Take Control of Your Finances: Don’t Let Inertia Rule the Day

28. August 2012 · 2 comments · Categories: Cell Phones, Financial Health, Housing, Insurance · Tags: , , , , , ,

We tend to think that history repeats itself. I believe that’s because we have no idea how to predict the future. Or maybe we’re lazy. Whatever the reason, we think that because things have happened one way in the past they will continue that way in the future. Psychologists call this inertia bias.

This assumption of continuity might be convenient, but I’ll show you why it’s poison for your wallet.

Financial success relies on knowing when to change and when to stay the course. For example, how do you know whether to stay with your auto insurance company or switch to a new one? How do you know your cable company isn’t ripping you off? Do you still use that land line or is it there out of habit?

Just because you found a great deal today doesn’t mean it’ll still be a deal a year or 5 years from now. Your goal is to save and be more efficient, so you have to put in some effort. You can’t afford to assume things will always stay the same.

Auto Insurance

I’ll admit – it’s a pain to shop around and get several quotes. The internet hasn’t provided an easy way to compare prices between companies, so we’re forced to call each one separately. Calling to get three quotes could easily take an hour. This is well worth your time though, because yearly premiums can vary by $1,000 or more.

Insurance companies differ in how they assess risk and how much of that risk they’re willing to take on. To one company you might be a moderate-risk driver, but to another you could represent a low risk. In addition, companies often raise and lower their premiums based on which area of the country they’re targeting. If they’re trying to rid themselves of customers from your zip code, you may find your premiums increasing quite a bit.

Those who remain with their auto insurance provider year after year are probably paying more than they should for coverage. The same goes with home and renters insurance, so shop around at least every two years.

Cell Phone Providers

I’ve covered how to save on your cell phone bill several times in the past. Most people remain with the same old provider they’ve always used – most likely one of the Big Four (Verizon, AT&T, Sprint and T-mobile). If you’ve been reading the news recently you know that these behemoths are passing through large price increases whenever they think they can get away with it. They’re doing away with unlimited data, which is ironic because that’s where we’re headed with cell phone usage in America.

What does this mean for your wallet? You’re probably paying 50% more for cell phone service than when you signed up a decade ago. You’re also stuck in one of those nasty two-year contracts, where they lock you in and provide inferior customer service. Instead, switch to one of the low-cost, no-contract providers like Straight Talk, Virgin Mobile or Metro PCS. With Straight Talk for example, you’ll get unlimited across the board for $45 a month, no contract.

Here, remaining in an overpriced contract with one of the Big Four will cost you about $500 a year, or more if you have additional lines. Just because it may have made sense before doesn’t mean it does now. There are better options out there.

Buying a Home

Since the start of the crisis people have moved out of houses based on economic necessity and have moved in with parents or other family members. Some have become renters. Housing prices have tumbled the past five years as a result.

Now it looks like housing prices have finally hit bottom, and interest rates hover around 3.5% for a 30-year loan. That’s the lowest rate on record. If buying a home makes sense in your life, this is the time to act. Prices don’t have anywhere to go but up.

If you’re looking at the gloom of the past five years you might assume prices will continue to drop indefinitely. You may be sitting on the sidelines, waiting for the economy to pick up again. When it does you will have missed your chance.

So Much “Normal”

With inertia bias such a large part of our lives, is it any wonder we have so many words in the English language to describe how things are always done? Typically. Usually. Normally. Generally. Ordinarily. Regularly. Characteristically. Did I miss any?

Like bad habits, inertia is tough to break. But your financial health depends on your ability to know when to change and when to stay the course. Shatter those molds and watch the savings add up!

Can you think of a time when inertia caused you to spend more than you should have?

Photo by thestrategyguysite.com

Warehouse Clubs: Why They Make Sense for Most People

29. May 2012 · 29 comments · Categories: Save · Tags: , , , , , , , , ,

I want to start by announcing that my wife and I are expecting our first child in November! We’re both beyond excited for the opportunity to be parents. It will truly be an adventure because for one, I’ve never changed a diaper. I also have no idea what it’s like to have to comfort a screaming baby at 3 in the morning. That said, I’m going to approach this new chapter in my life by being humble, learning everything I can and committing to being the best father I can be. 

As a new parent, I realize I’ll be spending a lot of time in Costco. Diapers, formula and baby wipes are just a few of the many things I’ll be buying there. I’ve heard that babies go through about 12 diapers a day when they’re first born. That means over 1,000 diapers in the first three months alone. 

But the truth is, my wife and I have been members of all three national warehouse clubs (Sam’s, BJs and Costco) at some point during our marriage. Some of you might wonder why, as a two-member household, we would pay up to $55 a year for the privilege of shopping somewhere. There are several reasons, which I’ll discuss briefly below. I’ve also included the percent of the yearly membership fee, out of $55, each category would pay for.

  • Prescription glasses. This is probably the best reason I have for why it makes sense to be a member of a warehouse club. Consumer Reports has consistently rated Costco among the best places to buy glasses
    based on price, quality and service. You can get a complete set of glasses for about $150, compared with $200 or even $300 at independent shops. Percent of membership paid: 100%
  • Contact lenses. I wear contacts once a week when playing basketball and usually go through a box of the disposable ones in about a year. While comparison shopping online recently, I found that the lowest price for the contacts I needed was $45 per box. I called Costco and asked for their price: $30 a box. Buying my contacts there instead of from an online seller saved me $15 per box, or $30 total. Percent of membership paid: 55%
  • Low-carb shakes. My wife likes to drink chocolate-flavored shakes for breakfast sometimes because they fill her up and they’re convenient. The cheapest place outside of the warehouse clubs I can find them is Walmart, at $7.00 for a 4-pack. At BJs they were $16 for a 12 pack, saving us $1.66 per 4-pack. Assuming she drinks 120 shakes per year, we save $50. Percent of membership paid: 91%
  • Allergy medication. My wife has minor allergies and normally takes an over-the-counter allergy pill each day. At Sam’s we bought a generic version of Zyrtec, which had a year’s supply of pills for $16. Compare that to drug stores, where you’d pay over $100 for a year’s supply of even the generic version. This one purchase not only pays your annual membership fee but saves you money every month as well. Percent of membership paid: 100%

These are just a few of the ways we’ve saved by having a warehouse club membership. We’ve experienced these savings even though we’re only a two-person family (for now). When the baby comes, we’ll save even more on the things we buy.

Are you a member of a warehouse club? Has your membership paid for itself yet?

Photo by frugalvillage.com

Why I Love Yard Sales

22. May 2012 · 18 comments · Categories: Save · Tags: , , , , ,

I’ve always loved yard sales. As a kid, my mom and I would ride all over town, on the lookout for those cardboard signs that led to mounds of “treasure”. This allowed us to go on bargain hunts and ultimately save money, but it also provided bonding time for my mom and I.

I loved sorting through the boxes and tables together, looking for old Nintendo games and baseball cards, or anything that would catch the eye of a 10 year-old boy.

My bargain-hunting ways have continued into adulthood. I find time and again that yard sales are perfect for finding things I would have otherwise bought new. For example, this past weekend I found a CD case to replace the one in my wife’s car that was falling apart. The price was marked 1 dollar but I was able to negotiate it down to 50 cents. Had I bought this at retail I would’ve paid $15 for it, easily.

I’ve also found yard sales to be a great source for numerous other things including: clothes, kitchen supplies and other household items.

Back in the day we had to depend on the newspaper classifieds to find yard sales. But today there’s a tool called YardSaleTreasureMap.com that makes the process much more interactive. After entering in your zip code you can see the upcoming yard sales in your area on a map. Their database pulls from Craigslist so you don’t have to look up each address individually to see how far away it is. You can then use their route planning feature to make an itinerary.

What I love about this tool is it allows you to see what is available at each yard sale, based on the Craigslist post. So if you’re looking for baby items, you don’t have to drive all over town looking for them. You can simply target the yard sales that have baby stuff available.

Because not all Craigslist listings have an exact address, they’ve included a section where you can browse more listings. Just click the “Other Ads” tab and cycle through. This is an excellent way to find neighborhood sales. They have apps for Android and iPhone as well.

Something I didn’t consider growing up is that yard sales offer more than just bargains. They allow you to:

  • Practice your people skills and the art of negotiation
  • Interact with your neighbors if the yard sale is near your home
  • Get exercise while walking around
  • Enjoy the nice weather during the warm summer months

Yard sales allow you to stretch a buck, but they offer so much more than that. If you haven’t already, plan to go at least once this year.

What do you like most about yard sales? 

Photo by blogs.momaha.com

Never Pay Full Price for These Things

22. April 2012 · 29 comments · Categories: Cars, Save · Tags: , , , , , , , , , , , , , , ,

Faced with decreased earnings as a result of the recession, consumers are putting their frugal mindsets to greater use. We’re increasingly demanding discounts and coupons on more categories in an effort to cut back our spending.

Let’s use dining out as an example. As a child growing up in the 90′s, I don’t ever remember my parents clipping restaurant coupons. Maybe it was because we lived in a small town with only a few restaurants to choose from. Today, I couldn’t imagine not looking online for a coupon before going out to eat. I don’t find one every time, but when I do the average savings is about 20%.

WiseBread has a list of 25 things to never pay full price for. I want to focus on a few and share some strategies that have worked for me.

1. Magazines

If you’re looking for a good variety of current, free magazines, look no further than your local library. Most libraries offer dozens of the most popular titles. If the library isn’t your thing, check out DiscountMags.com. They offer yearly subscriptions of rotating titles as low as $4, but you have to search for a coupon code to get that price. Amazon also has a good selection at decent prices.

Each time a renewal notice comes for one of your subscriptions, it’s a good idea to think about whether you actually read the magazine anymore. Do they sit in a pile on the coffee table collecting dust? If so, it’s time to cancel your subscription.

9. Gift Cards

Unless you are getting cash back or rewards points on your credit card, you should never pay full price for a gift card. Think about it. You’re taking actual, real cash and turning it into credit that you can only use at one store. For that inconvenience, you should get a discount of at least a few percent. Buying gift cards at a discount is a great way to save money before you even walk into the store.

GiftCardGranny.com is the best site I’ve seen for buying gift cards. It compiles gift cards from many different sources, so you don’t have to visit several sites to find the best deal. They give you a list of available cards from each store and provide info including the discount you get, shipping cost (if any) and who the seller is. I recently saw a JC Penney card valued at $130 on sale for $107 with free shipping — a discount of 18%!

13. Car Rentals

A quick trip over to Expedia to search for rental cars tells us that an economy car can cost as much as $50 a day, with the lowest price at $30. That’s expensive. So how do you find the best deal on a rental? There are two things you can do.

The first is to use Priceline. Using blind booking, you must agree to book a non-refundable rental for a set date. If you know your trip will definitely happen and you don’t care which company you rent from, this is the best way to go. You can save up to 40% using this method.

The second is to book at the cheapest published rate you can find online. Because car rentals are fully refundable pretty much up until the day of your trip, you can re-book at any time if a lower rate comes along. But who wants to constantly monitor for better rates? A new site called AutoSlash has developed a solution. You can either search for rentals on their site or enter a rental you’ve already booked. Then, they continually monitor for coupon codes or lower rates that pop up and automatically re-book you at the lower rate. It doesn’t get much easier than that!

Conclusion

Nobody should pay full price for everything they buy anymore. New websites become available every day to help us get a better deal on the things we buy. Use these resources and your own creativity to come up with ways to save on just about anything.

Image by swewhattearitup.wordpress.com

How to Save on Car Repairs

14. April 2012 · 5 comments · Categories: Cars, Save · Tags: , , , , , , , , , , , ,

I think it’s safe to say that most of us dread going to the mechanic. In fact, many would probably rather go to the dentist than navigate through the maze of car repair shops. Not only is it possible to find an honest repair shop, doing so will give you peace of mind and save you big bucks on car repairs.

The best thing you can do is to find a good repair shop before you experience a problem. I realize that in some cases this may be too late — when you’re stuck on the side of the road with smoke coming from the engine, for example. But hopefully you have at least a little time before trouble strikes.

To find a good mechanic, start by asking those around you where they take their cars. Find out where your coworkers, friends, neighbors, and even those in your social network go for maintenance and repairs. Another tactic I use is searching for internet reviews. I’ll look up repair shops on a search engine and see what others have to say. If a shop has multiple positive reviews, you’re probably on the right track. Finding an honest, reliable repair shop in advance will give you peace of mind when you do have to take your car in for repairs.

Use RepairPal to get a repair estimate. This tool will give you a total estimate for almost any job, breaking it down into labor and parts based on your zip code. Knowing the repair cost before you even take the car in helps you avoid getting ripped off.

For more expensive repairs, always get a second opinion. A few years ago my car needed new front shocks. The first shop I took it to quoted me $700. I called another shop and they estimated it would cost $500. I then looked around online and found a coupon for 10% off, so it ended up being only $450. Just a few minutes of work saved me $250.

Skip unnecessary maintenance. You could be changing your car’s oil or other fluids too often. Many people go by the old rule that says you should change the oil every 3,000 miles. But many cars built today are made to go 5,000 or even 7,500 miles between oil changes. Check your owner’s manual for the recommended interval.

Find parts yourself. Say you need a new headlight assembly. First, try calling your local salvage yard to see if they have any in good condition that would fit your car. If that doesn’t work, check auto part stores in your area to see if they have it in stock. One other place I have used in the past is the Parts and Accessories section of eBay Motors. This is especially helpful for hard-to-find parts for older or discontinued models. Mechanics charge more for parts than what you’d pay by finding the part yourself.

If you’re the adventurous type, do simple maintenance and repairs yourself. Replacing tail lights, checking fluids and installing new windshield wipers are simple tasks that can be done in your driveway. To start, look on YouTube for videos that walk you through the process for your particular car. I’ve replaced spark plugs and changed the oil and filter using guidance I found on the internet. More complicated repairs, such as brake work or replacing belts, should probably be done by a mechanic to minimize problems down the road.

Finally, consider a diagnostic tool that tells you what’s ailing your vehicle. This one from CarMD is considered one of the best out there. Plug it into your vehicle’s connector and it will tell you why your check engine light is on. Then, using your computer, you can find out more details including the estimated cost of repair. As an alternative, some auto parts stores will do this for free using their scanner. Some of these tools can be used to turn off your check engine light if the issue is a loose gas cap — a common trigger of check engine lights.

Car repairs can be expensive, but using these tips will keep the cost low and help you avoid getting ripped off.

Photo by bestsandiegoautomechanic.com

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