygiene technician. That’s the one job in my life where I didn’t give two weeks (or more) notice before quitting. But hey, if they had handed me the vacuum that they had promised, I’m confident that things would’ve turned out differently.

So, what’s the worst job you’ve ever had? I’m sure that there are some whoppers out there.

Contributions:

– Amanda tells a tale of survival in the cutthroat world of retail sales.
– JLP used to sling burgers (until his bosses torched the place).
– Nick spent five weeks as a corn detasseler.
– Penny Nickel (no relation) did newspaper assembly and temped at a BMW plant.
– IRA worked at a movie theater concession stand.
– LA Money Guy used to be an insurance salesman.
– Jose worked as an online HTML tutor.
– Frank spent a summer typing in physics questions from a textbook.
– MakingOurWay used to do mind-numbing work in a library.
– Dawn was a smut peddler!

But my lovely and talented wife thinks that we’re all a bunch of whiners… She’s done it all, and it all adds up to being the best job ever.

Follow me on Twitter!

---
Related Articles at fivecentnickel.com:

» Ten Most Reliable Cars
» The Worst 529 Plans – 2009 Edition
» The Safest Banks: Everbank and ING are the Best
» The Top (and Bottom) Jobs in the US
» The Worst 401(k) Plans
» My Best and Worst Money Moves
» Unemployment Jumps, Worst Month in 34 Years
» One Year Ago This Week (November 5th – November 11th)

I just ran across an article that talks about how much money Howard Stern makes from his gig with Sirius Satellite Radio… $93,000 per hour! But do you want to know what’s really amazing? That’s just a tiny fraction of the $705,000 that Oprah Winfrey will take home for an hour of work under her agreement with XM Radio. To be fair, Stern works a heck of a lot more hours (4 hours/day, 5 days/week) than Oprah (a weekly half hour show), so his annual take is considerably higher. But when you break it down to an hourly wage, poor little Howard takes in just over 10% of what Oprah earns.

[Source: MSN/Money]

Follow me on Twitter!

---
Related Articles at fivecentnickel.com:

» One Year Ago This Week (February 25th – March 2nd)
» The Best of FCN – Selections from 02/06
» Carnivals – Week of 03/06/06
» From the Archives (February 10th – March 15th)
» Natural Gas Price Hike
» PenFed Raises CD Rates
» Penalty for Paying Quarterly Estimated Taxes Late
» Required Minimum Distribution (RMD) Relief for 2008?

As a followup to my earlier post about the highest paid celebrities under age 25, I thought I’d also post a list of the highest paid celebrities that are dead. Here we go…

Ranked by annual income:

(1) Elvis Presley — $45 million
(2) Charles Schulz — $35 million
(3) John Lennon — $22 million
(4) Andy Warhol — $16 million
(5) Theodor “Dr. Seuss” Geisel — $10 million
(6) Marlon Brando — $9 million
(7) Marilyn Monroe — $8 million
(8) J.R.R. Tolkien — $8 million
(9) George Harrison — $7 million
(10) Johnny Cash — $7 million
(11) Irving Berlin — $7 million
(12) Bob Marley — $6 million
(13) Ray Charles — $6 million

Sadly, it looks like Dr. Seuss makes a bit less per year than Lindsay Lohan (see Highest Paid Celebrities Under Age 25). How much do you want to bet she doesn’t do nearly as well after she’s dead?

[Source: Forbes.com]

Follow me on Twitter!

---
Related Articles at fivecentnickel.com:

» Highest Paid Celebrities Under Age 25
» From the Archives (January 13th – January 19th)
» One Year Ago This Week (January 7th – January 13th)
» Dave Ramsey is Bad at Math
» Capital One – Intentionally Harming Credit Scores?
» Limits on Itemized Income Tax Deductions
» Weekly Roundup – The Internet is Dead Edition
» AmEx Buyer’s Assurance Warranty Extension Program

Want to feel like an underachiever when it comes to bringing home the bacon? Then check out this list of the ten highest paid celebrities under the age of 25…

Ranked by annual income:

(1) LeBron James (Athlete), 21 years — $22.5 million
(2) Mary-Kate & Ashley Olsen (Actresses), 19 years — $21 million
(3) Maria Sharapova (Athlete), 18 years — $18.2 million
(4) Hilary Duff (Actor/singer), 18 years — $15 million
(5) Serena Williams (Athlete), 24 years — $12.7 million
(6) Lindsay Lohan (Actor/singer), 19 years — $11 million
(7) Frankie Muniz (Actor), 20 years — $8 million
(8) Paris Hilton (Personality), 24 years — $6.5 million
(9) Ashlee Simpson (Singer/actress), 21 years — $5.3 million
(10) Adriana Lima (Model), 24 years — $4.5 million

Wow. These are all pretty crazy, but I’d have to say that the most troubling one (for me, at least) is Ashlee Simpson pulling down better than $5 million/year.

[Source: MSN/Money]

Follow me on Twitter!

---
Related Articles at fivecentnickel.com:

» Highest Paid Dead Celebrities
» From the Archives (January 13th – January 19th)
» One Year Ago This Week (January 7th – January 13th)
» Dave Ramsey is Bad at Math
» Capital One – Intentionally Harming Credit Scores?
» Limits on Itemized Income Tax Deductions
» Fed Raises Rates (Again)
» What’s the Most You’ve Ever Paid for a Tank of Gas?

Two years ago my employer implemented a program in which they’d add a monthly wellness credit to your paycheck in return for filling out a health questionnaire during open enrollment. It wasn’t a lot of money ($10/month), but it certainly did add up, and it was well worth the fifteen minutes or so that it took to fill out the questionairre. Last year they increased the requirements slightly, and bumped up the reward. And this year they did the same, such that I now have to fill out the questionairre, promise to take steps to improve my health (based on the answers that I gave), and go through a handful of online health-related learning exercises. All in all, it took me about 45 minutes to run through the entire thing — not bad for a $240 payout over the next year (not to mention the potential health benefits). Anyway, the economics of wellness programs such as this fascinate me — $240/year for each employee isn’t exactly chump change, so the payback must be pretty good. Of course, assuming that this program has the desired effect, my employer will benefit both in terms of reducing lost time due to employee illness and reducing the costs associated with health care. While it’s hard for me to imagine that the hoops that I just jumped through will actually end up saving my employer ?$240 in the future, it probably won’t take much for them to at least break even given the high price of medical care.

Follow me on Twitter!

---
Related Articles at fivecentnickel.com:

» Money Moves for 2006, Part 4: Your Health
» Cash for Clunkers Program Suspended
» CitiBank’s “All-Electronic” Program Sure Involves a lot of Paper
» Cash for Clunkers – Ending Soon
» Weekly Roundup – 01/19/07
» United Airlines to Charge $25 for a Second Bag
» 401(k) Changes to Encourage Saving
» Flexible Spending Accounts Under Attack?

It’s time for yet another installment of Money Magazine’s recommended money moves for 2006. Today it’s three tips related to your job…

(1) “Don’t ask for a big raise.” Instead of asking for a big raise, Money recommends asking for a bonus instead. I’ve actually heard that there is a growing trend toward rewarding high quality workers with bonues rather than raises, so you may be more likely to score some extra cash by following this advice. Then again, bonuses are here today, and gone tomorrow, so a raise would give you much more stability.

(2) “Get a better gig.” According to recruiters, the following fields will be hot in 2006 and beyond:

Retirement planning: Aging boomers need financial advisers and tax lawyers.
Health care: Constant change means work for benefit-plan administrators and information technology specialists.
Auditing: Increased scrutiny of corporate books requires more accountants.

So if you’re looking to make a switch, think about these fields. And if you’re already in one of these fields, now may be a good opportunity to negotiate a better deal for yourself.

(3) “Get an M.B.A. on the IRS.” There’s no better way to improve your lot in life than to improve your credentials. And a recent tax ruling means that you may be able to deduct the costs associated with earning an MBA. In short, you can deduct your tuition, but only if the degree “improves and enhances” your ability to perform the job that you already have. Note that you don’t have to stay at your current company to take advantage of this, but you’ll lost the tax break if you quit to go to school full time, or if you use your new MBA as a springboard for switching careers.

Read Part 1, Your Home
Read Part 2, Your Portfolio
You’re reading Part 3, Your Job
Read Part 4, Your Health
Read Part 5, Your Family
Read Part 6, Your Spending

[Source: CNN/Money]

Follow me on Twitter!

---
Related Articles at fivecentnickel.com:

» One Year Ago This Week (November 12th – November 18th)
» One Year Ago This Week (November 19th – November 25th)
» Money Moves for 2006, Part 4: Your Health
» Money Moves for 2006, Part 1: Your Home
» Money Moves for 2006, Part 5: Your Family
» One Year Ago This Week (November 26th – December 2nd)
» Money Moves for 2006, Part 6: Your Spending
» Money Moves for 2006, Part 2: Your Portfolio

Wouldn’t it be great if you could make millions regardless of your on-the-job performance? Well, that’s the deal that many CEOs have and, according to a recent article from MSN/Money, some of them are shockingly overpaid. According to the article, the five worst offenders are…

1. Patrick Nettles of Ciena. In the past four years he’s taken in $41.2 million while company shareholders have lost a whopping 93%.

2. Jure Sola of Sanmina-SCI, who earned $26.4 million during the past four years while Sanmina shareholders lost 78%.

3. Scott McNealy of Sun Microsystems, who earned $13.1 million over the past four years while Sun shareholders lost 76%.

4. Larry Johnston of Albertson’s, who earned $76.2 million over the past four years while shareholders lost 39%.

5. Peter Dolan of Bristol-Myers Squibb, who earned $41 million over the past four years while shareholders lost 48%.

Note that the lowest paid of these individuals (McNealy of Sun) makes over 32 times as much as the President of the United States — then again, he’s not burning through money nearly as fast as our current President, so maybe he’s worth it. Another interesting statistic from the article is the fact that the ratio of CEO compensation to that of regular workers has swelled from 200:1 in the early 1990s to 450:1 nowadays. From a shareholder perspective, it seems like we really need to get this under control by indexing executive pay to some reasonable measure of performance, as is already the case at some companies. Either that or we should all go out and get jobs as CEOs…

Follow me on Twitter!

---
Related Articles at fivecentnickel.com:

» From the Archives (August 19th – August 25th)
» From the Archives (August 24th – August 30th)
» Poverty in the US: The Rich get Richer
» Social Security Taxes in 2008
» Natural Gas Price Hike
» When Will the Recession End?
» The Social Security Tax Ceiling
» Frugal is as Frugal Does?

Quit reading this and get back to work! Based on a survey of 10,000 workers, Salary.com claims that surfing the internet is the top at-work time-wasting activity, with 44.7% of respondents admitting to it. Frankly, I can’t believe the number is this low… Socializing with co-workers came in second at 23.4%, followed by conducting personal business, “spacing out,” running errands, making personal phone calls, applying for other jobs, planning personal events, and arrive late or leaving early. All told, these workers admitted to wasting an average of a bit over two hours per day. So what are the most common excuses for wasting time?

The number one excuse given for all of this wasted time (by 33.2% of respondents) was a lack of work to do, followed by being underpaid and not having enough time after work. The most wasteful industries are insurance, public sector (non-education), research & development, education, and software & internet. The least wasteful industries include shipping & receiving, manufacturing, healthcare related, finance & banking, marketing & communications. Interestingly, women and men waste similar amounts of time despite the fact that HR managers typically assume that women waste more time than men. What about age? As it turns out, the older a person is the less time they tend to waste, with those born between 1930-1949 wasting just 30 minutes per day.

So what’s the cost of all this slacking? All in all, employers are wasting a staggering $759 billion per year on salaries for which real work was expected, but not actually performed — and this number already accounts for the fact that, when setting salaries, employers assume that workers will waste nearly an hour a day.

And how does your state perform? The laziest states in the poll Missouri, Indiana, Kentucky, Wisconsin and Nevada, whereas the hardest working states included South Carolina, Rhode Island, Hawaii, West Virginia and North Carolina.

Follow me on Twitter!

---
Related Articles at fivecentnickel.com:

» Sunday Roundup – Patio Furniture Edition
» Advice for Entrepreneurs
» The Salary Theorem
» Brits Often Work Drunk
» Top Five Time-Wasting Activities
» Weekly Roundup – Avoiding Chores Edition
» UPS Holiday Shipping Projection
» Good Deals Don’t Always Pay

CareerJournal.com has posted a list of the ten best and ten worst jobs in America. Given that their criteria included things such as income, stress, physical demands, outlook, security and work environment, it’s not terribly surprising that the ‘best’ list is full of mostly white collar, office-type jobs whereas the ‘worst’ list is riddled with physically demanding, labor-intensive jobs. In reading through the list, I was pleased to see my job near the top of the ‘best’ list — and even more pleased that I happen to agree with that assessment!

Follow me on Twitter!

---
Related Articles at fivecentnickel.com:

» Unemployment Jumps, Worst Month in 34 Years
» From the Archives (June 10th – June 16th)
» Recession-Proof Careers
» From the Archives (June 8th – July 5th)
» Investment Insights: Timing the Stock Market
» Weekly Roundup – 06/23/06
» Investment Insights: Staying the Course
» Banks and Fraud: Bank of America Better Than Expected?

Postulate 1: Knowledge is Power.
Postulate 2: Time is Money.
As anyone who has had a physics class knows: Power = Work / Time.
And since Knowledge = Power (Postulate 1) and Time = Money (Postulate 2)…
It is therefore true that: Knowledge = Work / Money.
Solving for Money, we get: Money = Work / Knowledge
Thus, as Knowledge approaches zero, Money approaches infinity, regardless of the amount of Work done.

Follow me on Twitter!

---
Related Articles at fivecentnickel.com:

» One Year Ago This Week (June 11th – June 17th)
» From the Archives (June 10th – June 16th)
» You’re Doing Better Than You Think
» From the Archives (June 8th – July 5th)
» 403(b) Contribution Limits for 2007
» Online Cost-of-Living Calculators
» Salary Negotiation – How to Win
» Opening an Optional 403(b)

According to a recent news report, the Federal Reserve has concluded that ‘good looking’ people tend to make more money. In fact, there is evidence of a ‘plainness penalty’ of up to 9%, and a ‘beauty premium’ of up to 5%. In other words, the unattractive make as much as 9% less than people with average looks, whereas the ‘beautiful’ make up to 5% more.

On top of this disparity, the Fed found evidence that better looking employees are more likely to receive promotions than are their less attractive brethren. I guess it’s no wonder that a looker like Alan Greenspan would be able to work his way to the top of the organization that sponsored the study! No word as to whether or not the difference had to do with discrimination on the behalf of employers, or if better looking people are simply more self confident and therefore more marketable.

Apparently the lesson here is that if you want to be successful, don’t be ugly.

Follow me on Twitter!

---
Related Articles at fivecentnickel.com:

» From the Archives (April 13th – May 3rd)
» One Year Ago This Week (December 3rd – December 9th)
» Register that Domain Name
» Plastic Bags for Fifty Cents at Airport Security
» Life’s Too Short to Drink Cheap Beer
» FTC Cracks Down on ‘Credit Repair’ Scams
» The Fallacy of Relative Price Evaluation
» Santa Dollars and Bunny Bucks