Category Archives: SAVING MONEY

‘If you don’t use cash, this won’t work’: Blogger amasses $50,000 with $5 savings hint

EVERY time you pay for something at the store and get change, save your $5 notes.

Put it away somewhere. Don’t spend it. At the end of each month, deposit your hoarded fives into a separate bank account.

Journalism professor Marie C. Franklin, who champions the idea on her blog “Save Money Fast With Fives”, has saved nearly $50,000 ($US40,000) by following this rule for the past 13 years.

Franklin said she first came up with the idea while putting two daughters through college and struggling to balance the family budget. “I made a decision that forever changed my relationship to money,” she wrote.

“Every time someone handed me a five-dollar bill I hid it away. I refused to spend it under any circumstance and started accumulating those fives, first in a separate compartment of my wallet, and then, as the pile grew, in an envelope.

“As the $5s started adding up, I put them in a separate bank account. Within weeks, I had a nice little stash, more than $200. Then $350. Then $500. By the end of the first year, I had saved almost $2000.”

She points out that $5 every day for a year works out to $1825 — two $5s and you’re looking at $3650. “Save five bucks a day until you turn 75 years old, assuming you’re 25 years old today, and that five dollar account, without adding in any compounded interest if you kept the money in a piggy bank, would be worth $91,250,” she writes.

And yes, obviously it means you need to start paying for things in cash. For millennials used to a cashless existence, that means shaking things up.

“You may love the idea of saving your nest egg with $5 bills but unless you use cash on a regular basis for everyday purchases like groceries, food or coffee to go, even gas and other issues of commuting and transportation, it will be impossible to save a significant amount this way,” she writes.

“Only cash will do the trick. End of story. Go to the ATM. Take out enough cash to cover the basic expenses you expect to face in the next seven days. Pay for as many things as you can in cash.

“Consume as you need, rather than simply buying out of habit. See how many $5s you get back in a week. If you like the number, repeat it into week two, then a third. At the end of the month, add it up.”

If you want to speed things up, she recommends a number of tricks to maximise your $5s, including paying for purchases less than $5 with a $10 or $20, or asking for two $5s instead of a $10 when getting change.

Others have found success with the $5 trick. Writing on Reddit, one user said they saved $2285 in five years, while another said they saved $1500 in six months.

“Working at a pizza shop and collecting tips I knew it’d be perfect,” wrote another. “From May to August of this year, I tried to bring home as many fives as I could. [In] mid-August, I cashed in all my fives and had over $525! Very easy way for anyone to start saving money.”

Henry Sapiecha

The remarkable life and lessons of the millionaire janitor . Lesson in frugality for us all.

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Ronald Read quietly accumulated a fortune worth millions by the time of his death at the age of 92. Photo: Bloomberg

You may have read about the remarkable life and times of Ronald Read. He was the gas station attendant and lifelong resident of Windham County, Vermont, who had quietly accumulated a portfolio worth a fortune.

As the Brattleboro ­Reformer reported earlier this year, Read died in June 2014 at age 92. Despite his relatively modest wages, he left an estate with “stock holdings and property” valued at nearly $US8 million ($AU10.1 million). His bequest was to leave most of it to the Brattleboro Memorial Hospital and Brooks Memorial Library.

His close friends and family were shocked when they learned the value of his estate.

There is wisdom to be learned from Read’s investing and life experiences. How a man of modest means accumulated so much wealth contains exemplary lessons for saving that apply to all of us. But there is also a cautionary tale about recognising the value of your finite time here on Earth. Perhaps learning to enjoy life while you can is part of that equation.

What do we know of Read? He served in World War II, seeing action in North Africa, Italy and the Pacific theatre. The local paper reported that when the war ended, he returned to Brattleboro. For the next 25 years, he worked at Haviland’s service station, which the Wall Street Journal reported was owned by his brother. He apparently did not enjoy retirement much, choosing instead to “retire from retirement” to work as a janitor at a J.C. Penney store until 1997. He was extremely frugal, saving money, avoiding waste and eschewing even modest luxuries.

What follows are the lessons from the remarkable Read.

The good

Not an active trader: Read had remarkable patience. When he died, he had a “five-inch-thick stack of stock certificates in a safe-deposit box.”

The key word is “certificates.” Keeping his holdings in cert form meant that any time he wanted to sell them, a laborious process was involved. He had to drive to the bank, remove the physical paper certificates from his safety deposit box, then drive over to the office where his brokerage account was. Only then was a sale possible.

Compare that with launching an app on your phone, then a quick finger swipe. Trading in the modern era is too cheap and too easy for our own good.

Time was on his side: Many of the stocks he owned he had held onto for decades, the Journal reported. To do so required a great degree of patience. It also helped to live to be 92 years old.

That patience allowed the power of compounding to work to his advantage. His gains grew on top of earlier gains, over decades.

Most investors don’t take advantage of time. They start saving seriously too late in life, they are not at all patient, and they don’t allow the years to work in their favour.

Dividend stocks do well; reinvesting the dividends does even better:

Read typically bought shares of companies that paid out regular dividends. He owned railroads, utility companies, banks, health care, telecom and consumer products. Those dividend cheques were then reinvested back into more shares of the same companies.

The reinvested dividends allowed him to keep making regular purchases over time. Read was not an active trader — he was an active buyer. There is a very big difference.

Avoid speculating; own blue chips: What did he buy? He owned 95 stocks, with many blue chips among them: Procter & Gamble, JPMorgan Chase, General Electric, Johnson & Johnson, Dow Chemical. He also owned consumer names such as J.M. Smucker and CVS Health. Like an investor named Warren Buffett, he avoided technology stocks and the hot stocks of the moment.

He did not own a concentrated portfolio; instead, he had a diversified portfolio with lots of companies in many sectors. This diversification allowed him to spread the risk broadly. Even owning failures such as Lehman Brothers had only a modest impact on his returns.

Charity avoids the tax man: The estate-tax exemption in 2014 was $US5.34 million ($AU6.78 million), or $US10.68 million ($AU13.58 million) for a married couple. Since Read was a widower, his $US8 million estate ($AU10.1 million) was not subject to federal estate tax.

But any size estate can do what he did, regardless of whether it is $US80 million ($AU101.7 million) or $US8 billion ($AU10 billion). Simply giving the money away to a qualified charity beats the IRS.

There is an estate tax in Vermont, and it ranges from 0.8 per cent to 16 per cent. But there is no gift tax in the state, and that means Read’s bequest to the local library and hospital passed unmolested to their intended beneficiaries.

Consider a revocable trust: Depending upon the circumstances (and the portfolio), some investors might want to take advantage of a revocable trust. Also called living trusts, they are an easy way to avoid probate. Heirs avoid a lengthy court process; assets transfer after the original holder dies.

In the case of Read, the process appears to have been rather painless. It took less than a year after his passing to get to his intended beneficiaries. Vermont is better than many states; your heirs may not be quite so fortunate, especially if you live in larger states with more complex laws. By many accounts, California is among the worst for beneficiaries; a three-way tie for next-most difficult is between New York, Florida and Illinois.

A revocable trust will cost you some dollars in legal fees to set up, but your heirs will thank you.

The bad

Certificates are a pain in the neck: As the Total Return blog pointed out, Read was lucky in that the certificates were all current and up to date. “That doesn’t always happen.” It can be a challenge to determine “all of the income-tax return info via dividends over the year.” Stocks that are not in physical form or in an account can be difficult or time consuming to trace. Certificates that are in electronic form and consolidated with an adviser or broker can save heirs lots of headaches later on.

Money is a means to an end, not an end in and of itself: Read might have benefited from reading one of the very first columns I wrote for The Washington Post back in 2011: “7 life lessons from the very wealthy.” That column discussed the insights about investments and experiences with wealth.

Among them were some specifics that Read might have enjoyed. Perhaps he could have given away his money while he was still alive. That might have provided some joy to him, seeing the effect of his legacy.

Understanding the value of your time was another. Of course, money has value, but so too does your time. One can wonder if we are using our limited time on Earth in a way that brings us additional life satisfaction. It’s a trade-off we all make.

The Washington Post


Henry Sapiecha

Money saving tips for each & every day of the week

The saying goes that if you look after the cents, the dollars will take care of themselves.

woman looks at money jar image

Trying to save money can be a daunting task, so an effective way to get started is by committing to small, regular savings. If you can maintain your discipline, you will start to see the fruits before too long.

By committing to one money saving practice every day of the week, you could soon see the savings stack up. Here are some suggestions to help you get started:

Monday: Make breakfast a habit

Give or take a few pangs of the Monday Blues, you should be fresh on Monday mornings after a weekend off. Get up early and make yourself breakfast and a cup of tea or coffee instead of purchasing one for the day. This will save you up to $4 for a coffee and even more on takeaway food.

Tuesday: Exercise for free

Why pay for a gym membership when it costs nothing to run or activities outside? What’s more, you get to exercise out in the outdoors without the dreadful gym playlist assaulting your ears.

Wednesday: Be resourceful

Wherever possible, look to capitalise on multipurpose household items. For instance, things like baking soda and vinegar can double up as cleaning agents, instead of buying expensive miracle products from the supermarket that rarely get used.

Thursday: Monitor petrol prices

Don’t let yourself get caught with an empty tank at the height of the petrol cycle. Throughout the week, keep an eye on the pattern of petrol prices with resources like If you see it at a low point, it might be in your best interests to fill up even if you have half a tank left. Granted, it’s only a small saving, but it’s more substantial than stopping the pump at $0.02 above the dollar.

Friday: Cut out costly habits

Most of us have expensive habits that could be eliminated. Smoking is an obvious one from a health perspective, especially given the eye-watering cost these days. Drinking is also an expense that can add up quickly. Either limit your consumption or restrict yourself to only buying from bottle shops where you get more value than in bars.

Saturday: Have a night in

Rather than always meeting friends out at a bar where you’ll encounter exorbitant food and drink prices, turn your weekly catch-up into a night in. A home-cooked meal with cheap drinks and good company without the fuss will end up saving you big time over the long term. You’re also likely to save on costly late-night taxi fares.

Sunday: Enjoy local entertainment

There are plenty of options for free local entertainment on Sundays in the form of events, exhibitions, free walks and activities. Check out websites or event guides like or to see what’s going on in your city.

Saving is easy when you start small and stay consistent. What money saving tips will you use today?

Henry Sapiecha

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