Lately, I've been more vocal about the importance of looking for ways to boost your income. Cutting costs is awesome — don't stop — but if you really want to supercharge your debt reduction or your saving, you have to look for ways to earn more money.

"That's great," some commenters have said, "but how do we earn more money." That's a fair question, though it's much tougher to answer than, "How do I spend less?" For the most part, we all spend money on the same things. But we all earn money in different ways. We each have different work ethics, abilities, and styles. It's much more difficult to generalize about ways to earn more money.

All the same, it's a topic we've explored many times in the past here at Get Rich Slowly, in articles like:

We hear a lot about the doubts over the future of Social Security. Here are a few I've come across:

• "Three-fourths of those 18 to 34 don't expect to get a Social Security check when they retire." — USA Today

• “My husband and I are both 28, and we laugh every time we hear [‘yes, you'll receive Social Security']. No, we won't receive Social Security, even though we've both been paying into it since we were teenagers...I can't think of one of my peers who expects Social Security to still be around when we're retirement age. Call us bitter.” — A comment to my last column (“When Will You Be Able to Retire?”)

• “Six in 10 Americans who have not yet retired believe they will get no Social Security benefits when they retire, more pessimistic than at any time since Gallup began asking this question in 1989.” — Gallup

• “According to one survey, 100% of people married to Robert Brokamp wish he would shave his head rather than try to pull off a comb-over.” — My wife

If you're among the doubters (of Social Security, not my hairdo), then listen up: The following paragraph is the most important group of words you'll ever hear regarding Social Security. It's key to understanding how the program works, and whether you'll get anything. Here it is:

Social Security is predominantly a pay-as-you-go program. Most of the payroll taxes that are collected from today's workers go into the checks of today's beneficiaries. Thus, as long as there are people working and paying payroll taxes, there will be money to pay Social Security benefits.

According to the m

Kris and I live in a small, quiet neighborhood south of Portland. When the trolley line ran through here — between 1893 and 1959 — Oak Grove was actually thriving community, with shops and stores and more. (It's true! I've seen pictures!) Now, though, downtown Oak Grove, such as it is, consists of a convenience store, a hair salon, a joint once named "the best dive bar in Portland" — and the home office of Get Rich Slowly.

There's also another business in downtown Oak Grove: a small coffee shop that opened a couple of years ago. It struggled a little at first, but eventually business picked up, and it's become a valuable part of our community. In fact, Kris and I think of the Oak Grove Coffeehouse as the only real hub our area has.

But there's a problem. This summer hasn't been kind to the Oak Grove Coffeehouse. The business is struggling. Jason, the owner, has been forced to cut back hours. He's waiting for classes to resume at the nearby high school in hopes that the teachers and students will bring a cash infusion. But for now, things look grim. Here's a recent Facebook post:

My philosophy on credit cards has changed completely in the last five years. I've gone from anti-credit-card to pro-credit-card — but only for those who can use them responsibly. I think they're a great convenience, and I like getting cash back when I use mine.

But not everyone thinks this cash-back feature is a good thing. In fact, my inbox is a-flutter with folks who want me to comment on the recent credit-card study from the Consumer Payments Research Center. This study (which can be downloaded as a 810kb PDF from the Federal Reserve Bank of Boston) found that credit cards transfer wealth from the poor to the rich. How? Through fees and rewards programs.

From the abstract: Continue reading...

Note: Although I try to keep GRS a politics-free zone, today's topic is inherently political. I've stayed as neutral as possible in the article, but I know that there'll be some political discussion in the comments. Please keep conversation civil, as always.

Because I was frustrated with my own ignorance about the U.S. federal budget and our tax system, I recently spent twelve hours researching a variety of tax topics. From my research came two articles: last week's short guide to the federal budget and today's post, which answers some of my personal questions about taxes.

Last week, we tried to take a few small steps toward understanding the federal budget. We looked at where the U.S. government spends its money. But where does it actually find the cash to spend?

Note: Although I try to keep GRS a politics-free zone, today's topic is inherently political. I've stayed as neutral as possible in the article, but I know that there'll be some political discussion in the comments. Please keep conversation civil, as always.

Recently at The Simple Dollar, Trent posed the question, "How much do taxes matter to you?" As might be expected, his readers responded with passionate comments from both sides of the political spectrum. The discussion frustrated me, though. There's just too much misinformation, and people offer their opinions as if they were facts.

I'm as guilty as anyone else.

Last week, Diane dropped a line asking for information about American consumer spending. She wrote:

I am trying to find sites that will provide average spending habits — such as how much an average person spends on food per week or how much a family spends on entertainment, that sort of thing. I am hoping to see where my habits line up with someone of similar means in the same part of the country. Continue reading...

More about...Economics

Americans are beginning to save again, or so the media is reporting. The personal saving rate has jumped from 0.4% in 2007 to a whopping 6.9% in May. But what does that mean? Is it a good thing? And how long will it last?

The Personal Saving Rate

"Personal saving rate" is an economic term for income that is not used immediately to buy goods and services. It's money that consumers save for the future. (According to Wikipedia, it's "personal disposable income minus personal consumption expenditure".)

For decades, the personal saving rate hovered at about seven or eight percent. It would spike into the teens during times of economic turmoil, but then settle at seven or eight percent when things returned to normal. During the early 1990s, the personal saving rate began to drop. For the past ten years, it's mostly been two percent. Or one percent. Or close to zero.

From what I can tell, there were no drugs, no free love, and just a little rock-n-roll. But the “Woodstock for Capitalists,” as the Berkshire Hathaway annual meeting is known, offered its own ways to expand the mind. This past weekend, I was joined by 35,000 of my fellow shareholders — a record crowd — in Omaha, Nebraska, to soak up the wisdom of Berkshire's chairman, Warren Buffett, and co-chairman, Charlie Munger. They didn't disappoint. Despite their ages (Buffett is 78 and Munger is 85) and recent performance (Berkshire's stock was down 31.8% in 2008), the two multi-billionaires had plenty to say, which means there was plenty to learn.

I attended the six-hour meeting on Saturday and the two-hour press conference on Sunday, so it would be difficult to boil it all down to just three lessons. But I'll give it a try anyhow. (Keep in mind, however, that no recording devices are permitted in these events, so when I quote Buffett or Munger, it's a close approximation of what they said, based on how fast I could type as they talked. And that goes for any other “transcript” of the Berkshire meeting you read.)

Lesson One: Everyone Suffered Last Year

Did your portfolio plummet in 2008? Don't feel bad. Most everyone's did, including those managed by some of the greatest investors in the world. Berkshire Hathaway posted its steepest decline in book value ever. And the people in line to succeed Buffett and Munger (when they eventually join the Great Holding Company in the Sky) reportedly didn't do so hot, either. Not that we know who the potential heirs to the thrones are; Buffett has people in mind, but he's not naming names.

But

Over the past few months, the mainstream media has been filled with stories about the New Frugals and the return to thrift. People who once lived beyond their means, financing their lifestyle with debt, have "found religion". They've begun to embrace frugality, and have discovered the joy that can come through spending less.

The New Age of Thrift

Not everyone is happy about this. The March issue of Redbook contained an article called "The Upside of Living on Less", which profiled how four women are coping with the recession. The story prompted the following letter to the editor in the May issue:

While I love Redbook, something in your article "The Upside of Living on Less" rubbed me the wrong way. When describing the economic crunch, after rightfully blaming the banks and consumers who were charging more than they should have, the author wrote "Basically, we'd all been spending way more than we could afford." I don't appreciate being in the same category as overspenders. I am frugal with every cent, and I use every item to its utmost capacity simply because I don't believe in waste of any kind. I always will be like that, regardless of the economy. Even though we're all in this together, not everybody contributed to the country's financial mess. — Darcy Bailey, Mount Holly NC Continue reading...

More about...Frugality, Economics