Rule of 78

Rule of 78

The Rule of 78 is likely to appear in a couple of our posts, so we decided to do a separate post to explain it. There is a little math involved, but it’s very straightforward. The Rule of 78  (also known as the “sum of the digits”) is often used as the the basis for companies to earn interest on loans, calculate interest rebates, or even calculate car insurance refunds. Understanding how it works and

Understanding Hire Purchase – Part 2

Understanding Hire Purchase – Part 2

Hire Purchase (HP) is likely the most common way household items are purchased and financed and is sometimes regarded as an easy way for persons of lesser means to afford certain necessities (or luxuries). But HP transactions are not straightforward. For clarity, we are not suggesting this is a reason to avoid them. On the contrary, our objective is to identify the points you should be aware of, so you have no cause for later

Buying a Car – Your Budget

Buying a Car – Your Budget

In Part 1 of this post we identified several points that you should consider when buying a car. In this Part 2, we’ll consider the costs involved and the impact on your budget. Post Contents1 Creeping cost base increase2 Think total cost over 5 years (at least)3 Financing4 Other Costs4.1 Insurance4.2 Gasoline4.3 Repairs & maintenance5 Car “fund”6 Closing thoughts Creeping cost base increase Before starting, we should make a general point about your targeted level of savings. One

The Debt Decision

The Debt Decision

A financial lifestyle choice that CariDollarsAndSense recommends is for everyone to always Be Uncomfortable With Debt. We also believe that true Financial Freedom is only achieved when we are debt free, which is one of our Cari$ Rules for Financial Freedom. Being in debt impacts our lives in so many important ways that we have dedicated several articles to the topic covering: Affordability: How Much is Enough Debt Part 1 and Part 2 Understanding interest rates: APR

Bad Debt & Wealth Erosion

Bad Debt & Wealth Erosion

This is a continuation of the posts Be Uncomfortable With Debt and Good Debt and Wealth Creation. In Be Uncomfortable With Debt we recommended that you should approach borrowing carefully and make an informed decision if new debt is right for you. A major factor in this decision would be the impact of new debt on your net worth: does it add or erode? In Good Debt and Wealth Creation we examined borrowing purposes that would

Good Debt & Wealth Creation

Good Debt & Wealth Creation

In the related post Be Uncomfortable With Debt, we promoted the idea that you should approach borrowing carefully, not casually. Treat debt with respect and agonize over having to borrow. When making an informed decision if new debt is right for you, a major consideration would be the impact of new debt on your net worth: does it add or erode? Generally, all debt erodes your net worth because of the associated interest cost. Interest is an

Smart Grocery Shopping

Smart Grocery Shopping

For most families, groceries (and food costs generally) tend to be one of the largest expenses in their budget, so reviewing our shopping habits is certainly warranted to make sure we aren’t allowing wastage.  We aren’t referring to eating less or necessarily buying less food, but this could apply to families that throw away a lot of food.  Instead, we are considering is there anything we can we do differently, habits we can adopt, or lifestyle changes

How to Approach Saving 33%

How to Approach Saving 33%

In Part 1 of this post (What are Savings?), we discussed a few principles around saving, including considering why it is important, what it is and is not, as well as how to arrange your savings in different buckets. In this post, we explain how to approach increasing your savings to our recommended target of 33% of your after-tax income. (Learn more in: Creating Your Budget (33/33/33).) Post Contents1 Don’t be discouraged2 Immediate3 Short-term4 Medium term 5 Success!6 Closing

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