When my wife and I got married we spent a lot on our photography. That was one of our priorities for the wedding to have nice photos that would last. So we chose to spend more on photos. One of the things we bought was a professionally made photo album. Photo albums from professional photographers can easily run several hundred dollars. Costhelper cites medium prices for hand crafted wedding photo albums at $250 to $450 range.
You can easily get very nice alternatives to the wedding photo albums sold by the photographers and same yourself a lot of money.
A friend of mine was pretty frugal with their wedding. They had a friend take pictures and then got prints made online. For their wedding album they got a hardcover photo book made. The photo book is actually quite nice.
Photo Books Options
The photo book my friend got came from Kodak. To make such a book you upload your photos to the service's website then select the options you want for your book. The photo books start with a certain number of pages (20 for larger books) but if you want more pages you can pay additional for extra. You can get a good size hardcover starting around $25-$30 or a smaller softcover for $10-$15.
Snapfish has 8 x 11 hardcover books starting with 20 pages for $30. Or a 5 x 7 softcover with 20 pages is $12. See: Snapfish photo books for more details on prices.
Kodak Gallery has a 9 x 10 hardcover with 20 pages for $30. Their 5 x 5.75 paperback with 14 pages starts at $10. See: Kodak photo book prices.
My Publisher via Costco Costco members get 20% off of orders on My Publisher. They sell an 11.25 x 8.75 hardcover with 20 pages for $30. The 7.75 x 5.75 paperback has 20 pages for $12.95. See base prices at My Publisher
You can also check Retailmenot for promo codes with the following links Snapfish codes, Kodak Gallery codes & My Publisher codes.
Build Your Own Traditional Album
Rather than buying a photo book you could assemble your own traditional photo album to use as your wedding album. There are a number of relatively inexpensive wedding photo albums for sale online.
I found the site AlbumSource.com which has a variety of nice albums. Their Classic Wedding Scrapbook is 10 x 12 with 40 sheets for $35.00. You could fill that with 20 8x10's and 60 4x6's from Snapfish for around 65 in print costs. So the total cost for such an album with pictures would be around $100.
If your building your own album like this then it would help to have some artistic capabilities.
February 28, 2010
When my wife and I got married we spent a lot on our photography. That was one of our priorities for the wedding to have nice photos that would last. So we chose to spend more on photos. One of the things we bought was a professionally made photo album. Photo albums from professional photographers can easily run several hundred dollars. Costhelper cites medium prices for hand crafted wedding photo albums at $250 to $450 range.
February 26, 2010
Newer blog Budgeting in the Fun Stuff talks about their budget for the fun stuff started with How We Chose to Budget in the Fun Stuff
Get Rich Slowly has From Whole Foods to Food Stamps talking about an unemployed single mother with 4 kids that lives in a trailer and writes the The Boxcar Kids
The Plutus awards are currently open for votes. They give awards for the best personal finance blogs in several categories. Why not go vote for some of your favorites. Better yet vote for my favorites: Bad Money Advice is up for most controversial. Bargaineering and The Simple Dollar are nominated for best non-collaborative blogs and Get Rich Slowly is in the running for best collaborative.
Yahoo has an article titled Blue Collar Jobs in Demand for 2010. The article says that the jobs on the list are those that "experts say are most in demand this year". The list of jobs is basically a list of construction industry careers: Plumber, Elevator installer, Carpenter, Electrician, HVAC and Roofer. The only other non construction industry job on the list is auto mechanics.
The problem I have with this article is that these construction jobs are not really in demand today. According to the BLS, the current unemployment rate in 2009 for the construction industry was 19.0%... 19%!! That 19% unemployment rate was nearly double the national unemployment level in 2009. Not only is it very high its actually the worst among all industries in the BLS list. I honestly don't know how anyone could say that jobs in an industry with the highest unemployment rate of 19% are "in demand". Is there something I'm missing here?
On the other hand longer term construction jobs will have pretty good demand. BLS info on the Construction industry says "The number of wage and salary jobs in the construction industry is expected to grow 19 percent through the year 2018, compared with the 11 percent projected for all industries combined." So over the next 8 years you should see good job opportunity in construction. You'll also see lots of job opportunity due to retiring baby boomers, the BLS says opportunity will be good "because of the need to replace the large number of workers anticipated to leave these occupations over the next decade."
Construction jobs are not what I'd consider "in demand" right now. The demand for construction labor should be pretty healthy over the upcoming decade.
February 25, 2010
A while back I talked about some electric cars that various automobile makers had planned. One of them was the Nissan Leaf. I've started to see ads for the Leaf.
Basic stats on the Nissan Leaf:
Cost $25,000 to $33,000 estimate
Range : 100 miles
Top speed : 87 mph
Battery capacity : 24 kWhr
Personally I think that electric cars are a great idea and eventually I'd like to own one. But I'm not going to jump on the early adopter band wagon any time soon. If I were to consider buying an electric car I'd first want to do a comparison to a hybrid or standard gasoline car to see if the numbers really add up or if you'd just be paying a large cost premium on the electric car. I figure that a good standard for comparison would be the Toyota Prius. The Prius is very cost efficient so it should be a good benchmark for comparison.
Purchase Cost of Leaf vs Prius
The Leaf cost is not officially announced. I'm going to assume it is closer to the high end at $33,000. However the Leaf should qualify for a $7500 tax credit since its a purely electric vehicle. That would make the out of pocket cost $25,500.
A Toyota Prius will cost you around $22,000 (or higher depending on model and options).
The Prius is about $3,500 cheaper than a high end estimate for the Leaf price after tax incentive.
Electricity costs for a Leaf = full charge is 24 kWhr and will go 100 miles. So if electricity is 10¢ per kWh then you'd be paying $0.10 x 24 for 100 miles or $2.40 / 100 miles. 100,000 miles will cost you $2,400 in electricity.
Gasoline cost for Prius = A Prius gets about 50 MPG. So if you drive 100,000 miles then thats 2000 gallons. At about $2.50 a gallon that is $5,000 for 100,000 miles.
Leaf electricity = $2,400
Prius gasoline = $5,000
Savings for Leaf over 100,000 miles is $2,600.
I don't know how to estimate the other costs of a Leaf versus a Prius. Other costs for the Leaf are a big giant question mark. The Prius has routine maintenance requirements for the engine. You have to change the oil and get it serviced. The Prius like any typical automobile might break down on occasion and require you to pay for some repair bills. I'm of the opinion that the maintenance and typical repair costs of an electric car will be less than what you see with a gasoline engine. But that is just my personal theory at this point, what the real costs are remain to be seen. One of the big unknowns is the life of the battery. I don't see anything concrete direct from Nissan about the battery life. However I suspect battery life will be substantial. Hybrid batteries last a long time so I see no reason they can't make an electric car with significant battery life. But still as we don't know much yet it presents another big question mark for the Leaf.
Bottom Line: If you compare the total costs of a Nissan Leaf and a Toyota Prius then the Leaf costs more up front to buy and the Prius costs more in gas to operate. Given just these two factors the total costs appear to be similar. However there are still too many unknowns in the other costs associated with the Leaf to make a solid comparison.
February 24, 2010
Most households have some form of debt. Most households give money to charity. There is some overlap between those groups so there are households that have debts and give money to charity. 46% of households carry a credit card debt according to the Survey of Consumer Finances (either 2004 or 2007). In 2004 the Center for Philantrhopy found that 68% of households give at least $25 to charity. If you overlap those two figures then at least as of 2004 about 14% of households carry credit card balances and give money to charity.
Does it make sense to give money to charity while you have a credit card debt?
If you pay interest on your credit card then that is lost money. When you make charity contributions at the same time you're almost financing your charity giving with your credit card debts. You could generate more money for the charity by paying off your credit card debts sooner. Not having to pay the high credit card interest will free up more of your finances which you could then redirect back to your charities.
Lets look at an example:
Lets say you've got a $5000 balance on your credit card at 19% and you make just the $100 monthly minimum payment. You also give $100 combined to your favorite charities. Your income is about $60,000 and you are married. That puts you in the 15% tax bracket.
$100 to credit card and $100 to charity
It will take you 99 months to pay off your credit card at $100 a month. At the end of the 99 months you would have given your charities $9,900 and gotten $1,485 in lower taxes.
$200 to credit card till its paid off then $200 to charity afterwards
If you pay $200 to your credit card every month then it will be paid off in 32 months. Then after that you can put your $200 a month into your charities. After 99 months your charities would get $13,400 total and you'd have $2,010 in lower taxes.
If you pay off your credit card first then your charities will get $3,500 more and you'll save an extra $525 in income taxes.
For you to get the tax break you have to itemize of course. But even without that paying off the credit card first would still net the charity more in the long run.
Does the Charity need the money now?
Its possible that the charities you give money to would really use / need the money today. They might prefer to have $100 today than $150 a couple years from now. I don't really know how most charities look at cash flows and how important having money now is versus having more money later. If you are worried about the impact on your charities of choice then you might contact them and see if they have a preference. Send them an email or make a quick phone call. This is something for the charities in question to answer. Personally I'd assume that most very large charities would just as soon have more money in the future than less money today as they have large endowments. Some smaller charities may have more cash flow difficulties and might prefer the money today so they can pay bills and get things accomplished today instead of tomorrow.
Bottom line: If you have credit card debt and simultaneously make charitable donations then consider paying off your high interest credit cards today so you'll have more money to share with your charities tomorrow.
February 23, 2010
If I'm browsing through the battery aisle at the local grocery store for some AA' then I might find the following options:
Energizer Lithium 4 pack for $10.99
Duracell alkaline 'ultra' 8 pack for $5.99
Store brand 8 pack for $4.79
The lithium batteries claim that they are super powered and will last a long long time. But they cost about 2 times as much for half the batteries. I get sticker shock if something is multiples the price of an alternative. Lets look at those prices on a per battery unit cost:
Energizer lithium = $10.99 / 4 = $2.75ea
Duracell 'ultra' = $5.99 / 8 = $0.75 ea
Store brand = $4.79 / 8 = $0.60 ea.
My frugal mindset would make me automatically pick those store brand batteries. But you should be aware that batteries are not all created equal. Those claims by Energizer that their lithium batteries are super powered and will last extra long are actually based on facts. On the other hand the cheap store brand batteries may be of inferior quality and may not last nearly as long.
Consumer Reports tested AA batteries and found significant differences. There is also a video clip of the Consumer Reports study. Consumer Reports found that a store brand CVS battery only lasted 92 pictures on a digital camera while a standard Panasonic alkaline batteries lasted over 2 times as long. The lithium batteries lasted even longer and they got 678 pictures from the Energizer ultimate batteries. The high end lithium batteries lasted about 7 times as long as the cheap batteries.
If you look at the cost of the battery per life then the most expensive per battery is actually the best buy:
Energizer lithium = $2.75 battery / 678 pictures = $0.00405 / picture
Standard = $0.75 ea / 184 picts = $0.00407 / pict
Store brand = $0.60 ea / 92 picts = $0.00652 / pict
So due to the low life of the store brand batteries they end up being more expensive. If I had bought the store brand batteries in the name of frugality thinking I was getting a good deal I might have ended up actually spending 50% more over all.
Rechargeables the best deal
Better yet for situations where you frequently use a lot of power and go through a lot of batteries then getting rechargeable batteries would be the most cost effective solution.
Consumer Reports also found that the Sanyo Eneloop brand batteries were the highest performing rechargeable. They got 400 pictures from the Eneloop and Sanyo claims you can recharge them up to 1000 times. A Sanyo Eneloop 4 Pack AA NiMH Pre-Charged Rechargable Batteries w/ Charger costs $16.46 at Amazon. That is $4.11 per battery. Even if you were only able to recharge them 100 times (just 10% of Sanyo's max claim) that would give you 40,000 pictures for $4.11.
You'd also have to pay the electricity cost to recharge the batteries. Trent at The Simple Dollar looked at the costs of recheargeable batteries a while back and included the cost of the electricity to charge the batteries. His calculations figured that it cost 0.02 kiloWatt hr to charge a single AA battery. At $0.10 per kWh that is a cost of $0.002 per charge. So 100 recharges would cost you an extra $0.20 in electricity.
Comparing batteries on cost / picture
Energizer lithium = $2.75 battery / 678 pictures = $0.00405 / picture
Standard = $0.75 ea / 184 picts = $0.00407 / pict
Store brand = $0.60 ea / 92 picts = $0.00652 / pict
Sanyo Eneloop rechargeable = $4.31 / 40,000 picts = $0.000107 /pict
Those very small $ values are hard to compare so lets look at it in the sense of pictures per $1 spent on battery:
Energizer lithium = $0.00405 / picture = 246 picts
Standard = $0.00407 / pict = 245 picts
Store brand = $0.00652 / pict = 153 picts
Sanyo Eneloop rechargeable = $0.000102 /pict = 9,280 pictures
The rechargable Eneloop battery is the clear winner.
February 22, 2010
A few weeks back my father bought up the idea of buying an infrared heater. I didn't know what that was really. At the time I didn't recall having heard of an infrared heater before, but I had probably just not been paying attention. Since he mentioned it and I started paying attention I've been seeing ads for infrared heaters all over the place. They are in print, on TV, on the radio and almost anywhere that ads can be bought.
What are they?
The models being pitched are generally 1000 Watt to 1500W infrared heaters housed in a nice looking wooden cabinet that might look ok in your living room. They often have a remote control. Most of the infrared heaters on the market seem to be in the $300-$500 range. From what I've seen it seems that they are always being sold at a step sales price or factory direct discount. There are a few vendors out there including Sunheat, Edenpure and Amish heaters to name just a few.
Whats so special about Infrared Heaters? How do they work?
Infrared heaters are basically large space heaters that heat by radiating infrared light. The idea if infrared heating is similar to how the suns energy can heat you through its light waves. The heaters use infrared energy to heat you by radiating invisible infrared light waves. Heating with infrared heat can be more efficient than a standard electric heater because you aren't having to heat the air and are directly heating the occupants and objects in the room. So theoretically at least an infrared heater should be more efficient form of heat than a traditional electric space heater.
Can infrared heaters save you money?
The makers of the infrared heaters claim you can save 50% on your heat bills. That may or may not be true. Heating with a space heater can save you money. The idea is to turn down your furnace to something like 50F and then use the space heater to keep your immediate area warm. I've done this myself in the past. I would hang out in my study and heat that single room with a space heater and keep my main furnace off. By doing this you can save money on your heat bills. But if you have a large house with a few people moving room to room or you yourself frequently visit multiple rooms then attempting to heat one small area with one small heater won't do the same job as a furnace.
Before I stated that infrared heaters should theoretically be cheaper than standard electric heaters. An irony of the advertising claims of the infrared heaters is that they don't actually benefit from the infrared heat. The design of these heaters actually negates the benefits of infrared heat. For infrared heat to be beneficial the infrared heat source has to be visible and direct line of sight to what you want to heat. Think of it like the sun, you want to be in the sun so you don't want the sun to be hidden. However the way the infrared heat boxes are designed they actually have the heat source inside and then use a fan to recirculate the heat. That is basically no more beneficial than a standard electric heater.
Another thing to consider is that electricity is often not the cheapest form of heat. In some markets electric heat can be twice as expensive as gas heat. So you may be better off using your natural gas heater in general.
While electric heat or electric space heaters may technically be more efficient it is not necessarily less expensive.
These high end infrared heaters seem to provide no special energy saving value over standard electric space heater. While there is potential energy savings from using a space heater there is no special benefit from using the high priced infrared heaters.
Some Infrared Heaters Have Poor Reviews
I did a quick search for reviews on infrared heaters and the first result I got was for a model called the EdenPURE GEN3 Model 1000 Quartz Infrared Heater at Amazon. They have 51 reviews and 24 (or 47%) of them are 1 star. Another 7 reviews (13%) are for 2 stars. So altogether 60% of reviewers gave the heater 1 or 2 stars. That is bad. The complaints from the reviewers generally seemed to deal with low reliability and poor quality. Consumer Reports also reviewed the EdenPure Gen3 Model 1000 and they didn't seem very impressed with it either.
On the other hand the Amish Heater brand comes out looking a bit better. The Consumer Reports review title sums up their finding: "Amish heater" does a good job, but don't expect any miracle. I do think the Amish Heater brand heaters look nice and if a nice looking wood cabinet is worth paying a couple hundred dollars extra then this might be your choice.
The Bottom Line
The infrared heaters that are typically advertised run $300 and up. Other than having an attractive cabinet they offer no special energy saving benefits that a traditional electric space heater would offer. On top of that certain models have very poor reviews. So, I would conclude that the infrared heaters are not worth the cost.
Consider Cheaper Alternatives
The Optimus H-5210 Infrared Quartz Radiant Heater is only $30 and its reviews are very high. Over 50% of owners gave it 5 stars and 80% of people gave it 4-5 stars.
They also have an oscillating dish model with remote control: Optimus H-4438 14-Inch Energy-Saving Oscillating Dish Heater with Remote Control. It runs about $60 and 4 of 7 reviewers gave it 4 or 5 stars.
Those are just a couple examples. You can undoubtedly find other low cost infrared heaters on the market. Or just run down to Home Depot and find yourself a standard electric heater.
Keep in mind with space heaters that there are safety concerns. Look for a unit that has automatic safety off and especially look for models with a switch to turn it off if it tips over.
February 19, 2010
Flexo at Consumerism Commentary writes You’re Not That Great: 4 Ways to Combat Overconfidence
And in the article he has pointers to a Kiplinger quiz to test your confidence level. Taking that quiz is probably a good exercise to gauge your own confidence level. If you're overconfident then that could lead to some risky financial mistakes.
Jim at Bargaineering gives a pointer to a nicely made little documentary Lemonade: It’s Not A Pink Slip, It’s a Blank Page on how being laid off may really be an opportunity.
ABC News had a nice story about how Bob Moore the owner and founder of Bob's Red Mill Natural foods gave the company to his employees.
When I buy airline tickets I end up generally getting the cheapest ticket. So sometimes I'm on Southwest, sometimes United, etc. The price is a key priority for me as far as airline tickets go. If the price is fairly close I might chose one airline that I prefer over another airline I dislike. But if I spread around my flying then I end up spreading around my airline miles rewards. If I consolidated all my flying on one airline and stuck to the same airline I would get more benefit from my airline miles and it could outweigh the cost savings of just hunting for the cheapest airfare regardless of airline.
I decided to check prices and compare across airlines for a few common air trips that we might take. The trips are Christmas trip to visit relatives, Vegas vacation in early summer and a July 4th trip to see relatives. Unfortunately I can't do a total comparison on these trips since Southwest only seems to show prices 6 months out so I can't check the Christmas vacation. Southwest is often the cheapest alternative but I have to book them in advance to get a preferable and discount rate flight. Southwest was cheapest for the other two flights. For the airlines that I could check all three flights there were only two options that were competitive pricewise and offered non-stop flights. For those two airlines Alaska was the cheapest. So in my case Alaska and Southwest are my two cheapest options.
Here is a mostly fictional illustration of different airline fares for discussion sake:
I tried to make those fares somewhat realistic but its contrived to illustrate the point.
If I were to do what I usually do and buy the cheapest ticket for each fare then that would mean flying on American for Christmas, flying United to Vegas and then going on Delta for July 4th. That would get me the cheapest tickets each time. I'd pay $149 + $218 + $250 or $617 total. But if I did that I'd have 1000 airline miles on American, 2000 miles for United and 2000 miles on Delta. At this rate it would take me about 12 and 1/2 years to get a free flight on United & Delta and 25 years to get a flight on American. If I didn't use these miles or keep accumulating miles on these three airlines then I would risk losing the miles due to expiration policies.
How does this really pay off? The benefit of accumulating miles on one airline and not spreading them around is that you don't waste any miles. Right now I've got about 48k miles on one airline, 8k miles on another airline and 18k miles on a 3rd airline. I recently lost over 3k miles on another airline. I can get 1 ticket on the airline with 48k miles. If I had instead consistently flown the same airline for all my trips then I'd have about 78k miles on that airline and could get 3 tickets and wouldn't have lost those 3k miles due to lack of use. Given the frequency that I fly on some airlines the miles I accumulate on them generally never get used and are basically wasted. The flip side to that is that the airlines I fly on most I actually can use the miles from so those miles can translate into a real cash benefit for flying those airlines.
Of course large ticket disparities would heavily outweigh any benefit from airline mile accumulation. If a flight is $200 on United and $300 on Delta then you'd definitely be best taking that $100 flight. A general rule of thumb would be that a $30 difference in a domestic flight ticket price would generally outweigh the value of consolidating airline miles. Most domestic flights are under 3000 miles which would be worth at most $30.
February 18, 2010
The other day we got our statement from our American Express Truearnings Costco card and it included the check for our annual cash back rebate. Our rebate check for the year came to a total of $552 and change
The period covers Feb. 2009 through Jan. 2010. During the period we had a total of $35,475 charges on the card. That works out to a total return for the rewards of 1.55%. The 1.5% is not bad, but not awesome either.
We could have done better. FreeMoneyFinance got a 2.2% return on his cards in 2009. FMF was using a combination of cards over the year and his best one was a 2% return from Schwab but I can't see that Schwab card offered anywhere online now. Theres a Fidelity card with 1.5% on the first $15,000 and 2% after that. That Fidelity card would have given us about $635 for the amount we spent. If we used the Amex card and the Fidelity card to maximize rewards we could have gotten about $730 in rewards. That would mean using the Amex card for 3% back on gasoline, restaurants and Costco purchases and the Fidelity card for everything else. I'll probably want to do some more research to see if switching to another rewards card would be worth it.
Of course $35k is a lot to spend on a credit card. Most of that is our normal spending on bills, groceries, eating out, gasoline, travel spending, gifts, etc. Some of the spending (10-20% maybe) was for our rental properties and a tiny amount (1% or less) was for work expenses that my employer reimbursed me for. I put virtually everything I can on the card to maximize the rewards. The main things that aren't on thee card are our mortgage, electric, water, car insurance and garbage.
I should state for the record that I do not carry a balance on the card and its paid off in full every month. If you carry a balance on a credit card then you should not be charging anything more on the card for the sake of rewards.
February 17, 2010
Here is a story from the Wall Street Journal via Yahoo news about student loans: The $555,000 Student Loan Burden. The title eludes to an extreme example case where a Doctor has $555,000 in student loan debt. The Dr. in question finished school in 2003 with $250,000 in total loans.
How did it go from $250,000 to $555,000 in just 7 years? The article says this: "It is the result of her deferring loan payments while she completed her residency, default charges and relentlessly compounding interest rates. Among the charges: a single $53,870 fee for when her loan was turned over to a collection agency."
Obviously this is an extreme, worst case kind of example. But while its not common to start out with $250,000 in loans it is easy enough to have say $25,000. If $250,000 can balloon to $555,000 then I could see $25,000 grow to $55,000 too.
There are a few things that caused her loan to grow so high.
Deferring the loan. This means she didn't make any payments on the loan while she was a resident. When you defer loan payments the interest will accumulate.
Default charges. She missed loan payments and was charged for it. I assume this refers to late fees and the like. They also cite that $53k fee for handing the debt to a collection agency which seems a bit extreme.
Compound Interest. All the while the interest on the loans has been piling up. Its very easy for a loan to grow significantly in size if you aren't making payments. With 7% interest your debt will approximately double in 10 years.
It may seem obvious but if you don't pay your student loans then the balances will go up. Interest will pile up, you'll get charged fees and the debt will only get bigger. But I guess the Doctor didn't understand this. The Doctor in the story says : ""Maybe half of it was my fault because I didn't look at the fine print,..." I don't know how realistic it is to lay the blame on "fine print". The interest rates on your loans and consequences of not making payments should be pretty obvious. I would say that most of the fault was hers for taking on a burdensome debt and then not making her loan payments.
She should count herself lucky that she's a doctor with a significant income potential so she has a realistic shot to pay off the loans.
February 16, 2010
While watching the Suze Orman show the other week they had a call which gave a good comparison of term to whole life life insurance. There was a caller who had life insurance for himself and his wife. The man had a 30 year term policy and the woman had a whole life policy. Both policies were for $1 million in coverage. The woman was 35 years old and the man was 39. The woman paid $1000 a month and the man paid $100 a month.
So to sum up:
Man with term : Age 39, Policy 30 year term, Coverage $1M, Monthly cost $100
Woman with whole life : Age 35, Policy = Whole life, Coverage $1M, Monthly cost $1,000
Now its not an exact equal comparison since its a 39 year old man compared to a 35 year old woman. But their ages are close enough that I think its pretty similar.
The same amount of whole life coverage was 10 times as expensive as a 30 year term policy.
I've actually seed this it said before that whole life generally costs 10 times as much as term life. So here's an example of that.
The annual costs are:
30 year Term Life : $1M coverage = $1200 /year
Whole life : $1M coverage = $12,000 / year
$12,000 a year is a pretty hefty amount to sink into insurance. Of course you are building cash value so its not as if you're throwing that money away. But I don't think most families have $12,000 available for such a thing.
What if you lose your job? Will you still be able to make $12,000 annual payments to keep the whole life policy? It would be a lot easier to manage a $1200 payment than a $12000 payment.
One thing I find a bit annoying about trying to compare term life to whole life insurance is the lack of information on whole life available. It seems if you want to find out how much whole life costs you have to have a consultation with a salesman who is going to try and sell you whole life. For term life you can easily get quotes online at places like QuickQuote.com. So anytime I see information on actual costs for a whole life policy I find it useful.
February 14, 2010
91% of American households have some form of subscription television service. Traditional cable companies have been gradually losing market share over the past 15 years. The satellite TV companies (Dish Network & DirectTV) have taken larger and larger chunk of the market. The TV Basics website has data on 'alternate delivery systems' which includes % of households that have DBS or Direct Broadcast Satellite or traditional cable.
Using the data from the TV Basics site I made a graph showing the % of total households with No pay TV, Cable service, Satellite TV or other forms of pay TV (big satellites or other misc. systems):
I would assume that a large part of the increased penetration of pay services is due to rural subscribers signing up for satellite TV. People in rural areas could not get cable due to cables limited penetration. So the increased % of households with pay service may be at least partially a reflection of rural viewers having access to a pay service for the first time with the advent of the satellite services.
February 12, 2010
Brip Blap gives a cautionary tale about his life in the salt mine. Personally I've been lucky or lazy enough to not fall into that kind of work trap.
Adam a guest poster at Get Rich Slowly finishes his 3 part series on a nearly disastrous rental investment read all 3 parts: part one , part two and part three.
Generation X Finance wrote Social Security – What You Need to Know About Benefits, Coverage, and Eligibility which has lots of good info on how social security works.
Yahoo has an article about credit cards with 79.9% interest rates.
The national unemployment rate just dropped to 9.7% in January 2010. Thats still a high number but it is good to see it go down if only marginally. The unemployment rate differs substantially between people with college degrees and those with a high school diploma or those who failed to finish High School.
You can get unemployment data from the BLS. You can break down unemployment figures based on sex, race, education level and age. They only break it up for education level for people over 25 years old, so all the data below is for people over 25 years old.
Current unemployment rates for January 2010:
High School Drop outs = 15.2%
High School grads = 10.1%
College Degree holders = 4.9%
The unemployment rate for people with college degrees is around half the national average. High school drop outs are unemployed significantly more than people with more education.
If you look back over the past 10 years the trend is pretty consistent.
The ability to obtain and keep employment is another benefit of education. College grads have a clear advantage in much lower employment rates.
February 11, 2010
When I was in high school I seriously thought about joining the military. It didn't end up happening for a number of reasons. Military pay wasn't one of the things I thought about at the time. There are a variety of compelling things about military service but the pay isn't often considered to be one of the pros of the military.
The Army has a page discussing compensation and doing a comparison between Army pay and civilian jobs. I'll look at the Army specifically but the numbers should apply equally to the other services. Someone correct me if I'm wrong but my understanding is that military pay structure is standard across the services so the pay for Navy, Marines and Air Force should be the same for a given pay grade and general situation.
If you look at the Officer job comparison they have compared a civilian "Telecom Engineer II" with a Lieutenant with 4 years service. Their bottom line is that the civilian engineer would end up with $52,652 and the Army Lieutenant would walk away with $68,149. Engineers are well compensated jobs so they are comparing to a highly compensated career field. The Army job comes out well ahead. However this is a recruiting website so I think their claims should be taken with a grain of salt.
Lets look a little closer at their compensation figures..
Civilian job Compensation:
Wages = $64,752
Health Care = -$12,100
Total = $52,652
The wages are pretty realistic. I found alternate source from Payscale.com for wage information for electrical engineers based on years experience. They have the median pay for 1-4 years at $53,844 to $67,249 and for 5-9 years at $61,477 to $80,977. So making $64,752 at 4 years seems about right roughly speaking.
The health care figure is inflated. People do not pay $12,100 out of pocket on average. This USA Today article on health care costs says the average family total premium cost is $13,375 but that "The average employee with family coverage paid 26% of the premium". So your out of pocket costs would average only $3,477. They inflated the cost of the health care by stating the full amount of the insurance costs, yet most of that is paid by the employer.
If you adjust for the inflated health care cost then the total compensation for the civilian job would actually be $61,275.
Now lets look at the Army officer.
Army Lieutenant Compensation
Salary = $47,908
Housing = $13,092
Food Allowance = $2,433
Special Pay = $1,800
Tax Advantages = $2,916
Health care = $0
Total = $68,149
The housing and food allowances are dependent on the assumption that you are married with children.
You can find the current housing allowance with this page. The figure they give is for Kansas City, Mo and its for 2008 with dependents. The 2010 number for dependents is $14,616 and no dependents is $12,744.
Current food allowance is found on this page. For 2009 the rate for officers is $223 a month or $2,676 for the year. You may or may not get special pay and that depends on your specific service duties.
Looking at the minimum you might get I would assume the housing allowance with no dependents and then remove the special pay. That would result in total pay range of $66,244 to $69,916.
There are pay other bonuses that the military jobs may qualify for such as hardship duty, foreign language proficiency or flight pay.
Bottom line, the Army officer job is well compensated compared to a civilian job when you include the housing and food allowances and other bonuses.
February 10, 2010
Do you think women or men are better at investing? I found a number of studies that showed women performed better at investing then men.
Merrill Lynch did a survey report to compare the investing habits of women and men.
The reports had the following paragraph: "Women are far less likely than men to hold a losing investment too long (35% of women reported having done so at least once vs. 47% of men) or wait too long to sell a winning investment (28% vs. 43%). Men are also more likely than women to allocate too much to one investment (32% vs. 23%), buy a hot investment without doing any research (24% vs. 13%) and trade securities too often (12% vs. 5%)."
In various ways women made fewer mistakes than men in handling money.
The report goes on to say: "Of men who reported buying a stock without doing any research, 63% said they did it again, whereas only 47% of women repeated the mistake. Nearly half (48%) of all women who waited too long to sell an investment did it again, but 61% of men repeated the mistake. And among men who ignored the tax consequences of an investment decision, 68% did it more than once while only 47% of women did."
Not only did women make fewer mistakes they also learn from their mistakes and are a lot less likely to repeat them.
Another study reported on by the New York Times looked at the performance of women who ran hedge funds versus that of men who ran hedge funds. The article says:
"BusinessWeek notes that according to the research, from January 2000 through May 31, 2009, hedge funds run by women delivered nearly double the investment performance of those managed by men.
On average, funds managed by women produced annual returns of 9 percent, compared with a 5.82 percent average annual return by funds run by men.
Furthermore, in 2008, during the height if the financial crisis, funds run by women were down 9.6 percent versus a a 19 percent decline in those run by men."
This survey found that :
"To wit, approximately half the men surveyed (49 percent this year and 53 percent last year) viewed themselves as the primary financial decision maker, compared to only 12 percent of women this year and 13 percent last year.
- Not surprisingly, eight in 10 women (83 percent) felt it was important that both partners should contribute to household finances, compared to only six in 10 men (65 percent)."
Of course these are just generalizations. Individual men and women won't necessarily follow the trends and there can of course be men who are better than women and vice versa.
So whats the point of this? For some of us its just an interesting report. But for some people this might help us improve our own finances. If you had previously assumed men were better at investing then this data should make you reconsider. I think women should have more confidence in their investing instincts and some men should trust the opinions of women a little more.
February 9, 2010
The College Board has data on the trends of college costs. You can find a spreadsheet with lots of tables and figures here. I’m going to look at just the annual cost increases for tuition, fees and room and board for public 4 year colleges.
Currently the average cost of a year of tuition and room and board plus fees at a 4 year public college is $15,213 for the 2009-2010 school year. The cost of public college has tripled since 1980. The average annual increase is 6.5%.
First take a look at a chart showing the annual percent change in the cost of college from 1980 to 2010:
The maximum annual increase was for the 1981-1982 year when costs went up 12.5%. But back then inflation was pretty rampant. The smallest change as an increase of 1.9% in 1995-1996.
Now lets look at the figures if adjusted for inflation:
If you take inflation into account then the average annual change was +2.7%. The worst year is the 2009-2010 year when college costs went up 8.2% above inflation. There are a few years when costs went down relative to inflation and the 1980-1981 year was the largest decline at -3.1%.
College costs are a bit volatile. As you can see in the charts the increases bounce up and down. I can only guess why its so inconsistent, but it may be due to things like government policy changes or reactions to economic conditions. Over the long term public college costs have increased at a pace around double the rate of inflation for the past 3 decades.
It should be kept in mind that most people get some form of scholarships or need based financial aid so looking at the 'retail sticker price' for college without considering aid doesn't give us the full picture.
Note that this information is specific to public 4 year colleges and trends for private colleges, 2 year schools (community college or junior college) or cost for online schools is going to be a bit different. Though in general college costs have been rising in fairly similar patterns for any kind of college.
February 8, 2010
Since we got our home air sealed and insulation increased I've been tracking the heat costs of this winter versus last year.
January heat bill was down 43% from last year, however it was a little warmer this year compared to last.
January 2009 heat bill =$166
January 2010 heat bill = $95
January 2009 degree days = 592
January 2010 degree days = 563
I've now got 4 months of data from Oct 2009 through Jan 2010 to compare to last winter.
Its been a little bit colder this winter:
2008 Oct - 2009 Jan Degree Days = 2,310
2009 Oct - 2010 Jan Degree Days = 2,390
2008 Oct - 2009 Jan Heat cost =$604
2009 Oct - 2010 Jan Heat cost =$398
Total accumulative heat savings $206 or 34%
With 4 months of data I'm fairly confident that the 30% savings we've been seeing is accurate.
February 7, 2010
On USA Today they have this fancy web gizmo that lets you put in an income figure and a year and see what the tax rate would have been. I found about about it from an article on Get Rich Slowly. The tool calculates the federal income tax and the employment withholding for social security / medicare for a single person. If you play with it a little bit you can use it to find out your effective federal tax rate given an income figure going back from 1940 to 2010. I wrote about the history of taxes a couple times myself in my previous article History of Effective Tax rate for Median Income Families. My analysis was a bit different since I looked at median income for a family. But this tool is in the same basic category of data.
Playing with the tool is interesting. Start by putting a salary figure into the calculator. Say $50,000. Next it will tell you that the tax bill in 2010 is $10,188 or 20% effective rate. There is a graph in the main portion of the gizmo. If you move your mouse across that graph it will show you the tax rate for each year. It will inflation adjust the salary amount and calculate the tax rate for that year. Or you can hit the 'x' button next to the year and then enter a new year.
I checked the tax rates for a few different income levels and found out how the effective tax rates varied over history.
For someone making $50,000 in 2010 dollars the effective tax rate has varied from 14% in 1946 to 23% level by 1981. $50,000 income is not far from the current median income level.
Select years and tax rates:
Now lets look at someone with a higher income level of $150,000 in 2010 dollars. That person would have seen their effective tax rate bounce between 25% for 1946 and high of 41% in 1981.
Anyway, its a neat gizmo and I like how it lets you quickly find the tax rates for previous years. The only drawback that I think it has is that it is based on a single person with standard deduction. It would be nice if they let you run the numbers for a married couple and for people with kids.
February 5, 2010
Free Money Finance posted a reader question Help a Reader: Saving versus Mortgage The reader is $125k under water on their mortgage and looking into maybe paying down the mortgage some to dig out of the hole and maybe refinance. But then the comments took a turn into discussion on the ethics or morality of going into foreclosure.
Jim at Bargaineering talks about expired medicine with Insider’s Look at Drug & Vitamin Expiration Dates
But I don't personally feel that comfortable with expired drugs or vitamins. I *know* that my wife wouldn't.
My Money Blog talks about Selling Back Really Old Textbooks Online and gives a link to the site BigWords.com. At Bigwords you can get quotes on multiple sites that buy books and other sites that you could sell the book.
I have an older computer in my living room hooked up to our big screen TV. The computer is hooked to the TV via an HDMI connector and its got a wireless internet connection. I can stream TV via Hulu.com and watch videos via Netflix online. I can surf the web, play video games and look at digital photos. I've got a wireless keyboard with a built in mouse pointer so that I can control the computer from the comfort of the couch. Since I already had the computer it didn't cost me anything to buy the system and I paid under $100 for the parts to hook it up. If you have an older computer that you aren't using then setting it up in your living room to connect it to your TV can be a fairly inexpensive way to get internet video in your living room.
Note: Connecting your computer to your TV will require some basic computer know how. This article isn't meant to be a complete guide but more of a basic idea.
Hooking the computer to the TV takes a few connections. You need video, audio, internet plus a way to control the computer.
If your computer and TV both have HDMI connectors then you've got it easy. You can just get an HDMI cable and plug it right into your HDTV. Some computers like mine have what is called a DVI connector. For those you can get a HDMI to DVI connector. Your TV might have a VGA connector and if it does then that also makes it easy as that is the standard video output from computers so you can just get a longish VGA-VGA cable. If you don't have any connections on the computer that match your TV then you could get a new video card. Cards nowadays seem to come with HDMI pretty standard and you can get a new card with HDMI for as little as $30. The tricky part for me was getting the video resolution set at the right dimensions so it would display property on my TV.
Generally HDMI can carry audio but the output from your computer likely doesn't carry the audio on the HDMI. So you'll have to connect the audio separately. If you have any other connector like DVI or VGA then you'll need to connect the audio too. You can do that with a cable adapter that splits a 1/8" jack output on your computer to a red & black RCA connector pair. I have the audio connected to my stereo system. You may be able to route the audio straight to the TV. This isn't the best quality audio in the world but it works. Newer computers than mine may have better audio connections built in. Or if you really value higher quality audio signal you can spend a few bucks and get a sound card with an digital output port like an optical port. Such cards are on Newegg for as little as $10.
It is probably easiest to setup wireless internet. A USB wireless network adapter plugs straight into a USB port on your computer and lets you get wireless network access. The adapters can be bought for $20 or less nowadays. If you don't have wireless internet or prefer to save some money you could also use a long ethernet cable. A 50' cable is as little as $7 on Newegg. However the wired cable may be a hassle depending on where your network hub is versus your TV setup. I had a wired network connection for a while but I had to snake the cable across a couple rooms and kept tripping over it.
Keyboard & mouse
If you hook up a computer to your TV you could just use a standard old keyboard & mouse connected directly to your computer. But you'll have to be able to put the keyboard and mouse on a surface that you can use them on. In my front room theres no good spot for a computer setup with keyboard and mouse. I prefer a wireless RF keyboard with built in mouse. This lets me use the computer from the comfort of my couch. I bought a wireless keyboard with built in joystick style mouse for around $40. It connects via a USB and sues RF wireless.
Total cost to hook up a computer to TV to act as an entertainment server : less than $75 or as little as $10.
To take my old computer and turn it into a media center to hook up to my big screen TV today I'd need just four items. My shopping list on Newegg would be:
Wireless USB network adapter = $17
Wireless RF keyboard = $33
6' HDMI to DVI cable = $6
6' audio adapter cable = $4
With shipping & handling to my home the total cost comes out to $72 and change.
You could do without the wireless keyboard and wireless internet and get it set up with ethernet cable and standard keyboard & mouse plugged into the computer. That would make your minimum costs at around $10-$15 for the audio & video cables.
Build a DVR
With the addition of a TV tuner for your computer you can also use your computer as a DVR. A decent TV tuner like the Hauppage WinTV HVR-1250 can be bought for under $50. (Note this particular card is PCI-Express and may not be compatible with older computers.) With this kind of card you can watch and record live TV on your computer. A computer TV tuner will handle over the air broadcasts or plain cable signals pretty handily, but it might be capable to decode new digital cable or satellite TV signals.
Other ways to get computer or internet feeds on your TV.
Maybe you don't have an old computer or maybe you just don't want a big old computer sitting in your living room.
Network media server
You can also serve video and audio from your computer via a accessory devices like the Hauppage mediaMVP. The device connects to your network and then hooks to your TV. Using it you can watch video and listen to music on your TV. Cost is about $130. I haven't used this device or anything like it myself and this is just an example of such devices out there.
Game consoles. Xbox and PS3 let you stream Netflix to your TV. This is an easy way to watch Netflix. You can also get things like Youtube on Wii or PS3 consoles.
Mac Mini. If you're going to buy a full fledged computer with the intention of hooking it to your TV then the Mac Mini may be a good choice. You can get a mini for $600. Here is a guide for connecting a mini to your TV.
February 4, 2010
From November 2008 to February 2nd, 2010 my Roth IRA is up 34.6%. I'm including the $10,000 that I put in for calendar years 2008 and 2009 but excluding the $5000 that I just put in for 2010. +34% is a very good increase for a year and a couple months. But the market as a whole has been up substantially in 2009. Theres a saying that a rising tide raises all boats. This leaves me wondering if my +34% increase is any good or if I might have done better simply throwing my money into index funds. I decided I should compare my performance to the standard stock indexes and other investments to see how it stacks up.
What Benchmarks should I use?
I'm going to compare my performance to the standard stock indexes. The S&P 500 is a standard for measurement of US stock market. Its not the best index or the smartest investment but its a standard benchmark. You can also look at the other major indexes like the NASDAQ and the Dow Jones Industrial average. I'm also going to compare against a very simple portfolio of 3 index funds. I've talked about Lazy porfolio investing before. Its a simple way to get a more diversified portfolio with a few index funds. One of the Lazy portfolios that I like is the 'Margaritaville' which consists of 33% each in Inflation index bond index, US stock market and foreign stock markets. You can get that by buying Vanguard funds. VIPSX, VGTSX and VTSMX. Its diversified and simple.
If I take the S&P 500, NASDAQ, Dow Jones and the Margaritaville portfolio and then figure their performance for the period Nov. 2008 to Feb. 2010 I can use them as my benchmarks to see how well my Roth IRA performance stacks up.
Performance from Nov, 2008 to Feb. 2010:
My Roth IRA = 34.6%
S&P 500 =15.9%
Margaritaville = 20.6%
Dow Jones Industrial = 10.3%
NASDAQ = 27%
The performance figures above are adjusted to include dividend payments or capital distributions. My Roth IRA came out ahead in this period compared to all the benchmarks.
What if I'd thrown my money into a mutual fund?
Comparing my performance to mutual funds is not too straight forward. With the Yahoo mutual fund screener I can look for the performance of funds over the past year. They measure the 1 year performance going back 12 months from today. So that would be from Feb. 2nd 2009 to Feb 2nd 2010. Back in Feb 2 2009 my Roth IRA was valued at about $7700. So my Roth IRA balance has gone up 72% in the past 12 month period. Using the screener I can find funds that have gone up 50% or more in the past year. Only 1850 funds have gone up 50% or more. There are 19,550 funds total in their database. So the performance of my Roth IRA for the past 12 period has been better than 90% of all mutual funds. But that is comparing my Roth IRA performance to safe treasury or bond funds that you shouldn't expect high growth from. If you narrow the screen down to just US stock funds then 670 funds are up 50% or more out of 8400. That is less than 8%. Either way I'm beating over 90% of the mutual funds.
The 34% return I got in my Roth IRA from Nov. 2008 to Feb. 2010 has been better than indexes or most mutual funds. This is confirmation that I did in fact out perform the market.
Of course this is just 1 years performance. This does not mean I'm especially skilled at stock picking. I might have totally lucked out in this past year and stumbled randomly into a few stocks that just happened to perform extremely well recently. Who knows, maybe next year the S&P500 and the Dow will beat my investments by 20%.
I'm not going to draw any conclusions on this other than the confirmation that my 34% is better than average and better than just going with an index.
Disclaimer: Nothing here should be viewed as investment advice in any way shape or form.
February 3, 2010
This morning I saved myself $12.50 a month. It took me maybe 30 minutes total. That adds up to $150 a year in after tax savings. Not bad for half an hour of effort. How did I do this? I finally went and canceled two services that I should have canceled months ago. I didn't really 'save' money but I instead stopped wasting it.
I removed two "leaks" in my budget. These expenses were minor compared to most of my spending and thats a big part of why I hadn't cancelled them before. The items in question are my Angies List membership and a web site hosting service. I hadn't used either for months. I'm thinking of these as "leaks" because they seem like a dripping faucet. A small amount of money being dripped off once a month on a regular basis. The expenses are small enough to not really be noticed much, or at least small enough to let me procrastinate taking action on them. But while the leaks seem small the impact adds up over time.
I signed up for Angie's list back in August. I signed up for a one month membership and decided to give it a try. I found the service to be a good one but I didn't end up really using it for anything much. So it sat unused since then. That was 6 months ago. If I'd cancelled it after the 1st month then I would have saved $7.50 x 5 months = $37.50.
The website host service that I had I originally signed up for about 2.5 years ago. I had the site setup so I could learn (play around with) web programming tools. I actually used it for around a year so initially I put it to good use. But after that I stopped using the website and it just sat there. But the $5.00 a month bill kept coming in automatically. I sat on the account for a while. Initially I figured I'd use the site more in the future. But eventually I realized I wasn't using it and that I was just wasting $5.00 a month. Even after that it still took me a few months to stop procrastinating and simply log in and cancel the account. Total money wasted is approximately $90 for 18 months of service at $5 a pop.
Cancel stuff as soon as you stop using it. Don't delay. Procrastination can cost you money. This is a bad habit that I have that I need to fight.
You may have some "leaks" in your budget too. Possibly a Netflix membership which you haven't used for a few weeks. You could have a gym membership for a gym you never visit. Maybe you signed up for World of Warcraft but you haven't played it for a couple months. Whatever you might be spending money on if you are not using the good or service then you should cancel it.
February 2, 2010
My Updown account is currently down 0.2% for January. The S&P 500 was down 3.7% that month. I beat the index by 3.5% which is not bad.
Overall I'm up a total of 4.8% since I started in March 2008.
I didn't make many trades this past month. I bought some Verizon at $30.80. It is one of the stocks I had considered buying for my real world Roth IRA.
I track my net worth monthly on NetworthIQ.
This month I'm making an adjustment to what I track by adding my wife's Roth IRA account. I wasn't previously tracking her Roth IRA in the net worth total. Her account wasn't all that high and I don't have routine easy access to the balance figure. So I just didn't bother tracking it. But now she's been drawing cash to fund her Roth which makes it look like our cash is going nowhere so I figured I should really add the Roth IRA into the total. Adding my wife's Roth IRA makes about $15,000 difference to the total net worth.
So while the January 2010 figure is now at $627,348 which is up $10,494 from Dec. 2009 that includes a bump of roughly $15,000 from adding my wifes Roth IRA to the tracking. So the net worth is really down $4,506 in January.
There weren't any major changes in our net worth otherwise. Basically the value of our real estate dropped some and our cash balances dropped a bit. My retirement was up some not counting the addition of my wife's Roth IRA figures.
February 1, 2010
I found a site that has a history of the credit ratings of GM from the ratings bureaus.
Here are the ratings actions for Standard & Poor's on GM
Date -- action
Nov 1981 -- Lowered AAA/A-1+ to AA+/A-1+
Nov 1986 -- Lowered AA+/A-1+ to AA/A-1+
Dec 1987 -- Lowered AA/A-1+ to AA-/A-1+
Feb 1991 -- Lowered AA-/A-1+ to A/A-1
March 1992 -- Lowered A/A-1 to A-/A-1
Feb 1993 -- Lowered A-/A-1 to BBB+/A-2
Oct 1995 -- Raised BBB+/A-2 to A-/A-2
Jan 1998 -- Raised A-/A-2 to A/A-1
Oct 2001 -- Lowered A/A-1 to BBB+/A-2
Oct 2002 -- Lowered BBB+/A-2 to BBB/A-2
Oct 2004 -- Lowered BBB/A-2 to BBB-/A-3
May 2005 -- Lowered BBB-/A-3 to BB/B-1
Oct 2005 -- Lowered BB/B-1 to BB-/B-2
Dec 2005 -- Lowered BB-/B-2 to B/B-3
The rating was lowered a dozen times in 21 years. It was lowered 4 times in a 14 month period from Oct 2004 to Dec 2005. By 2005 they at non-investment grade (aka junk bond) rating levels. Looking back at this history it seems no surprise that GM ended up in bankruptcy.
In hindsight does it seem like a good investment? Do you think you'd buy bonds in a company like this with this history of ratings? Of course hindsight is 20/20 but the ratings history is definitely something to consider when buying a stock or bond.