Jim'sMoneyBlog

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How Much Is That $1 Coupon Really Worth?

IFG BlogJim Lorenzen, CFP®, AIF®

Did you receive some coupons in the mail?

We get them at our house!  Sometimes they come in envelopes, sometimes in books; we even receive them by email!  My guess is most people simply throw them away; but should they?   Maybe they should rethink what they’re doing!

If I gave you a “$1-Off” coupon, how much would it be worth?  $1?   Think again.

Believe it or not, what you’d be holding in your hand represents real cash flow!  For you non-financial types, cash flow is what’s left over after all taxes and expenses.  Now we’re getting closer to what that $1 coupon is really worth.

If you had to produce that $1 in cash flow on your own, you’d have to earn $1.39, assuming you’re in a 28% federal tax bracket and pay no state income tax.  If you live in California, New York, or some other high tax state, you’d likely have to earn far more in order to have $1 left over!

Now look at that “$1-Off” coupon again. 

Now you know what you’re really looking at:  FREE CASH FLOW!   It replaces $1.39 (maybe) or more, maybe much more,  in earned income!  That’s significant, don’t you think?

$1 may not sound like much; but, as mom used to say, “Pennies turn into nickels, nickels into dimes, and…”  you know the rest.  And, you can find coupons for nearly everything.   Our daughter-in-law saved $50 on tires!

Couponing has been a smart hobby for many Americans over the years; now you know why some have even made a little ‘home business’ out of it.   I was behind a lady in the grocery store one day who purchased a fully-loaded shopping cart of food for exactly 39-cents.   I don’t know how much money she saved; but, if she’s shopping for a large family with any frequency, she could be earning more in cash flow than if she went to a job and paid commuting costs and taxes!

Important caveat:  Use coupons only for the things you would normally purchase anyway.  Never buy something just because the coupon looks like a good deal.    When used ‘instead of money’ for the things you normally buy, you might be surprised just how much free cash flow you can replace during the course of a year.

Use the savings to invest in your `future self’.  You’ll likely be glad you did.

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Jim Lorenzen, CFP®, AIF®Jim Lorenzen is a Certified Financial Planner® and An Accredited Investment Fiduciary® in his 21st year of private practice as Founding Principal of The Independent Financial Group, a fee-only registered investment advisor with clients located in New York, Florida, and California.  IFG provides investment and fiduciary consulting to retirement plan sponsors and selected individual investors.  IFG does not sell products, earn commissions, or accept any third-party compensation or incentives of any description.  Nothing contained in this material is intended to constitute legal, tax, securities, or investment advice, nor an opinion regarding the appropriateness of any investment to the individual reader.  The general information provided should not be acted upon without obtaining specific legal, tax, and investment advice from an appropriate licensed professional. 

 

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IFG does not sell products, earn commissions, or accept any third-party compensation or incentives of any description.  IFG does not provide legal or tax advice and nothing contained herein should be construed as  securities  or investment advice, nor an opinion regarding the appropriateness of any investment to the individual reader.  The general information provided should not be acted upon without obtaining specific legal, tax, and investment advice from an appropriate licensed professional.  The Independent Financial Group does not sell financial products or securities and nothing contained herein is an offer or recommendation to purchase any security or the services of any person or organization.

Written by Jim Lorenzen, CFP®, AIF®

June 12, 2012 at 8:00 am