Archive for the ‘Personal Finance’ Category

I Gave Myself a Raise

Money Tree

The following is a staff writer post from MikeS.  He is a married father of 2.  So, with the cat, he ranks number 5 in the house.  He loves numbers and helping people. Please leave any questions or comments below for either Mike or Crystal.

I recently gave myself a raise, not my salary at work, though that would be nice, but my allowance.  As I have mentioned before, my wife and I each receive monthly allowances.  This helps us to stay on budget, as wants are paid for via allowance money for the most part and needs come from the household budget.  I have been finding recently that my allowance is too small.  In the past, I have managed to get by with a much smaller allowance than my wife.  That ability to get by has been under pressure for the last year or so as my wants have started to increase.

Increasing Wants

The biggest expense that has come up, is I am trying to surprise why wife with a second-honeymoon in a few years.  Don’t worry; she won’t see this post, so I haven’t spoiled the surprise.  It will be our 15-year wedding anniversary, as well as, her 40th birthday that year.  I’d like to surprise her with the trip.  I am estimating the cost of the trip at around $6,000.  I figure I can cover that cost between a combination of savings from my allowance and tax refunds.  I can’t dip into the normal household budget or she would know. 

My goal is for me to save roughly half the cost from my allowance and the remaining from the refunds.  My portion comes to about $600 a year or $50 a month.  The second biggest expense that has been coming up has been running shoes.  I have been running a lot more recently and thus shortening the life-span of my shoes.  The shoes are just over $100 a pair.  I had been getting away with buying only 1 pair a year, but with training for a marathon, this year I will need 3 pairs.  Even with just those two things, my allowance would be insufficient, but I also have been wanting more recently.  That could be due to more financial stability for the household in general.  We are probably in the best financial shape that we have ever been in.  Since the cost of my wants is going up, I needed to find a way to pay for them.

Increasing Pay

How can I give myself a raise, if my salary hasn’t increased?  The first was to pick up a small side hustle, staff writing.  My wife and I agreed that any money earned outside of my salary belongs to that person.  So, my side hustle doesn’t have to be shared with the household. 

I next examined my credit card.  As part of our allowance strategy, both my wife and I are allowed to have our own credit cards.  This helps tremendously with managing the household finances as everything is separate.  The only requirement for the credit card is that you cannot carry a balance.  I had a 1% cashback card, but since I wasn’t spending a lot, I wasn’t getting a lot.  A few months ago, I developed a new strategy. 

I now have two cards, one from Bank of America, the other from Discover.  The Bank of America card gives me $30 every quarter if I have paid more than the minimum on my bill every month.  That’s $120 a year for doing what I would do anyway.  As a comparison, I’d have to spend $12,000 at 1% to earn that as cashback.  My allowance isn’t that large.  What I’ve done is take one recurring charge on our normal household card and switch it to this card.  It’s paid in full very month and it’s above the statement minimum payment.  The Discover card is their It card.  It has 1% cashback in general and a 5% rotating category every month.  I have been using it for my expenses and then if a household item is in the 5% category, I’ll use it for that too. 

For example, gas stations are the category now, so when I fill-up I use my card rather than the household card.  I estimate this will allow me to reap an extra $50-$100 dollars a year.  That’s about $800 extra a year, which about covers my increasing wants.

Dealing with Lifestyle Inflation

My increasing wants can be attributed to lifestyle inflation.  Now that we are more financially secure, I want to enjoy the benefits of our hard work.  The trick is to keep in my mind the behaviors that put us in trouble in the first place.  Namely, not saving for a large purchase beforehand and not making savings a priority.  Since I could not increase my allowance directly, without disrupting the household budget, I had to get creative and find another alternative.  The same principals can be applied to any expense.  If you want something bad enough, you should be able to find a way to pay for it.

$10 Per Month Cell Phone Plan – My Experience with Republic Wireless

Photo by where_ever_i_am_ via MorgueFile - used w/permission

Recently I decided to stop overpaying for my mobile/cellular phone service. At $150 per month for two lines, I realized there had to be a better and cheaper way.

Finding a New Plan

Locking myself and my wife into a neverending stream of contracts, two year commitments on a phone barely designed to last one and a half. Even the top model phones can’t stand two years of service, losing battery life and generally acting like a ten year old shitty computer after a few months of use.

Smartphones have become an integral part of our lives. Just sit on a park bench or watch people on public transportation. Hell, just walk people walking down the street, sneaking a look every few steps at the ground to make sure they don’t get run over by a car. And the recent story where a woman died after running back into her burning house for her cell phone, injuring a police officer in the process, shows more than anything that our smartphone addiction is reaching dangerous heights.

So in addition to saving money, I challenged myself to do away with the 24/7 smartphone. Republic Wireless, one of the newer cell providers that resell access to the networks of Sprint and Verizon, has a $10 per month cell phone plan that gives you data access only on wi-fi. That means when you are travelling between your home and office, or out camping, you won’t be able to surf the web. I know that most of you couldn’t stand the idea of not being able to distract yourselves on a boring train ride to the office, but I’ve been without a smartphone for about two months and I am happy to report that I don’t miss it.

How Much Am I Saving

The first thing I did was do the math. My wife still had a year in her contract on an iPhone 4, and I had two months left in my two year agreement. I called AT&T to inquire about my early termination fees. To cancel both lines and break my contract would cost $380. Many would balk at a fee like that, and in fact, fees for early termination are the number one reason in my unofficial survey that friends and colleagues hesitate to make the jump. One of the benefits of financial independence is that you are able to spend money to save money. So that’s what I did.

I figured out that waiting the extra two months to cancel my phone when the ETF went away would actually cost me $100 more than just cancelling immediately. That’s because of the monthly rate for the service. I also did the math a bit further and found that it would only take 5 months to reach my “break even point,” which is the date by which I will have saved enough by switching to pay for the $380 fee. After that, the ETF would be zeroed away, as well as the $300 additional funding I would need to buy two new phone from Republic Wireless. I would be saving $105 per month, every month, going forward.

So my upfront costs were actually $680 – hence the notion of spending money to save money. If I hadn’t paid off $100,000 in debt and not been living debt free, I might not have been able to do this. Time is money, and I have both, so I could do it.

My cell phone bill went from $150 per month for two phones to $45 per month. That’s with me getting the $10 per month cell phone plan, and her getting the $25 per month cell phone plan. The difference between them? She gets unlimited 3G data wherever she is, I don’t. That’s because she is a stay-at-home mom taking care of two kids, and living in a fairly unfamiliar city, we don’t want her to be without GPS or the ability to look up needed information when out and about.

How Does Republic Wireless Work?

Republic Wireless offers four rate plans, and almost all of them are cheaper than any of the major providers like Sprint and Verizon. They make money by operating on a dual calling system: when you are connected to Wi-Fi, your telephone calls are routed through the internet via a VOIP protocol. When you aren’t on Wi-Fi, they use rented access to existing providers, as MVNOs. Republic’s hope and belief is that most of us are connected to a Wi-Fi access point at most times, and the free usage they get during those times will more than pay for the times they need to access the paid cellular networks.

Those are the positives, so let me tell you about the negatives, which may actually not be negatives for you. Republic only offers two phone options, the Moto G for $150 and the Moto X for 180-200 (these prices will vary based on when you are reading this). That’s because the phone must be preconfigured to use their unique dual access calling system. If you want to save even more money, Republic allows you to purchase a used Republic Wireless phone from another ex-user or upgrader and activate it.

We both got the Moto G, and I will say that I like it as much as my older HTC One X that I ditched. My wife likes the phone more than her iPhone 4 because the camera actually turned out to be quite good and she likes the larger screen.

I haven’t noticed noticed any call quality issues that would make me not recommend their services. Obviously you’d be best served by living in an area where Sprint gets good coverage. The only issue I had was when I returned from vacation, I forgot to switch my phone from the $5 per month plan of Wi-Fi only, and went to a wedding. Realizing that I had to switch back to my $10 per month cell plan, I could not do so because Republic Wireless requires you to have wi-fi access to do so. So this negative was actually my fault, and was the result of a really good positive, which is that Republic Wireless allows you to switch your cell plan twice a month. So if you are going out of the country for two weeks, you can drop down to the $5 per month wi-fi only plan, which leads me hahaha to another negative, which is that Republic Wireless phones do not work internationally…but…if you are connected to Wi-fi overseas, you can use your phone just like you were in the USA. Your friends can call you for no extra fee, and you can call them without dialing international codes or prefixes.

Is It Worth Switching?

If you want to save some real money and can live with the minor downsides, or if you want to try to limit your smartphone use, Republic Wireless is highly recommended. For my family, we are saving $105 per month, which is definitely enough to convince me to switch. The main driver was the frustration of paying $150 per month, and some upcoming costs that were going to rise (rent). In addition to switching our cell phone service, I switched auto/renter insurance providers, saving another $35 per month. Sometimes smart money management is staying even at zero in a time of rising costs.

Are you looking to switch your cell phone plan too?

3 Main Ways to Market Your Small Business

Photo by Cohdra via MorgueFile

I started my own pet sitting business about 7 months ago.  It went from nothing to about $1500 a month since then.  I’m not a marketing genius or anything like that.  But I do have a solid work ethic, I love animals, and I try to make every pet sitting job go as well for my human clients as for my animal ones.  :-)   Here are the 3 main ways that you can market your small business:

Craigslist and Other Sites

I went to Craigslist first.  A professional posting that is well written and contains all of the major info is the best way to make a first impression on anybody searching your niche that has to decide between you and someone else that offers the same service.  My Craigslist posting contain my experience, services offered, general pricing, and the link to my pet sitting website and all of my other contact info.  I make sure to post in every category that may be searched for pet sitters.  I also repost at least once a week.  Altogether, about 95% of my jobs come from my Craigslist posts.

I also listed myself on Care.com (although they are not very respected overall) and Sittercity.com.  I splurged and spent $10-$15 on both sites to have them run their official background check too.  I’ve gotten a grand total of 3 jobs through those two sites.

Word of Mouth

As with all businesses, word of mouth is huge.  Happy customers spread the word and you get a better reputation and more calls.  I have personally received several jobs just because happy customers and family have told others about me.  The best way to get people to talk about you is to exceed their expectations.  I treat all of my pet sitting animals like my own or even better, lol.  I’ll also do little but thoughtful things around the house if I have any free time.  I just washed one person’s dishes since they had to leave hurriedly because her grandma was sick.  People appreciate thoughtfulness.

Print Advertising

I have business cards via Vista Print, magnetic car door signs, and I’m looking into leaflet design tips.  Overall, people may not call you because of your printed items, but they do shout professionalism.  My future clients seem to request my card sometimes just to see if I was taking it seriously enough to have cards printed.  It also helps that my cards have a memorable photo with me and a parrot on my head…

penny without words

What other tips do you have for us?

Changing a Need to a Want

Money Tree

The following is a staff writer post from MikeS.  He is a married father of 2.  So, with the cat, he ranks number 5 in the house.  He loves numbers and helping people. Please leave any questions or comments below for either Mike or Crystal.

I recently made a change to something I had previously considered a need, dry cleaning.  I don’t have to wear a shirt and tie to work, as my workplace is business casual, but I prefer it.  I have been wearing a shirt and tie for work since my internship in college.  I have also been going to the dry cleaners once a week.  In the last few weeks, I have been rethinking that habit.  I have the money budgeted for the dry cleaning expense, but I began to question whether that’s where I wanted my money to be going.

Expenses Trending Upward

Over the past several months, I have been seeing a couple of my expense categories trending above their respective budget allocations, namely food and what I call house.  Other than I think the kids are eating more, I can’t say for sure what is driving the increased food spending.  I just know it’s been about $25 a month higher on average.  The house category has also seen increased spending.  The house category could simply have been under estimated.  I have been in my current house for 3 years now and I still feel like I am trying to get a handle on the routine maintenance costs for it.  I have a good handle on the things that I know come up on a regular basis, but costs still seem to be outpacing my budget.  Again, it’s not a huge amount, probably in the $25 a month range.  Since, I won’t receive any salary changes until April of next year; something would have to change if I wanted to address the shortfalls.  It may have been Crystal, that triggered me to reevaluate my expenses, but I decided to look and see if there was anything that I could change.

Is It Really a Need?

As I stated earlier, dry cleaning has been in the budget from the beginning and I have always treated it as a need.  When I reevaluated my expenses, I questioned that assumption.  I was spending about $105 a month for dry cleaning.  In the beginning, when I was wearing suits, this made more sense.  All of my suits were dry-clean only.  Today, I simply wear slacks with a shirt and tie, none of it is dry-clean only.  The only thing preventing me from cleaning and pressing the clothes myself was me.  I started thinking whether the $105 on dry cleaning was really where I wanted the money to be going or whether there were better ways to allocate that spending that money.  It was then that I decided that I could clean and press my own clothes and reallocate the $105 to other areas.

Redistributing

The first two things to account for were easy, food and housing.  I will begin to allocate an additional $25 each month to each category.  This should hopefully bring those categories back on budget.  The next allocation was to additional savings.  I will be adding $25 to the monthly amount that I send to my Vanguard brokerage account.  That will bring that amount to a total of $75 a month.  I then decided to up our allowances, or “fun money”, by $25 a month.  I’ll allocate $15 to myself and $10 to the wife.  Yes, this is certainly a want, but I reason it that I am doing something to earn it by washing and ironing the clothes myself.

Constantly Changing Budget

My budget never seems to remain the same during the course of a year, which is a good thing.  As my opinions change or evolve on what I believe the best use of my money is, my budget reflects it.  I certainly don’t make daily or even weekly changes, but a few times a year seems to be the norm.  This helps me to stick to the budget as I believe it gives me the best chance to achieve my goals.

Saving Money Everywhere We Can

cash 2

Mr. BFS and I just made the appointment to have our cable cancelled this coming Sunday night.  My discounted rate was expiring and I was not okay with the bill going up to $170 just to tape our shows.  And we’re making other cuts too.

Utilities

Our water bill is pretty much set since we aren’t allowed to shop around.  Same goes for our natural gas bill.  But I do find the best electricity rates that I can at the end of every contracted term.  I don’t even need to look at cool things like an energy conversion calculator to know that for every 1 cent per kilowatt hour that I save us, it’s like putting $15 into our pockets.  I have been able to consistently keep our rate between 8.5-9.5 cents per k/h for the past 3 years.  :-)

Extras

We generally spend on things that make us long-term happy but cut things that don’t affect us anymore.  Our next plan of attack is to transfer our cell phone service over to Ting Wireless.  Sprint has been charging us $150 a month for years for our unlimited everything plan, but I am sick of contracts and their pretty bad customer service.  Ting and Republic seem to be where the party is at now, and Ting will accept our phones (at least, I am 99% sure they will).

Altogether, we should be saving at least $60 a month by cancelling cable and $40 a month by switching to Ting (hopefully).  That’s $1200 a year that I can put towards our Roth IRA’s or even the vacation fund…SCORE!

What have you cut back on lately?

 

The American Dream

Money Tree

The following is a staff writer post from MikeS.  He is a married father of 2.  So, with the cat, he ranks number 5 in the house.  He loves numbers and helping people. Please leave any questions or comments below for either Mike or Crystal.

The headline, as designed, caught my attention. “The American Dream is out of reach.”  It being a CNN Money article, I was curious to see what is was about.  Apparently, CNN Money had conducted a poll and about 60% of the respondents said the American dream was out of reach.  I think there are a lot of pessimistic people in this country.

The American Dream

The simplest I way to describe the American dream is that children generally end up in a better position financially than their parents.  I am sure that is what my parents wanted for me and it is also what I want for my children.  Now, better is of course a relative term.  My dream is certainly not for them to become the next Bill Gates or Warren Buffet.  That would be nice though.  No, my dream is that they are more financially secure.  My hope is that I can teach them the necessary tools to achieve it.  I think in the future, the emphasis should be on how you manage your money, not necessarily how much salary you can earn.  I don’t think that was the case as I was growing up.

Now versus Then

I’ve talked about the differences between my parents and myself previously.  They were blue-collar hard-working people.  Learning that work-ethic from my parents and being blessed with a certain skill set, I have managed to obtain a nice white-collar job.  The job pays me quite well.  Not Bill Gates or Warren Buffet well, but well enough that my wife does not have to work.  The job alone has allowed me to be in a better position financially than my parents.  This is why I think it will require more than just a job for my children and other children today to end up in a better position than their parents.  There are more people today working in cubicles than ever.  Most of them are probably earning more now than their parents.  In addition to that, there are a lot more dual income households, which the article touches on, making it that much harder for children today to out earn their parents.

Keys Going Forward

The article only mentions this statement in passing, but I think it is probably the biggest key.  The article mentions that the savings rate today is low.  No wonder people think the dream is unachievable; they aren’t doing anything to achieve it.  They aren’t setting aside money for retirement, for college, for anything.  People are just consuming.  Companies have become very sophisticated at separating people from their money for the latest products.  Smart phones, TV’s, computers, cable TV and even cars are being advertised so effectively, that people feel they can’t live without them.  This means they spend their money on these products, instead of saving, and wonder why they can’t get ahead.  I have learned this lesson the hard way.  I was in a financial hole.  The only way I was able to dig myself out was to stop spending more than I made.  This has meant no smart phone, no new car, limited cable and until recently, no new TV.  Discipline is going to be needed to get ahead in the future.  Without it, people will go through life complaining how they never get ahead, all the while buying the latest fad.

My Hope

My hope is that my children are able to find a job that they enjoy.  I won’t even mind if they don’t go to college.  My plan is to have money set aside for them in case they do attend college.  I want them to start out in the best position that I can possible put them in. I don’t really care whether their job pays them a higher salary than what I currently earn.  I care that they will be able to manage their finances and be happy.  By accomplishing this, they will be able to achieve the dream.

Time to Switch Again – AT&T Uverse vs Comcast

Money Tree

The following is a staff writer post from MikeS.  He is a married father of 2.  So, with the cat, he ranks number 5 in the house.  He loves numbers and helping people. Please leave any questions or comments below for either Mike or Crystal.

I came home from work the other day and my wife said a gentleman had stopped by from Comcast. He informed her about a potential deal we could receive if we switched.  We currently have AT&T U-Verse.  We’ve been with AT&T about 9 months after switching over from Comcast.  When it comes to cable and internet service, I go with the least expensive.  This has meant switching every few years between the companies.  This might seem like a hassle to some, but for me, it’s how I keep my costs down.  My wife told the gentleman that I handled all of that; he said he would be back in the area on Saturday and would stop back.

The Deal

Sure enough, Saturday afternoon the doorbell rang.  The deal was basically $89 a month for cable, phone and internet.  I’m usually skeptical of deals because they usually are too good to be true.  Included in this deal would be a $150 credit for switching over.  It would also include a couple movie channels and faster internet speeds.  Ok, I’m now interested.

We talk some more and I learn that a HD DVR receiver is included and that I would be looking at about $122 a month when taxes and fees are included for the first year.   The second year would be $25 more.  Being in charge of the finances, I know I pay $157 a month now for those 3 services.  So, even in the second year of the deal, this is less than I pay now.  This deal is looking better and better.  However, I know that I have a termination penalty with AT&T; I just can’t remember the amount.  I also want to compare the channel line ups to make sure I have the channels that I currently watch included in the new deal.

I asked if I could get back to him after I compared the channel lineups and determined my termination penalty.  He left his contact information and the channel lineup and informed me that the $150 credit would be expiring on Monday.

Upon Further Review

First, I compare the channels and don’t see anything missing.  The biggest difference is that I am swapping Showtime for HBO.  Not a big deal for us as we only watch Showtime occasionally anyway.  Next, I need to contact AT&T to find out what my termination penalty is and when does it end.  Rather than call on the phone, I use the on-line chat feature.  The service representative looks up my information and says that my contract is up in August of 2014 and that early termination results in a $15 a month charge for each early month.  This is actually better than I thought.  I thought my contract did not end until 2015 and that there was a $300 termination fee.  The representative informs me they don’t want me to cancel and offer to lower my bill by $10 a month.  This deal is working out in all the right ways.

Signing on the Dotted Line

I call the Comcast guy back Monday morning and tell him I want to go ahead with the deal.  Even by cancelling AT&T early and paying the $15 a month fee, I still come out ahead by about $30 a month.  There is a termination fee with the agreement, which is no surprise to me, there always is with this type of deal.  It is $230 if I terminate before the end of 2 years.  Since my prices are looked in for the two years, I don’t really care.  The one item that did catch me by surprise was the $30 installation fee.  In all of my past experiences, this has been waived.  The fee is offset by the $150 bonus in my mind.  So, I only net $120.

I have had both AT&T and Comcast in the past.  I’m not really partial to either one, which is why I probably switch so easily.  Price is my deciding factor.  Whichever one gives me the best deal has my business.  In 2 years, I will go through the same dance and see if I can score another deal.

Have you been able to lower your cable bill recently?

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