Archive for Mar, 2013

Easter Week Blog Round Up

Here are some great articles from other personal finance blogs I follow, check out these them out for the best interest rates, secure online transactions, 11 great tools, devices to lower auto insurance premiums, and 2009 tax refund.

11 great tools everyone should have, from Money Talks News

15 tips for secure online financial transactions, from Moneyning

Best Available Interest Rates March, from My Money Blog

Would you install a device to lower your insurance premiums, from Bargaineering

5 Home Maintenance projects to save you money, from Money Smart Life

Time is running out to claim your 2009 tax refund, from Smart Tax Tips

How to Save on Razor Blades

baby shaveMen’s razor blades can be very expensive, easily costing $15 to $35 for a package of replacement cartridge blades- however I may have found a couple of cheaper solutions: one is an online service called Dollar Shave Club (DSC). I cringe every time a single item at the grocery store costs $15 or more, so I was intrigued when I heard an advertisement on AM radio for DSC. This is a seemingly low cost way to get razor blades online.

Razor blade coupons? You might not be interested in another ding to your debit or credit card each month for DSC, thinking you will use a coupon instead. However, these are really hard to find- since the only coupons you normally see in your local paper are just for a razor handle and one blade, or for low quality disposables.  A few weeks ago my local grocer accepted a $4.00 off coupon even though it wasn’t for the exact item, but for the correct brand. This is worth a try. I don’t feel like I am cheating the system, figuring the cash register is wired for correct coupon verification. So it is worth it, to keep an eye out for your brand’s coupons, whether or not the deal matches exactly what you are buying.

Regular replacement cartridge price tag can cost about $3.00 per cartridge, for my old school 3 blade Gillette Mach III, so with a coupon it came to only about $2.50 with tax per cartridge. The 5 blade Gillette Fusion 8 pack of cartridges can be found for $28, or $3.50 per blade, and prices can even climb higher, depending upon the number of blades and features.

Everybody is different: What is the best deal for you really depends upon how often you change cartridges, how thick your beard is, and your skin’s sensitivity. I can get about 4 weeks out of my Mach III’s; towards the end, the shaves can be a little rough and not cut as close. However, if I can stretch them few extra days, it is worth the try to save a few bucks.

Regular annual cost: If I use a new blade every three weeks, probably more typical for the average person, that comes to 13 blades in a year’s time. That seems low, so I’ll round it up to 15 blades a year to be safe. Assuming no coupons or special deals, that comes to $45 dollars per year- not that bad. If you have a thick beard and replace them every week and half, you would go through about 35 cartridges a year. Using the $3.50 per cartridge example, that comes to more than $120 per year.

dsc

How does Dollar Shave Club work? DSC is a monthly subscription service, that sends you a supply of cartridges each month for a set price. When you sign up you get a free handle. You choose between:

  • The Humble Twin: $1 per month plus shipping and handling: 2 blade head , 5 cartridges per month
  • The 4X, The Lover’s Blade: $6 per month plus S&H: 4 blade head, 4 cartridges per month
  • The Executive: $9 per month plus S&H, 4 cartridges per month

Is Dollar Shave Club a good deal?  For me, I’m pretty sure the Humble Twin wouldn’t provide the type of shave I am used to with the Mach III, but the 4X would probably work fine. $72 plus S&H is pretty good for 48 blades per year. Assuming with shipping and handling $90, that comes to less than $1.90 per cartridge. However, this is way too many cartridges for me. I could easily stop the service after 6 months, and have enough for the remainder of the year, for about what I now pay. DSC’s higher quantity would allow me to change them a little more often. These are not name brand cartridges, so I am guessing I will have to replace them more often if they get duller more quickly.  If someone has a thick beard, the Executive would probably be the way to go, and with shipping they would probably spend something like $120 per year for 48 cartridges, or about $2.50 per. Again, in this example, more blades, for about the same cost.

Convenience: There is this factor too- it seems as if I always forget to buy cartridges when I need them. It would be nice to have a ready supply of them whenever needed, and save a little on gas from making special trips to the store.

Conclusion: Dollar Shave Club is a great idea, they have a nice website, you can stop or start the membership anytime, save a little money and time. If there are more than one adult males in your home shaving everyday, this would probably save you a little money, and allow you to change blades more often- pretty nice. What about for the ladies?  They don’t have cartridges specifically designed for females, and DSC is definitely target marketed at guys, so ladies would have to gauge their usage to see if this is good for them. Let me know if you try this service: what the cost for shipping and handling is, and if you think the quality is good. If you work for DSC, send me a few samples to try so that I can blog about your product.

7 Great Articles from Other Personal Finance Blogs

Here are some great articles from various personal finance blogs I follow, from insurance to good coffee makers, and from cheap nutrition to entrepreneurial success.

  1. 7 Inexpensive Powerhouse Foods to Add to Your Diet for National Nutrition Month, from PT Money
  2. Why Frugality Matters, from the Simple Dollar
  3. Insurance: An easier way to comparison shop, from Get Rich Slowly
  4. The Five Best Coffee Makers, from Wise Bread
  5. Pay Off Mortgage Early vs. Save More For Retirement?, from Digging Deep Into The Details
  6. Should You Itemize or Take the Standard Deduction?, from Smart Tax Tips
  7. 5 Reasons Entreprenuers succeed, from Good Financial Cents

Extended Warrantees and Buyer Protection Plans

Is buying extended warranties a good idea? Sometimes they are called buyer protection plans too. The general consensus from almost all financial planners, writers and personal finance personalities like Dave Ramsey and Susan Orman is that they are a rip-off.

Most products come with some sort of warranty, and that is a good thing to compare when considering a purchase. However, automotive dealers and electronics dealers for example, are always trying to get us to buy contracts that extend the normal warranty beyond the store’s or manufacturer’s.  Recently I bought a memory stick for less than $5, and I was offered a warranty by the cashier–come on, that is silly! The cost of the contract, or premium for the insurance, is usually expensive, and the odds are that most people never benefit from the investment.

They do provide some peace of mind, knowing that you won’t have to spend money in the future if the item breaks within a reasonable time period. I think there are several ways to make sure product failure doesn’t set you back financially:

  • Compare customer product reviews and ratings online before purchasing.
  • Research products in Consumer Reports. This costs a little money, but our library provides it online for free.
  • Probably the best thing people can do is to make sure they have plenty of money in their emergency savings in case a product needs repair or replacement.
  • We often buy the extended warranty ONLY for laptop computers and cell phones, especially for the one’s our children own. Laptops, tablets, cell phones and really nice iPods can be prone to break in the early years, so sometimes it is worth it to buy warranty extensions for these things.
  • Purchase things from a good retailer that you trust. Often sellers will go to bat for you to fight or recover from the manufacturer, especially if they see a lot of similar problems. Sometimes local retailers will eat the cost of the replacement or repair if they want to keep you as a customer, especially if the product failure wasn’t reasonable at all.
  • Purchase items with a credit card that automatically offers extended warranties for a few years. Call your credit card issuer to find out. This goes against Dave Ramsey’s advice to always use cash and avoid using credit cards since that often causes us to overspend and build up a balance. However, if you are excellent at staying under budget, and at non-cash negotiation, then using a credit card to provide extended warranties at no cost is a great idea.

Conclusion: Extended warranties are usually expensive and seldom used, so for the most part avoid them.  If your car dealer offers you one, be sure to read the contract cover to cover a couple of times, to ensure that what you are considering buying covers those really expensive repairs that could really set you back.

Hedonic Adaptation

Hedonism isn’t a word we use very often. If loosely defined it means happiness achieved through feeling pleasure. Many psychologists say that one of the greatest barriers to happiness is ‘hedonic adaptation.’ When you are getting ready to buy something, you anticipate the pleasure it will bring. However, after you own it for a short while, it gets relegated to the back ground of our consciousness. We get used to having it, and it doesn’t provide as much joy.

Psychologists say this same principle applies to almost everything, from buying electronics to marriage. They also say, that when we think about losing things, due to unfortunate circumstances, we feel the pleasure again. This negative thinking reverses the adaptation’s effect, and shifts it back to where we experience pleasure once again.

I can think of several applications this has to peace of mind.

  • Fasting from things that bring pleasure, or meditating doing nothing can have the effect of our appreciating them more, and giving us time to think about important things and priorities
  • Hesitating: Knowing that an item I want to buy will soon after ownership deliver less pleasure than I imagined it would, may cause me to hesitate before purchasing.
  • Appreciation: When I’m thankful for the things I have, it is okay to think that I could loose them: the opposite of positive thinking can lead to more happiness.
  • Giving: When I let go of money and possessions, for the moment I experience pleasure and pain together: I’m re-living the feelings I had when I originally acquired it, but now know that it will be gone forever. I can imagine the happiness it may bring others. Giving is the antidote for greed and materialism,
  • Relationships:  Friendships and marriages in particular require ongoing investment, since our tendency is to relegate them to the background, yet we want more from them as we get older. Doing all of these things are good for my relationship with my wife: focus on her needs not mine (fasting)- hesitate and think of her first, appreciating her, giving things and myself to her.

Conclusion: To be a good manager of one’s personal finances, it is important to understand the thinking involved when one makes purchases of wants and not essential needs. Marketers of products know what motivates buying decisions. It may be wise to evaluate our emotions when we are getting ready to buy a new car, piece of technology, house, piece of sporting equipment and really anything outside of basic food, shelter and clothing.

The Whys and Hows of Budgeting

budgetIn this article I will answer these important cash flow planning questions: Why don’t people budget? Why should people want to budget? What will happen if they do? How to get started easily?

Why don’t people budget? It is because you (don’t fear, we have tips below to help you overcome your resistance):

  1. Don’t want to: You know it is going to take work to design a plan and track spending, and you would rather spend time doing something else.
  2. Don’t know how: You may be in the camp that just has no idea how to go about it, and has never looked into figuring it out.
  3. Takes too much time:  You have little spare time and the last thing you would rather do is math, when you could spend what extra time you have doing something relaxing, not stressful like managing money.
  4. Don’t want to change: You are afraid of reality, meaning if you really saw your numbers, you might have to change your lifestyle.
  5. They don’t like the word budget: People hear the word, and think it means shackles and chains, and no more freedom.
  6. Don’t want to know what is really going on: Ignorance is bliss. You can pretend that things will just work out magically in the end .

Why people should want to budget? Here are the reasons and motivation for doing it:

  1. Like everything else, money is a limited resource for you (unless you are a politician), and if you don’t have boundaries and limits–no plan–you might spend too much in one area and then be short somewhere else.
  2. You are willing to live like no one else, so that you can live like no one else (this is perhaps Dave Ramsey’s greatest quote), you are willing to do without things in the short run (like most people are not), so that you will have more in the future (most people will not have more).
  3. You are tired of the same old paycheck to paycheck, never have enough lifestyle–running out of money, borrowing, and stressful financial problems–you are going to do it and experience less stress.
  4. Budgeting is a adult behavior: budgeting is a grownup thing, just like getting up everyday, showering, and going to work. You will feel great when you do it.
  5. Budgeting helps you save more for the future: those that have plans for retirement and college can limit their savings today so that they will have money to set aside for future needs. You are going to budget because you have great goals.

What will happen if people budget? You will:

  • Have less stress: you will know where money is going, and that you will have enough.
  • Be able to cut back in the right areas when you discover you are over spending on some things.
  • Accumulate savings for emergencies and not panic next time.
  • Re-pay all of your debt and save instead of borrowing next time for something you need or want.
  • Accomplish future financial goals: because you are saving the right amount for them now.
  • Be more wise overall with your life because it will start a trend that will spread to other aspects of life.

How to get started easily? Just do it, that is…

  • Don’t call it budgeting, but instead refer to it as cash flow planning–it just sounds and feels better.
  • Do some simple math: 1.)  Add up what you are spending NOW in the categories of giving, housing, food, vacations, transportation, medical, debt, entertainment, miscellaneous, children related expenses, cell phones, eating out.  2.) If you have a deficit (expenses exceed income), go back and change your expenses in groceries, entertainment, cell phones, cable and other non-fixed items, until you have money left over.  3.) If you have debt, use all of your extra money to re-pay all of it.  4.) If you don’t have debt, make your goals for the future and begin saving for them.
  • Start tracking spending: Use paper and pencil to get started, or Excel if you are good at spreadsheets (email me–I have a good one I will give you), or a free one like Mint.com if you don’t mind them selling information about you, or buy YNAB at www.ynab.com if you want to keep your information private. Mint or YNAB will download values from your bank and work with your smart phone to track spending easily.

 

How To Opt Out of Credit Card Offers

stop

Does your mail box fill up with offers from credit card companies? Sometimes they will mail you checks and pre-approved credit cards. It is annoying, and its also a waste of time to go through them. You must also shred them to be sure no one steals your identity.

Those of you with an ecology or stewardship mindset would no doubt consider it a tremendous waste of our natural resources to make the paper, as well as a waste of energy to print and ship the offers. And 99% of the offers end up in the trash–the right place for them anyway.

Stopping those annoying credit card offers also helps remove the temptation to accept them. Today I went to the Federal Trade Commission website to see their most current instructions, and I cut and pasted the following for you to easily start the process:

  • To opt out for five years: Call toll-free 1-888-5-OPT-OUT (1-888-567-8688) or visit OptOutPrescreen.com. The phone number and website are operated by the major consumer reporting companies.
  • To opt out permanently: You may begin the permanent Opt-Out process online at OptOutPrescreen.com. To complete your request, you must return the signed Permanent Opt-Out Election form, which will be provided after you initiate your online request.

When you call or visit the website, you’ll be asked to provide certain personal information, including your home telephone number, name, Social Security number, and date of birth. The information you provide is confidential and will be used only to process your request to opt out.

March Money Madness, Who Wins?

mon

And you thought March Madness was only about basketball! March is a mad month for money, particularly this March, because the month is full of extra money but also of extra challenges–more than most months. Jon White tweeted last week about #2 below and it got me thinking. Thank you, Jon, financial coach and blogger at J W Financial Coaching for the idea and the encouragement to write this.

March Money Madness is because of the 7 things listed. Will you be the winner of this financial tournament? You have the choice to avoid the traps and gain financial advantages the month holds, or to let yourself be caught in one of the many traps.

  1. Many people get 3 paychecks in March, so your income goes up by 50%. This may not be for you this month, but if you are paid every two weeks you will get two extra paychecks two months each year. If you don’t plan for this extra money, if you don’t closely watch spending, you may spend this money without realizing it.
  2. March has 5 weekends this year. I don’t know about you, but we do more fun things on the weekend such as eating out, and more mundane things like grocery shopping. If you are not careful you may end up spending more than you have budgeted and lose the advantage of the extra paycheck because of weekend spending.
  3. March is Tax Refund month. Many people who really rely on their tax refunds have submitted their tax return already; they may get it this month. Make smart plans now what to do with this money (see below), whether you receive it this month or later.
  4. Are you due a bonus? I never realized it before, but I have spoken to a number of people who have recently received a bonus or will get one this month (see below).
  5. Basketball Tournament Winners:  Okay, this one is a stretch. However, if you enter a basketball bracket contest with a few bucks and win, you might have extra cash to plan for. I’m not advocating gambling as a financial tip, far from it (check back with this blog in several days, for I will post an important article about this).
  6. March is Spring Fever Month.  Have you been cooped up all Winter? As soon as warm weather breaks, if you live in the north you will be outside washing the car in your shorts in 50 degree weather because it will feel warm. Many stores start seeing increased sales. The lawn and garden department at your local hardware store sees a lot of new sales. In addition, automotive dealers and boat and RV sales really get cranked up starting now.
  7. Tax Refund Advertisements start. Everywhere you will see advertisements on how to spend your tax return, everything from vacation planners and cars to furniture. For a small fee, they will even give you a short-term loan until the check arrives in the mail, but the interest on the loan will probably be some crazy figure like 100+% if computed annually.

How to win the March Madness Game? If you are in debt, have no emergency savings, or are always stressed about money, this is what you can do!

What to do with extra money: tax refunds, bonuses and extra paychecks: Here is your great opportunity to get ahead in life. This doesn’t happen often, so take serious advantage of it.

  1. Invest $100 in a financial class: Take a financial class; it will only cost you $100, such as Dave Ramsey Financial Peace University. Go to his website and search by your zip code for a class near you. I promise you, your investment of $100 will return you many thousands of dollars. I am not kidding you: you will get much more back than you will ever receive in tax refunds.
  2. Put the money in a savings account, all of it!  If you need to remove the temptation right away, open up a separate account at a bank where you don’t have any accounts; otherwise, you will spend it, maybe all at once, or slowly transfer it into checking and it will dwindle away.
  3. Plan for needs and not wants: Do not spend it on vacations, large screen TV’s or vacationing if you have debt and no savings. If you have been doing without for quite a while because finances have been tight, this extra money will make you feel a sense of elation. When we feel this way, we end up spending more money. Our emotions tell us that good times are back for good, even though it is a temporary thing.
  4. Make a list of all of your savings and debts.
  5. Make a list of the things you really need:  If your car’s tires are bald, or you need money for upcoming things for medical, children’s needs, savings for Christmas in 9 months–set it aside. Now prioritize your list. Don’t forget to include tithe (10%) if you are a church or temple attendee, if not give some away anyway to help others- it feels good, helps others and puts things into perspective. If you do all of these things right, you will have more money every month in the future, not just once per year.
  6. Put $1,000 in savings, if you don’t have any. This is to be used if you have a real emergency, for example, the car is on fire or a family member is bleeding. I’m exaggerating of course, but this is not for the emergency pizza. You will have a car repair or other emergency need in the future; this is your ‘rainy day’ savings so that you don’t have to borrow to make it–you see, we are trying to avoid the trap of debt.
  7. Now look at your needs list again and  prioritize the really immediate needs and debts. See how many loan payments you get get rid of by paying off some debt, and use that freed up monthly payment that you don’t have anymore to pay off the other debt each month until you are debt free (this is called debt snowballing).
  8. Put 6 months of expenses in savings for big financial setbacks like job loss. This is if all non-mortgage debt is paid off, and your $1,000 emergency fund is established. Every financial planning book says to do this, and it is really smart.
  9. It is okay to use a small part of the windfall for fun, but instead of blowing $100′s, take a few bucks a buy some steak and a nice bottle of wine and have a home date and watch a video.
  10. If you have done all of these things, you are ready to plan for intermediate things, like car replacements, or long-term needs like retirement and college education.

Just because you got a nice chunk of change, it isn’t time to live big, but by being wise you can make great decisions, and maybe this year you will advance to a stage in life of living smarter with less stress. This is what the wealthy have learned to do, and if you want to accumulate wealth, this is what you will do. Poor people blow it and a few months from now wonder were it all went; they never seem to get ahead. March Money Madness–who wins?  You will if you do these things.

Gullible Consumers Buying Bad Products

headHave you ever bought a product but later discovered it was a piece of junk? Trevor Moore is a comedian that demonstrates how gullible some consumers are. He hocks awful products that he creates that don’t work. His brand Winnovations comes up with all kinds of ridiculous products that people believe in. For example he created a fake device, the Flava-Pult  that smacks food against a wall, that he tells people will make food better because of what it does to the molecules. Another product, the Blow and Grow  transfers someone’s carbon dioxide to one’s scalp to grow hair. His videos show people actually using the products and they think food tastes better, or grows hair- all for laughs.

PT Barnum said a fool is born every minute, and I think he is right. Everyone has bought products from the Internet, info-mercials, or maybe at the fair. Last summer we went to the Ohio State Fair, and walking through the various buildings all kinds of products were being demonstrated and sold. We bought some amazing glue, that actually works better and faster than super glue. It was $20 but was worth it. Another product was this little spring action whisk that is supposed to whip things so well it can make whipped cream from skim milk in less than a minute. We didn’t buy it, but later we found the same item at a dollar store for  a few bucks. It works okay, but not quite as well as the demonstration made it look.

My experiences and these Winnovations videos tell me that we need to be careful of miracle product pitches, or we may end up spending money on worthless junk. What have you bought that you later regretted?

7 Great Articles from the Blogosphere

There are many great personal finance blogs that publish articles on a vast array of subjects. Check out some of these really informative recent blog posts:

  1. Should you trade in or sell your car? From One Money Design
  2. 4 Investment alternatives to equities, from Money Smart Life
  3. What you should or shouldn’t buy at drug stores, from Money Talks News
  4. Small Business Resources from the IRS, from Smart Tax Tips
  5. 4 Things to make you spend more money at the grocery store, from the Consumerist
  6. Sneaky strategies at your local grocery store, from Get Rich Slowly
  7. A well designed organization system can save you money, from Gather Little by Little

 

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