Found Money

I was doing some ‘Net surfing this morning and came across this very funny satire on the “tax rebate checks” that we’re all waiting for Uncle Sam to deliver to our bank accounts this spring.

I guess the idea behind these rebates is that we’ll all go out and buy laptops, booze, fancy dinners, or other such consumable items to get our floundering economy back on track. Maybe we’ll use it for a down payment on an even more expensive item, like a new car. Being an American has never been so fun!

It’s tempting, but the SpendMiser household isn’t falling for it. Rather than waste this “found money” on stuff that will be worth – at most - half its value within a year, we decided to invest it in something that will last. We like to think of the rebate not as fun money, but as an opportunity to improve our standing on Uncle Sam’s dime. Bearing that in mind, I’m proffering a list of suggestions for your rebate. This is just my opinion, and I’m in no way a financial expert.

1. Pay off debt. Debt is part of the reason our economy sucks so badly – people taking on more mortgage than they could afford, with a little help from shady lenders. But even if you’re not trapped in a scammy financial deal, there’s a good chance you owe something to someone. Pay off that little balance on your department-store credit card, or put some cash toward that really big Visa balance; you may not pay it off, but you’ll be saving yourself quite a bit on finance charges in the coming months. (This is assuming you’re not using the card any more.) You may even want to take a look at the promotional no-interest deals you have. Find out when the promo ends and whether you can pay off the balance by that date. If you can’t, you might get socked with high interest rates or even retroactive finance charges. Paying down debt is always a good deal, even if it’s interest-free debt.

2. Pay down your mortgage. Yeah, this is debt too, but it’s good debt – a rare thing – so I’m putting it in a separate category. Use your rebate to make an extra mortgage payment (and maybe a little extra). Making one extra payment a year can shorten the life of your mortgage by years and save you hundreds of thousands of dollars in interest. Think of it as a really big discount on the total price of your house. To make the payment, call your lender and ask what you need to do. Some companies are picky and want any extra to be processed separately from your usual mortgage check. Don’t be surprised if it’s a little difficult to get answers. After all, the mortgage company is losing money when you make extra payments.

3. Invest in your future. If you’re like me, you’re downright frightened to check the performance of your IRA. I know ours have been plummeting. But now is actually the BEST time to put money in retirement accounts. Share prices are falling, so you can get more shares for your dollar than you could just a few months ago. So when the economy rebounds, share prices will go up, and - cha-ching! – you’ve made some serious dough. Of course, when you contribute, make sure to adjust your contributions for the rest of the year so you don’t go over the limit.

4. Invest in your child’s future. My parents had no college fund for me. I managed to pay my own way through scholarships, grants and work-study programs. But there’s no guarantee your child will receive these forms of assistance, so plan ahead and start a nest egg for his higher education. Our two sons have 529 plans, which are tax-free investments used to pay for educational expenses, like tuition, books, dorm fees, and so on. (No, keggers are NOT eligible.) There are also Coverdell accounts, which can receive up to $2k of contributions per year. I recommend starting a college fund even if you don’t feel you can contribute regularly to it. If you put $1,000 into an account for your 2-year-old today, and don’t contribute again, he’ll still have over $3,000 to take with him for his freshman year. That could be a big payment towards a semester’s tuition, or it could take the form of a “book scholarship” that would last several years. Any way you look at it, $3,000 is better than nothing at all.

5. Make home improvements. Lack of money and lack of planning led to the deterioration of my childhood home as I grew up. Cabinet doors broke off and weren’t replaced. Walls got holes and weren’t fixed. By the time my parents decided to sell, they got a lot less than they would have if they had maintained the place. So if you think you might have termites, or your roof is leaking, ante up your rebate cash and hire a pro to fix it. CAVEAT: When I say “home improvements” I do not mean “replace your perfectly serviceable kitchen counter with mega-expensive granite, just because you like it.” The home improvements I’m speaking of here do not include home theater systems, hot tubs, or any similar toys. When you sell, you’ll likely not get back the money you spent for these superficial improvements. But a holey roof can be a home-selling dealbreaker.

6. Renters, start a house fund. See #4 and follow the same advice. Only you’ll probably want to put your money in a CD with a good rate, or a money market account. As I said before – even if you never add another dime to that account, you’ll get a few bucks worth of interest AND you’ll be one step closer to homeownership, which is one of the best investment tools out there. (Yes, even in this market.)

7. Start an emergency fund. What would happen if you got laid off tomorrow? Or if the transmission blew on your car? Would your finances be strong enough to carry you through the crisis? These kind of catastrophes happen to lots of people, every day, and odds are that sooner or later, you’ll be one of them. So tuck your rebate money in a money market account and get a head start on saving for a rainy day. If you truly feel you can’t make any more contributions after that, fine…but even $5 a month will help build up your balance and allow you to bank more interest (i.e., free money). Someday, you WILL need this money. So get some emergency funds banked today.

 

What if I’m Already Doing All This?

99.9 percent of all people won’t need this section (including myself). But let’s say that you have no debt, are making extra payments on your house, have fully funded your retirement, your emergency fund and your child’s college fund, and your home is in perfect condition. Here are a couple of ideas for you.

Make a charitable contribution. They’re (mostly) tax deductible and the perfect way to help a cause that you care about. Visit http://www.charitynavigator.org/ to find one that’s right for you.

Spend quality time with your family. Most of us don’t get enough one-on-one time with our spouse, kids or other family members, like parents. Perhaps this money will give you the leeway to take a couple of unpaid vacation days and just enjoy being around your loved ones. Traveling isn’t necessary, and often just adds stress to what is supposed to be an enjoyable time. Take the kids to a local park, or go on a long walk with your spouse. Fly to your parents’ for the weekend and thank them for doing such a great job of raising you. I know this sounds cheesy, but since having kids, family time has become extremely important to me. They won’t be around forever, so enjoy them while you can.

 

If You Have a Few Dollars Left Over…

If you’re like me, you like depositing nice round numbers in your various accounts. There’s nothing like adding an even $1,000 to your emergency fund. So here’s a few ways to responsibly spend that extra $5.71 burning a hole in your pocket.

Do some “grocery investing.” If you usually buy 6 cans of Bush’s Baked Beans every week for 75 cents each, and one week you see them marked down to 25 cents, stock up with a month’s supply or more. You’ll save yourself a total of $12 in groceries for that month. That’s money you can use to pay a bill, pay down more of your debt, or otherwise improve your financial standing. (Note: This only works if you buy products that are part of your regular grocery repertoire. If you buy 10 bags of marked-down Doritos just because they’re “a good deal,” you haven’t saved any money. In fact, you’ve probably lost some by buying a non-necessary item.)

Buy a roll of “Forever” stamps. These are the boring-looking ones with the Liberty Bell printed on them. Not the most exciting way to express yourself on the outside of an envelope, but they are guaranteed to always be good for mailing a standard letter. So if the Post Office raises their stamp rates again and you have some left over, you’ll be somewhat shielded from the increase. A good way to save on what is already the best postal deal out there.

Paper Towel Pigs, Reformed

Not so long ago, our household was incredibly wasteful with paper towels.

I say “our household” because it’s a more diplomatic term than “my husband.” I wasn’t using them nearly as much as Mark, who would grab 3 or 4 to dry his hands every time he washed them. And he washed them a lot. I preferred the ever-so-chic method of wiping my wet hands on my pants. But I still did use paper towels to a certain extent – for occasional drying of the wet counter, wiping my son’s crusty face, and so on.

This overuse added up to a roll-a-day habit, and it made me ill. I wasn’t so much concerned with the cost – paper towels are less than $1 a roll at Wal-Mart – as I was with the waste. We probably felled a few small forests of trees with our paper-towel use.

So one day about 3 weeks ago, I was at Wal-Mart, and I passed down the paper goods aisle. I approached the shelf and put out my hand to grab our usual 6-pack of towels. But something made me stop. Maybe it was the aisle full of packaged paper in various forms, from cups to plates to toilet paper. They all seemed to softly whisper, “Come on, who are you kidding? Make it easy on yourself.” (OK, so maybe the toilet paper wasn’t saying that. But you get my point.)

I left the aisle and went to the back of the store, where I purchased a set of blue and white dishtowels for $6. They, along with the dishtowels we already have, are now meeting all of our hand-drying and counter-wiping needs.

It’s been a painless switch, for the most part, but there are some bumps. Mark still complains about the absence of paper towels, but he’s not ambitious enough to go to the store and actually buy some himself. And there are rare times when I actually do need a paper towel, like last night, when I was making banana bread and needed something to grease the loaf pan. I ended up using the corner of a freshly-washed dishrag, then removing the leftover Crisco in the sink with my fingers and some dish soap. I didn’t think about it at the time, but I probably could have retrieved a couple of fast-food napkins from my car to do the job. I guess I could also hide an emergency roll of paper towels somewhere in the house, but that seems risky, kind of like leaving cold medicine on the counter in front of a meth addict.

Oh yeah, and if you like numbers…I figure we’re saving about $20 a month by skipping paper towels, so my $6 investment in dish towels will pay for itself within 2 weeks.

Still Here…

I haven’t passed away. Just been very, very busy with a visit from one of the parental units, at which time I was also working on a rush story for a client. (Rule of thumb for small business owners: Never turn down a job if there is any way that you could possibly handle it.)

I’ll be back in a day or so with a few thoughts on our tax refund/rebate and how we got rid of paper towels in this house.

In the meantime, I leave you with this: A photo of one of the old churches we saw in the French countryside. I believe this was in Luneville, in the Lorraine province, but I’m not sure.

Good Deals from Walgreens’ EasySaver

I’m generally not a coupon/rebate kinda gal. Most coupons are for convenience foods we don’t eat, or brand names that we don’t buy. But I have to admit that Walgreens’ EasySaver program is a great tool for saving money on drugstore items like OTC meds, shampoo, and the like.

Essentially, you pick up the monthly EasySaver catalog in the store (or look at it online) and keep an eye out for the current month’s free-after-rebate items. Purchase the items, and then mail in the rebate form, along with original receipt, and Walgreens will cut you a check for the price of the items. Opt to have the rebate put on a Walgreens gift card, and you’ll get a 10 percent bonus.

The EasySaver catalog also has partial rebates for various items in the store. I don’t normally do these offers, as Walgreens’ prices tend to be higher than good old Wally World’s on most things, but sometimes a partial rebate combined with a sale price can yield a good deal.

Anyway, back to the rebates. The trick here is remembering to send in the receipt and rebate form. Walgreens is counting on some of its customers buying the products and then forgetting to apply for their rebates. Don’t be one of those guys! I always fill out my rebate form the day I buy the products, stick it in an envelope, and mail it.

Some months, the free items are kinda blah, but April’s offerings are great – for our household, anyway. There’s an offer for free Wal-Itin (store brand Claritin), free Wal-Zyr (store brand Zyrtec), a free toothbrush, free Aquafresh toothpaste and free jane mineral blush. There’s also an offer for free Just for Men hair color, Tums and a SoyJoy bar, but I chose not to purchase these, as we would never use them.

Do you know of another rebate program that yields good savings for you? What is it?

It’s the Little Things

I have a confession to make.

I, the biggest cheapskate on earth, overspent this month. (Well, my husband is partially to blame too.)

And I’m not talking just a little overspending. I’m talking a lot of overage here. It’s not overage on a larger-than-life, Owning Mahowny level. We will survive, pay our bills, keep a roof over our heads. But we spent more than is comfortable for my husband and I.

Where did we go wrong? Our credit card statement had a few clues. (We use an American Airlines Mastercard and pay it off every month to get frequent-flier miles. They come in handy when you live 12 hours from relatives.)

There were some large charges on there. Electric bill, phone bill, a big charge from Babies R Us from when we bought the expensive – yet absolutely necessary - car seat for our 2-year-old son, who at 32 pounds and 36 inches tall is likely going to become an NFL linebacker. But those big dings weren’t the problem.

It was the little things that made up the bulk of the bill. $5 for breakfast at Sonic. $20 from when we all went to Subway for dinner one night. A $40 charge at Target for my friends’ baby shower presents. At the time, they all seemed so insignificant…but added up, they amounted to a big deal. A REALLY big deal.

Obviously, something has to be done. But what? This is where my husband and I diverge in our schools of thought. He’s of the opinion that we should each set a monthly limit for discretionary spending and keep a running total in our heads of how much we’ve spent. To me, this is a recipe for disaster. All those Sonic breakfasts and Starbucks treats tend to run together, and by the time you realize you’ve gone over…it’s too late.

My proposed solution: Get two prepaid debit cards, like these, and load them each month with the monthly allotment. When your money is gone, it’s gone. No more gingerbread lattes, McFlurries, or new outfits until the month is over. End of story. Even though there is an initial fee for each card, they can be reloaded free if you use the direct deposit feature.

“Why not just keep an envelope full of cash?” asked my hubby.

For many reasons: 1. I’m an unlucky person. If a thief is going to rip someone off, it will probably be me. And if you get robbed, your cash is as good as gone. 2. I tend to overspend when I have cash in my pocket. Because it’s not coming out of a bank or credit account, it just doesn’t feel real to me. 3. I lose things frequently.

What do you think is the best way to control discretionary spending, and why?

Lesson in Frugality: Always Check for a Warranty

Well, the estimate for the air-conditioning repair came to roughly $400. I had the company order the part and I was waiting on them to call me back with a new repair date, when something popped into my head: Our house is less than 2 years old. Surely that cooling system has to be under warranty.

I contacted the builder. Apparently, there had been problems with some of his other houses caused by overfilling the AC unit with refrigerant. He offered to have his guy come and fix it free of charge. Which would be great…except the other AC company had already ordered the part for us.

I explained the situation. He offered to pay $250 towards the other company’s repair. I left a message with the original air-conditioning company. I’m hoping they’ll let me off the hook. Surely they can use that part on another customer’s repair somewhere down the road.

And the lesson in all this? ALWAYS, ALWAYS see if your product has a warranty before you call the repair guy. Worst case scenario, we go with the original repair company and end up paying only $150…but if I had checked for a warranty before calling them, we would have been out nothing at all. And nothing is a lot better than $150. 

I’ll update when I get a response from the repair company.

Update: The cost is going to be less than originally thought. I managed to talk the first AC repair company out of charging me for the part – it turns out that they did NOT special order a part for me, but instead were planning on using a stocked part. So that was good. I then called my builder, who said he could get his AC guy to come out at no charge to me. Then he called back – his AC guy could not come out until Monday, and it’s supposed to be warm this weekend. So considering the fact that we have 2 kids, he decided to pay for the first AC repair company to fix it today, minus the $69 service charge.

I was impressed with the way the builder handled the situation, when many would have just said, Not my problem, and left us in the cold (or the heat, so to speak). If anyone out there is looking for a builder in the Dallas-Fort Worth area, check these guys out. Quality built homes and, as I found out today, they stand behind their product.

More Air-Conditioning Chronicles

Remember how I said that our AC problems were due to a dirty filter? Yeah, not so much.

Shortly after writing the post about the air conditioner, the blower quit working again. I immediately called the AC guys, and one has been here for the past two hours tinkering with things. Turns out there was too much refrigerant in the outside unit, causing the coils to freeze, which in turn caused the blower to work too hard, thus burning out the motor. See the nice domino effect? He’s going to have to leave in a little while and get a part and return this evening to finish up.

I have no idea what the bill is going to be, but we’ll likely be able to swing it without going into debt, which is always good. Even so, I sense a belt-tightening period coming on. Our car insurance note is going to be due soon as well.

Hourly Wage: A Great Way to Quantify your Frugal Efforts

Do you ever wonder how much value you’re getting out of your money-saving strategies, like shopping sales or line-drying your clothes? Have you ever been in the midst of making banana bread from soon-to-be-rotten bananas and wondered, “Is this REALLY worth it?”

There’s a way to figure it out. I call it the Hourly Wage Concept. Essentially, it’s a way to calculate the worthiness of any money-saving project. I can’t take credit for it, though – it was first written about in the Tightwad Gazette, an awesome newsletter (and later, a series of books) about living on the cheap. (Side note: If you do not have this book, I recommend buying it used at a local store or on Amazon. Why buy and not check out from the library? Because you will refer to it over and over. I consult mine at least weekly, sometimes daily.)

To calculate the hourly wage of a money-saving project, first figure out how much that project is going to cost you. Example: At our last house, my husband and I ordered and installed a yardful of sod ourselves. We paid $350 for the sod and its delivery.

Then, calculate how much the more convenient alternative would be. To have the sod laid by a landscaping company would have cost about $600 total, including materials.

Finally, determine the time needed to complete the more frugal option. It took my husband and I three hours of backbreaking work on a Saturday to install the sod.

To get the hourly wage, subtract the cost of the frugal option from the cost of the more convenient choice, and then divide by the hours devoted to the frugal option. $600 minus $350 is $250. Divided by 3 hours, that works out to an “hourly wage” of about $83.33. Since neither of us had a weekend job that paid more than $83 per hour, it was totally worth it to install the sod ourselves.

Sometimes you’ll find that your hourly wage is not high enough to bother with a particular project. For example: I sometimes make banana bread to use up rotting bananas, as mentioned above. But the bananas cost me about 39 cents total, and making the bread requires about 25 minutes of hands-on time. Do I devote 25 minutes of my time to baking, so as not to waste 39 cents? For me, the answer is no. There are other, more profitable projects, such as vegetable gardening, that I could spend that half-hour on. So when I find myself with rotting bananas (which isn’t often), I either let them rot, or put them in the freezer. The bananas can then be thawed and made into bread at a later date, when I don’t have any other projects to complete, or when my family just WANTS some banana bread.

Give the hourly wage concept a go and see what it turns up for you. You may be surprised.

We Can Live Without This

It’s amazing how money-saving ideas can present themselves. For many years, air-conditioning costs have been a pet peeve of mine. Living through the ungodly hot Texas summers – and having a spouse who will MELT if the thermostat is not set at a cool 73 – hamper my ability to lower our bill by any significant amount.

Yesterday evening, however, our central air-conditioning unit decided to die on us. Well, it didn’t die exactly; the blower part that brings the cool air into the house quit working. The outside unit, a less-than-two-year-old Trane, works fine. We flipped circuit breakers, consulted owner’s manuals, but failed to correct the problem. So we did the only thing we could – opened the windows and turned on the fans. We’re living out our last cool days of spring down here, so the effect was actually not too bad. The air was a little more humid, for sure, but otherwise totally livable.

That night, my curtains blowing in the breeze, I got to thinking. Did we really NEED air conditioning in April? Are we really hot, or do we just need the air to circulate a bit more? And just how much could we save by flipping that little thermostat switch to “off”?

Plenty, it turns out. According to this man’s very helpful site, I’m spending about $130 a month to run my AC unit (based on the assumption that it runs about 10 hours a day, which I think is pretty on target). If I could knock that down by half, to 5 hours a day, I’d cut my cooling costs to $65.

Now, don’t get me wrong. I’m not about to sell my unit on Craigslist. There is a very definite need for air conditioning here in Texas, especially in the dead of summer, when high temps can actually kill you. I realize that in July, I’ll run my unit quite a bit, probably more than I’m doing now. But a $65 savings is $65 in my pocket. And if I can cut down on my AC time during those few weeks that we call “fall” and “spring” around here, that’s a few hundred a year saved. That’s enough for a few months’ worth of diapers for my two sons, or extra money to pay down our mortgage, or – dare I say it? – a haircut for myself.

As I write this, the AC is still not on. I’m going to re-open the windows in a few minutes because we’re heading toward high noon. (The air conditioning unit, by the way, was fine; it was a dirty air filter that was causing the blower to stop working. Lesson learned: change your filter monthly.)

Can you go air-conditioning-free in your neck of the woods? If not, how long can you go without it during the year?