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#893 Put A Hold On Toilet Flushing

14 May

fresh water

Be a good fresh water steward, use less water at the toilet. Photo via flickr by Corey Leopold.

If it’s yellow, let it mellow… If you live in a dry or drought area, you’re probably familiar with the waste of fresh water to flush toilets, and the cost to flush every time you use the bathroom. It’s not just a monetary cost, but the strain on the water table and fresh water resources costs as well.

Old toilets can use as many as four to seven gallons of water per flush, more water than an average citizen in many parts of the world would use per day. Newer toilets do a bit better with one and half to three gallons per flush. Either way, limiting flushes reduces fresh water waste and saves money. At pennies a time, the big savings would occur over a lifetime, but small savings per year also accumulate. Not only does saving fresh water by reducing flushing save money on the water bill, but it also helps with the future outlook of limited water resources.


Don’t flush your money down the toilet. Photo via flickr by Titanas.

While water is not expensive currently, many speculate it could become the next oil, a treasured and expensive commodity. According to the Environmental Protection Agency (EPA), American households spend about $2 per 1,000 gallons, and $474 on water and sewage charges per year. The EPA estimates the average American uses 90 gallons of water per day, while a European uses 53 gallons and a sub-Saharan citizen uses three to five gallons a day. A single person saving three flushes per day could save seven gallons of water per day (calculating average flush use of four gallons of water) or 49 gallons per week or 2,548 gallons per year, which would be just over $4.50 per year saved. Multiply that by a family of four, and the savings increase to $18 a year or $324 for 18 years of children living at home. This of course is assuming that the $2 per 1,000 gallons will not increase exponentially as water becomes scarce due to drought and contamination by farming, pollution, runoff and sewage.

In many ways, conserving water now is a way for payoff in the future. Being good stewards of the resources we have now will mean that we’ll continue to enjoy those resources at a low cost in the future. Not flushing every time isn’t the only way you can save water at the toilet. You can multiply savings a few other ways as well.

First, check for leaks in your toilet. A few drops of food coloring in your toilet tank will tell you if you have a leak. If the color comes through in the bowl after 15 to 20 minutes, then there is a leak and fixing the leak can save 1,000 gallons or $2 a month or $24 a year. It’s an easy fix that most likely involves replacing the valve seal. A brick or plastic bottle filled with sand and sunk into the tank will displace water, which means there will be less in the tank and less water per flush. You can replace an old toilet from a four to seven gallon model to an efficient one and a half gallon model. I like the European model toilets that are tankless and allow you to have a “big” flush button and “little” flush button to address the issue of not always needing a huge flush.

Here are some tips for refraining from flushing and saving water on bathroom use:

  • Don’t be grossed out. The mellow yellow approach is best saved for in home use. As long as you’re home by yourself or with family members who are all on board with the practice, it’s just a matter of getting in the habit and not being offended by it. Have a rule for flushes, like every other pee or every three pees so the yellow and TP don’t collect excessively. When guests are over, social convention kicks in with toilet flushing, unless you are in a drought area and comfortable explaining the limited flush model. Remember pee is sterile. Obviously anything besides pee should be flushed.
  • Don’t run the water at the sink or shower. Don’t wait for the water to get hot, jump right in or start to wash right away. A little wake up isn’t bad. Some people end their shower with a cold blast of water as a health aid to improve alertness. Or change your shower head to a low flow model. My family has one where you can shut the water off at the shower head as you soap up and shampoo. If you have a warm bathroom, it’s not unpleasant to skip being under the running water the whole time.
  • Consider graywater. Why use fresh water for toilets? Some people ask this and say don’t. Graywater is the water runoff from showers, sinks, dishwashers, ect. Anything that is not sewage from toilets. If you are constructing new or doing major renovation, look into recycling graywater into your toilets so the household water flows from the freshwater sources into toilet use, which eliminates wasting fresh water on toilet flushes. You can even use graywater for irrigation outside.
  • You’ll be saving your septic and sewage. Saving on water in the bathroom means that your septic or sewage system won’t get overloaded with water. This means less to go wrong and less overflow contamination of other freshwater sources.
  • Don’t think it doesn’t apply to you. I don’t pay for water, I don’t own a home, my water is included in rent… whatever the reason that you think you don’t pay for water, you do. It’s part of the cost of living whether you feel it or not.




#935 Rent Savers: Live With Your Parents or In-Laws

24 Jan

You can save for your own house while living with your parents or in-laws. Photo via flickr by Images_of_Money.

You can save for your own house while living with your parents or in-laws. Photo via flickr by Images_of_Money.

Living with your parents or in-laws as a way to save money for a period of time will totally depend on the relationship you have with them. Some should never enter this agreement, but others can negotiate it just fine. Children in other cultures stay in the family home through university and even until they get married. It’s really a unique phenomenon in the United States to have children out on their own by the time they’re 18 and off to college.

There are lots of reasons to stay at home through university and later. One of the big reasons is to save money. Now I’m not talking about being a “freeloader” or having an indefinite stay with your parents or in-laws, but here are some good reasons to live with your parents or in-laws for a period of time to save money:

  • College.
    College is a good time to save money on housing and live at home.

    College is a good time to save money on housing and live at home.

    To cut down on college expenses, if you’re going to college where you grew up, it makes sense to live at home. European universities don’t usually offer housing as students always lived at home with their parents while attending school. Because cost of living is high and college is almost free in Europe, it makes a lot of sense. Saving on housing during college will reduce your overall loan burden if you’re taking out loans to cover tuition and housing.

  • Transition times.  If you just graduated college and are looking for a job (or making close to nothing) or if you’re making a big life transition like trying to launch a new business or going back to school, it’s a huge help financially to live with your parents while sharing expenses. Many detailed conversations about expectations should be had beforehand. If your parents are like most parents, they’ll love to have you back. But it’s time for an adult relationship, something that may or may not be difficult for both parties.
  • Saving for your own place (or other goal). If you’re ready to make the move to home ownership, it could accelerate your savings to move in with your parents or in-laws for a period of time. Everyone will celebrate when you move into your new place, in a good way. You could also save for another goal like paying for grad school or starting a business.
  • Health reasons. If you’re parents are in need of your help, it would be a great time to move in with them to help out. They took care of you, it’s only natural to take care of them. Sure they’re not a cute little baby like you were, but they’re you’re parents. It would save both parties a lot of money to have some help and reconnect. Even if it’s only a temporary arrangement like while your mom recovers from surgery and goes to physical therapy, everyone will feel a closer family bond.

Now if you’ve decided to live with your parents or in-laws as an adult, here are some rules to make everyone’s life easier:

  • Have discussions about who will pay for what. You may not be paying rent, but you should help out with groceries, utilities and other bills related to living expenses. If you’re a student and not earning income, then you should decided what you’ll do around the house to help out. Laundry, dishes, cooking, cleaning and mowing the lawn are all up for grabs and a relief for parents if they don’t have to do it.

    A helping hand is always nice, but graduating to an adult relationship is key. Photo via flickr by stephanski.

    A helping hand is always nice, but graduating to an adult relationship is key. Photo via flickr by stephanski.

  • Have discussions about space and your need for your own space (and their need for their space). Ideally, you can have a garage or basement space that is pretty much self-serving. Or if you’re lucky, a second home or apartment that they aren’t using. If you’re staying in your old bedroom in the house with much more shared space, then talking about what you and your parents need in terms of privacy and space will save some serious problems from arising.
  • Have a timeline. Be clear about the timeline and update it as things change. Actively work on your goals that you are trying to achieve while living at your parents. Living with your parents for a year to achieve a goal is fine. If it stretches on more than a year as you are transitioning or looking for work, then have a state of the union with your parents or in-laws and ensure that the arrangement is still working for everyone and adjust as necessary.
  • Be honest. Both parties should be honest and up front about their feelings and what they’re thinking from the start. If one party or the other can’t deal with something, then the arrangement isn’t going to work. If both parties know what to expect and any changes in plans are communicated long ahead of time, then everyone will be happier.
  • Be grateful. Your parents or in-laws are helping you achieve your goals. Show your gratitude by sticking to the rules and financial arrangements, being respectful and thoughtful and saying thanks. And repay them any way you can down the road.
  • Be an adult. This might be the hardest for both parties – letting go of the parent-child dynamic and having an adult relationship. It’s probably easier if you’re living with your in-laws as your relationship has always been an adult relationship (you’ll have to help your spouse transition though). This means not meddling and offering unsolicited advice or judgement from the parents’ side and being mature and self-reliant on the child’s side.

Deciding to live with parent or in-laws is a huge decision once a child has left the family home or if it continues on beyond the “accepted” mark of living with your parents. Be confident in your goals and use the opportunity to save money, become financially independent or start your new life. Your parents will be so proud.

#936 Rent Savers: Work For A Boarding School

22 Jan

Photo via flickr by 401 (K) 2013.

Photo via flickr by 401 (K) 2013.

There’s no denying it, if you don’t pay rent, you save a lot of money. Money you could use to buy a house, travel the world, invest, take a few years off, retire early… Saving on rent does wonders. So now that it’s clear you shouldn’t pay more than 25% of your gross income on rent, how about not paying rent at all? If you work for a boarding school, one of the benefits of employment is free housing. When I worked for a boarding school, I got paid the least amount of  money but saved the most. It was made possible by not paying rent.

Sure, I had to live in the apartment they selected for me. But once you’re working at a boarding school, housing shuffles yearly so you can put a claim in on a better house or apartment. You may also be required to live in the dorms for a certain period of time. Any dorm apartments I’ve seen have been really nice. And mostly block out the sound of over-excited high schoolers.

To work for a boarding school, you have to be able to handle high school students, although there are some boarding schools that have grades 7 and 8 as well. In exchange for benefits like food (at the dining hall) and housing, boarding schools want you to not only teach or be an administrator but coach sports, run clubs and rotate dorm duty. I worked as an administrator, which made my working hours longer than a teacher’s, so I didn’t coach a sport in the afternoon, but I helped out with clubs like the newspaper one evening a week as well as had dinner in the dining hall two evenings a week. I also had a group of freshman advisees that I tracked to make sure they were getting good grades and staying out of trouble.

I don’t have a great love of high schoolers, but all the kids were good kids. They were mostly well-off students with a sprinkling of super-intelligent scholarship kids. The facilities at the school were amazing – on par with a top-tier college and better than some universities. I could work out, have lunch, use the library and have access to ski passes all for free in addition to free housing.

With the one caveat that “free” was actually a taxable benefit that put me in a higher tax bracket, free housing when I worked for a boarding school was a great deal. It saved me a lot of money. I didn’t end up working at the boarding school long enough to save for a house. But my parents did. In the more than 10 years my dad worked at a boarding school, the housing provided allowed my parents to save money to buy a summer home. The house they bought served not only as a place to go every summer, but a home that would always be there no matter what.

Even if you have your own housing and you start working for a boarding school, you can get a housing stipend that would offset the cost of your rent or mortgage.

To get a job at a boarding school, you can sign up with one of the many recruiting agencies, contact the school directly or look at job boards. There are boarding schools around the world including many English-speaking international schools in foreign countries.

#941 Skype, Google Talk and other online phone services

15 Jan

google talk versus skypeI remember trying out Skype way back in 2003 when it first came out. “OMG! You can talk to someone for free!” It was an exciting prospect to be free from exorbitant phone charges on land lines and cell phones. Then I moved into an apartment where they couldn’t seem to find the phone line. Finally after  a week of trying to get the phone company to get me a phone number, I asked myself why I even needed a traditional land line. I had cable internet installed in no time and signed up for Vonage service. I haven’t paid a long distance charge on a phone bill since.

With the entrance of Google Talk and a bunch of other Google phone-related services, the Skype-only domain of chatting on the phone online got more interesting. There are also smaller providers like ooVoo, who offer similar services.

The nice thing about Google Talk is that domestic calls for the US and Canada to any phone are free. With Skype, you have to pay for anything that is not Skype-to-Skype. All the services offer free calls when you call someone else who is also signed onto the service as well. Signup and downloads are all free.

Baby born far away? Skype it out with the grandparents so they can see the new addition.

Baby born far away? Skype it out with the grandparents so they can see the new addition.

I love using Skype to stay in touch internationally. I finally convinced my parents to use Skype when I lived overseas, and now it’s like they never knew anything else. Video chats let them see their granddaughter in Switzerland and their daughters in the UAE and Nepal. My in-laws also have embraced Skype. This Christmas we had simultaneously present opening in the US and South Korea via Skype with my brother-in-law. It makes it feel like loved ones are a little less far away.

oovooYou can do the same video chat over Google or ooVoo as well. It’s just a matter of both parties having an account and being signed on at the same time to connect. My family sets up “Skype dates” to Skype internationally. Set a date and time (adjusted for time differences) and then sign onto Skype at that time and wait for the other person to call you or sign on as you check email, do the dishes or have a coffee. You can get fancy and get a headset for very little, but as long as you have speakers and a microphone built-in, then the audio is good to go. With tablets and laptops, you can take your Skype or Google chat just about anywhere. There are also apps for Skype and ooVoo to use on your mobile, but you use more data than a regular call.

I’ve even used Skype video conferencing for work. The free service offers video conferencing for up to 10 people. The workplace is embracing Skype, so you’re not going to look crazy or get quizzical looks like you would have not too long ago when you suggest a Skype video conference or chat with colleagues in another location. Again, Google and ooVoo offer the same, I’m just most familiar with using Skype because that’s what I started out using originally.

If you do have to make an international call that is not Skype-to-Skype or over Google or ooVoo, all the companies offer ridiculously low rates. Just buy some credit and make your calls for a fraction of the cost that a land line or cell phone would offer. Between cell phones and online phone services, I’m surprised land lines haven’t died more quickly, but there is no reason to pay for a land line anymore if you can get high speed internet cable instead of DSL. I still have a land line to get DSL as the cost of DSL without a land line is the same as having the land line and DSL, but the cheapest, most basic land line plan is all you need. Long distance and international calls can all be taken care of through Skype or Google.

So if you’re still paying long-distance rates on your phone bill, stop! Use an alternative like Skype, Google or ooVoo to save.


#948 Calculate Six Months To Adjust to New Financial Circumstances

4 Jan

Cutting expenses takes a bit of habit adjustment in practice. All photo via flickr by Images_of_Money.

Cutting expenses takes a bit of habit adjustment in practice. All photo via flickr by Images_of_Money.

Forget three months of emergency savings…you need six months. Not only does it give you a bigger cushion, but I’ve found it takes about six months to adjust to a new financial reality. You might know your finances have changed. You might have reconfigured your budget. You might of spent hours with your sweaty fingers clutched to a calculator. But even then, what you know and what your brain and body want to do are two different things. Your behavior doesn’t usually do an about face overnight. Ingrained habits and the myriad of daily tasks that you do almost unconsciously don’t adjust as quickly as the cash flow stopped. Whether it was planned or unplanned.

Don’t you hate it when you switch the silverware drawer, and you spend the next few weeks opening the old drawer expecting to find spoons when instead you find dishtowels? Even months later, you may occasionally open that drawer expecting to find the pie server. It’s the same thing with spending and money habits. At first you still expect to do the same things, when things aren’t the same anymore. And slowly, you adjust. Month by month, your financial habits and brain become reconfigured to the new way of doing things. That’s of course, if your conscious of what a new financial reality means. If you’re in denial and never change, then you’re one of those people written up in the news who used to have six-figure salaries and still have a maid, a nanny and a lawn guy even though they’ve been unemployed for a year. So don’t be those people.

Put money in the bank for six months of living expenses.

Put money in the bank for six months of living expenses.

If something in your life happens that affects your income like losing your job, moving to a single income from a double income or long-term illness, be prepared with six months reserve cash to cover your expenses while you recover. Six months will give you time to find another job or launch a new career. You’ll barely get a job interview in three months. Six months will allow you to embrace your new financial outlook. Three months will leave you in a panic that you didn’t cancel the cable bill as soon as you lost your job.

Six months will allow you to enjoy your switch to being a stay-at-home mom or dad while learning what one income instead of two really means in practice. Three months will barely have your kid sleeping through the night while you’re up anyways worried about money.

Six months will allow you to get answers about your illness and a treatment plan so you can return to work or make other plans. Three months will leave you stressed, which is not good for healing.

Bottom line: six months reserve cash for life events that affect your income. And six months for your brain to reconfigure habits to fit into the new financial circumstances. By the end of six months, you’ll have gotten so good at the new financial model, that even if you do go back to work or get a new job, you can save more money and use your cash more wisely because you’ve gotten used to the adjustments. You probably won’t even notice them anymore, but your bank account will.

Having a planned income change is easier to plan for ahead of time. Start earlier than you need to.

Having a planned income change is easier to plan for ahead of time. Start earlier than you need to.

If the new financial reality is planned, like staying at home after the birth of your child or launching a business, then you can plan even more precisely and practice the money saving measures ahead of time. Why wait for your baby to be born or for your business to be launched to reconfigure your budget? Start living like you’re on one income once you’ve passed the 12-week mark of pregnancy. Start living like you are all-in on your business (a.k.a. a poor entrepreneur) six months to a year before you quit your 9-5 job. That way when the baby comes or the paychecks stop being regular, your confident instead of in a panic.

Saving for six-months of expenses is a big chunk of money. You should have a line item in your budget for it. Take the bare minimum of what you will have to pay: rent or mortgage, utility bills, outstanding debt (pay at least the interest), food, transportation, insurance and childcare (if needed). This will provide you with the basic needs of food and shelter and the ability to continue working or to find work. It will cut out all “superfluous” expenses, which would greatly increase how much you need to save. Add it up and save for that amount while working on alternatives to save money so that you may even spend less than your six months of savings in six months.

Calculate expenses to cover basic needs like food and shelter.

Calculate expenses to cover basic needs like food and shelter.

Six month estimate for a couple with a child living in a house (changes based on geographic location):
Rent/mortgage: $1,300
Utility bills: $350 (electric, gas, phone, heat)
Outstanding debt: $100
Food: $400
Transportation: $200 (gas, maintenance, bus/subway passes)
Insurance: $100
Childcare: $800
Total per month: $3,250
Total for six months: $19,500
Save $500 per month ($250 per working adult): 39 months of savings for six months of emergency cash or just over three years.

Not bad…better than going $19,500 into debt if you are caught unawares. You should keep the money in an account that earns some interest to keep up with inflation and is low risk, while still having it available at a moment’s notice. Your local credit union would probably have some good options or speak to a financial adviser.


#951 Get a Budget Now…Write It Down…Track It Diligently

1 Jan

budget jar

Photo via flickr by Tax Credits.

So you have money that gets deposited into your bank account on a monthly or bi-weekly basis from your workplace. You have these bills to pay. You go out to get drinks once a week. You get some gas. Oh, you forgot about the oil change you need…and what about saving for the family trip to Cancun? If you’re ever going to find out where the money that’s coming in goes to and how not to run a deficit bigger than the government, then you need a budget. In fact a budget is the number one rule of financial health and thriftiness. So let’s start the new year with the basic of the basics – a budget and how to make your money work for you.

Rules are you must have all incoming and outgoing cash accounted for; you cannot spend more than you take in; you have to keep track of every purchase or income on a spreadsheet with some basic addition and subtraction; and you must keep up your budget tracking on a weekly, monthly and yearly basis.

Here we go:

A few years out of college, Elsa has negotiated a job offer for $40,000 in a medium-sized city with moderate living expenses. Before accepting, she has to decided what $40,000 will do for her. That’s about $3,333 a month before taxes and deductions. After calculating 35% in taxes and deductions that leaves her with $2,167 a month for expenses. The 10-year-old Honda she inherited from her parents is paid off, she has student loans, minimal credit card debt, is a bit of a gourmand and uses the internet but does not watch cable TV.

She starts a spreadsheet with $2,167 coming in the door…to see what goes out…

Rent: One bedroom apartment, heat and hot water included: $900
Electric bill: $40/month
Phone bill: $50/month
Internet: $35/month
Loans/Debt Repayment: $250/month
Groceries: $320/month
Gas: $100/month
Car maintenance: $100/month
Insurance: $100/month
Entertainment: $100/month
Savings: $110/month
Total spending: $2,105
Remaining cash: $62 (put into emergency fund separate from savings)

Pickled herring not your thing? Save for something you love. Photo via flickr by mtcarlson.

Pickled herring not your thing? Save for something you love. Photo via flickr by mtcarlson.

She decides she can squeak by, be comfortable with all the basics covered as well as have some room for a night out with friends and not miss the yearly trip to Sweden to enjoy pickled herring with her mother because she didn’t save.

Items like car maintenance and insurance aren’t a monthly expense, but she needs to account for them in her monthly budget so she is not surprised by the $250 tune up in a few months. She can also start to identify places in her budget to save money. Can she go generic to cut her grocery bill down? Can she combine her love of cooking with entertaining friends? Can she find a roommate situation or rent a studio for lower rent?

She tackles the new job and city with her budget. She finds an apartment that fits the bill, begins to make a grocery list and shops only once a week, cooks for herself and friends instead of going out, eats leftovers for lunch, makes do with the wardrobe she has and looks for deals in thrift stores or on eBay with they money she saves on groceries, she saves all her receipts and keeps track of her spending in Microsoft Excel.

Some months she’s in a panic because she blew her entertainment budget in one weekend and her car breaks down. Other months she’s feeling confident about being right on target. She knows this because she’s keeping track and can adjust her projections, identify new, recurring expenses she didn’t account for and see where she’s getting herself in trouble. Through the years as Elsa gets raises, new jobs, moves, get a boyfriend, a husband, a baby, she keeps her budget updated and adjusted for new expenses and increased costs. She makes new budgets for her wedding, the baby and buying a house. She’s a financial pro. Budget for the win!

Elsa is friends with Hilary who also moved to the same city with a similar job at the same time as Elsa. Hilary was excited about getting a job that actually paid! She was an unpaid intern living at her parents, now she has cash. She gets an apartment, goes out every weekend, shops with girlfriends, goes to the spa with her mom, lives on take-out and cheese nips, buys a new car and gets a few credit cards.

Spreadsheets are not just for accountants. If you can add and subtract, you can make a budget spreadsheet. Photo via flickr by Casey Serin.

Spreadsheets are not just for accountants. If you can add and subtract, you can make a budget spreadsheet. Photo via flickr by Casey Serin.

She doesn’t keep track of where her money goes, she just knows she runs out before the end of the month and uses her credit cards, which she tries to pay off, but then it leaves her with less money from the next paycheck. In five years, Hilary ends up with $18,000 in credit card debt but she’s keeping up with minimum payments. She meets the man of her dreams, and she’s going to have the wedding of her dreams with 180 guests in an all-weekend blowout. Her parents aren’t going to pay for it all, so she makes up the difference. What’s another $18,000 in debt anyway? With two incomes, her husband and her will be able to pay it off.

With $36,000 in debt from credit cards and the wedding, Hilary knows she can’t have kids, a house or go on vacation anytime soon. Luckily her husband paid for the honeymoon. But he has $80,000 in law school debt and has a starting salary of $50,000. Hilary gets laid off and spends her time not answering the phone for fear of creditors. She finally asks Elsa what her secret is. Elsa seems to have everything, but she can’t make that much money. Elsa tells Hilary, “I’ve always had a budget. If it’s not in the budget, I don’t get it.” 

There it is folks: The tale of two people – one living with a budget and one living without a budget. The happy ending is always there for those with a budget – written down, tracked and adjusted as life moves along.

Most of us are somewhere in between the two. But almost anyone could use better budget practices. You can go free with a spreadsheet. My sister loves the software You Need A Budget, which of course you’d have to budget for the paid service. I’ve tested the free trial, and it definitely warp speeds your budget prowess. The investment would be worth it if it helps get your financial house in order and saves you money by allowing you to keep better track of your spending. Start the new year fresh with renewed financial goals and a budget.

For a free budget program that really kicks your butt into gear, check out Mint.

#965 Forget the Gym Membership

10 Dec

Gyms are usually empty…unless it’s around New Year’s. Photo via flickr by hotelcasavelas2.

The gym is always packed for the first week after New Year’s. By the end of the month, the crowds are gone, and it’s just you and the guy training for the Appalachian Trail with a backpack on the stair stepper. Yep, everyone starts out with a resolution to exercise more and hit the gym, but it’s estimated that people overestimate how much they’ll use the gym by 70%. So that means if you resolve to go to the gym three times a week, or 12 times a month, you’ll actually end up going 3.6 times. If you’re paying $35 a month for your membership that would make the cost go from $2.92 per time to $9.72 per time, a $6.80 difference. If someone said to you, “let’s go to the gym, it’ll cost $3,” you’d probably agree. If the same person said, “let’s go to the gym, it’ll cost $10,” you’d probably say no. So why are you most likely paying close to $10 per time you go to the gym…

Gym memberships on average can be anywhere from $10 to $50 a month plus a one time start up fee, which adds to your cost. Take a close look at how much you pay and how much you actually go and get a cost per visit. If you’re O.K. with the number, then you might be one of the few dedicated gym goers. If you’re surprised by what you find and not comfortable with the high price you’re paying, then you’ve just found one of the easiest ways to save money and trim your budget.

Here are some solutions to not being a gym member that will make you exercise more than any membership:

  • Photo via flickr by mindfrieze.

    Walk or bike to work, school or shopping. Live too far away from work…walk to the store…or to a friend’s house…or to drop off your kids at a friend’s house. Suburbs are not designed for walking. There are usually no sidewalks and stores are not close by. But it’s still possible. In high school, we lived in a southern city that would be paralyzed by snow. So on snow days, we’d walk to the closest strip mall to go to the grocery store. Sure you had to cross through the back lot behind the dumpsters, but it wasn’t that bad. Bring a backpack or sturdy reusable shopping bag to easily haul back your purchases. It’s easy in a city to walk to everything you need. Rural areas are ideal for biking. When you choose where to live, choose a place where it’s possible to walk or bike to work, and don’t be tempted to get in the car because it’s convenient. It might take some adjustment at first, but if you make a habit of walking or biking places, it’ll become second nature. You’ll also have the added savings of lowered gas and car maintenance costs.

  • Our half-pig, half-dog pup – he loves to eat and run around.

    Get a dog or walk the one you have (or your neighbor’s). Getting a dog is a huge commitment, so you don’t enter into this one lightly. But studies show that people with dogs are active. It comes down to this…a dog is not going to say he or she doesn’t want to go for a walk or a run, he or she ALWAYS wants to go (unlike your workout partner). Dogs have to go out at least three times a day…that adds up to half an hour of walking easily. One of the walks alone should be a least half an hour for proper doggie exercise. Dogs get crazy when they don’t exercise enough, so if you’re dog is behaving badly, stop yelling at him and really tire him out with exercise. You’ll find that you’re active and the dog is passed out from exhaustion so he can’t chew the couch.

  • Pick up an active hobby. This might cost you at first for equipment (remember second-hand!) but if it starts a life-long passion, it’s worth it. The problem with gyms and working out is that they are not where you want to be and it’s not really what you want to be doing. It smells weird, and you’re being splattered with sweat from the guy next to you. An active hobby (one one my girlfriends has become a mountain biking fiend) gets you excited, and you WANT to be doing it.
  • Work out at work or at a local high school or university. A lot of workplaces have gyms. Don’t pay for a membership if you can work out for free. You can work out the awkward details of sweating and showering with coworkers however you want. I worked at a place where you could use the skating rink in the winter during lunch hours. It was awesome for my butt and thighs. I was the only one in there most days. I was ready to tear up the ice for the Christmas family tradition of pond hockey. Your local high school might let you use their gym. A university will charge you a small fee. Both would have outdoor tracks that you can walk or run around for free.
  • Pay as you go. If you really want to do the gym thing, it might be cheaper to choose to pay as you go. After analyzing your behavior and what you’re paying, decide if this option is more economical.

#969 Prepaid Cards

4 Dec

Prepaid cards will help you eliminate your credit cards, while overcoming some of the challenges that would pose.

If you’re ready to take the plunge and go credit card-less to avoid any chance of getting sucked into debt, you don’t have to totally give up the convenience of a credit card. Prepaid cards offer the same protection and perks of a credit card, but you’re limited to the money that you put onto the card, which can be helpful in budgeting your spending. You can still shop online, give a credit card over the phone and you are protected by the same consumer laws if you’re card is compromised. But you have zero chance of racking up debt and paying high interest rates. It’s like going cash only while still entering a card number and expiration date.

While prepaid cards are mostly seen as an option for people with bad or no credit or for “poor” people who don’t qualify or apply for regular cards, they can be a good tool for getting your financial life and spending under control. I was racking up huge credit card bills, and didn’t know why until I took a close look at what was driving up my bills. I would make a large purchase like an airline ticket to go home for the holidays, and then end up playing catch up to pay it off. It would start the cycle of a creeping upwards of my credit card bill that I would then have to dig out from underneath. I still wanted to go home for the holidays, and I could afford it if I budgeted better, but I didn’t want to worry about the card bill. So I got a prepaid card. I would slowly put money on it a few hundred at a time, and then when it came time to buy $1,500 tickets (these were overseas flights) I charged the tickets to the prepaid card. And it was done. No bill to pay later. No creeping up of debt because of a lingering $100 or $200 I didn’t pay off. Maybe I could have done the same with a savings account, but the prepaid card was a de facto savings account that allowed me to use the money as soon as I was ready. Maybe I could have left the money in my checking account, but it never seems that I can keep an extra $100 or $200 untouched as I worked toward the $1,500. Maybe I could have kept the cash in a drawer, which I have done as well…but the prepaid card made it easy to compartmentalize the money and then spend it worry free.

Unfortunately, fee structures with prepaid cards can be quite cumbersome and of course, the actual fee structures are usually buried deep within the member agreement, so be sure to hunt around for the best card for you with limited fees. Make sure you are absolutely clear on the fees. While financial people argue that prepaid cards charge you to spend your own money, credit cards charge you to loan you money if you don’t pay your balance every month, so unless you’re going cash only, someone will probably end up charging you to spend money. As these cards started out being for people who may not have have checking accounts or credit cards, there are fees at every turn if you’re not careful. Monthly fees or fees to put money on the card are particularly onerous. Hands down, American Express offers the best cards with little to no fees. Another way to avoid fees, is to use a prepaid card only as a tool to limit spending on certain purchases like big ticket items and online shopping and not as a replacement for a checking account or cash. I still use a debit card to do my day-to-day shopping that is tightly budgeted and for getting cash from an ATM.

Remember, the best way to limit your spending is to not spend at all. Or to make it as difficult as possible to freely spend. Prepaid cards help you realize that your limit is not $10,000 of someone else’s money, but $400 of your own money.


#970 Bargain For a Lower Interest Rate

3 Dec

Photos via flickr by 401(K) 2012.

So you haven’t been good about paying off your card…and you’re paying 14.99% every month on your balance. The first step is make a plan to pay it off, and then pick up the phone and call the card company to bargain. Tell them you want a lower interest rate and they’ll pretty much do it. I’ve done it many times over the last 10 years. I’ve never had anybody say no. How much they’ll lower it is usually where the bargaining comes in.

You can arm yourself with some tools before you call. If you don’t know what your interest is, it’s listed on your monthly statement. Make sure you know what it is. First, if you know your credit score, then you know whether you’re a “average” or hopefully “better than average.” If you’re “better than average” then you should pay less than the going national rate. You can find the latest numbers for average national rates here under the Credit Card Rate Report. This should give you an idea of how you match up to the average and what you really should shoot for when speaking to the company. Aiming for 3% to 5% less is a good goal. Some people can even get 10% or more depending on where they start out. Realistically, a card company won’t go much lower on interest than 8% or so. But 8% is a whole lot better than 14%.

More money for me…less for the credit card company.

Even if you’re “average” or “less than average” doesn’t mean you can’t get your rate lowered. Next, shop around for other cards and their rates so that you know what the competition can offer. When you call up the card company, keep pressing them to see how much they can do for you and make sure you’re speaking to someone who can help you. If they’re trying to tell you they can’t help, then insist on speaking to someone who can. You can even call back another day or hour to get a different representative. They want your business. I usually say I have another card with a better rate that I’m going to transfer the balance to or say I’m going to pay off the card and cancel it. The longer you’ve been a customer, the more willing they are to help you out as well. You can get a least a couple percentage points or more off, which does save money little by little. Plus all this bargaining helps your skills for negotiation.

If you have more than a couple hundred on the card, you may want to transfer your balance to a lower interest rate card or one that offers a 0% introductory rate for 12 months or more on balance transfers. Watch out for balance transfer fees that can be anywhere from three to five percent of the balance. The transfer fees could make transferring the balance uneconomical in the long run. If you can find a card with no balance transfer fees (this would most likely require excellent credit ) and a 0% or low rate for 12 to 18 months (or if you’re really lucky an extremely low rate for the lifetime of the transfer), then you should do the math to see if it will save you money to transfer your balance from a card that has a higher interest to one with a good introductory rate. Even a 3% to 5% balance transfer fee can save you a lot of money if your balance has four digits (or more!).

Let’s say I have a card with $5,000 on it (about average per person these days) at 12.99% interest. I make a plan to pay $250 a month on it, which will take roughly 23 months to pay. By comparison, if I only paid the minimum payment of $100 a month, it would take me more than 20 years to pay off, and I would pay just about as much interest as my balance. This is of course if the card does not accrue any more debt, meaning I can’t charge anything that I don’t pay off immediately and those payments are in addition to the $250.

If I transferred the $5,000 to a card with 15 months at 0% as an introductory rate and then 12.99% after that, then I would be left with only eight months where I was paying 12.99% instead of the full 23 months. With a 5% balance transfer fee on $5,000, it would be $250 to transfer the balance, but that would be still more than $100 less than the interest I would pay in 15 months if I didn’t transfer the balance. Paying less than 5% or no transfer fee would save even more money. Right now, there are plenty of card offering 12 to 18 months at 0% so taking advantage of an offer for any high interest cards with a large balance you may have is a good idea to save money quickly, especially if you have a plan to pay off the card in a timely manner.

When you do make your card payments on a card that carries a balance, credit cards charge their interest rate based on an average daily balance, meaning they average your debt per day, so you’re better off making a large payment at the beginning of the month than the end of the month. If you make your large payment at the end of the month, all those preceding days with a large daily balance are going to be counting against you when the interest is calculated. If you make the large payment at the beginning of the month (right when you get your statement instead of waiting to the due date) then the average daily balance will be lowered for the whole month, another good way to save a little money.

#971 Pay Off Your Credit Card Balance Every Month

30 Nov

Photo via flickr by 401 (K) 2012

These days it’s hard to shop online, travel or book reservations without a credit card. Things like booking a rental car or buying online require the use of a credit card. You don’t want to use your debit card online, so a credit card is the easiest and safest option. But credit cards can get you into a sticky situation financially. They’re so easy to use. They’re so convenient. They’re a budget buster and financial drain if you’re not careful. The best solution is to pick one credit card that has no annual fee and pay off the balance of the card every month so that you do not pay an interest on your purchases.

If you buy something online for $100 and then don’t pay it off at the end of the month, it starts accruing interest on a daily basis, adding around 15% or more to your purchase depending on your interest rate. If you pay off your card, you never even have to worry about what your interest rate is. Average credit card debt per person in the U.S. hovers around $5,000, a number that would take years to pay off for most people and would cost you hundreds of dollars in interest. Paying only the minimum payment is designed to protract the payment process out as long as possible so the card company can rake in the most interest from you. So even if you find you can’t make the full balance payment, don’t be tempted just to pay the minimum either.

Photo via flickr by 401 (K) 2012

If you’ve gotten yourself into credit card trouble, the best solution is to make a plan to pay it off quickly and put a freeze on your credit card spending. Some people literally freeze their card in a block of ice, but they also might have their card number and expiration date memorized, making it easy to enter it online in a moment of weakness. Here are some tips to avoid charging more than you can pay off at the end of the month:

  • Leave your credit card at home. If you don’t have it with you, you can’t use it. You’ll have to use cash or a debit card. If you lock it up somewhere, then you’re less likely to use it impulsively.
  • Prioritize your spending and make sure you’re updating your budget every time you make a purchase. When you see where you’re money is going and how much you have left to spend, it helps you realize what you can and can’t purchase and cut down on impulse spending.
  • Remove your card details from online sites that you favor. Are you an Amazon fiend or iTunes lover? Those small purchases add up fast.
  • Don’t deny yourself completely. There’s nothing like trying not to eat bread when you absolutely love bread. Then you eat a whole loaf. You feel sick. You didn’t want to eat the whole loaf. But being denied just made you crazed. Same thing with spending. Decide on a little luxury you can afford and enjoy it. One slice at a time, without feeling sick or sorry.
  • Sit down and review your cards. If you have more than one, cut up and get rid of all of them except one. If they have balances that you are carrying over, write in bold letters on them – DO NOT USE, YOU’RE PAYING THIS OFF or DO YOU WANT TO BE IN DEBT? Whatever will motivate you NOT to use them and pay them off. Then put them in a safe place and cut them up once they are paid off. Decide on the one that you will keep for things like renting a car and write a warning on that one as well like USE WITH CAUTION.

Some people go card-less. I wish this was easier to do, but realistically it seems like more hassle than exerting a little self control and budget savvy.