Give Yourself a Raise

The Multiplier Effect as talked about on the AMIBA website is a way to give yourself and your community a raise. The way the multiplier effect works is that when you buy local you recirculate that money through your local economy in more ways than you do if you shop at a national chain. The impact happens in three ways:

Direct impact happens when the business spends money in the local economy to operate the business, including inventory, utilities, equipment and pay to employees.

Indirect impact happens when those other businesses recirculate that money to other local businesses.

Induced impact happens through consumer spending when employees and business owners spend money at local businesses.

The difference between spending your money at a local business versus a chain is that when you spend at a local business 48 cents of every dollar recirculates through the local economy versus 14 cents if the money is spent at a local chain. That’s a difference of 34 cents.

Now if we look at the GDP (Gross Domestic Product) per capita then we can measure how much of a raise we give ourselves when we shop locally. As I’m currently living there, let’s look at New Mexico. Per capita GDP in New Mexico in 2015 was $41,551. If all of that money was spent at national chains then each resident of New Mexico is giving themselves a raise of 14 cents of each dollar spent or $5,817 per year. Now if everyone spent their money at local businesses the amount of a raise everyone would be giving themselves would be 48 cents of each dollar or $19,944 per year. That’s a difference of $14,127 per person, per year.

This assumes that every dollar you spend is spent at local businesses and that everything you need is manufactured locally. Which is never the case. But, by shopping as much as you can locally you end up paying yourself more than if you shop at a national chain.

Look up your state’s per capita GDP and figure out how much of a raise you can give yourself by shopping local.

F#ck You Money

The popular definition of “F#ck You Money” is that you have enough money that when your boss asks you to do something you don’t want to do, like take a pay cut, you can say “F#ck You.” Following is a simple formula for creating “F#ck You” money.

Save 1/2 of what you make and invest it.

The nice thing about this formula is that the more you use it the longer you can say “F#ck You.” To make my point. Let’s say you get paid $200 every week. If, with your next paycheck, you take $100 and invest it at 5% interest you can tell your boss “F#ck You” for 1.05 weeks or 1 week and about 8 hours. If you do this on your first pay check you’ll probably be looking for a job, so I wouldn’t suggest it. But look at what happens if you do it for a year. Investing $100 a month at 5% compounded monthly will give you enough money to say “F#ck You” for 1.115 years or one year and 4.5 days. Having a year and 4 days to find a job before you run out of money is better than only having a week don’t you think?

Now look what happens if you do this for 5, 10 and 20 years.

5 years: “F#ck You Money” = 5.797 years or 5 years, 9 months and 17 days.

10 years: “F#ck You Money” = 13.131 years or 13 years, one month and 17 days.

20 years: “F#ck You Money” = 34.621 years or 34 years, 7 months and 14 days.

What do you think having the ability to say “F#ck You” for 5, 13 or 34 years is going to do to your presence of mind? I’m thinking it’s going to make you a hell of a lot more confident, less likely to take shit from anybody, make you a better employee and definitely allow you to negotiate your pay better. It makes sense doesn’t it? If you want to work out your own scenario go to the savings calculator on dinkytown.net.

The trick is saving half of what you make and investing it in something that will give you 5% interest. As for saving half of what you make check out my other blogs on how to save money: Affordable Nutrition, Buying Used, and Buy Local.

To get a consistent 5% return on your money you’re going to have to educate yourself on investments and there is plenty to trip you up especially the lure of higher returns. All I can say about the lure of higher returns is beware. If it sounds too good to be true it most likely is. A good place to start your education is with index funds. The other thing you can do is find a good wealth manager. But again, you’re going to need to do your homework. I would suggest against wealth managers at investment banks. There is something about that combination that stinks “conflict of interest” to me. Also, you don’t want a manager who gets paid commission on what they sell you. Instead pick one who gets paid on the value of your investments. That way they get paid more when your investments grow. So the incentive is to grow your investments. In the mean time start socking away the cash.

As an addition to saving money look at the ways credit cards and gift cards pay you back. Some grocery stores offer discounts on gas for every dollar you spend on groceries. Some even give you double points when you buy gift cards. If you shop regularly at a specific store it might be worthwhile to buy one of those stores gift cards. And, if you use a points earning credit card to buy the gift card you could be saving two ways. One, you earn points by buying the gift card with the points earning credit card. Two, if you buy it at the grocery store you can earn twice the cash per gallon off gas.

 

Top Reasons to Buy Local

The biggest benefit I see to buying local is that, compared to an online retailer, you return almost fifty times the amount of money back to your community. This increases the wealth of everyone in the community. It decreases taxes because it puts less of a strain on infrastructure. It employs more local people. It fosters choices more in line with the values of the community. It creates a more cohesive community which leads to less crime. It is healthier because with the increased cohesiveness there is the tendency to address health problems more effectively and the food is better for you.

Buying local also increases the unique characteristics of your community which increases tourism. When you go on vacation do you eat at a chain restaurant or do you sample the local fare? Do you shop at Walmart or do you try the local shops who have a more unique selection? Do you engage in the cultural activities that only your destination has to offer or do you choose the same types of entertainment you can find in every major city? You choose the local color of course. Otherwise, why would you go on vacation? Encourage others to enjoy a richer cultural experience when they come to your town. Support your local businesses.

If you want to increase your wealth and the wealth of your community get  involved with your local business alliance. They can help.