One of my goals for this year is to avoid any new debt other than my student loans. One of my credit cards has offered me 3.99% for life for a balance transfer with a max fee of $75. My Grad Plus student loan has an 8.5% rate. I haven’t done the math yet but by transferring $4900 of the student loan balance to the credit card I should be able to make up the $75 transfer fee fairly quick. Since this would actually still be student loan debt even though it is on my credit card it is in keeping with my goals in my mind. What would you do?
2007 Online Income
My net online income for 2007 was $883.84 out of a gross income of $1025.38. Which comes out to roughly $73.65 a month. I’ve got a long way to go if I want to be able to live off my online income. Although I do also make money from other alternative sources such as paid surveys and bank bonuses.
Most of my income was generated by my other blog Bank Bonuses. I’ve yet to fully monetize this blog. I don’t want to put Adsense on here and I want to keep any ads unobtrusive. But I do want to make more money so I’ve got to come up some other ways to generate income from this blog.
How Little Could You Live On?
J.D. at Get Rich Slowly recently had a post “Extreme Personal Finance:America on $10 a Day.” It was about a man who lives on about $3,700 a year. I found it interesting that some commenters couldn’t imagine living on anywhere close to that. Some didn’t think they could live on that much for a month. Although somewhat odd the man does seem to be quite content living on that amount.
It makes me wonder how little I could live on. There have been many years that I’ve lived on less than $10,000. It was pretty simple to do because I made less than $10,000. Since I avoided debt I couldn’t spend money I didn’t have leaving me with no choice but to live on what I made.
If I were free from the expenses associated with earning an income I think I could live quite comfortably on less than $10,000. If I were to spend six months hiking the Appalachian Trail and the rest of the time in Guatemala I think it would be fairly easy to live on $6000. That does include paying for health insurance. That year would probably be much more enjoyable than the present one too.
How little could you live on?
Underwear That Pays
After doing some calculations I have determined that my new underwear will pay for itself. I normally do a very small load of whites every week. This isn’t my preference but I only have enough clean underwear to last a week. I often wear pants or sometimes shirts more than once but not underwear. Even a miser has his limits.
The math works like this. A load of laundry costs me approximately $1.50. I was able to buy seven pairs of underwear for $5 at Target. I used a Target gift card I’d received for Christmas making the purchase free to me but I’ll stick with the $5 figure. Now that I have the additional underwear I only need to do a load of whites every two weeks. That makes a savings of $1.50 every two weeks. In eight weeks I’ll have saved $6 which is a dollar more than the underwear cost me. That makes it underwear that pays for itself.
Get up to 50% Return with Saver’s Credit
Using the Saver’s Credit you may be able to take the credit of up to $1,000 (up to $2,000 if filing jointly) if you make eligible contributions to a qualified IRA, 401(k) and certain other retirement plans. Here is a table showing what your credit would be depending on your filing status and income.
|
Single AGI |
Head of Household AGI |
Joint File AGI |
|
0-15500: 50% |
0-23250: 50% |
0-31000: 50% |
|
15501-17000: 20% |
23251-25500: 20% |
31001-34000: 20% |
|
17001-26000: 10% |
25501-39000: 10% |
34001-52000: 10% |
As you can see it would be pretty hard to end up in the 50% bracket. I haven’t gotten all my tax information yet but I believe I would end up in 20% bracket coming close to getting to the 50% bracket. I won’t qualify though because I was a full-time student for 5 months of the year.
Another thing to keep in mind is if you don’t owe any taxes than this credit won’t do you any good. You can’t get a refund of the credit itself. The best it can do is reduce your taxes to zero which should result in an increased refund.
I’m thinking I’ll probably credit for the credit for the 2009 tax year. I’ll be attending school less than full-time in the spring semester. With attending school and then studying for the bar there is a good chance my income will be low enough to qualify for the credit. Depending on where my income ends up I could use a traditional IRA to lower my AGI enough to qualify for a higher percentage credit.
If you don’t make a lot of money and you contribute to a qualified retirement account make sure to determine whether you qualify for this credit.