Monthly Archives: December 2008

Breaking the Monthly Payment Mentality

Posted on by  at  2:00 pm
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Local car dealerships have been running a blitz of advertisements here in my local town over the last several weeks in an effort to move inventory before the end of the year.  One thing I detest about car advertisements is the notion of “affordable payments.”  As if the final cost of the automobile is irrelevant.  What matters is whether or not buyers can afford the monthly payment.

And this monthly payment mentality is not limited to the car-buying business.  Blue Hippo computers has gotten in on the act, too.  A fellow blogger recently posted about Blue Hippo computers, a company that “helps” people “afford” computers by offering a monthly payment plan.  In fact, Blue Hippo is selling inferior, over-priced products through some sort of bastardized layaway or rent-to-own plan.  Here’s an excerpt from his article; first a message from the Blue Hippo site, and then his comparison:

Unlike other financial companies, BlueHippo® doesn’t check your credit and measure you based on some score. Since we don’t check your credit, we do ask that you build a credit history with us by paying a $99.00 initial fee, followed by 52 weeks of consecutive layaway payments of $39.99. After 13 weeks we can then offer to finance the balance of your purchase price, order your computer, and have it shipped directly to your home via UPS or FedEx. It’s that simple!

After reading this, my first question was “So how much do you pay for the laptop?”. Based on the above, assuming you use their layaway program, you’ll pay $99 + (39.99 * 52 weeks) = $2178.48.  I’ve read that the $39.99 is for the desktop and that the laptop is actually $49.99 for 52 weeks making the laptop $2599.48.

As he points out later in the article you can get “a faster processor and double the hard drive space” at a site like Dell.  So why would anyone even consider doing business with Blue Hippo?  Because they offer a monthly payment plan.  That’s it.  Forget the fact you will pay many times the cost of a comparable computer.

The only way to win at finances long term is to break this monthly payment mentality.  With the exception of large expenditures such as a house, just about everything else in our life can be paid for in full, up front, at the time of the purchase.  Doing so may change your ownership time line, but there is nothing wrong with delaying gratification for the satisfaction of avoiding a new debt.

Next time you are considering a large purchase and considering a monthly payment option, inspect the terms of the deal.  Chances are you will be paying much more for the opportunity to make payments rather than paying in full on the day of the purchase.  Trust me, stores, car dealerships and banks are not doing you any favors for offering monthly payments (plus interest) for many months, despite how nice their advertising sounds.

Gym Memberships Still Worth It Despite Recession

Posted on by  at  6:00 am
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Much of the advice I share here are lessons I’ve learned the hard way.  I certainly don’t possess any unique skill at navigating the personal finance world, and I’ve made my share of mistakes.  To clean up those mistakes I typically advise families to cut any unnecessary spending, particularly in this time of recession.

We have taken our own advice in the Frugal household by cutting the cable back to basic service, lowering our cell phone plan, signing up for the value Internet plan, and a number of other cuts.  However, there is one expense I am unwilling to let go–my gym membership.

Gym memberships really are a luxury in that I could get adequate exercise with a good pair of walking shoes and a few dumbbells.  However, with our current layout a home gym is not possible, and most of the equipment I use at the gym is too expensive to put in the house anyway.

Over the years I have struggled with whether or not to let go of my gym membership.  I have even gone so far as canceling it and trying to do home workouts to no avail.  Right now my membership costs about $30 a month, or $360 a year.  That works out to roughly a dollar a day.  Actually, because I don’t go every day like I should it works out to closer to two or three dollars a day.  Still, that is not a lot considering the benefits I receive.

Benefits of a Gym Membership

Lower health care costs.  If I can get in and stay in better shape it will help lower health care costs and insurance premiums.  In this way, I consider the $30 a month an investment because it more than offsets the costs of additional doctor visits and increased premiums.

Relieves stress.  After sitting at a desk all day, and much of the night, it is good to get up and move around.  I have lifted weights since high school and find it to be therapeutic in terms of relieving stress.  It would take much more than $360 to outfit my garage with the same equipment I use at the gym–weight bench, squat rack, leg press, barbells and a full weight set, not to mention the various cardio equipment.

Mental clarity.  Ever just feel like you are in a fog, mentally?  Me too.  When I start to feel that way I immediately look at two things:  my diet and my workout schedule.  When I start to slack off on either one I can feel a decline in mental sharpness and often feel more fatigued.  Strange that working to near exhaustion in the gym actually gives you more energy, but it really does.

Adds discipline to your daily routine.  Regardless of what time of day I workout, the workout itself sets the tone for the day.  I used to get up early and hit the gym, but I have replaced that early morning time with writing.  Now I typically workout after I leave work, and it is a nice change of pace to leave the office, hit the gym and then head home.

Networking opportunities. If you are single, this advice may mean something totally different to you! But for us married folks, I am referring more to professional networking opportunities.  The gym is sort of a melting pot for professionals in my area as people from a variety of industries have memberships to the same gym.  It is not unusual to strike up a conversation about the market with the guy on the treadmill next to me.  Eventually we chat about family and jobs and I have established a new contact.  It never hurts to have a few of these casual friends in your network.

Boosts self-confidence.  It is true that better looking people have an easier time getting ahead in life.  Fortunately for me, looks aren’t the only thing that matter!  Hard work and discipline makes up for a lack of looks, but one secret ingredient can override all others–self confidence.  Establishing a workout routine, sticking with it, and making progress boosts self confidence.  The physical improvements are nice, too, but the change on the inside is far more important.

Do you have a gym membership?  Have you considered canceling it to reduce monthly expenses?

A Simple Holiday

Posted on by  at  2:00 pm
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A few members of The Life Skills Network put together an outstanding resource around the theme of simplifying the holidays.  My first “Fab Five” entry will be dedicated to their posts, and I’ll include a few others as well.

Simply Perfect: 43 Holiday Tips from On Simplicity Readers (@On Simplicity)
Simplify Your Holidays in 3 Easy Steps (@My Dollar Plan)
Crappy Economy = Best Christmas Ever! (@My Super-Charged Life)
3 Ways to Simplify Your Christmas (@The Wisdom Journal)
The Top of Your Holiday To-Do List: Breathe (@Simple Mom)

Debt Elimination Tips: How To Reduce Debt With These Do’s and Don’ts.  Enjoyed this read on tips for getting out of debt.  I usually find a nugget in each “get out of debt” article I read, and this was no exception. (@The Digerati Life)

New Credit Card Rules Coming Soon, to the Benefit of Cardholders.  A vote this Thursday could eliminate such credit card nastiness as double-cycle billing, universal default, and at-will interest rate increases.  An unintended consequence of this legislation, assuming it is approved, is that issuers will charge higher rates and lower credit lines to minimize risk exposure.  You don’t expect the banks to lose money do you? (@The Sun’s Financial Diary)

10 Things We Can’t Have Without the Other.  Because as the article states, “one without the other makes less sense than none at all.”  A fun, thought-provoking post. (@Marc and Angel Hack Life)

Holiday Tipping Guide 2008

Posted on by  at  6:00 am
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Despite the tough economy many people still rely on proceeds from holiday tipping for a large portion of their seasonal income. But tipping is not reserved for only traditional service professions such as restaurant servers.  Around the holidays there are many other tipping opportunities for people who provide a service to you throughout the year.

Things to Consider Before Leaving Your Tip

Quality of the service provided.  Obviously, if you are unhappy with the service you are receiving you should not only not leave a generous tip, but should probably discuss the level of service with the provider.  When determining how much of a tip to leave let the service level guide you.  Does the individual go above and beyond, or just enough to get the job done?

Tip within your budget.  Sure, it would be nice to add to your paperboy’s tuition fund around the holidays, but a large tip might not be in your household’s budget.  Do not feel pressured to live up to a tipping standard (like the ones offered below) if your budget does not allow it.

Tip frequency throughout the year.  Do you typically tip for this service during each transaction?  When I venture out to get a haircut I typically leave a few dollars extra as a tip throughout the year, so at the end of the year I don’t leave a particularly large Christmas tip.  However, I do not tip our newspaper delivery person throughout the year, so I’ll include a little extra with the December bill as a thanks for keeping the paper out of the yard and on the pavement.

How Much Should You Tip This Holiday Season?

Like I mentioned above, a general rule of thumb should be to allow the level of service guide you.  Still, it is good to have a baseline, or starting point, when determining how much to tip.  Hopefully the following amounts will help get you started.

  • Newspaper delivery person: $20, or less if you are like me and only receive the weekend editions.
  • Baby sitter: Equivalent of one evening’s pay (in addition, a small gift from the child is a nice touch).
  • Hairstylist:  If you tip throughout the year, double your normal tip amount.
  • Mail carrier:  Gift up to $20, but not cash.  Personally, we like to bake a few goodies for both the mail carrier and the policeman that directs traffic after school.
  • Housekeeper:  Consider a tip equal to the cost of one service.
  • Personal trainer: If you see your trainer regularly (as in more than once a week), $30 to $40 ought to be sufficient.
  • Gardener: Equivalent of one week’s pay.  This should be reserved for lawn care providers or gardeners that provide a regular, weekly service.  Give less for seasonal lawn care providers.
  • Day care staff: A tip of $25 to $50 to each care provider plus a small gift from your child.

This is also a good time for a reminder that tips are appreciated by those in service industries all year.  One of my family members used to deliver pizza while in school and said you would be appalled by the amounts of some tips he received – in the $1 or $2 range, if any at all.  Think about it, food delivery drivers brave the elements and navigate traffic to deliver your meals.  Why do they receive less than the standard 10%-20% of the total bill that servers in restaurants receive?  Never quite figured that one out.

We are going through rough economic times, and tip income seems to be down for those in jobs that typically rely on tips for income.  People are eating out less, and canceling unnecessary services, minimizing the opportunities for those that work for tips to earn their money.  If you can afford to be a little extra generous, now is a great time heading into the holiday season.

Holiday Safety Tips

Posted on by  at  2:00 pm
14

The Christmas holiday is one of the most anticipated times of the year.  Unfortunately, criminals also look forward to the season as more people are out shopping and leaving their homes unattended during holiday travel.  Here are a few holiday safety tips to protect you and yours this season.

Safety Tips Around the House

Before traveling, contact your local law enforcement agency and ask to have your home placed on “vacation watch.”  Most municipalities offer this service.  The nearest patrol officer will ride by your home for a safety check once during their shift.  Be sure to notify authorities when you have returned.  Note, please do not call 911 to discuss this service.  A non-emergency number should be listed in your phone book. 

Try to make your house look lived in while you are away.  Consider picking up some inexpensive timers for lights and radios, and have them come on at times when you are normally home.  I even suggest staggering the timers so that living room lights come on and off early in the evening and bedroom lights come on later.  This is consistent with most schedules, but adapt it to fit your family’s routine.

Do not broadcast your plans to everyone.  You may be proud that you are taking your family on a week-long cruise over the holidays, but don’t brag too much.  You never know who might be taking note of your travel plans.

Leave a spare key and emergency telephone number with a trusted neighbor or friend.  In an emergency it may be necessary for someone to enter your home (water heater busted, etc.), so it is a good idea to leave a key with someone local. 

Pay someone to rake up leaves and/or blow off your drive way.  Tall grass in the summer and down leaves in the winter are a sure sign of an unoccupied house.

Silence the ringer on your home telephone.  One trick of the criminal trade is to stake out a house and call the phone number.  If the phone rings and rings with no answer it is a safe bet no one is home. If the phone doesn’t ring at all, crooks may suspect they are dialing the wrong number, or someone is home and using the phone.  Do not mention your travel plans on voicemail or answering machines.

Remove garage door openers from cars parked in the driveway.  It is a good idea to leave a second car parked in the driveway, but be sure to remove the garage door opener.  Burglars can easily bust out a window and open your garage with the click of a button.

Lock garage entry doors.  If you live in a home with an attached garage, lock the door from the garage to the home when leaving for Christmas vacation.  Garage doors have been known to malfunction, or be manually forced up, allowing access to your home.

Trim shrubbery and trees close to your home.  Overgrown shrubs provide the perfect cover for a burglar working to pry open a window.

Do not leave remnants of Christmas morning by the curb.  Large appliance boxes and containers are a sign Santa was really good to someone in the neighborhood!  They are also a sign to theives that the house just got a new plasma television for Christmas.  Break down boxes and put them in cans or black garbage bags to conceal the products that were inside them.

Holiday Shopping Safety Tips

Use the buddy system.  It is always a good idea to shop in pairs as theives are less likely to target two or more individuals. 

Lock your gifts in the trunk.  An electronics store bag filled with goodies sitting on the back seat in plain view is tempting for a smash-and-grab burglar.

If shopping at an outdoor mall or outlet stores, consider moving your car when you drop off presents.  No one likes to lug around too many items from store to store, so most people return to their cars several times to drop off purchases and resume shopping.  When you do this, consider moving your car a few lanes away.  Thieves like to stake out parking lots for people leaving purchases in their car and returning to stores.  If they see you get in and drive away they will likely assume your shopping trip is over and look for another target.

Ask for a security guard escort.  If you approach your car and see an unsavory character staked out nearby, return to the store and ask for someone to walk you to your car.  Most store security personnel are used to this, so there is no need to feel embarrassed.  Besides, better to be safe than sorry!

Have keys ready, and don’t take your time getting in your car.  There is nothing I hate to see more than a single woman approaching her car while digging through a purse for her keys.  With her head down and her attention diverted she is such an easy target.  Find your keys before you leave the store and have them in hand.  Walk quickly and confidently to your vehicle, and unlock, enter and lock the doors in quick fashion.  Once safely inside you can verify receipts, store away purses, etc.

Park in well-lit areas.  If you know you will be shopping for a long time, anticipate coming out into a dark parking lot and look for light poles to park under.  Besides providing light, light poles also serve as a reference point in a crowded parking lot to remind you where you parked your car.

Parents, park next to the shopping cart return area.  When you are finished shopping it is nice to put Junior in the car seat and return the shopping cart one lane away, rather than walking fifty feet away with Junior alone in the car, or you toting him and three bags of groceries.

These are just a few things to keep in mind while out and about this holiday shopping season.  Actually, they are good tips for any time of the year, but especially during times when criminal activity is high. 

I’d like to hear from you.  Please add any additional holiday safety tips in the comments below.