Financial Optimism, Cashback To Go Green, & How YOU Money 🫵

Happy Tuesday, money nerds! 🤓

“If you try and fail, congratulations! Most people won’t even try.”

I was chatting with a friend the other day who was sad about “failing” at one of their money goals… Their original plan was to save $10k in 2022, but they only have about $3k saved so far and likely won’t hit their goal by year end.

When I heard this I was like, “Dude congratulations!!! Don’t be sad — an extra $3k saved is awesome. Better than $0 saved, and waaaay better than not trying at all. Plus, now you have experience and can learn from any mistakes you made.”

And I think maybe this advice might be relevant to many others right now… Whether you’re trying to save more, buy a first home, or doing anything *new* you haven’t tried before…

If you are failing, congratulations! It is evidence that you are trying and learning.

Keep going 💪

TO DO

Do nothing!

Well, specifically, we mean buy nothing. 🙅

Join the millions of people around the world who have pledged to buy less, share more, and reduce waste via the Buy Nothing Project.

You can find a local group via facebook search (or global list here), and for all you non-facebookers there are mobile apps (iOS | Android) to connect with peeps in your area.

Before you buy anything new, throw out a request to your community to see if anyone has a spare one laying around. Money saved is better than money earned. 👍

ECONOMY

Becoming a Financial Optimist! 🙌

Came across a few really interesting charts last week…

This first one comes from the Pew Research Global Attitude Survey. It shows how people feel about their children’s financial future vs. their own today 👇👇👇

Seems most people think their kids are going to be financially worse off in the future. 🤨

And it’s not just feelings about the future. Here’s another kinda related chart that shows our *feelings vs. reality* when it comes to current inflation (courtesy of Axios) 👇👇👇

Seems a lot of people are out there complaining about “significant increases” for a many consumer goods when in reality they’ve only increased a few %. Just like the authors of the original study say: “perceptions of inflation don’t always match reality”.

Anyway, this got me thinking more about the importance of financial optimism. I’m not sure how you’re feeling currently, but it never hurts to check in on your money mindset…

Couple reminders for y’all:

Your kids’ economic future is somewhat within your control! It doesn’t take a boatload of inheritance for your kids to be well off, it’s more about teaching them good money habits while young.
Celebrate and dwell on all the good things happening in your financial life (vs. the bad stuff). Studies show being optimistic and positive has a direct impact on stronger financial health.
Action is the antidote to anxiety. If you’re not feeling great about something, put a plan in place and make it happen! 💪
Remember, setbacks are temporary. So are recessions (in the long run).
FYI apparently optimists tend to live longer than pessimists.

🎙 Episode 129: Becoming Financially Optimistic

💻 New Blog Post: Practicing mindful spending

🧑‍💻 HTM Blog Post: Ways to prepare for a recession

SAVINGS

Inflation Reduction Act — What’s in it? 🤷‍♂️

There are a LOT of things covered in this (non-inflation reducing) act that went into effect last week.

Here’s some of the main stuff that might affect you:

New EV Tax Credit 🚗
Mostly same as the previous credit — $7,500 credit if you buy a new EV, but with these conditions:

EVs must be assembled in USA (only these approved vehicles qualify now)
Cars must be under $55k purchase price for sedans, and under $80k for SUVs/trucks
Income limits are $150k annually for single filers and 300k annually for MFJ to qualify for credit

*Used* EV Tax Credit 🚘
Up to $4,000 tax credit for buying used EVs, under these conditions:

Begins Jan 1st, 2023 (might be worth holding off your purchase ’til next year)
Must be under $25k purchase price
Credit is $4,000 or 30% of vehicle price (whichever is lower)
Income limits are $75k annually for single filers and 150k for MFJ to qualify for credit

Greenify your home 🌱
There are several incentives for energy efficient home upgrades:

Home Improvement tax credits: equal to 30% of expense (up to $1,200 *annual limit*) for upgrading windows, doors, heat pumps, boilers, and heaters.
High-Efficiency Electric Home Rebate: Up to $14,000 total for electrical appliances, wiring upgrades, heating cooling pumps. Income limits apply (up to 150% of your area’s median income)
Federal Solar Tax Credit: You can now claim 30% of the cost of a new solar system equipment and installation (no expense limit, no income limit), and this 30% credit remains in effect until year 2032!!

Reduce Healthcare costs ⛑
Some of this is an extension to the affordable care act, protecting benefits already in place.

This act extends enhanced healthcare subsidies that were set to expire soon. It protects about 13 million existing enrollees who have health insurance via healthcare.gov or their state exchange from steep price increases, as well as lowers the cost for new enrollees. (Average estimated savings = $800 per year)
Puts a price cap on prescription drugs for people on Medicare bringing costs down to ~$4000 per year by 2024, and lowering to $2k in 2025. Caps insulin at $35/month. Also free vaccines for seniors!
Allows Medicare to negotiate prices of ~100 drugs over the next decade. Beginning in 2024, drugmakers will have to pay a rebate to Medicare if they raise the price of their medications higher than inflation rate.

Stronger Tax Enforcement ⚖️
The IRS will receive nearly $80B of new funding, helping them:

Hire approx 87,000 new IRS agents (apparently 50k IRS employees are retiring over the next 5 years)
Clear the backlog of tax filings, and process future returns faster
Audit more people (targeting mostly high income earners and small businesses making over $400k/yr)
Enforce a 15% corporate minimum tax for $1B+ companies and stock buyback tax for publicly traded companies.

*****

Please excuse this quick and dirty list. As with any new law, it takes a while for everyone to decipher what’s inside a 700+ page official Act document. We’ll share more as we learn more relevant stuff, but in the meantime please do your own research before making purchases or counting on incentives/rebates!

ICYMI

In other news…

iOS Update 📱
For those of you using Apple devices, you should probably install the latest software update ASAP. Apple found some security vulnerabilities in their code affecting devices dating all the way back to 2015.

“Like New” 🤸
LuluLemon launched a Like New Online Store, allowing customers to exchange their “gently used” work-out clothes for new ones or store credit. You can also buy second hand gear to help the company’s goal of reducing landfill waste.

Groceries 🍅
Many grocery stores reject completely edible food items because they don’t have enough “curb appeal” to display in their stores. Well, check out BuySalvageFood.com — it’ll help you find a grocery store that picks up these slightly imperfect foods and sells it to you on the cheap! Also check out these tips to save money on groceries.

Credit Card Rec 💳
One of our fav *every day* credit cards now has a sign-up bonus! The Citi Double Cash Card gives you a $200 welcome bonus (after spending $1.5k in the first 6 months) and 2% cash back on everything you buy. Learn more about one of our favorite credit cards here. No annual fee either 😉

Social Security 🎂
Happy Birthday Social Security!… The program turned 87 years old last week. Will it still be around for millennials and gen z’s later in life? We think so, but with modifications. Here are some other thoughts on SS we talked about on the podcast recently.

HOW *YOU* MONEY

Arielle, 24y/o from Portland, OR 🌲

Occupation: Auditor
Salary: $68,000/year

Paycheck deductions: -$1,950/m (Taxes/401k)
Rent: -$800/m
Car loan: -$400/m
Living expenses: -$750/m
Leftover savings each month: ~$1,250!! (not every dollar is accounted for in my budget due to some wiggle room)

How are you investing your excess savings each month?
I invest $500/month into a Roth IRA, $450 is saved towards a down payment, and $325 goes into sinking funds for vacations

Biggest “craft beer equivalent” splurge:
My car

Best savings hack/advice:
Reduce your expenses as much as you can. I just got two roommates to cut back on rent and utilities. Otherwise as a single person working a lot, I just generally don’t spend a lot of money

Recent money win and how did you celebrate?
Growing up my family always struggled with money, so the first thing I did when I finally graduated college was to set a money goal of saving 6 months of an emergency fund so I would always have something to fall back on. Within one year of starting my new job, I was able to save six months worth of expenses! To celebrate, I finally started saving for something I’ve always wanted to do, go to Hawaii! There is slow progress toward this goal, it wasn’t nearly as important as saving my emergency fund, but it’s something I’m proud of and I can’t wait to go to Hawaii knowing I’m secure with my emergency fund.

**Editors note: One thing we love about Arielle’s expense breakdown is that not all her money is accounted for as leftover savings. (There’s about ~$500/m allotted for “wiggle room”). What’s cool about that is life can change pretty rapidly, especially in your 20’s, and having a buffer each month allows you to adapt/expand your spending without compromising your other money goals. Cheers for sharing Arielle!**

Thanks for reading and have a great week ahead!

Best friends out 🍻