July 30, 2010

Best of blog posts for week of July 30th

Get Rich Slowly tells us How to Find Unclaimed Money (and Unclaimed Property)

GM announced that the Chevy Volt will cost $41,000.

Darwin's Finance has 5 Reasons Why You Should Consider Using a Health Savings Account (HSA)

Quizzle writes Take Advantage of All-Time Low Mortgage Rates which has a graphical look at the cost of a $200,000 loan over the years that is quite surprising.

Updown Performance : July up 5.6%

Practice invest

My Updown account was up 5.6% in July 2010 but  the S&P 500 was up 6.9%.  I was beat by the index by 1.3% this past month.

In 2010 I'm up 5.6% and the S&P 500 is up 0.4%.   So I'm a full 5% ahead of the index for the year to date.

Since starting in March 2008 I'm up 8.4% while the S&P 500 is down 17.2%.

I didn't make any trades last month.   However I had a stake in FRE which was delisted which forced a sale  at $0.34.   I had bought it at $1.20 with the speculation that it would go up a bit.   That didn't work out too well.

Net Worth Update : July 2010 up +$218

I track my net worth monthly on NetworthIQ.

Our net worth at the end of May was $652,554.  This is an increase of $218 from last month.

We're basically unchanged this month from last.   Our cash, retirement and stock assets all increased nicely but our real estate values dropped a sizable chunk to cancel out all our other gains.  

July 29, 2010

Sample of Food Price Inflation from 1980 to 2010

Didn't milk used to cost like $1.50 a gallon or something?  Now it seems milk is $3 a gallon.  I think I remember spending 22¢ a pound on bananas and now they are like 70¢.   Have food costs really doubled in the past 10 years or so??    Am I just remembering prices wrong?   Or worse yet, I turning into an old man before my time by waxing nostalgic about how "In my day, candy bars used to cost a quarter!!".  

I decided to take a look at real data on the price of foods over the past and get the truth of the matter.

The BLS tracks the Consumer Price Index.  They have information on inflation and they track data for various individual food prices.  I picked a fairly random sample of food items meant to cover major topics:

Bread, white, pan, per lb. (453.6 gm)   
Flour, white, all purpose, per lb. (453.6 gm)   
Ground beef, 100% beef, per lb. (453.6 gm)   
Chicken breast, bone-in, per lb. (453.6 gm)   
Bananas, per lb. (453.6 gm)   
Potatoes, white, per lb. (453.6 gm)   
Coffee, 100%, ground roast, all sizes, per lb. (453.6 gm)   
Margarine, stick, per lb. (453.6 gm)

Here is a list of the foods, which year the BLS data starts at and the annual inflation from the start of the data up until 2010.  I got the BLS data for the US City Average and I'm just looking at January prices just to make the math simpler.  I'm assuming there isn't a lot of month to month volatility in prices or if there is its just due to temporary conditions like bad weather causing a drought or something.

Here's the inflation data per item:

Food Bread Flour Beef Chicken Bananas Potatoes Coffee Margarine
Start  1980 1980 1984 1980 1980 1988 1980 1984
Inflation 3.4% 3.0% 2.2% 1.9% 2.0% 3.9% 0.6% 1.7%

The foods in question have been going up at inflation rates in the 0.6% to 3.4% range.    From 1981 to 2010 food prices as a whole increased at an inflation rate of 3.0%.   The overall inflation rate (CPI) in that same time period from '81 to 2010 was 3.2%.

Looking at the a graphical chart of the actual prices we see the upward trend :

Gaps are due to data missing for certain years from the BLS information.

Most of the food prices I looked at increased in price fairly steadily at an upward gradual increase over the years.   But the price of coffee was pretty volatile with it jumping up and down by large %'s from year to year.  More often than not the prices goes up or down by more than 6%.  The price jumped drastically from 1994 to 1995.   I did a quick google search and found a reference in a book 'South America, Central America and the Caribbean 2003' that said: "In June and July 1994 coffee prices escalated sharply, following reports that as much as 50% of the 1995/96 Brazilian crop had been damaged by frosts"  There you go, a bad crop caused the price to jump.

Generally the cost of the commodity food items I looked at have had relatively mild inflation over the past 3 decades in the range of 0.6% to 3.9%.  Individual food items may go up at a rate slightly higher or lower than foods in general or CPI, but the long term inflation of foods I looked at are within 1% of the general CPI.  Keep in mind this is just a sample of 8 foods and other foods have behaved differently.

July 28, 2010

Saving Money In Vegas : Entertainment

There are a lot of entertainment options in Las Vegas. Some of the shows in Vegas are pretty pricey and tickets to some of the most more elaborate stage shows can run $100 to $200 each.   But there also many free and reasonably priced attractions in Vegas to help keep you from busting your budget.   Today I'll be giving some general suggestions on keeping your Vegas entertainment spending low as well as a list of free and reasonably priced attractions.

Figure Your Budget

I'm not opposed to spending money on an enjoyable vacation experience.   You could go to Vegas and spend zero money on entertainment but what fun is that?   Some of the best shows in Vegas are a bit pricey but I feel that many of them are well worth the experience.   Of course you have to keep your spending under control and within a reasonable budget for your finances and spending more than you have to doesn't serve any purpose.   Figure out your budget and then find entertainment options that appeal to you and will fit within that budget.  

Do some research

Before you go to Vegas it is a very good idea to do some research to find out more about the attractions and decide which ones you are interested and which ones are not worth the money.   To get an idea of what people think are the better attractions in Vegas you can see the 'Things to do in Las Vegas' list at Tripadvisor.    You can find information on attractions from travel guides as well.  Frommers has a list of attractions and Fodor's has a list too.

Hunt for Discounts

If you have a specific show or set of shows in mind that you are interested in seeing then you may be able to save some money by hunting for discounts.   There are frequently discounts on entertainment attractions in Vegas.  You might be able to get 2-for-1 discounts to a popular show by booking your rooms at the hotel that hosts the show.  If you do a google search for the show and the keyword 'coupon' or 'discount' then you may find discount offers from 3rd parties.   You can also check to see if your employer or any clubs or organizations you are a part of offer discount rates.    AAA members, students and military members can usually get discount rates at many attractions.

Don't fall for timeshare sales pitches.  

When you're walking around Vegas you will eventually run into a booth with some salespeople offering free tickets to a show.   Its been my experience that these free show ticket offers are an incentive to get you into a timeshare sales pitch.   I'd avoid these offers.  Free tickets can be a tempting incentive but you'll likely spend hours sitting listening to a high pressure sales pitch which isn't a great way to spend your vacation.

All of the attractions mentioned below are places I've been myself with the exception of Red Rock canyon.

Take Advantage of FREE Attractions

There are a lot of free attractions in Vegas.   Vegas.com has a list of free attractions in Vegas.  Enjoying these free attractions is a great way to have a fun vacation without spending a dime.  Below is a list of free attractions in Vegas. 

Stroll the Strip : FREE   The Las Vegas Strip is a major attraction in itself.   There is nothing quite like it anywhere in the world.   You can spend a few hours simply strolling along the strip and taking in all the sights.   Along the way you can visit the major theme casinos and see the impressive decor both inside and outside.  The landmark hotels like Luxor, MGM, New York, New York, Paris, and the rest are major attractions in themselves for both the impressive architecture and unique decor at each location.   You can spend many hours seeing all the hotel casinos on the strip.   Its a 4 mile trek from Sahara to Mandalay Bay so you might want to cut your site seeing into shorter chunks spread over a couple days. 

Fountains of Bellagio FREE   The Fountains of Bellagio are a water fountain show that is put on in a large pool directly in front of the Bellagio hotel.   The water sprays high into the air and dances in patterns choreographed to music.   You can't go wrong with the Bellagio Fountains in my opinion.   Its free.  Its right out on the street.   Its Ranked #6 on the TripAdvisor list.   Shows are every 15 or 30 minutes through out the day and evening.

Fremont Street Experience FREE The Fremont Street Experience is a giant overhead light and music show put on over four blocks of Fremont street in old downtown Vegas.  The show is put on every hour on the hour after dark until Midnight.    The music shows are musical medley tributes to such bands as Queen, The Doors or KISS.  The experience is #52 on Tripadvisor.

Your Hotel's Pool. FREE (generally for guests) This isn't just one attraction but several attractions.   Most major hotels in Vegas have a pretty nice pool.   On a hot Vegas day, lounging by the pool or taking a dip is a great way to soak up the sun or cool off.

Sirens at TI : FREE In front of TI  (Treasure Island) is a free theatrical show put on about every 90 minutes in the evenings.   Personally I'm not too fond of this attraction and I'm not alone, it comes out #518 on the list at Tripadvisor.   Its a hassle to fight the crowd of people to get a spot that you can see the show and the show isn't that entertaining in my mind.  I mention it because its one of the major free attractions on the strip and very popular.   You might want to check it out if you have the time and interest, but I don't recommend it.  If you do go then get there early to secure a good viewing spot.  The show is

Auto Collection at Imperial Palace :  FREE with a coupon  (or $9)    I like old cars.   So a museum of old cars is a pretty interesting attraction for me and this is one of my personal favorite attractions in Vegas.   Its #73 on the Tripadvisor list.  The Imperial Palace has a collection of 100's of antique and classic autos on display.   The inventory rotates some with cars being replaced with others.  They have a variety of unique cars like Johnny Carson's car.    Many of the cars on display are also for sale.  I could spend a couple hours wandering through the collection.   You can get a free admission ticket online good through the end of 2010.  Its open 10AM to 6PM and located in the 5th floor of the Imperial Palace parking garage.  

MGM Grand Lion Habitat : FREE The MGM grand has some lions in an enclosed habitat. ITs free to see them.   The attraction is inside the MGM grand.   Its worth a look if you're in the area but theres not a lot there to see really.  #152 on the Tripadvisor list

Great Reasonably Priced Attractions

Siegfred and Roy's Secret Garden and Dolphin Habitat at The Mirage : $15 adults/ $10 kids    The Secret Garden and Dolphin habitat is a pretty good exhibit.   They have a number of large cats and several dolphins.   #135 on the Tripadvisor list.   Its not very big compared to a city zoo and its limited to large cats and dolphins.   But they have a lot of the large cats and you get a very up close and personal view of the dolphins.  Its probably a 1-2 hour attraction.

Atomic Testing Museum : $12 for adults, $9 age 7-17, free under 7 yr.   This is an interesting museum with a full history of the atomic testing that was conducted in the Nevada desert.  I spent a couple hours wondering through the exhibits.   This kind of thing isn't going to be appealing to everyone but if it interests you then I'd recommend it.

Impressive Views

Stratosphere Tower Observation Deck : $16 for adult or $10 children.    The Stratosphere tower is over 1,100 feet tall and is at the North end of the main Strip.   Its one of the best views of the city.   They also have some thrill rides at the top that you might enjoy for extra fees.  You can get package tickets like admission and 3 rides for $30.

Eiffel Tower at Paris : $10 or $15 for adults.   The half scale replica of the Eiffel Tower at Paris hotel has an observation deck at the top which gives another great view of the city.

Thrill Rides

Roller Coaster at New York New York.  : $14 for one ride.   This is a fun coaster at the New York, NY casino.   The coaster hits speeds over 60 MPH

Speed the Ride, Coaster at Sahara : $10 for a ticket.   This is another thrill ride.   The coaster hits speeds of 70 MPH.

Side Trips

Hoover Dam:    $11 or $30 for tours.    Hoover Dam is a short trip about 30 miles outside of Las Vegas.  Hoover Dam is the largest dam in the Western hemisphere.   Its a national historic landmark and has been named one of the top 10 construction achievements of the 20th century.

Red Rock Canyon :  The Red Rock Canyon National Conservation Area is 17 miles West of Vegas.   You can drive through the CNA for $7 per car.  Its the #13th most popular attraction on Tripadvisor which says "Visitors can admire colorful rock formations on several hiking trails or on a 13-mile scenic drive."

Photos by musoSF and  http2007

July 27, 2010

The Topsy Turvy Garden Experiment

This weekend my wife and I bought a Topsy Turvy tomato planter.   The purchase was pretty much a whim.   My sister had introduced us to the product over July 4th when we were visiting her.  My wife has been interested in doing some gardening at home.   Then we ran across a display of Topsy Turvy planters at our local grocery store for 50% off.  Buying a Topsy Turvy planter seemed like a good idea.    I'm not sure if it really was a good idea or not.   The only way to know first hand if it was a good purchase will be to try it.   I figured I'd make it an experiment and document our experiences and results in a series of posts.

Couple Questions to Address in the Experiment:

Is the Topsy Turvy a worthwhile product??

Is growing tomatoes with a Topsy Turvy a good investment in time and money?

To determine if the Topsy Turvy is a good product I'll make a personal judgment based on my experiences with it.  The answer to this question will be my personal opinion and based on my sum of experiences with the product at the end of summer.   To answer the second question I'll figure out how much money we saved versus buying tomatoes and  evaluate if that savings is worth the cost of the Topsy Turvy and other materials and our time investment.  Organic tomatoes cost $2.50 to $5.00 per pound depending on the variety.  

Note: This is not a scientific experiment at all.  To do a better experiment I should really also have a tomato planted traditionally in the ground.  My wife and I are novice gardeners so we may kill the plant due to our own mistakes.
Day One: Purchase and Planting

We bought the Topsy Turvy at the store.  When we got home we opened it up and read the instructions and quickly realized we needed to make another trip to the store for potting soil, fertilizer and tomato seedling.   Needing to buy the soil and seedling seems obvious in hindsight but I guess we weren't thinking about it when we bought the Topsy Turvy initially.   I didn't know exactly how it worked and didn't read the package too well.   (obviously this purchase was not well planned... it was definitely bought on a whim).   So anyway we ran back to the store and bought some soil, fertilizer and a tomato plant.   The Topsy Turvy itself was on sale for $7.  I think we spent around $8 on the bag of soil, about $3 on the plant and another $5 on the soil.  Our total cost is about $23.   The $8 on the bag of soil and $5 on fertilizer was for a lot more product than we need for one tomato plant.  A small bag of potting soil wouldn't have been enough soil and we bought the smallest quantity of fertilizer they had.  

The labor put into the Topsy Turvy so far was mostly at the store and a few minutes to actually plant the tomato plant into the planter.   I would estimate that we've put about 1 hour of effort into it so far.   The end result is one young tomato plant hanging in our back yard (pictured at left).

Initial investment : About $23 and 1 hour labor

If you're interested in a longer more detailed experiment that assessed the savings of planting a garden then check out The Year-Long GRS Project: How Much Does a Garden Really Save? from Get Rich Slowly.  I borrowed the idea for my experiment from GRS, but my own experiment is on a much smaller scale. 

July 25, 2010

Teacher Pay vs Median Incomes by State

There are over 3 million elementary and secondary school teachers in the country.   The BLS has statistics on earnings for teachers at the national level.  It says "Median annual wages of kindergarten, elementary, middle, and secondary school teachers ranged from $47,100 to $51,180 in May 2008"   But teacher pay varies greatly from state to state and from city to city.  I figured it would be interesting to look at teacher pay by state and then put their pay in relation to the median income for each state.   Its one thing if a teacher gets $34k or $48k a year but its another thing if thats 70% or 100% of the median income level.

First I got figures for teacher salaries by state.   That page has the average beginning salary and the average salary per state.   I think the data is from 2006.   I also found Census data on median household income.  I am using the figures for 2 year average over 2007 - 2008.   Yes the dates don't match exactly between teacher pay and median pay but pay rates don't change all that much from year to year so its close enough for my purposes.

Now keep in mind that the information here is based on state level averages and there will be significant variations within a state between cities.  A teacher in rural New York will probably make significantly less than the average and a teacher in New York City is going to make a lot more.  Even within individual metropolitan areas you can see significant differences in pay levels between school districts.

[edit March 7, 2011 : This is not an apples to apples comparison.  I want to point out that I am using the mean teacher salary versus the median household income.   These are two different things.  The mean and median are different.  The mean is the true average and the median is the middle point.   I'm also comparing teacher salary versus household wages.   The mean and median wages for teachers won't differ much at all given the nature of the job.  I'm using the median household income as a basic benchmark of pay levels for the state in question.   My purpose here is to get a general comparison of how teacher wages compare to income levels in the state. ]

Here is the full list of all states showing the average teacher salary, median income for households in the state and then the percentage of the teacher pay / median income.   

Teacher Salary  Median Income 
Alabama $40,347  $   44,155 91%
Alaska $53,553  $   64,701 83%
Arizona $44,672  $   47,972 93%
Arkansas $42,768  $   40,974 104%
California $59,825  $   57,445 104%
Colorado $44,439  $   62,217 71%
Connecticut $59,304  $   65,644 90%
Delaware $54,264  $   53,695 101%
Florida $43,302  $   46,206 94%
Georgia $48,300  $   48,369 100%
Hawaii $49,292  $   64,002 77%
Idaho $41,150  $   49,247 84%
Illinois $58,686  $   53,889 109%
Indiana $47,255  $   47,898 99%
Iowa $41,083  $   50,465 81%
Kansas $41,467  $   49,119 84%
Kentucky $42,592  $   41,058 104%
Louisiana $40,029  $   41,232 97%
Maine $40,737  $   48,481 84%
Maryland $54,333  $   65,932 82%
Massachusetts $56,369  $   60,515 93%
Michigan $54,739  $   50,528 108%
Minnesota $48,489  $   57,607 84%
Mississippi $40,576  $   37,579 108%
Missouri $40,462  $   46,906 86%
Montana $39,832  $   44,116 90%
Nebraska $40,382  $   50,896 79%
Nevada $44,426  $   55,440 80%
New Hampshire $45,263  $   68,175 66%
New Jersey $58,156  $   64,070 91%
New Mexico $41,637  $   44,081 94%
New York $57,354  $   50,643 113%
North Carolina $43,922  $   44,058 100%
North Dakota $37,764  $   49,325 77%
Ohio $50,314  $   48,960 103%
Oklahoma $38,772  $   45,494 85%
Oregon $50,044  $   51,947 96%
Pennsylvania $54,027  $   50,850 106%
Rhode Island $54,730  $   54,767 100%
South Carolina $43,011  $   44,034 98%
South Dakota $34,709  $   49,901 70%
Tennessee $42,537  $   41,240 103%
Texas $41,744  $   47,157 89%
Utah $40,007  $   59,062 68%
Vermont $46,622  $   49,959 93%
Virginia $43,823  $   61,710 71%
Washington $46,326  $   58,472 79%
West Virginia $38,284  $   40,851 94%
Wisconsin $46,390  $   52,224 89%
Wyoming $43,255  $   51,977 83%

The states with the Top teacher salaries are :

California $59,825
Connecticut $59,304
Illinois $58,686
New Jersey $58,156
New York $57,354

5 Lowest teacher pay:

South Dakota $34,709
North Dakota $37,764
West Virginia $38,284
Oklahoma $38,772
Montana $39,832

But when you compare teacher pay to median income levels the picture changes.

High percent pay / median :

New York 113%
Illinois 109%
Michigan 108%
Mississippi 108%
Pennsylvania 106%

Low percent :

New Hampshire 66%
Utah 68%
South Dakota 70%
Virginia 71%
Colorado 71%

July 23, 2010

Best of blog posts for week of July 23rd

Christian PF has 24 Top Legitimate Home-Based Business Ideas & Opportunities

A Wall Street Journal article says that Gold Investing Really Does Belong to the Stone Age

Bargaineering discusses a The Five Minute Rule for investing.   Its a pretty good rule.

My Money Blog talks about Stable Value Funds – Exploring Risks and Rewards

Good List of Mistakes to Avoid as a Landlord

An article on The Landlord Protection Agency website titled Common Mistakes Landlords Make gives a list of 10 mistakes.

Here is their list:

1. Not screening each applicant.
2. Not following Fair Housing Laws
3. Not keeping up on the rental market or not raising rents
4. Not signing a lease
5. Not doing a move-in condition report
6. Not giving your new tenants and renewing tenants Title X information
7. Not having the property ready for new tenants
8. Not maintaining the property
9. Not properly handling security deposits
10. Not documenting

This is a very good list and I agree with all 10 items.   For a more detailed description of each item see the full article Common Mistakes Landlords Make

July 22, 2010

16 Frugal Tactics Saving Me Over $2,000 a Year

Below is a list of 16 frugal tactics that I've been using.   All together these tactics are saving me around $2,000 a year total.

Some of these tactics require a one time purchase like buying some compact fluorescent lamps, some are one time negotiations for lower prices and other tactics are ongoing shopping strategies.    While they may require a bit more work or effort on your part you shouldn't be giving up on quality.   None of these frugal options should lower the quality of goods or services you pay for in a significant way.

Some of these won't apply to you and you may already be doing others.    But I think its a pretty good bet that theres something on this list you aren't already doing.

16 Frugal Tactics:

  1. Mowing my own lawn and washing my car myself saves me $500/yr + $30 /yr  (ongoing effort)
  2. Using a credit card that pays cash back rewards I saved $550 last year  (ongoing shopping strategy)
  3. Negotiate a reduction in the interest on your home loan rather than doing a full refinance.  You could cut 0.5% off your rate and save $500-$1000 a year on $100-$200k loan  (one time shopping negotiation)
  4. Get classic car insurance instead of standard insurance for your classic car and save $470/yr (one time shopping negotiation)
  5. Avoid higher priced gas stations to save 5-30¢ / gallon up to $400 yr (ongoing shopping strategy)
  6. Haggle with your cable company to cut your rate $148 / year (one time shopping negotiation)
  7. Using a water filter system (like Pur or Britta) to drink filtered water at home instead of bottled water saves $110 to $133 /yr
  8. Use compact fluorescent light bulbs at home saves $61 /yr (one time purchase)
  9. Go to the movies at a a lower priced theatre's matinee instead of evening show  $10 / movie (ongoing shopping strategy)
  10. Using  Ebates to get cash back when you shop online can net you $59/2yr (ongoing shopping strategy)
  11. Buy your vitamins at Costco or online rather than grocery store can add up to $24/yr (ongoing shopping strategy)
  12. A water saving shower attachment could save $20/yr in hot water (one time purchase)
  13. Using a smart power strip can save $18/yr in electricity. (one time purchase)
  14. Permanent air filters in your car can save you $60 over 100k miles or around $7-10 /year (one time purchase)
  15. Using an electric lawn mower instead of gas = $8/yr   (one time purchase)
  16. Shut down your car instead of idling saves on gas = 2¢ /min (ongoing frugal strategy)

July 21, 2010

Double Major : Possibly the Best of Both Worlds

Are you having a tough choice between "following your passion" or choosing a career that will actually pay your bills?   Well maybe you can have your cake and eat it two via a double major.  I just read a post from Trent at Simple Dollar talking about his college and career choices in which he says: "I could have double-majored in a way that allowed me to follow my dream and still follow a lucrative path, too, if the dream didn’t work out."   I think this is a great idea.  

If its not obvious what this means let me explain:  Say you have a "passion" for music but you realize that musicians are often relatively low paid and that paying the bills can be a challenge.   Instead of going to college and just getting a music degree why not get a double or dual major with music and another career option.   The second half of your major should be something that you know will have a higher likelihood of providing you a decent paying job.   You could combine your music with business, education, accounting, nursing or any number of other options.  

If you have a passion for something that is not very highly paid then simply find a second degree that is in a more lucrative field that you have a talent for and which appeals to you and combine the two in a dual/double degree.   The two halves of your degree could compliment one another or they may have little to do with each other.   A dual/double degree allows you to keep the door open to follow your passion while giving you a more lucrative and dependable career option as well.    You can also combine the two degrees to open the door to career options that utilize both skills.

I had a roommate in college who dual majored in music and engineering.  He had a gift for playing the violin but he was practical enough to know it would be hard to make a good living at it.   Getting the dual degree gave him a fall back option of working as an engineer but left the door open to a possible career  in music.   I actually think he did it to keep his parents happy yet still pursue his own interests.

But what about the Extra time and work?    Yes there is generally going to be extra time and effort involved in getting a dual/double major.   Getting a dual/double degree isn't going to take 2 times as long as getting a single major.   With some planning it shouldn't take more than a year or two extra.  First of all your general requirements should be similar so you don't have to take English 101 two times.   Its mainly just the courses in your major that will differ.   You should probably be able to get a dual/double degree in 5-6 years.   If you plan it out well and try to achieve the maximum amount of overlapping courses then you could squeeze it into 4.5-5 years.

Two degrees makes you more marketable in general.   When I show people my resume I have two degrees on it, one in engineering and the other in computer science.   Having both degrees gives me a leg up in the job market over people with only one degree.   Even if your two majors are quite different you can find an intersection where they will open more doors in different industries or jobs.   For example if you have a music degree and a computer science degree then you could work in a purely music area, purely programming area or you could combine them and work as the music director in a video game.

July 20, 2010

What Would Individual Health Insurance Cost Me?

The other day I wrote "Investigating Side jobs and Alternate Incomes where I talked about how I'd like to find myself some other income streams.   In a comment to that article a reader named Lola asked if I'd accounted for the impact on taxes, health insurance, and other benefits as a self employed person. 

If I were to ever quit my day job then I'd have to figure out how to handle taxes and replace some of the key benefits that my employer currently pays.   Chief among those concerns in my mind is getting health insurance coverage for myself and my wife.   I'd need to make sure that I could pay for health insurance out of pocket and budget for it appropriately.   Unfortunately the cost of health insurance is a fast moving target and its been going up pretty quickly over the years.  So it may be hard to plan for the cost long term.   But we have to start somewhere and figuring out what coverage would cost today is step one.

Over two years I budgeted an estimated $800 a month for health insurance.   I'm afraid I don't remember exactly where I got that figure from.   It may have been a quote off eHealthInsurance or it could have been a ballpark estimate.

There isn't a single answer on how much health insurance costs.   In fact the cost of health insurance depends on how much you want to spend on it.   If I want a higher risk high deductible plan then I will spend less on health insurance, but if I want a plan that covers almost all the costs with little or no deductible then my monthly premium costs will be much higher.   A key element in the cost of health insurance is determining how much coverage you want and how high of a deductible you are comfortable with.  If you want to take on higher risk then you can get a lower monthly premium, but if you want to be confident all your costs are covered then your premiums will be higher.

You also have to compare like plans and look for good value.  Some plans are better than others no matter what, for example I wouldn't spend $20,000 a year on a plan with $0 deductible if I could get a $5000 deductible plan for $5000 in premiums.   If two plans have the exact same deductible, co-insurance and other coverage details but one has a low premium monthly premium than the other then its lower cost.

Determining how much health insurance costs you is a process of deciding what level of coverage you want and finding the best value to meet your needs.

Note:  The premium costs and terms mentioned below are just an example for my situation in my state.  Your own situation is going to be unique and the rates may vary substantially in your state.   To get an idea of health insurance options available to you, you can do a search on eHealthInsurance  for yourself.

I got quotes on  eHealthInsurance for health insurance plans to cover my wife and myself.   The search resulted in over 90 different options with a wide array of monthly premiums, deductibles, co-insurance percentages, total out of pocket maximum spending.  Here are 4 options that covered the spectrum of choices which I've given nicknames of Cheapo, High Deduct, Health Savings and Low Deduct.

Deductible Co-insure Max Premium
Cheapo $15,000 40% $25,000 $125
High Deduct $10,000 30% $20,000 $258
Health Savings $6,000 0% $6,000 $319
Low Deduct $2,000 20% $7,000 $500

If you look at just the monthly premiums then there is a huge range there between $1,500 a year all the way up to $6,000 a year.   The 'Cheapo' plan has the lowest premiums at $125 a month but a very high deductible and high out of pocket maximum cost.   The High Deduct plan has high deductible and out of pocket maximums but both are lower than Cheapo and the premiums are twice as expensive at $258 monthly.    The Health Savings plan has a Health Saving Account (HSA) and while it has a $6,000 deductible that is the maximum you'll have to pay and also about the maximum you can deposit into an HSA for a family.   The HSA plan's premium is $319 a month.    The Low Deduct is closest to a traditional health insurance plan.  It costs $500 a month but as a lower $2,000 deductible.

If my wife and I never got sick or injured then the cheapo plan with the $125 monthly premium would be the cheapest option.   But its extremely unlikely we'd be perfectly healthy forever.    The Low Deduct plan has the lowest deductible but the highest fixed monthly premium costs.

To compare the 4 plans I'll look at the minimum, medium and maximum costs you would incur for each based on spending scenarios reflecting the best case, medium and worst cases.   The minimum cost is just the monthly premium x 12.   That cost assumes we're both in perfect health with no additional out of pocket costs.   The medium cost is assuming about $4,000 in additional medical costs so its the cost of $4,000 in spending plus the 12 month of premiums..   I don't know what our average annual health care spending is but I'm just arbitrarily picking $4,000 to represent the cost if one of us is injured or becomes ill in some way that isn't life threatening.   The maximum cost is the most we could pay out of pocket in a given year. 

So the minimum, medium and maximum costs are :

min med max
Cheapo $1,500 $5,500 $26,500
High Deduct $3,096 $7,096 $23,096
Health Savings $3,828 $7,828 $9,828
Low Deduct $6,000 $8,400 $13,000 

First of all I see that the Health Savings plan is cheaper than the Low Deduct plan in all 3 scenarios.   So I would immediately cross the Low Deduct plan off the list since the HSA option is better overall.   Now lets look at the High Deduct plan versus the Health Savings plan.   In the min and med spending scenarios the High Deduct plan is  $732 a year cheaper than the Health Savings plan.   But in the max spending scenario we'd be spending $13,268 more with the high deductible plan.     This basically leaves me with a choice between the Cheapo plan and the Health Savings plan.    The Cheapo plan would be less expensive in most cases but we could end up with a very substantial bill if we run into high medical costs in any given year.   The Health Savings plan would cost a bit more on any given year but our total maximum costs are much less. 

Given this comparison I think the Health Savings plan is the better option for our situation and risk tolerance of my wife and myself.   The plan would cost us $3,828 to $9,828 per year depending on actual health care costs.   Since the plan is using a Health Savings Account (HSA) some of that spending would be tax sheltered.

The basic process:

1. Get quotes for available health insurance plans on eHealthInsurance
2. Compare the plans and narrow them down to the best options given your needs
3. Once you've got the short list of best options, then compare the minimum, medium and maximum out of pocket costs.
4. Pick your preferred plan.  Your costs are then the range of the minimum and maximum costs.

 Bottom Line:   The cost of health insurance is a highly variable thing that depends on your situation and your needs.   To find out the cost you have to do some research and decide what kind of coverage will work for you.

July 18, 2010

Saving Money In Vegas : Food

Food prices in Vegas have been gradually going up over the years.   It used to be that most places offered  dirt cheap just to get you into their casino.  But nowadays the casinos make a hefty profit off of their dining operations.     Eating when you travel can be pretty pricey since you're often stuck eating out.   Vegas isn't as cheap as it used to be, but you can still find some pretty good deals on food.

Note:  All prices are current as of writing and are likely to change in the future.   

All You Can Eat Buffets

All you can eat buffets are a mainstay in Vegas and can be found at most every major casino hotel.  Prices vary widely from around $10 at the low end to about $40.   Vegas.com has a list of buffets.   The buffets can be a very good deal for a meal as they offer a wide selection of food at a pretty reasonable price.  I'm particularly fond of the buffets that have crab legs.   The quality of food at Vegas buffets runs the whole spectrum from mediocre to fabulous.   The Buffet at the Golden Nugget has seafood for $21 and I've also been generally happy with the More buffet at Luxor which is $20 for dinner.   If you want to splurge then the Bellagio buffet is very good but its around $30-35.

All Day Buffet Deals

Taking the all you can eat idea one step further some buffets have recently started selling a ticket for all-day dining that gives you access to their buffet all day long for breakfast, lunch and dinner.   The RoundTable Buffet at Excalibur or the More Buffet at Luxor both currently have an all-day long price of $29.99.   The Circus buffet at Circus Circus is $25 for adults or $20 for kids.

Buffet of Buffets

If you aren't satisfied with unlimited food all day at a single buffet then you can get unlimited all day dining at seven buffets for one price.  Right now several of the major strip hotels are offering a deal called the 'Buffet of Buffets'.  This is a one price deal that lets you eat at any of 7 different buffets.     Buffets included are : Paris, Planet Hollywood, Flamingo, Harrah's, Caesar's Palace, Imperial Palace and Rio.   Currently it costs $34.99 for rewards members or $39.99 for non members.    The Buffet of Buffet's is an easy way to get a lot more variety than just getting an all-day buffet pass at a single buffet.

Discount Food Deals 

It is a long tradition for Vegas casinos to offer deeply discounted food prices to entice gamblers into their casino.   While this isn't as common as it once was there are still many casinos offering great bargains on food to tempt you into their establishment.   There are numerous deals on meals at the casinos and hotels around Las Vegas.     The major destination hotels on the strip are less likely to have great food deals.   You're more likely to find such discounts at the off strip and downtown casinos. 

The Vegas.com website has a list of food specials.   You can find breakfast deals for $2-4 at half a dozen spots, shrimp cocktails or hot dogs for $1-3 at several places, steak or prime rib dinners for $7-10 currently at nine restaurants.   If you manage it and plan your eating right you could get a $2 breakfast, $1 hot dog for lunch and a $7 steak dinner and eat for about $10.   The major drawback to these deep discount deals are the travel involved.   If you don't have a rental car then that much travel will cost you more than you'll save making it impractical.   Even if you do have a rental car the amount of time spent driving around time will cut into your vacation fun time.   You can also find some recommended cheap eats at CheapoVegas.com.

Free Food Credit From Hotel

Vegas hotels will periodically offer specials where you can get promotional credits or discounts when you book your hotel reservation.  Food credit good for use in their restaurants and buffet are one of the things they sometimes offer.  For example the Palace Station is currently offering a hotel package with 2 free breakfast buffets per day.  

Coupon Deals

There are a number of discount coupon deals offered by hotels and casinos in Vegas.   Its fairly common to get discounts on dining through these coupon offers.   When we checked into our hotel on our last trip to Vegas we were handed a sheet of coupons including at few for discounts at the hotels restaurants.   For example the Sahara has a special currently offering a coupon book when you book with them which has $200 worth of discounts on food and entertainment at their hotel.   The Harrahs hotels are currently offering a coupon book which has discounts on shows plus : "$5 off half a dozen Buffets, and lots of dining discounts and free drinks"   But be warned, take the advertised value of this kind of discount packages with a grain of salt.   If they advertise a large discount total dollar value like "$900 in discounts" since that really means a lot of 2-for-1 show tickets and 20% off coupons that are worth "up to" a total of $900 if you were to use all of them.

Restaurant.com gift certificate coupons

You can use discount gift certificates from Restaurant.com at several Vegas locations.   The restaurants in Mandalay Bay take the coupons.   These might work if you want to eat at one of the restaurants in question.  But you have to get the gift certificate in advance, you have to generally spend a minimum amount and a 18-20% gratuity is often mandatory.   It might be a good way to get $25 off a $75 meal at a high end place, but its not a super bargain in general.

Research Reviews Online

Cheap food isn't a very good deal if the food is poor quality.   Some of the buffet's in Vegas may have very cheap prices but the food isn't very good.   To help identify the poor quality dining and buffets in Vegas you can do a little research online first.   Yelp.com has user reviews on restaurants and buffets in Vegas.   If you go to Yelp.com and search for 'buffets' in Las Vegas you can sort the list and add filters for price.    For example I did a quick search for 'buffet' in 'las vegas nv' and then filtered for Las Vegas itself, '$$' price level and 'buffets' category.  The 3rd option there is the Garden Court Buffet at Main Street station with 4 out of 5 stars average from 39 reviews.   On the other hand the Sahara Buffet only has 2 stars average.   You can also view the list of reviews for restaurants at Tripadvisor.com   and then sort their list based on price and filter it to show buffets or other options.

Visit a Grocery Store and Make Your Own Food

Eating out at restaurants is more expensive in general than cooking your food at home.   If you rent a condo or motel unit with some cooking facilities then you can save a lot on food by preparing your meals at home in your own kitchen.   You don't have to cook everything in your room, simply having a box of cereal and a half gallon of milk in a mini-fridge can save you a lot on breakfasts.  Major downside for this strategy is that most hotels in vegas do not have any kitchen facilities in room even minifridges or microwaves and most don't even have a coffee maker.  And of course it can take time away from your vacation fun to prepare your own meals.   This is a good way to save on in between meal snacks or water.  Simply dropping by a grocery store at some point to get yourself some snack food and bottled water can save you a fair amount versus the prices you might pay for such things on the strip.

Free Comped food

You may have heard of 'comps' in Vegas where the casino gives free stuff to gamblers.   If you do much gambling then you can get yourself free things from the hotels and casinos.  Let me be clear : I would NOT recommend gambling just to get the rewards, but if you're gambling for entertainment anyway then you may as well get the free comps.   This doesn't work very well for me since I never gamble that much.   But if you are a gambler then you should take advantage of the gambling comps you may be offered.   Casinos usually have a club card of some sort that will track your gambling and get you free stuff based on a reward system.  When you sign up for the casino club card you can often get some free discount coupons as well.  You may have to gamble a LOT in order to get comps of any significant value.     For example the Grazie club would take 2500 slot points in order to get a $10 gift card which means you'd be gambling $2500 on slot machines to get $10 free product.  

Bottom Line : There are a zillion different food options in Vegas with everything from $1 hot dogs to $40 buffets.   If you do a little research in advance and take advantage of deals you can keep your costs down and get some very good food.

Photos by prayitno and lbshopgirl 

July 16, 2010

Best of blog posts for week of July 16th

Mr Free Stuff has a list of  36 Free Food Deals for Your Birthday  And I'd note that many of the birthday freebies don't have to be redeemed on the actual date of your birthday so you can do more than one and spread them out over a few days.

Bargaineering lets us know about a deal for Free Amazon Prime for Students  (its for 1 year).

My Money Blog looks at some charts for PE/10 with Fun With Charts: P/E Ratios vs. Future 10-Year Returns
Original charts are from Mebane Faber

Ebates cash back total $59.35

I've been using Ebates since the end of 2008 so its over 1.5 years now.    I've accumulated $59.35 in cash back rebates by using Ebates in that time.  

Almost all of my spending has been on travel sites.   I have cash back from Orbitz, Priceline, Hotwire, Hotels.com and Holiday Inn.   In total I spent just under $2,300 and the cash back of $59.35 amounts to about a 2.6% rebate.    The $2300 was from several hotel stays, airfare and rental car purchases over a year and a half.  

I've gotten cash back on 10 separate purchases.  I figure it takes maybe 20-30 seconds to go to the Ebates website and find a merchant.   Even if I'm slower and take 1 minute then this amounts to about 10 minutes total work to get $59.35.   Thats pretty hard to beat.

Ebates only works with online sales though and I dont' buy a ton of stuff online actually.   For me it works great for my travel purchases since those are almost entirely made online.

July 15, 2010

History of Federal Tax Receipts as % of GDP

Previously I talked about the History of Taxes as % of GDP.  In that article I showed two graphs showing the personal income tax as % of GDP and the corporate tax as % of GDP.   I decided to revisit that topic and show more graphs.  I like graphs.

The Government Printing Office (GPO) has data online for the budget of the US government showing historical details in tables.  In the 2011 FY budget tables in table 2.3 they list receipts by source as % of GDP from 1934 to 2015.    I made the graphs below using that data as is.   I decided to show just the period from 1946 to 2009.  Before 1946 the situation was a lot different given the depression and then WWII.   The numbers for 2010 to 2015 are just projections so I'm not showing those.

Since the numbers are represented as a % of the GDP then they will go up and down based on the changes in the GDP.   If tax rates remain the same but the economy is really strong one year then GDP will go up and the % of taxes as GDP will be lower as a result.    Its important to keep in mind that these figures are a reflection of the taxes relative to GDP but not a direct picture of tax policy.

Of course these figures are only for federal taxes and do not cover state or local taxes. 

First of all lets look at the historical trend of total receipts from 1946 to 2009:

The total tax receipts as % of GDP has bounced up and down a bit over the decades but the long term trend line for that period is pretty flat.   The average and mean rate was 17.8%, the low was 14.4% in 1950 and the high was 20.6% in 2000.

Personal Income taxes:

Personal income taxes are the taxes that get the most visibility when talking about federal taxes.   The trend in the amount of personal income tax as % of GDP has been surprisingly flat from 1946 to 2009.    As you can see the % amount bounces up and down from year to year but the overall trendline is only slightly tilted upward.   The average was 8.0% and the median 7.9%.  The low was 5.7% in 1949 and the high was 10.2% in 2000.

Excise Taxes :

Excise taxes used to be more significant but from 1946 to today they steadily dropped from around 3.1% to 0.4% in 2009.

Corporate income taxes

Corporate taxes as % of GDP have been on a gradually went down from 1946 to about 1980.    In 1952 the corporate taxes were about 6.1% of GDP but by 1983 they'd dropped to 1.1%.    From the 80's to 2009 the rate fluctuated a bit within the range of 1.0% to 2.7%. Some of the fluctuation in the tax rate is due to the performance of businesses rather than changes in tax policy.   So for example if the economy is bad then companies don't make as much money and therefore pay less taxes as a result.

Social security & retirement payments:

You can see there was a pretty steep upward trend from 1946 to around 1985.   It started at a just 1.4% of GDP and then ramped up to 6% by 1981.  But from the 80's onward it has held relatively flat between 6-7% range.

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