In an attempt to stretch my husband's hard earned dollar as far as it will go, I have been doing a lot of "reading up" on frugality. I've run into a TON of information. It's a little overwhelming and mind-boggling.
This morning, I was over at The Coupon Game and I spent an untold amount of time trying to learn what I could and even went to this website and printed off some coupons. I am also really liking the lady over at Like Merchant Ships and her advice/examples. Jen at Conversion Diary had some links posted to Laine's Letters , especially this one about how they paid off their house in 17 years on a minimal income of less than $30K/year and also recommended The Two Income Trap for reading. Interestingly enough, in one of the first chapters of this book the main example she uses about the middle-class being forced into a two income home to keep their place was that of men who were police officers, as mine recently has become.
I've been thinking and reading up on all this stuff for a few weeks now, and I have some questions about this idea of frugality that I believe the Lord is drawing me to.
How much time is prudent to spend coupon clipping?
Does it "pay" to print coupons at home on my printer using my own ink and paper?
Should I start buying the Sunday paper?
What can we live without?
Can I convince my husband to cancel the cable?
Should we drop the car insurance to just liability?
Do we really need a cell phone (or two, as it is in our house)?
What about Christmas?
Can I give up my "name brand" staples, like Heinz Ketchup, Miracle Whip, Kraft Cheese and Prego, for the "store brand"?
How much organic and natural products can I continue to purchase now that I am trying to stay within a food budget?
What is a reasonable food budget for a family of 7?
How can I be a good steward of our earnings and still keep my family happy without seeming like the KillJoy of our family?
As I ponder these questions, I ask you, my dear readers, for some help and advice through these questions:
How much do you spend weekly/monthly on groceries?
What size family do you have?
Is eating out once month/week in your budget (right now, it's not in ours)?
Do you clip coupons?
How do you "bargain shop"?
What other things do you do that really help save money in your home?
Am I nuts to think that I can survive the year buying only used clothing?
How do I convince my extended family that my kids really (really, really, really) don't need toys for Christmas this year? (Because we already have way too much stuff in our house and I'd like to minimize what we already have, and teach them the value of Christmas, i.e. that Christ came to die for our sins.)
Please leave a comment and answer if you can. The more the merrier!
~H
Showing posts with label Economics. Show all posts
Showing posts with label Economics. Show all posts
Saturday, November 8, 2008
Thursday, November 6, 2008
Economics 101
Our Tax System Explained: Bar Stool Economics
Suppose that every day, ten men go out for beer and the bill for all ten comes to $100.
If they paid their bill the way we pay our taxes, it would go something like this:
The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.
So, that's what they decided to do. The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. "Since you are all such good customers," he said, "I'm going to reduce the cost of your daily beer by $20."
Drinks for the ten now cost just $80. The group still wanted to pay their bill the way we pay our taxes, so the first four men were unaffected. They would still drink for free. But what about the other six men - the paying customers? How could they divide the $20 windfall so that everyone would get his "fair share?"
They realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay.
And so:
The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).
Each of the six was better off than before. And the first four continued to drink for free.
But once outside the restaurant, the men began to compare their savings.
"I only got a dollar out of the $20,"declared the sixth man. He pointed to the tenth man, "but he got $10!"
"Yeah, that's right," exclaimed the fifth man. "I only saved a dollar, too. It's unfair that he got ten times more than I got"
"That's true!!" shouted the seventh man. "Why should he get $10 back when I got only two? The wealthy get all the breaks!"
"Wait a minute," yelled the first four men in unison. "We didn't get anything at all. The system exploits the poor!"
The nine men surrounded the tenth and beat him up. The next night the tenth man didn't show up for drinks so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!
And that, ladies and gentlemen, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.
Suppose that every day, ten men go out for beer and the bill for all ten comes to $100.
If they paid their bill the way we pay our taxes, it would go something like this:
The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.
So, that's what they decided to do. The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. "Since you are all such good customers," he said, "I'm going to reduce the cost of your daily beer by $20."
Drinks for the ten now cost just $80. The group still wanted to pay their bill the way we pay our taxes, so the first four men were unaffected. They would still drink for free. But what about the other six men - the paying customers? How could they divide the $20 windfall so that everyone would get his "fair share?"
They realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay.
And so:
The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).
Each of the six was better off than before. And the first four continued to drink for free.
But once outside the restaurant, the men began to compare their savings.
"I only got a dollar out of the $20,"declared the sixth man. He pointed to the tenth man, "but he got $10!"
"Yeah, that's right," exclaimed the fifth man. "I only saved a dollar, too. It's unfair that he got ten times more than I got"
"That's true!!" shouted the seventh man. "Why should he get $10 back when I got only two? The wealthy get all the breaks!"
"Wait a minute," yelled the first four men in unison. "We didn't get anything at all. The system exploits the poor!"
The nine men surrounded the tenth and beat him up. The next night the tenth man didn't show up for drinks so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!
And that, ladies and gentlemen, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.
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