Sunday, August 10, 2008

attentive spending

i came across an article by one of my favorite personal finance writers, scott burns, today entitled the power of attentive spending. he gives some examples in that article on what a typical family can do to save $500 a month.

this comes out to $6,000 a year of after tax "earnings". to put it in perspective, he notes:

Suppose, for instance, you have the good fortune to live in a no-income tax state and want to get all your return from a portfolio of common stocks. At a 15 percent tax rate on dividends, you’d have to collect gross dividends of $7,059 to net $6,000 a year. With the S&P 500 index yielding 2.29 percent, you’d need to have $308,246 in your portfolio.

that's a lot of money.

while i'm not sure that i can find $500 a month to trim out, i would say that finding any reasonable sum would certainly be worthwhile in light of that comparison.

the moral of the story: a penny saved is more than a penny earned (after tax implications).

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