Do It Yourself and Save Big Bucks

04.16.08 | Money | 1 Comment | by Fred Siegmund

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In today's economy, we need to remind ourselves we can save without saving by using do-it-yourself production.

Suburban homeowners might employ a lawn service to take care of their yard or join a health club or gym with a personal trainer to take up a program of planned exercise. Do-it-yourselfers will get their exercise mowing the grass and avoid the lawn service and the health club altogether.

One of the often overlooked advantages of owning a home over renting an apartment is the opportunity to save with do-it-yourself production. Apartment renters lose the tax deductions for property taxes and home mortgage interest, but their rent has to cover all of the landlord's landscaping and maintenance costs.

Renters pay out of pocket each month while the homeowner can choose a few, or many, do-it-yourself savings from lawn care, painting the shutters, replacing faucet washers, or flashing the roof vents.

Condominium owners get property and home mortgage tax deductions, but lose some do-it-yourself opportunities since condominiums often provide landscaping and exterior maintenance in common as part of a monthly fee paid with after tax dollars.

Take just $60 a month out of a condo fee for landscaping and the savings are $8,835 for 10 years at just 4 percent interest.

Remember too that cost of living increases come as a percentage of gross income. If you have a $50,000 salary and a 3 percent cost of living increase, it will be $1,500 more in gross income. Before you get a dime, 7.65 percent goes to social security, at least 15 percent goes to the federal income tax and probably 5 to 8 percent goes to a state income tax. That's before you buy anything, which will also be taxed.

With heavy taxation and the loss of at least a third of gross income, do-it-yourself savings of only $800 or $900 will be equal to $1,500 of gross income. It is something to think about in a stagnant economy.

In the United States, nearly every transaction that can be recorded is recorded, then it's counted and taxed. In the mayor's office, or the county commissioner, or the state legislature, or the federal Congress, they want transactions. It is their bread and butter, so to speak.

Do-it-yourselfers have another idea.

Fred Siegmund covers America's jobs as part of work doing labor market analysis and projections for a client base of recruiters, trainers and counselors. Visit him at www.americanjobmarket.blogspot.com

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