10 Tips For Saving Money

Sometimes it's the little things that make the biggest difference.  By starting early enough and getting a hold of the small money drips in your financial life, you could reap significant savings over the long haul.

1. Bring your own lunch. When you go out for lunch chances are you’re going to pay at least $10 each day, you will spend $200 a month. I’m not advocating never going out for lunch but if you bring your lunch just 3 days a week, you should easily save over $100 a month.

2. Coupon clipping I have great difficulty finding coupons for most of the food I buy on a regular basis. But, you can always save money on other staple items such as paper towels, Ziploc bags, Kleenex tissue, lotion, etc.

3. Choose water over sugary sodas. I’m not talking about so-called vitamin water either.  Just good, clean, pure water.  When I was a kid we weren’t allowed to drink anywhere near the amounts of soda that people do these days. You can save yourself money and improve your health just by quitting your soda addiction. And don’t even get me started on Starbucks. Many companies provide coffee and tea free for their employees.        

4. Adjust television consumption. Premium cable and satellite subscriptions (HBO, Cinemax, Showtime, etc. can cost anywhere from $900 to over $2,000 per year or more.  Think about what you watch.  Do you really need all those premium channels?  If not, then you know it’s time for a downgrade. Use www.billshrink.com under their television tab, enter the information and find out if lower priced options are available for you.  Make sure that your purchasing decisions reflect your lifestyle.

5. Pick up DVD’s and music (CD’s) and books from the library. If you can live without getting the latest releases, you can definitely save some money. When you do purchase these items, why not buy used?  There are used bookstores in most cities and Amazon provides an amazing selection of used movies, music and books.

   6. Do you suffer from a subscription money leaks? How many magazines /newsletters do you subscribe to? Now, how many magazines / newsletters do you actually get around to reading each month? On the subject of subscriptions what about Netflix? I’ve never been a fan of Netflix because I don’t watch a ton of movies.  Same thing with gym memberships.  I know for a fact that I’m going to get my moneys’ worth from any gym I belong to, so I don’t hesitate to pay for that.

7. Use ceiling fans, and space heaters. I love my space heater. They are an especially good purchase if your household is small. No sense heating the entire house when just one room will do.  Many of the newer models have a built in safety feature.  They automatically shutoff if knocked over.  Ceiling fans provide a wonderful breeze on hot summer afternoons.  Open a window, turn on the ceiling fan and turn off the A/C.

8. Install energy saving CFL bulbs. Have you made the switch yet? Compact fluorescent lights (the curly top bulbs) are more expensive but use much less electricity and have a longer rated life when compared with normal incandescent bulbs. CFLs can save over $40 in electricity costs over a lamp’s lifetime.

9. Visit local parks. I love mountain biking and hiking.  Living in the Bay Area, I have access to tons of regional and state parks nearby that I visit often. I not only get great exercise but it just makes me feel better mentally to be outdoors in a beautiful environment.  Some parks charge $5 parking fee but for many others the only cost is the gas used to get there.

10. Cell phone options. Running out of minutes or going over your text limit can result in sticker shock at the end of the month.  But on the other hand, you don’t want to pay for minutes you’ll never use.  To start trimming your bill check out a number of prepaid plans and see if one works for you. A great place to start is withwww.billshrink.com or www.myrateplan.com.  Go back over your old phone bills and look for charges that seem out of line with what you use.




Inside Job or Inside Rot?

I just recently finished watching Inside Job. I know. I know. I’m a bit late but I’ve really been pursuing this DVD for a while now. Charles Ferguson provides a revealing look at the global financial crisis in Inside Job.  Over the span of two hours the viewer is introduced to dozens of players: authors, bank managers, government ministers, politicians, madams and even a psychotherapist. In many instances what’s even more telling who declined to be interviewed.

What really struck me about this DVD was the absolute lack of a moral compass in almost all of these individuals.  It galls me how they can sit there in front of the camera and excuse their behavior. Many of these folks are considered leaders: Business leaders, political leaders, and education leaders.  If these people are leaders where exactly have they led us? Oh yeah, to the brink of a depression. I almost forgot.

I’ve often heard a discussion that ethics should be taught in high schools and colleges. I used to think that this could be effective but let’s be serious.  Unless you are getting consistent messages from your parents, professors and society in general regarding the importance of ethics I don’t see how such a thing could work. The temptations: wealth, multi-million dollar homes, dream vacations, etc. can be overwhelming.

America used to be the land of innovation. Now it seems to be the leader in Ponzi schemes, payoffs and backroom type deals.  We have devolved into a culture that worships greed and materialism above all else. Back in the day when a bank gave you a mortgage, they wanted to be certain that you could pay it back. Common sense tells you that when you get a mortgage and the lender couldn’t care less about repayment, things have seriously gone off the rails. 

As I watched Inside Job I couldn’t help but think about this country’s dogged pursuit of Osama Bin Laden. I would go so far as to argue that Bin Laden didn’t cause anywhere near the amount of damage to America that the “Wall Street” gang did.

When you tally up the total cost of: the invasion of two countries (Iraq and Afghanistan), thousands of lives lost and the billions of dollars this country spent, you would think some of these folks would be looking over their shoulders.

At the end of "Inside Job," Robert Gnaizda lists various groups that should be prosecuted. When asked why this has not been done, he answered: "It's a Wall Street government!"

Now that is a devastating point.

I guess if you aim at the wrong target you shouldn’t be surprised if hitting it doesn’t do any good.

Boomers Are Sitting Pretty For Retirement

What? When did this happen? I thought us “boomers” were going to be relegated to an existence of cat food and homelessness. I always get nervous when someone writes either a scare article or in this case a ‘feel good’ article. Most likely either side is only partially correct. 

I read an article over the weekend that states the average 401(k) balance for someone who has been in their current plan for at least 10 years and is 55 or older is $233,800.  I’m okay with that statistic.  The writer(Steve Butler) then assumes an average age of 60(in this example) and that said worker would have an additional five working years to accumulate additional assets.  Well, possibly.  Who’s to say that this person will want to or be allowed to continue working until age 65?

Butler also states, “The existing money has time to increase by 50 percent or more even if invested conservatively.” Huh? Who’s making those investment decisions, Warren Buffett?  Maybe I’m wrong but that seems like a pretty big reach in terms of what a person can reasonably expect to earn over a five year period.

Butler continues, “Then, five more years of $10,000 per year contributions (hopefully) should add another $50,000 plus interest.” Again, who is Butler referring to?

I congratulate anyone who can afford to contribute $10,000 per year to their retirement fund but I can only think of one individual that I know personally who could pull off that number.  Maybe I’m just running with the wrong crowd.

It gets better. “That's just the money in their current job's 401(k) plan. The average boomer has changed jobs at least seven times over a career. This means that there are IRA roll-over accounts sprinkled around town like deer droppings -- old 401(k) roll-overs that went to a variety of different financial institutions depending largely on what was convenient or automatic at the time of each job change.”

Really? I’m at the tail end of the boomer generation and I’ve had maybe seven or eight jobs in my life.  That’s including the part-time jobs I held while in college. News flash: At least half of these “jobs” did not offer 401(k) plans. I guess I need more deer droppings.

First of all, back in the good old days most employees had to wait for their employers ‘open’ enrollment period to enter into their 401(k) plans. If the average person has had seven jobs, how likely is it that they even stuck around long enough to enroll in the first place? It’s possible, but still I wonder.

My gut feeling is that if the current account balance is $233,800 it must be as a result of having already rolled over old 401(k) plans into the one where these people are now employed.  If you’ve been at your current employer’s company for at least ten years, even if you did contribute $10,000 or so each year(highly unlikely) I doubt that that would be enough for your balance to reach such a large number.  More likely fifteen years at a contribution rate of $10,000 per.  In addition, let us not forget the financial implications of both the dot-com bust of 2000-2001 or the sub-prime meltdown of 2008.

The section that really made me laugh is the following, “There is a good chance, then, that the ‘Boomer’ with almost $250,000 at their current job's 401(k) probably has another $250,000 in an IRA.”  Sure.

Alright now, who’s got my other $250,000 IRA account?

Seriously, I do have an IRA in addition to a 401(k) but it doesn’t have that kind of cash in it.  I’d better get going if I ever intend to retire like the folks Butler is referring to in this story.

Is A College Degree Still Worth It?

When you take into account the struggling economy. the skyrocketing cost of a college education, and the rising student debt burden, many folks are questioning whether or not pursuing a college education still worth it?

According to a Pew Research Center study 57% of Americans say the higher education system fails to provide students with good value for the money they and their families spend.  The first question that pops into my mind is, “How do those parents define value?”

The study also states that 94% of the parents expect their child to attend college. Why the myopic path of college only?  College is definitely not for everyone. Have these parents not considered vocational schools? Last time I checked, plumbers, electricians, welders and auto mechanics were doing okay in the working world.

Another curious tidbit is that 58% of college presidents say that public high school students arrive at college less well prepared than their counterparts of a decade ago.  If this is true, then I guess the value of a high school education isn’t holding up so well either.

According to an article in USA Today back on September 10, 2010 Total student loan debt exceeds total credit card debt in this country. Students currently owe  $850 billion outstanding, while consumers owe about $828 billion in revolving credit. By year's end, student loan debt is predicted to surpass the trillion dollar mark. Ouch!

I know what you’re thinking. I’ll just file for bankruptcy if things get to rough. Right? Uh, maybe not. Student loans are not dischargeable in bankruptcy unless the debtor can prove that paying them back would cause undue hardship.

President Barack Obama is clear about his position on the value of  a college education.

He is committed to ensuring that America will regain its lost ground and have the highest proportion of students graduating from college in the world by 2020.

That’s great news for colleges and universities but once we have all those college educated citizens, “What are we going to do with them?”  Is there a corresponding goal of business creation? How does a population full of graduates translate into jobs? Maybe we should focus on entrepreneurship instead of chasing sheepskins. I wonder.

At this rate, it’s not too far fetched to imagine a world where the guy making your pizza  is freshly minted PhD  from Harvard.  Okay that may be a bit of an exaggeration but…

What are your thoughts on the matter?