Flexibility

Setting financial goals is the best way to achieve what you want in your financial life, however, you must also be flexible.

Recently, I had to raid my emergency fund for a non-emergency purpose: advanced rent of 6 months. However, because I was willing to raid my emergency fund, I believe I received a better deal from my landlord.

Also recently, I made the mathematical calculation to see if it was better to pay off my private loan aggressively or to take it slow now because I am still paying capitalized interest which counts principal and interest as interest payments for tax deduction purposes. My goal was to pay the loan down aggressively, however, after doing the math, it did not make sense until the capitalized interest was paid off.

Therefore, it is always best to be flexible if it benefits you in the long run.

My financial goals are now the following:

1. Continue to contribute up to the match to my 401(k) (4% of gross salary)
2. Make my emergency fund what it was before
3. Contribute 11% of my gross salary to my Roth IRA
4. Then think about saving extra for increased student loan payments in the future

Debt and Savings

If you have debt, you are probably aggressively paying it off, or should be. If you follow the Dave Ramsey Plan (or a version thereof as I still believe in high interest loans should be paid first), you will try to pay everything off before you save money for an emergency fund or in your retirement fund.

If you have student loan debt that will be dismissed after a certain amount of years because you work for a non-profit, for example, you might not want to pay off the loans quicker than you should.

In my case, it mathematically works out better if I pay the minimum on the loan that has capitalized interest because the principal and the interest is currently tax deductible. Therefore, I'm not in a rush to pay that off until the capitalized interest is paid off.

For me and the people whose loans will get dismissed, a savings account valued at the same amount as the student loan is necessary to feel the debt freedom that everyone should want to experience. This way, if something happens - you quit working for the non-profit, decide to move, etc., you have the freedom to pay off the loan in full and be debt-free.

Netflix

If you find yourself renting movies at the store on pay-per-view, you should consider investing in the cheapest plan of Netflix. Now that you can watch hundreds of movies by streaming online, it seems like the way to go. You can also get the usual current movies from your queue. What's not to love about it?

Comparison Shopping

If you are looking to buy something, even if it's small like light bulbs, you can do a comparison search on Google Shopping. There of course are many other sites like Price Grabber and Nextag, however, I feel that the Google Shopping website is advanced enough now to service basic needs.

For example, I've been looking at mirrors for a long time. I found some for $10 at Ikea. However, after doing a Google Shopping search for wall mirrors, I found a mirror from Linen's and Things for $5, used 20% off coupon and received free shipping. Mirrors by the same company and of the same size went for over $50 on other websites. Not every deal is this good, but if you know what you want, you can walk away with great savings.

Micro Lending or Peer to Peer Lending Websites

If you are looking for a personal loan, great places to look are the micro lending or peer to peer lending websites. You apply for a loan and investors contribute a portion of that loan so that you have several people lending to you at one time. The interest rate is determined by what you want to pay, by what the investors want to pay, and your credit rating. Here are a couple of the more famous websites:

Prosper
Lending Club

The best use I can think of for this type of loan is for start-up money for a business. Don't consolidate your student loan debt using these websites as they won't come with perks such as IBR repayment or deferment options.

You could also be an investor to a person seeking a loan. The websites advertise high returns, however, be ware, as some of the high risk loan seekers do not repay and you, as an investor, will have to file for collections of your loan and you might loose the money you lent out. What I like about these types of websites is that you can lend $50 to 50 different people. This feature allows you to diversify yourself.

Tax Brackets Explained

There are several tax brackets in the US tax system. If you earn more money, you pay a higher percentage on some of your earnings. Here is how the tax brackets break down:

To see how this would break down for other statuses, visit the Money Chimp Website.

The key to understanding the tax bracket system is that if you currently earn $34,000 and you are filing as a single tax payer, you are in the 15% tax bracket. If tomorrow, you will receive a tiny raise and your salary will be $35,000, only $500 of that will be taxed at 25% and the remaining $34,500 will keep being taxed at the 15% rate.

Shipping - FedEx

If you are shipping something via FedEx, the cheapest way would be on a business account. You can easily create an account yourself at FedEx Open an Account Website. Not only are you saving money by creating an account, you are also saving your address and credit card information in the system, which allows you to use FedEx easily next time.