The core principle of a financially free person is “unearned income.” This means that you have money that makes more money without requiring you to put in any labor. Meanwhile, you can sit back with your hands behind your head and watch your wealth grow. Your goal should be to turn your earned or salaried income into investments that bring in more and more streams of unearned income. The key to this process is choosing smart, reliable investments with a decent rate of return.
The Numbers
In planning for your retirement, you decide that you would like $100,000 a year to live comfortably. How long will it take you to have enough investments or savings so that you live off of the “unearned income” that they produce each year?
If you save or invest $1000 every month, here are the rates you need to achieve your goal:
1) A 6.00% rate of return after 37.25 years will equal $1,666,660, which is the amount needed to provide you with $100,000 per year if you continue to earn 6.00% on it.
2) An 8.00% rate of return after 28 years will equal $1,250,000, which is the amount needed to provide you with $100,000 per year if you continue to earn 8.00% on it.
3) A 12.00% rate of return after 18.70 years will equal $835,00 which is the amount needed to provide you with $100,000 per year if you continue to earn 12.00% on it.
4) A 15.00% rate of return after 14.90 years will equal $666,667, which is the amount needed to provide you with $100,000 per year if you continue to earn 15.00% on it.
5) A 20.00% rate of return after 11.25 years will equal $500,000, which is the amount needed to provide you with $100,000 per year if you continue to earn 20.00% on it.
Tuesday, June 30, 2009
Thursday, June 25, 2009
Are Energy Efficient Roofs Worth the Price?
Average Non-Energy Efficient Cost: $5,000 (common roof consisting of asphalt shingle materials)
Average Energy Efficient Cost: $15,000 - $1,500 stimulus money = $13,500 (metal or reflective shingles)
Benefits: Lifespan of 50 years vs. normal roof lifespan of 15 years. It will also reduce electricity bills through its reflective/insulation capabilities, which are most noticeable in hot, sunny climates with high levels of air conditioning usage. Attics that are well-insulated will reduce the benefits of a metal roof.
Estimated Monthly Electricity Savings: $15 ($25 in places with constant heat and sun)
Estimated Yearly Electricity Savings: $180 ($300 in places with constant heat and sun)
Analysis: If you pay for a non-energy efficient roof, you will need a replacement in 15 years, which equals a total cost of $10,000 over a 15 year timeframe with no electricity bill savings. If you buy an energy efficient roof for $15,000, you will only have paid $5000 extra over a 15 year timeframe for a roof that will last 35 more years than a common asphalt shingle roof. You will also realize an electric savings of $4,500 in ideal conditions and $2,700 in normal conditions, effectively reducing the difference between the price of energy efficient roofs and non-energy efficient roofs over a 15 year time span to $500. That means in ideal conditions you will break even on your roof investment in 15 years, and in normal weather environments it may take as much as 30 years to break even.
Recommendation: If you plan to stay in your home for 15 years or more and live in a hot and sunny location, definitely invest in an energy-efficient roof the next time you need a roof replacement. If you don’t live in conditions that will allow you to take full advantage of the metal/reflective roof, you probably will not want to invest in an energy efficient upgrade unless you plan on staying in the home for more than thirty years.
Average Energy Efficient Cost: $15,000 - $1,500 stimulus money = $13,500 (metal or reflective shingles)
Benefits: Lifespan of 50 years vs. normal roof lifespan of 15 years. It will also reduce electricity bills through its reflective/insulation capabilities, which are most noticeable in hot, sunny climates with high levels of air conditioning usage. Attics that are well-insulated will reduce the benefits of a metal roof.
Estimated Monthly Electricity Savings: $15 ($25 in places with constant heat and sun)
Estimated Yearly Electricity Savings: $180 ($300 in places with constant heat and sun)
Analysis: If you pay for a non-energy efficient roof, you will need a replacement in 15 years, which equals a total cost of $10,000 over a 15 year timeframe with no electricity bill savings. If you buy an energy efficient roof for $15,000, you will only have paid $5000 extra over a 15 year timeframe for a roof that will last 35 more years than a common asphalt shingle roof. You will also realize an electric savings of $4,500 in ideal conditions and $2,700 in normal conditions, effectively reducing the difference between the price of energy efficient roofs and non-energy efficient roofs over a 15 year time span to $500. That means in ideal conditions you will break even on your roof investment in 15 years, and in normal weather environments it may take as much as 30 years to break even.
Recommendation: If you plan to stay in your home for 15 years or more and live in a hot and sunny location, definitely invest in an energy-efficient roof the next time you need a roof replacement. If you don’t live in conditions that will allow you to take full advantage of the metal/reflective roof, you probably will not want to invest in an energy efficient upgrade unless you plan on staying in the home for more than thirty years.
Wednesday, June 24, 2009
5 Daily Routines That Will Reduce Your Electric Bill
1) Change your clothing instead of the thermostat to regulate your body temperature. If it is hot, take layers off. If it is cold, wear more. This is a very simple way to leave your thermostat at a constant, comfortable temperature that minimizes the need for electricity. The more you hear your heater/air conditioning turning on and running, the more electricity you are using and the more money you are wasting.
2) Learn how to use your curtains in ways that will benefit you. Open them during the day, especially when it’s cold outside. You will allow sunlight to come in through your windows, which will double your electricity savings by warming up your house and providing illumination at the same time. Once the sun sets, make sure to turn off lights in rooms you aren’t using. An exception to this rule is with extremely hot summer days, when keeping your curtains closed may help prevent heat from entering your house and stop cool air from leaving. An air conditioner takes priority because it uses much more electricity than light bulbs.
3) Use cold water instead of hot water whenever you can. A few examples of occasions where you might possible use cold water: washing your clothes, cleaning the dishes, brushing your teeth, bathing, rinsing your hands, cleansing your face, mopping the floor, etc. If you find yourself using less and less hot water, you may be able to turn the temperature on your water heater down, saving even more on your electricity bill. If you are looking to lower your electric bill, you are probably going to want to check out five easy ways to lower your water bill as well.
4) Connect all of your media centers to one single master switch, such as a surge protector power strip. If you have a television, DVD player, Blue-Ray player, stereo system, and cable box in the same location, you will be able to flip the “smart switch” and turn all of them off at once. Otherwise they will run day and night, wasting electricity even when you aren’t using them. You can do the same thing for desktop, monitor, router, printer, and fax machines that are in your office or computer location. This idea simply expands upon one of the rules of saving electricity and reducing your monthly bill: “If you aren’t using it, turn it off.” You might notice that your home is a little cooler in the summer when you lessen the use of electrical equipment by turning them off instead of letting them idly run.
5) Refrain from continuously opening and closing your refrigerator or freezer. You will force the refrigerator into using more power to keep the inside temperature at the specified setting. It also helps to keep your freezer and refrigerator at least 60%-70% full at all times. Air warms up faster than solid items, so if the door is opened and closed constantly, a full freezer/refrigerator will reduce the amount of air space and have to use less electricity in cooling itself.
2) Learn how to use your curtains in ways that will benefit you. Open them during the day, especially when it’s cold outside. You will allow sunlight to come in through your windows, which will double your electricity savings by warming up your house and providing illumination at the same time. Once the sun sets, make sure to turn off lights in rooms you aren’t using. An exception to this rule is with extremely hot summer days, when keeping your curtains closed may help prevent heat from entering your house and stop cool air from leaving. An air conditioner takes priority because it uses much more electricity than light bulbs.
3) Use cold water instead of hot water whenever you can. A few examples of occasions where you might possible use cold water: washing your clothes, cleaning the dishes, brushing your teeth, bathing, rinsing your hands, cleansing your face, mopping the floor, etc. If you find yourself using less and less hot water, you may be able to turn the temperature on your water heater down, saving even more on your electricity bill. If you are looking to lower your electric bill, you are probably going to want to check out five easy ways to lower your water bill as well.
4) Connect all of your media centers to one single master switch, such as a surge protector power strip. If you have a television, DVD player, Blue-Ray player, stereo system, and cable box in the same location, you will be able to flip the “smart switch” and turn all of them off at once. Otherwise they will run day and night, wasting electricity even when you aren’t using them. You can do the same thing for desktop, monitor, router, printer, and fax machines that are in your office or computer location. This idea simply expands upon one of the rules of saving electricity and reducing your monthly bill: “If you aren’t using it, turn it off.” You might notice that your home is a little cooler in the summer when you lessen the use of electrical equipment by turning them off instead of letting them idly run.
5) Refrain from continuously opening and closing your refrigerator or freezer. You will force the refrigerator into using more power to keep the inside temperature at the specified setting. It also helps to keep your freezer and refrigerator at least 60%-70% full at all times. Air warms up faster than solid items, so if the door is opened and closed constantly, a full freezer/refrigerator will reduce the amount of air space and have to use less electricity in cooling itself.
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