Do you negotiate your rent? Measure your investment performance? How do you save on vacation meals?
Cutting out unnecessary expenses – especially if you can lower the big ones, such as rent — is one easy way to free up more money from your budget to invest for your future.
We launched Mint Answers a few weeks ago to give consumers a platform to voice their personal finance and investing questions. Since then, hundreds of you have asked – and many more have chimed in with responses. (At Mint Answers, your questions are answered by experts, as well as by other community members like you.)
In this week’s Mint Answers round-up, we give you some answers to the questions above, contributed by Mint users and community members.
If you saw an apartment that is within your budget and seems to be a reasonable price based on the other units you’ve seen in the area, would you still try to negotiate the price? Bear in the mind that the apartment has been sitting empty for a month and that there are very few applicants. Or would you just appreciate the fact that you found a great place at a good price and leave it at that?
1. … the fact that the place has been sitting empty may mean they’re being picky. If you’re going to negotiate, it can’t just be about price; you need to show why you’re an awesome tenant, worth giving a price break to because you’ll pay on time and won’t break stuff.
2. Brought my rent from $950 asking down to $725. Worked quite well for me 🙂
If I invest $100 each month in an index fund, how do I measure performance? Do I track each month’s buy as a separate investment?
1. The most common way to measure the performance of a series of investments is to use the internal rate of return (IRR). This gives you the periodic rate of return at which your invested dollars produce the investment results you see at the end of the period. The formula itself is fairly complex, but a financial calculator or the IRR formula in an Excel spreadsheet will do the heavy lifting for you. What you need to know is the amount that you invest (or withdraw) during any period (month or year), and the value of the investment at the end of the period.
For example, if you invest $100 per month in XYZ fund, and your investment is worth $1,260 at the end of twelve months, your IRR for the year would be approximately 9%.
In contrast, you had invested the entire $1,200 at the beginning of the year and had an investment worth $1,260 at the end of twelve months, your IRR would be approximately 5%. This reflects the fact that you had your money invested for a longer period on average (because it was all up front), and so the final result represents a lower rate of return.
2. What’s wrong with just measuring the performance of the underlying asset? I see what you’re getting at, but in the end, all you care about is how much you have relative to what you put in, right?
3. Because the underlying asset’s value will be different for every $100 buy. After 2 years, if I own 500 shares of stock X, it’s easy to say what those shares are worth. But how do I know how much I’ve “gained” if those 500 shares were bought at different prices?
Food seems to be one of the things that makes traveling expensive. How can I save money on my upcoming vacation?
1. You don’t say where you’re going on vacation, but I’ve attacked this problem three ways.
– Rent an apartment. It may cost more than a hotel room, but often doesn’t. A good place to find a vacation rental is VRBO.com. The thing that always puts me over budget on vacation eating isn’t any one particular blowout meal, it’s the fact that I have to eat all my meals out or get room service. Having scrambled eggs in your apartment every day before heading out can save you a bundle. Furthermore, you can go out for a lavish lunch (when nice restaurants often charge half what they do at dinner) and have dinner in.
– Vacation someplace with excellent, cheap food. In the past I would have recommended Thailand. Maybe not at the moment. Vietnam, India, and Mexico come to mind.
– If you’re vacationing someplace with expensive food—New York, say—spend some time on Yelp or Urbanspoon and get excited about some new ethnic restaurants. Or neighborhoods–you could eat Chinese food for a week in Flushing and never get bored. I went to New York twice last year, never set foot in Per Se or Masa, and didn’t miss them. (Sorry, chefs!)
2. Eat where the locals eat. Authentic food for lower prices. Avoid American restaurants if possible.
3. Stick with tap water instead of a soda, where safe. Keeps you hydrated and healthy, soda is a rip off
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