Christmas shopping

Of course everyone is talking about Christmas shopping, and I am no different.

Looking back several years, I spent a ton of time in stores that I didn't really want to be in. For example, I spent an hour in line just to check out at a Best Buy a few years ago, for some random Black Friday deal. Bleh. Looking back, I can't believe I wasted that time.

Seeing as how today is "Cyber Monday," maybe it is fair to talk about the difference between standing in line, and having your items shipped right to your place.

My preference, overwhelmingly, is to get whatever the heck it is I want to buy shipped straight to my place, rather than drive to the store. I save the commute, the hassle of standing in line, and the stress.

The cost of said simplicity? Usually it results in a savings, as opposed to an increased cost.

When shopping online, I use Amazon.com quite a bit. They offer free shipping over $25 on a bunch of items, and their variety makes it easy to get what I need, at a good price. I also peruse the forums at Fatwallet and Slickdeals, as they enable me to find the best deals. Fatwallet is a favorite of mine as well, because they offer a bunch of cash back offers through their "Fatcash" which rewards you for using their shopping portal. Many times, I have combined Fatcash with a coupon or other offer and saved a ton of money compared to MSRP. True to form, many of the longtime members of the sites call anyone paying MSRP "suckers," as there is always a deal somewhere!

I also use Google's portal for comparison shopping, and often compare prices (with shipping and fees) to Ebay as well.

With all of the online resources, why pay retail anymore? With coupon codes, and free shipping offers, it makes more sense to have everything delivered while you have a cup of coffee!

I hope this helps you with your holiday shopping!

Free online finance book

Rick Ferri is CEO of Portfolio Solutions, a low cost investment management firm.

He has a free book online that is completely readable, and very timeless advice.

I highly encourage anyone interested to check out the book!

Serious Money

If you like this material, head to your local library and grab some more!

Dilbert Guide to Personal Finance

The cartoonist Scott Adams, famous for creating the Dilbert comic strip about office humor, also created something about personal finance.

In a quick, concise, and simple guide, he breaks down the basics in less than 150 words.

Enjoy!

Dilbert Guide

Micro Transactions

When I started getting more serious about saving a few years ago, I had trouble thinking about getting started. It seemed like the big numbers I wanted to try to save were just too big. Then I started to look at it from a different perspective. When you "chunk" away at saving by breaking it into smaller pieces, it decreases the pain from saving. For example, if you are trying to put $2,000 into your Roth IRA, it really sucks to write that entire check for a lot of people. An easier route may be to set aside (with automatic deductions) $80 per paycheck.

Another tactic I used was looking at so called micro transactions. These are those small purchases that tend to add up quickly, and really hurt your savings potential.


Let's take a look at a few easy ways to spend a lot of money without really thinking about it.
 You have work early this morning, but you have a second after your shower to load up your iPod with some new tunes. You grab that new single that you can't get out of your head, and play it as you finish getting ready. You realize you are not going to have enough time to make coffee. It's early, you had a late night, and you want some coffee for work. You decide to stop at Starbucks on your way, and grab a large specialty drink for $4. It's only $4 + tip, and you're making money today at work, so why not treat yourself? After that quick stop, you grab gas at the station next door, even though the station charges you extra for using your card. After a twelve gallon fill up, you notice they charge an extra ten cents per gallon when you use your card. Oh well, it was very convenient, and you needed gas to get to work.

The morning goes well, but you forgot your lunch as you rushed out the door, so you go out for lunch and spend a few dollars more than you really meant to. Again, you remind yourself that you are working today, so it's OK to spend a few extra bucks. It's food, and you're hungry, so you grab a $7 value meal with chips and a drink. Back at work, the afternoon is dragging after your lunch, so you decide to grab an energy drink. Because they are on sale price when you buy two, you grab an extra because you know you will need it for Wednesday. Finally work is done, and you head home. Once you get home you order pizza because it was a long day, and you don't feel like eating your lunch you forgot to take with you this morning. You click on your cable and call it a night!

*****

By the end of this story, I think it's very apparent there are some places that would be easy to adjust to that would save you lots of money.

1.29 (music) +5 (coffee drink  w/tip) +1.20 (gas surcharge) +7 (lunch) +5 (energy drinks) + 25 (pizza w/tip) = $45.49

Let's half that amount, and use that for some quick math. ~$22 per day/4 days a week.

So four days a week, you spend quite a bit more than you really mean to on stuff you probably don't really need. While spending money on stuff we don't really need is part of why America is such a great nation to live in, it does not help your savings goals.

$88/week X 50 weeks (let's say you take a few extra days to save in there) will leave you with $4400 missing from your savings account, and nothing to really show for it.

I used to make many of these choices quite often, and I still do...but I am definitely more aware when I do! It's even easier to avoid spending on extra things that don't meet your savings goals when you set your account to automatically set money aside in a different account.

Remember that $80/paycheck I mentioned at the beginning? Yea, we just doubled that, and if you give it a shot you may not even miss it after a few weeks.

Extended Warranties

My laptop was recently giving me some issues.

I purchased it at the end of 2007, and I'm hoping to use it until it melts.

That, or until I start getting looks similar to those still using Betamax instead of Bluray.

With that in mind, when I bought the laptop I managed to find a better deal with the purchase of an extended warrranty.

This was a little odd, as extended warranties usually add cost without neccesarily adding the same amount of value.

I managed to combine a work discount, coupon, rebate, and the warranty purchase for less than I would have paid at Best Buy. That was intended to be somewhat of a joke, as Best Buy is usually anything but on big purchases.

Usually Best Buy also hounds you to buy their extended warranty too, which I've always found overpriced.

In fact, I am usually against buying extended warranties, unless I know there is a part that tends to die after so many uses/hours.

I purchased a Mack Cam warranty for my TV for example, because I knew the bulbs tended to go out within two years. I learned this after intensive research on Avsforum.com.

Sometimes it does make sense to purchase an extended warranty, and my laptop warranty paid off, with the motherboard, fan, and heatsink being replaced free of charge.

This also let me watch the technician do it so I can potentially do it again after the warranty is up!

Update on Overdrafting

In an interesting and timely update to a previous post concerning bank overdraft fees, the Federal Reserve has announced that overdraft fees will no longer be allowed for most purchases. There is still an opportunity for banks to charge fees for some transactions, including those that are recurring, like monthly auto pays for cell phone bills as an example.

The rules go into effect July 1st, leaving the banking industry time to respond with creative changes. The industry has responded to the new credit card rules by increasing fees and charges before those new rules take place, and it will be interesting to see what changes they make in response to this threat on a huge revenue stream for them.

Yahoo News Article

One of the interesting parts of this article to me is that it seems like a direct response to Senator Dodd's proposal to strip the Federal Reserve of most of it's current authority. This also comes at a time when the public is looking for more action/magic bullet on the current economic situation, and if anything is a good image move for the Fed.

Fed Press Release

To those that want overdraft protection, it will now be most likely a "pay to play" set up. This opens the door for a consumer friendly/good PR bank to announce they will offer free overdraft protection, even if they already do.

Steam Cleaners

Today's post is a little different.

The wife and I are looking into buying a steam cleaner to help keep our apartment cleaner. We vacuum quite a bit, but are considering adding this item to keep our carpet in better shape.

Here are the models that we are looking at currently:

Hoover F7411-900

Hoover F5914-900

Both of these are lower cost cleaners, and we are not expecting ridiculous results. We would just like to reduce the amount of dirt/dust that we have inside. My wife says our carpet looks pretty darn good, and I have  to agree based on a completely professional and scientific cross section quick and dirty review of carpets we have been witness to.

Why would we want a steam cleaner if we rent?

My argument is we will have a house someday, and I have been wanting to get the carpet professionally cleaned anyways, so why not buy our own. The cost will be less than even one professional job, and while the results may not be, I am relatively confident we will be happy. In addition, we will be able to utilize the steam cleaner for many years, "saving" additional money with each use. We should also be able to recover more of our security deposit for our apartment.

What  do you think of the idea?

Rate of return

My examples that I use on this blog are meant to encourage real world examples of savings opportunities to become real world investment opportunities. I try to keep it relatively simple, and that is what I try to do personally as well.

I feel that a good rate of return (or investment return) that should be factored into "how much do I need to save" calculations is 5-6% before taxes/inflation. This differs quite a bit from what some companies want you to believe their products will do for you. I figure, if you "low ball" your expected return, you are more likely to try to save more. This is of incredible benefit because it puts more compound interest at your service, which is really my end game anyways.

I don't just want to make 5-6% and take it off the top every year, I want that 5-6% to add into my investments and continue compounding until I retire. This magnifies your savings in a ridiculous manner, which I like to highlight on this blog.

If someone is trying to sell you a product and is telling you that you will make ridiculous returns per year, you have to ask yourself some questions.

Why are they selling this product to me, instead of investing in this amazing opportunity themselves?
What do they invest in personally?
Will they share their personal asset allocation with you?
What does the product cost, including all fees?
Do I really need this product?
Is this product better than what is available to me as an individual investor?
Is this a "combo" product, that does not really do as well as individual products in their respective area?

After you work through these questions, many financial products do not hold their salt. Keep it simple with low fees, make it automatic, and start your plan as soon as possible. This will enable you to save for what you want, and you won't need to stress about it.

Rent Negotiation.

As a renter, I am subject to potential rent increases. This year was no different, but I was successful in getting the increase reduced significantly by writing a letter to the manager and management company.

This could potentially save you some money, as long as you have been a good renter (paid on time, haven't had 20,000 noise complaints, don't use the apartment for science experiments, etc.)

To: Manager Name - Manager                                9/4/2009
Apartment Complex Name
Dear (Manager name),
    Thank you for your letter offering us lease renewal options. This letter is in response to that previous letter sent to my household concerning our rental lease renewal options for our lease ending on 10/19/2009 and the subsequent conversations we have had since then in person and by phone.
    My household is unable to sign a new twelve-month lease agreement with (Property Management Company) with the current terms, however we understand the interest in your company maintaining a positive cash flow and  occupancy of my unit with a 12 month lease in these economic times and thus respectfully offer the following modified terms.
    My household is willing to sign, immediately, a 12 month lease for our current unit with the following modified provisions:
A monthly rent amount of #########, which represents no increase in rent from our previous lease agreement.
    My household has been an (Property Management Company) customer for two years now, but after our lease renewal options were presented we looked at available and comparable units in the (your county area), both (the neighborhood you are in) and in other areas. Simply put, there are many units available that are not with (Property Management Company) that are much more economical in their pricing structure. Many start at a lower monthly price, and also offer rent credits that range from two weeks to a month of free rent with a new lease being signed. We have a good history with your company and would like to continue our relationship if possible.
    We recognize the economic situation, and believe this represents an equitable compromise. (Property Management Company) is facing many revenue challenges, as is our own household. By accepting these modified terms, (Property Management Company) maintains the following advantages.
    My household represents that of a "model tenant." My household presents rent checks on time, and in the majority of cases, early rent checks are presented. This represents an uninterrupted revenue stream. The  savings from keeping your current tenants in place with a new lease at our modified terms instead of having an empty apartment represent a cost savings. Even a two week vacant period would result in a 35% loss of revenue as compared to keeping your current tenants at the same rental rate for the proposed 12 month lease. When the extra costs associated with prepping our current unit for new tenants are added onto this, the option seems less than ideal than our modified terms.
    By meeting our household at an equitable compromise, this arrangement would benefit both parties. (Property Management Company) and my household can mutually meet our respective individual and corporate needs.
    Immediately, the proposed terms enable our unit to continue generating income for your company for an additional 12 months. Your company maintains it's revenue stream, but eliminates cleaning fees, advertising fees, carpeting and painting fees, and income loss.  This is very positive and you are also maintaining a quality tenant who pays consistently on time and keeps the unit in very clean and quality condition.
    Please call me upon receipt of this letter so that we can complete the necessary documentation. I look forward to a mutually beneficial outcome.
Sincerely,
JH
Unit #
Phone ###-###-####
cc: propertymanager@yourpropertymanagementcompany.com

This letter could have been better I'm sure, but the end result was a much smaller increase than originally proposed.

Laptop on the fritz

I am working on getting my laptop fixed today. Another lesson on why it's not really any better to spend more on a laptop!

In the meantime, check out Bankrate.com for great banking interest rate availability. They also compare credit cards, and mortgage rates.

Another awesome site is Dinkytown. Funny name, awesome financial calculators.

Have a good day!

Avoiding overdraft fees

When I got my first bank account and started depositing my own paychecks and using an ATM/Debit card, I made some mistakes. I overdrafted twice, and realized I never wanted to do it again. I had a few fees taken out of my account, and I realized I didn't like that either.

The cure for overdrafting for me was a simple rule my wise grandmother helped me out with, always have at least $500 in your checking account. This was a tough rule when my paychecks from my first job were miniscule, but I have stuck with it since and it has served me well. I have bumped up the amount and currently try to keep right around $1000 in our checking account. This is a good amount for us, and let's us maintain our automatic deductions into our savings/investing accounts as well. These do not need to be huge automatic deductions, but making them automatic means we don't think about them on a day to day basis and then BAM! a few months later we see that we are making progress. That bam was for effect =D

If you have overdrafted, don't be afraid to ask the bank to waive the fee. Feel free to throw in that you have been a great customer/1st time you've made the mistake/anything that will help your case. Avoiding the overdraft fee for me was easy the first time, and took a little more effort the second time. I felt embarrased after I got hit with the fees, but after I put my pride aside I was sucessful in avoiding $70 worth of fees. In this case, the fees were a huge portion of my small take home pay at the time. Granted, I was a bit younger, and that may have been why the manager took pity on me, but it never hurts to ask your bank to waive a fee. If you find you are getting hit with fees all the time, maybe it's time to shop for a new bank.

MSN Article with good advice

MSN Money has a fantastic article on very basic wealth building concepts.

While the entire article has great material, my favorite is the "Part-time millionaire" mentioned at the bottom.

This is a concept my wife and I try to take seriously by actively pursuing new ways to add to our income without over working ourselves.

The article also mentions the years from 18-30 being some of the most important years as far as wealth building is concerned. It doesn't really hit on the fact that this is the age range where many people are the least concerned about saving, until they are shown how important a few extra years of compound interest is!

No dessert with this post.

Everyday I try to highlight easy, relatively painless ways to save money on Future Think Dollars.

This post is not going to sugar coat it.

Trying to save money sucks!

It is incredibly hard to not think about everything you would rather be spending your money on than trying to set up that Roth IRA, or start your 401k, or get yourself out of debt. It is also incredibly hard when it seems all your friends/family/acquaintances want to help you spend your money. It is simply not the "coolest" thing to hang out and watch movies, play some old school board games, or catch a cheap sports event. Now it seems that anytime people get together, the goal is to go spend money. Spending money has been incredibly well marketed as buying happiness by everyone that stands to profit.

The goal of this post is not to stop spending all money. Although that would be fantastic for your savings, it would be horrible for your life.

Instead, this is meant to encourage some reflection upon whether those nights out on the town, or shopping trips, or major purchases are indeed making you happy.

Don't spend money just to spend money, because you are only delaying the start of your financial life. This is your life, and you should be thinking about where you want to be in 5, 10, 20, 30 years. I don't think you will really wish to be back at the age you are now buying all of the things that are literally costing you a fortune over that time frame.

Some of the best days of my life have included days where I spent a decent amount of money.

Many of the best days of my life have been days where I only realized afterwards that we'd spent a pittance compared to the good times we had with a great group of people.

Cut your own hair.

This post may be a lot easier for my male readers to take action on, but could be useful to anyone willing to give it a shot.

How much do you spend on a haircut?

These clippers probably cost a couple haircuts or less...and you can use them until they melt. I have had no issues with this set of clippers.

Take that figure (15-50 x 12) and this is how much you could potentially save in the first year alone. This assumes once per month plus tips

I used to get my hair cut at Supercuts for around 15 bucks plus a few dollars tip. Then one day the nice lady cutting my hair mentioned "Really? You could just do that yourself..." when I asked for my normal short haircut. Talk about killing your market lady! But she had a great point, and she was right.

I didn't realize for some time that my haircut is incredibly easy and I was shooting myself in the savings foot, and this was when I was younger and just saving up for the Friday night movies. Now I have much different savings goals for the wife and I, and we find ourselves stretching to meet those goals.

This method alone can easily save the average guy $200 a year. That's a lot of cash for taking the fifteen minutes to do it yourself! As long as you don't make to bad a hack job of it, at most you are just going to need to try again a bit shorter, and more carefully. After a cut or two, you will be pretty decent at it!

Did I mention you also saved all the time you used to spend just driving to, waiting for, and driving back from a haircut? That's wear and tear and gas for your vehicle, and the "cost" for your time too!