Monthly Archives: May 2010

Weekly Roundup: Discretionary Spending Edition

Posted on by  at  5:00 am
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The theme of today’s roundup is inspired by the first post mentioned in the roundup below: discretionary spending. It’s fun to hear what others spend their “left-over” money on each month.

I’m a little strange in that I don’t really have a hobby. I have a video game system with exactly one game. I have golf clubs with cobwebs surrounding the bag. I’m not a car guy. I’m not a “techie.” I don’t collect music, or DVDs, or books.

Here lately, any left-over money is going to a “home improvement” fund. We hope to soon add gutters and a deck to our backyard. What about you? What do you spend your discretionary money on?

The Frugal Roundup

What We Spend Money On: Video Games. This is still a relatively new site, but is quickly becoming a favorite of mine. I enjoy watching a young couple make the right moves with money. In this post, they share a little about their discretionary spending – a category we should all have when properly accounted for in our budgets. (@Couple Money)

Three Things the Amish Taught Me About Money. I was always a little curious about how Amish businesses operated. (@Get Rich Slowly)

Never Cosign a Loan Unless You Want to Pay It Yourself. The pitfalls of cosigning have been well document, but this is an excellent reminder. I’d rather give someone money than cosign. (@The Simple Dollar)

The 7 Big Money Problems Most People Have. A great list of things that could stop your from succeeding financially. (@Gen X Finance)

Best of the Rest

Tricks to Save on the Summer Electric Bill

Posted on by  at  5:00 am
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The following guest post is from PT of PTMoney.com.

It’s almost summer time! Are you ready? I’m ready for the nice, long days. But I can’t say I’m ready for the oppressive Texas heat. One of only things I truly dislike about this time of year is the electric bill. No matter how hard I try each summer it seems like I still end up with ridiculous energy bills. But I’ll never stop trying to keep these costs down. If you’re like me, and want to win the war against this summer’s heat, here are a few tricks for keeping energy bills down.

Change the A/C Filter – This is a quick and easy fix, and really something you should be doing already. A dirty filter can restrict airflow and make your unit work harder. Maintenance varies from unit to unit, but typical recommendations are to change the filter once a month.

Keep Some Windows Covered – Summer afternoons and evenings can be brutal on the western and southern ends of your house. Make sure you keep windows on that side of the house covered with drapes. At a minimum, close the shutters, which will reflect some of the heat.

Consider a Whole House Fan – I don’t own one of these, because I live in Texas and the heat is too much for it. But I hear they are an effective way to cool a house in more moderate climates. The idea is to bring in the cooler air through the windows, and expelling the hot air out through the attic.

Use More Fans – If a whole house fan isn’t in your future, then at least make sure you’re using your other fans effectively. Ensure you’ve switched the fan circulation back from winter mode. Summer mode is counter-clockwise. This will push the air down. To be effective, you have to be in the room with your fan. So make sure you turn off the fan when you leave a room.

Install a Smart Power Strip – By installing one of these power strips, you’ll eliminate the vampire power that’s sucking money from you even when you’re not there in the home or using your electronic devices. Simply unplugging your devices also works.

Plant a Tree Near Your Home – This won’t exactly work overnight, but you’ll reap the rewards for years to come. As much as 11% in savings some studies say. For a more immediate effect, plant a tree to shade your outside air conditioning unit. The extra shade helps the unit to be more efficient.

Get Out of the House – Look for more opportunities to get out of the house this summer. Plan your trips in the afternoon, when the heat is the most intense. Head to the grocery store, the pool, the library, or even the mall, which sometimes have indoor play areas for your kids. Although, be sure that this routine trip to the mall doesn’t end up costing you more than your energy savings.

Cook Outside More – In the summer months plan to do more of your cooking outside on the grill. This will keep your house cooler because you’ll be using the oven and range less. I like my steaks cooked in the oven, but I’ll settle for the grill if it means a cooler house.

You can actually reduce heater and air conditioning expense by regulating humidity with home dehumidifiers. You will find that sometimes the dampness is the most uncomfortable.

I’d love to hear your ideas for saving on energy bills this summer. Share them in the comments below…

Read more money saving tips by PT over at PT Money: Personal Finance. Lately, PT has been covering the topics of mortgages, online savings accounts, insurance, and beginning investing.

How to Guarantee a Call From a Debt Collector

Posted on by  at  6:00 am
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This story is by Adam from Money Relationship. Check out how much debt he paid off last month.

This post isn’t about defaulting on your credit cards. It isn’t even about not paying your mortgage payment. It’s a story about how my wife and I got into a little trouble buying some “items” online.

It all started with a daily trip to Facebook by my wife. While perusing through the endless status updates of people she probably didn’t even know, a beautiful white smile started shining back at her on the sidebar. The ad read “Have a Beautiful Smile In Under 5 Minutes a Day!” Having been thinking about getting Crest White Strips, this interested her very much. So, she clicked.

The deal seemed amazing. They claimed that they could get you a white smile in less than 5 minutes a day. All of this for only shipping and processing! So, she bought it. I mean, what could go wrong?

Later in the week, I inquired about the transaction on our bank statement. It was for $7.95 so I didn’t think much about it but I was just curious. She told me she purchased some teeth whitening and being the guy that I am, I thought we were going to save a few dollars since we didn’t have to buy Crest White Strips. Boy was I wrong.

A few days later, a charge for approximately$97 showed up on our account from 20 Minute Smiles. After the initial anger, I thought OK, when we get the stuff, we’ll just send it back. Well, even before the package arrived we got ANOTHER charge on our account for a little under $90 from Pristine Health! What the heck were the charging me for? I didn’t even get the thing yet!

Well, the next day the box arrived. What a bunch of crap! It was a syringe and a mouthpiece. I could have made it myself! We thought enough was enough. We called the company to get our money back. We were greeted by an answering machine stating that they were busy and to leave a message. We left a semi nice message asking them to call back. Well, after they didn’t call back, we called back again. Nothing. We left a more threatening message. After no response two days later, my wife called and screamed at the answering machine. I sure hope someone was there to hear it!

Since we couldn’t get our money back, I decided it was best to go to the bank and shut down the card she used to purchase the items. The bank was pretty nice about it and let us file a complaint. They shut down the account and actually credited our account with all of the money we were out.

The next day, another charge appeared! The bank said they slipped it in before they got the account closed. I started getting REALLY angry.

So, more weeks went by and we thought everything was great. I cooled off by then. We learned our lesson and actually made out pretty good since we got our money back. Then came the dreaded letter in the mail.

It read, “Dear Mrs. Adam, this letter is in regards to Mrs. Adam vs. Everbright Smiles (how many freaking names does this company have?). You have 30 days to pay $58.95. After that date, Everbright Smiles may pursue legal actions against you and we will report you to the credit agencies.” Yipee!!! Actually, this wasn’t even our first encounter with a debt collector, so we knew what to expect.

I had my wife call the debt collector and settle some kind of deal. I wasn’t in the mood to counter sue for $59. Of course they wanted her to give access to our checking account over the phone. She said we will be sending a money order. She got the charge down to $29.50 and we sent the check the other day. What an ordeal!

All I know is, this better not happen again. What’s stopping them from attempting to do it again? I mean, we can’t get a hold of the people to cancel the dumb thing!

I guess the moral of the story is: DO NOT BUY STUFF ONLINE FROM COMPANIES YOU KNOW NOTHING ABOUT! It will surely end bad.

UPDATE: This is the website that my wife went to. Please just look and do not order anything from the site! It is a SCAM!

Weekly Roundup – Frugal Dad Voted Best Frugality Blog

Posted on by  at  5:00 am
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Some exciting news to share. Frugal Dad was voted the Best Frugality Blog in the first annual Plutus Awards. Thanks to all who voted for me. Check out the Plutus Awards site for a run down of all the winners in the remaining categories. Many of my favorites on there!

The Frugal Roundup

12 Good Reasons Why You Should (and Should Not) Pay Off Your Mortgage Early. Here is a great list of the pros and cons. (@Len Penzo)

Getting Paid to Lose Weight. A little motivation? Maybe. (@Get Rich Slowly)

5 Money Questions for Couples With Kids On The Way. I know this article wasn’t written by Peter, but he should be following the advice ;-) . Congrats on the addition to the family Peter! (@Bible Money Matters)

How to Cure Financial Constipation. Having some financial blockage? Head over and find the cure! (@MoneySmart Life)

Comcast: Round 3 . For those of you who haven’t read about FMF’s Comcast troubles, head over and get a good recap. (@Free Money Finance)

Best of the Rest

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Financial Independence: When Your Income Matches Your Outgo, Without Working for Money

Posted on by  at  5:00 am
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Financial independence is one my favorite topics. It’s something I one day hope to achieve through a variety of sacrifices, such as paying off our mortgage early, building savings inside and outside of retirement accounts, and sticking to a frugal lifestyle.

Saltwhistle Bay Dock and Beach on Flickr by Jason Pratt

The other day a reader asked for clarification on what financial independence meant. Well, I suppose it can mean different things to different people. To me, it means that my savings can be moved to ultra-conservative investments, and still spin off enough money each month to cover my basic living expenses. At that point, I technically do not have to work for money.

Roadmap to Financial Independence

So how does one reach financial independence (FI)? It certainly doesn’t happen overnight. The point where one reaches FI is a function of three things:

  • Diligent Savings. To build enough capital to live on interest and dividends takes years of faithfully saving and investing. We are still in the “capital building” stage ourselves, and invest in a variety of tax advantaged retirement accounts and taxable accounts. Currently, our plan is to max Roth IRAs, invest in my 401k through the match, and with anything left over, build our FI savings capital buying dividend stocks through our discount brokerage, Zecco.com, and tax-efficient mutual funds at Vanguard.com in a mix of stock funds, bond funds and international index funds.
  • Debt Freedom. Reaching financial independence is hard enough, but adding a pile of debt to the mix makes it next to impossible. We have already eliminated all consumer debt (credit cards, student loan and car loans). We’d like to eliminate our mortgage in the next 5-7 years. However, building savings capital and paying off our mortgage early will mean there will be little money for anything else. Which takes us to the third component.
  • Reduction of Monthly Expenses. Saving money every month on regular expenses not only helps increase your disposable income for savings contributions, it’s good practice for living financially independent. It also means in most cases, you don’t necessarily have to become a millionaire to retire. In early retirement, you would need a nest egg of $600,000 to spin off enough money to cover $2,000 in expenses (assuming a 4% return, before taxes).  You would only need $450,000 to cover $1,500 a month in expenses given the same terms. That’s a significant difference in the amount of savings needed to reach financial independence.

Other Sources of Income in Early Retirement

Once monthly expenses have been reduced, and fairly well defined, we can begin to get a good idea of the amount of money we’ll need saved to retire early. But one thing many formal calculators and financial gurus forget to take into account is that most people will not “retire” early at 50 years old and never earn another dime from some type of work. Sure, they may not earn what they made while working full time, but most early retirees go on to work in another field they are passionate about, splitting time between their passion, their family and a hobby or two.

In the example above, if our expenses were $2,000 a month in early retirement, but we were able to earn $500-$700 from part time work, consulting, or something similar, our savings needs would be much lower than if we planned to earn nothing. This often means people can technically reach financial independence much earlier than they previously anticipated.

Do any of you have plans for early retirement? What steps are you taking today to get there?