January 31, 2013

Another Sensationalistic Fake Tip Story?

Yahoo reported this story Person claiming to be pastor leaves waiter note: ‘I give God 10%. Why do you get 18?’

In short the story claims a pastor left a note on a tip saying ... oh yeah the title of the article actually pretty much sums up the story doesn't it?  

I distinctly remember another story not too long ago that found its way on Yahoo news which was about a rich 1%'er who left a 1% tip with a note "get a real job".   Then the day after that the story was revealed as a hoax.   It isn't hard at all to fake a tip and write something controversial and then apparently the 'news' will pick it up and run with it and 1000 people on the internet will get indignant.

I smell something fishy.   Lets wait and see if tomorrow or the next day this alleged zero tip receipt from the pastor is revealed as just a photoshopped hoax...

January 30, 2013

Shadowstats is Wrong on Inflation

Shadowstats is a website and newsletter that claims that the government inflation numbers are wrong.   The Shadowstats site claims the government is incorrectly calculating inflation and that the data is intentionally manipulated by the government for political reasons.  

They say in their 2004 article "GOVERNMENT ECONOMIC REPORTS: THINGS YOU’VE SUSPECTED BUT WERE AFRAID TO ASK!" on the consumer price index that :

"Inflation, as reported by the Consumer Price Index (CPI) is understated by roughly 7% per year."

They have also been predicting hyperinflation to occur within the year since 2008.

If you use some common sense and a little math I think its relatively easy to refute the claim that inflation is really 7% higher than government reports.

Lets just look at the past 10 years.   The governments BLS inflation calculator says that over the past 10 years inflation has been 28% total or about 2.5% compounded annually.    Shadowstats would have us believe that this number is 7% lower than the real figure so they are claiming that inflation has really been more like 9.5% a year.    Ok, but what does 9.5% annual inflation look like?   Over 10 years an annual inflation rate of 9.5% would cause prices to be 2.48 times as high.

Now comes the common sense part:   Has the price of EVERYTHING gone up 2.5 times in the past 10 years?   Its true some things have more than doubled.  Gasoline has gone up a lot (and then down a lot then up a lot then down a lot then up a lot)  It seems that health care and college tuition have gone up substantially too.     But there are clearly many things that have NOT doubled in cost or even come close.

Housing certainly has not doubled in cost in the past 10 years.   According to the Case-Shiller housing index  the composite index for 20 markets went from 132 to 144 between Oct. 2002 and Oct. 2012 (latest data).   Thats only 9% increase over 10 years.  

2003 Toyota Camry had an MSRP of $19,000 to $25,000 range.   Todays 2013 Toyota Camry has MSRP range of $23,000 to $30,000.    Thats more like a 15-25% increase, and clearly not double.   This is just one example but I'm sure you'll find similar pricing changes across most new cars.

Health insurance premiums have more than doubled in the past decade.  See figure 15 of this KFF report.  But thats an exception and even that hasn't gone up the 2.5 multiple that Shadowstats claims would demand.

Look at the typical household budget and you'll see that housing and transportation are the two largest expenses and those costs have certainly not gone up anywhere near the 9.5% annual rate.  In fact in the past 10 years they've gone up closer to 1-2% rates.    Its not much of a stretch to see that if the top 1-2 expenses haven't doubled then all spending has not doubled either.   Only the extreme worse items have doubled in the past 10 years.   Thats the exception and not the norm. 

Shadowstats is wrong on inflation.

January 28, 2013

Why Some People Think Landlords Are ALL Evil Slumlords

Excuse me while I step on my soap box...

We often see people who have negative viewpoints of landlords and who seem to think landlords are all villainous slumlords.  I'm a landlord and my father has been a landlord across four decades so I have some experience from the landlord perspective.    Naturally I may get a little offended when I see random people disparaging landlords as a group of heartless opportunists.   But its a somewhat common thing and I think it has a logical reason.  I think the general negative view of landlords comes from peoples experiences and perspectives.  

Lets say that 10% of landlords are awful and 10% of renters are awful.   Thats just an arbitrary assumption for arguments sake.   Almost everyone rents a home at some point and most people end up having a few rentals in their lives.   Its not at all unusual to live in 5-10 different rental properties.   Its therefore common for renters to end up facing 1-2 awful landlords.   So most people rent and most people end up with a bad landlord at some point.   You may luck out and have only bad landlords.  This ends up resulting in a lot of people with negative experiences with  landlords.   Either because 1-2 of their landlords across 5-10 properties was bad or they lucked out and had 2 bad landlords in 2 rentals.   It is statistically likely that most people have had a bad landlord at some point.   That tends to sour peoples view of landlords and they make negative generalizations of landlords.

On the other hand very few people are landlords.  I'd guess around 5-10% of the population are landlords.   Landlords will see many renters over time and get exposure to good the bad and the ugly among tenants.  But most people have no experience at being a landlord and do not see the landlord perspective.

Therefore the end result is most people rent at some point and experience a bad landlord.   So its easy for people to end up with a negative impression of landlords all due to 10% awful landlords which is actually equal to the 10% awful renters originally assumed for this discussion.

Now I'm not saying that 10% of landlords or tenants are awful, thats just a made up number to illustrate the example.   There may indeed be a higher percentage of bad landlords out there. I doubt there are a lot of broad objective data on the quality of landlords.   I did find one study from a program at a University that surveys students who rate local landlords at the University of Pennsylvania.   They have a total of 58 landlords rated and the average score is 3.68 out of 5.   20 of 58 landlords rated 4 or higher while only 11 landlords had scores under 3.     Thats almost twice as many good landlords as bad landlords in this particular survey.   Of course this is a pretty small sample so its hard to draw any general conclusions but its at least one data point supporting the idea that most landlords aren't awful slumlords.

Another reason that landlords may have a general negative reputation is the situation in general.   Landlords are occasionally faced with the difficult task of having to evict a tenant.  Evicting someone is not something a landlord really wants to do.  Trust me as a landlord I'd prefer to never have to evict anyone and I'd much prefer they all pay their rent promptly and never break their lease terms.   Eviction isn't something a landlord in their right mind would do without good reason.  Eviction is a costly, time consuming bureaucratic hassle.   Simply put its easy to view landlords as the 'bad guy' if they are the ones 'putting people out on the street'. 


January 27, 2013

Infation versus Wages for 2002 to 2011

I've seen a couple blogs talking about wages versus inflation.   Theres a concern lately that wages aren't keeping up with inflation.   Personally every individuals wages and expenses take different paths so what matters to you is your own wage history and your own spending.    Looking at national averages really only gives a very abstract situation.  Still you don't want the national situation to be negative in general.

I got data on wages and inflation from the BLS.

Here's how the wage and benefit costs have changed annually versus inflation :

The cost of wages and the cost of benefits are different for employers.   Employees usually only really look at or even see the wages portion.   You know your hourly pay or salary.   However most employees also get substantial compensation via benefits which our employers pay for.   The cost of the benefits to employers may include reduction in benefits, so the % cost here isn't too useful from the employee perspective.  

If you just look at wage change minus inflation change then its still been generally positive :

If you add up the cumulative changes from 2002 to 2011 then wages went up about 28.5% on average and inflation went up about 26.9%.   The total for the latest 3 years shown isn't as great from 2008 to 2011 wages were up 8.1% but inflation rose 8.4%.   So we lost a little ground in the latest 3 years.

 Of course these numbers don't mean much to an individual who may or may not have gotten a wage increase.   Also the numbers don't really say what the  "average raise" was but instead show the average in wages paid.   Theres a difference there.   A 3% increase in wages doesn't mean people got 3% raises, but that total wage spending was up 3%. 


January 25, 2013

Best of Blogs for Week of January 25th

Every Friday afternoon I share some of the more interesting or notable posts that I have seen in the personal finance blogs and other sources for the past week

Reuters has an article on Traveling for Healthcare, but Not That Far
I wouldn't be interested in 'medical tourism' overseas but I wouldn't mind flying to Oklahoma to save 75% on an expensive surgery.

AP press has good news that Study: High school grad rate highest since '76
The increase in graduation rate is apparently due to the economy since high school kids realize getting a job is even harder without a high school diploma.

An article from The Atlantics answers the question How Low Are U.S. Taxes Compared to Other Countries?
 they compare effective tax rates for on $100k income including both social security plus income taxes and they look at taxes as a percent of GDP.

PlanetMoney tells us about The Fake Economist Who Conned A Nation
That happened in Portugal.  Here in the USA we avoid that by just getting our financial advice from  TV pundits with no credentials at all.

WSJ has A Trick for Cheaper Flights Hiding in Plain Sight


Next Year ObamaCare Could Pay a Typical Uninsured Family $8,462

Did you know that in 2014 one the new elements of the Affordable Care Act (aka Obamacare) will kick in which will subsidize health insurance for low/mid income families?   You may have heard something about that detailed buried in amongst the partisan hyperbole when they were debating the law.    Did you know that those subsidizies will be in the form of tax credits to help families pay for health insurance if they aren't eligible for insurance from their employer?  

 The Kaiser Family Foundation has a calculator to estimate the amount of the subsidy based on age, income and some other factors. 

The tax credit mandated by Obamacare to subsidize health insurance are expected to be around $8,462 for a family of 4 with 42 year old policy holder and a $55,000 annual income.

The subsidy will vary based on the details.   A 40 year old single person with the same $55,000 income would not get any subsidy as their individual insurance is much cheaper.

Now don't get all excited, this subsidy is not available if you can get insurance from your employer.   So for most people theres no changes and no subsidy.   The tax credit is meant to help people pay for health insurance who don't already get insurance from work.    You can also only get the credit if you buy insurance through an exchange.   And the credit is setup to pay part of your insurance so families will often also have a share of the expense to pay themselves.   Its not like the government pays you $8462 and you get to do whatever with it, that amount is based on an assumption that insurance will cost $12,597 and the family pays the other $4,135.   Thats what the KFF site says.  

One Lease I'd Take : $69 /Month Electric Car

I normally don't think leasing a car is a good idea.   The Autoblog site ran a story about a dealer in Illinois that was advertising a $69 per month 24 month lease deal with $2100 in fees on the Mitsubishi i-MiEV.   : Mitsubishi i available for just $69 a month in this outrageous lease  I visited the site of the actual dealer O'Brien Mitsubishi but I see no $69 lease advertised there.   Its possible they already sold them out and removed the deal, I have no idea.

In any case if I had the opportunity to lease a car for $69 a month I think I'd do that in a heartbeat.  Especially if it was an electric car.   Lets say you just commute 25 miles round trip to work and your car gets 25 MPH which is relatively common situation.   That means you spend about 1 gallon in gasoline per work day.    That alone equates to about $70 in gasoline per month.   Once you add in the cost of depreciation on the car it makes even more sense to get a $69 lease.   Of course you do have to pay for the electricity but thats significantly cheaper than the gas.   Also that $2100 in up front fees is a hefty sum.  But all in all this would be a pretty great lease deal if you were looking for a good daily commuter option.    Now on the other hand a reasonably good mileage older used car would still possibly be a cheaper option overall.


January 24, 2013

How To FIgure How Much An Investment Grows Over TIme with Interest

On one of my older articles History of new car costs and average inflation a commenter said that $1500 would grow to over $3 million in 64 years with just 3% interest.   I'm not sure how they did the math or what mistake they made but with 3% interest you'd have $9946 after 64 years.  Nowhere near $3 million.

Here is the formula to see how much an investment will grow with a given interest return over multiple years :

Growth rate = ( 1 + [interest rate ] ) ^ # Years

The interest rate is expressed in decimal i.e. 3% interest is .03   So for example if you had 3% interest over 64 years that would make the growth rate :

= (1 + [interest rate ] ) ^ Years
= (1 + .03 ) ^ 64
= 1.03 ^ 64
= 6.631

Once you know the growth rate you can find the future value by multiplying your investment by the growth rate.  If you start with $1 then you'd end up with $6.63... $100 would give you $663, etc.

 Therefore if you start with $1500 and the growth rate is 6.631 then your investment after 64 years of 3% growth would be $1500 x 6.631 = $9946.50

In Windows operating system you can use the x^y key on the scientific layout of the calculator program.  The X^Y key is shown in yellow here :


January 22, 2013

Official Unemployment vs Unemployment, marginal and Underemployment 1993 too 2012

How many times have you seen this kind of statement in the last few years? :  "The official unemployment rate cited by the government is 7.8% but the REAL unemployment rate is 14.4% if you include the underemployed."    Of course the underemployed and marginally attached workers are out there when the economy is good too.   When unemployment was 5% were people running around making sure we were all aware that the 'REAL' rate was 9.2%?   Not that I recall.

I pulled the numbers for a few years back off the BLS Table A-15 charts Here's a look at the official unemployment rate versus the larger rate including marginally attached and underemployed part time workers from 1994 to 2012 :

(click for larger size)

Those numbers are monthly seasonally adjusted figures for
U-3 Total unemployed, as a percent of the civilian labor force (official unemployment rate)
U-6 Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force

As you can see in the chart the broader U-6 unemployment measure plus the marginally attached and underemployed workers is generally a few points higher than the simple unemployment measure.   The numbers are roughly proportional as well.    The marginal and underemployed number is around 60-80% of the unemployment number.


January 18, 2013

Best of Blogs for Week of January 18th

Every Friday afternoon I share some of the more interesting or notable posts that I have seen in the personal finance blogs and other sources for the past week

DoughRoller discusses Quarterly Estimated Taxes: Due Dates and Payment Strategies
Generally self employed individuals can be required to pay quarterly taxes.
They also tell us about Stop Loss—How Investors Can Lose the Right Way

PlanetMoney talks about how Cat Beats Investors In Stock Market Challenge
I wonder if we ever hear about the experiments where the humans beat the animal?

Yahoo lists 3 Big Myths About the Federal Debt Limit


Maximum Lifetime Social Security Taxes at $141,067

I just saw another person comment on the internet saying something along the lines of "I've paid more to Social Security than I'll live long enough to get back" and this was from someone who is currently 60.    Some people have this idea that they've paid some sort of giant kings ransom into Social Security.   However the maximum anyone has paid is not as high as you might think.

The maximum amount anyone could have theoretically paid into Social Security is $141,067.  

That number assumes someone worked for 76 straight years paying the maximum amount which is not really feasible. 

If you worked the past 47 years at maximum income then your total Social Security taxes paid would add up to $138,961.

Thats a little closer to feasible but still unlikely that anyone would have a 47 year long uninterrupted work history starting at age 18 and making the maximum income.    But there are probably 1 or even 2 people in the entire country who have paid that much due to some odd circumstances.

You can figure the maximum Social Security tax paid simply by multiplying the social security tax rate over the years by the maximum income.   For example back in 1937 the tax rate was 1% and the maximum income was $3,000 so the maximum anyone paid was $30 or in 2008 the rate was 6.2% and the max income was $102,000 so the max tax was $6,324.   Note that I figured in the 2% payroll tax cut for the 2011 and 2012 years.

That persons lifetime maximum income would sum up to $2,489,900.    They would have paid 5.67%  of that into Social Security.    They would be eligible for the maximum Social Security benefit which would be $2,513 per month or $30,156 per year.    If they live just 5 years they'll get all their money back and then some.   Everyone else would have a shorter pay back period.  Thats because the maximum income level has the least generous benefit rate. 

Of course I'm not talking about inflation impact or the return of investment of the money.  I'm simply looking at the nominal value of the taxes paid.


January 17, 2013

Wal-Mart To Save the Day and Fix U.S. Economy

Just read this article :  Wal-Mart to Hire Vets, Buy American which leads with the line "Why wait on Washington when there's Wal-Mart?"     You can read their press release at Walmart to Boost Sourcing of U.S. Products by $50 Billion Over Next 10 Years

Wal-Mart's plan is to hire 100,000 veterans and increase spending on U.S. made goods by $50B over the next 10 years.   Horray!  We're saved!    Our economy will turn around in no time thanks to private industry finally shoving government aside and taking charge of the situation!   No more waiting for government to do everything for us and it only took five years of economic stagnation for Wal-Mart to stop sitting on their thumbs and leap straight into action.

Now I'm not going to wish failure on Wal-Mart, but if unemployment isn't under 6% and GDP up +5% by 2014 then we know who to blame: Wal-Mart.

Wait... no, I guess thats not what we're being promised here?    To its credit the article later adds: "They sound impressive when you first hear the numbers but when you begin to look at them, it's a very tiny scale that doesn't add up to much," said Stacy Mitchell, senior researcher at the Institute for Local Self Reliance, a nonprofit national research organization"    Yes thanks, someone has clearly noticed that this is not a very large change at the national scale.
Hiring 100,000 veterans over 5 years equates to 20,000 veterans a year.   Wal-Mart employs 1.4 million people so thats a very insignificant 1.4% difference.   I'm sure Wal-Marts annual turn over rate is much much higher than 1.4% so they can simply achieve this by giving veterans hiring preference and not increase staffing in order to meet that goal.     Theres no indication that there will be a net increase of jobs or any impact to unemployment.   It may help veterans which is a good thing, but it may have no impact on the economy as a whole.

By comparison the White House issued Executive order 13518 a few years ago which then resuled in 34,000 veterans being hired by the federal government in just the first half of 2011 and  28% of federal government hiring going to veterans.

Buying another $50B in U.S. made goods over 10 years is a $5B annual impact.   The US has manufacturing of $1.8T so a $5B annual boost to US production would be a 0.27% increase.

Now don't get me wrong, this isn't a bad thing at all.  I think its a great initiative and I'm glad Wal-Mart is doing it.   But this certainly should not be positioned as private industry fixing things after the government failed.   "Fixing things" for our economy is a tall order and this is not going to do it.


January 16, 2013

Average Student Loan Debts 1989 to 2010

Over on FMF recently a commenter named Noah said he'd heard that the total amount of student loans went from $100B to $1 trillion from 1990 to 2012.    Sounds about right.

Part of that is inflation, part of it is due to more people going to college and part of it is from increased costs of college and finally lower state funding of financial aid impacts debt levels too.  It all adds up to increasing debt levels.

WE can get some specifics from the Survey of Consumer Finances which has data every 3 hears from 1989 to 2010.   I pulled the numbers out of the SCF 2010 data and compiled the chart below.

This is showing two things.  First is the left axis and the blue bars which is the average amount of debt among people who have loans.  Of course most families do not have student loans and those families are not considered in the average.    THe red line on the right axis is the percent of families who do have student loan debt.   So for example in 2010 only 19.2% of families had student loan debts and the average they carried was $25,600.  

Here is the data in table format as well:

average % families
1989 $5,400 8.9%
1992 $7,100 10.7%
1995 $8,000 11.9%
1998 $13,000 11.4%
2001 $13,700 11.8%
2004 $16,700 13.5%
2007 $21,500 15.2%
2010 $25,600 19.2%

Of course the numbers have gone up since 2010 but thats the latest data the SCF has compiled.


January 14, 2013

UpDown Performance for 2012

Practice invest

I have not  been actively trading in Updown this year. I only made two trades all year long and those were back in February. Even so, I wanted to keep track of my positions and see how well they've done.    My summary of performance for my portfolio versus the S&P is shown below.

My last update covered June through August 2012.

Here is my monthly performance for the entire 2012 year :

Freeby50 S&P 500 diff.
Jan-12 2.8% 4.4% -1.6%
Feb-12 2.4% 4.1% -1.7%
Mar-12 2.0% 3.1% -1.1%
Apr-12 -0.4% -0.8% 0.4%
May-12 -1.6% -6.3% 4.7%
Jun-12 3.9% 4.0% -0.1%
Jul-12 4.4% 1.3% 3.1%
Aug-12 -1.3%* 2.0% -3.3%
Sep-12 1.1% 2.4% -1.3%
Oct-12 -2.4% -2.0% -0.4%
Nov-12 -1.8% 0.3% -2.1%
Dec-12 0.4% 0.7% -0.3%
SUM 9.5% 13.2% -3.7%

As I noted in my last update my shares of Coca-Cola (KO) are incorrect in the Updown system because UpDown did not properly credit me for a 2:1 stock split.   That had a minor impact on my performance numbers from Sept. to Dec. as well.  However KO is only about 4% of my holdings so it wouldn't change my overall performance too much.

I ended the year on a bad note.  My portfolio underperformed the S&P 500 from August through December.    I only had three months in 2012 where I beat the S&P 500 with 4.7% better in May, 3.1% more in July and barely more at 0.4% in April.

For 2012 I underperformed the S&P 500 by about 3.7%.   My stocks were up around 9.5% and the S&P 500 was up 13.2%.    It may not seem 'bad' to be up by 9.5% in a year.  But I consider it pretty poor performance when you compare it to the S&P 500.   


I could spin this two ways.    I could say that my portfolio was full of stocks that were poor choices as reflected by my 2012 performance below the S&P 500.    Clearly I did not do well versus the index.   On the other hand since I didn't do hardly any active trading during the year I could claim that the poor performance in 2012 is evidence that you really need to be actively involved in your stock trading if you expect to do well.    But maybe the real conclusion is a little of both.  Maybe this set of stocks in my portfolio are bad choices for a 'buy and hold' strategy.   I know if I were to pick stocks with a 'buy and hold' mentality that I'd personally shoot for more blue chip stocks that are more dependable.


This article may contain referral links which pay this site a commission for purchases made at the sites.

January 13, 2013

State Government Debt Levels

The individual states all have varying debt levels.   I found state debt levels on the Census site on State & Local Government Finance.  The figures are from 2010 and are estimated.

The top 5 states are :

California  $ 148,929
New York  $ 129,530
Massachusetts  $   73,940
Illinois  $   61,412
New Jersey  $   60,968

The bottom 5 states are :
Wyoming  $     1,514
North Dakota  $     2,198
Nebraska  $     2,330
South Dakota  $     3,483
Vermont  $     3,493

You may notice a trend there that the largest states in population also have higher debt levels while the lowest debt is found among low population states.  Of course the raw debt numbers don't say too much because clearly California or Illinois are much larger states with higher economic output than Wyoming or Vermont.

California may owe almost $150B in debt but on a per capita basis thats around $3,850 per person and by comparison Vermont's relatively small looking $3.5B debt for that small population state is over $5,000 per person.   Plus if you look at Gross State Product (GSP) then the GSP for Vermont's economy is only $28B while California's economy wracks up $2.1 trillion.   The debt / GSP is 12.5% for Vermont and 7% for California.   Either way California's debt level is less than Vermont's as far as per person or in relation to the respective state economies.

Here is the full list of states in alphabetical order with the amount of debt in millions of dollars :

Alabama  $    8,785
Alaska  $    6,381
Arizona  $  13,960
Arkansas  $    4,247
California  $148,929
Colorado  $   16,710
Connecticut  $   30,216
Delaware  $     5,515
Florida  $   41,324
Georgia  $   13,789
Hawaii  $     7,701
Idaho  $     3,872
Illinois  $   61,412
Indiana  $   23,635
Iowa  $     5,140
Kansas  $     6,478
Kentucky  $   14,393
Louisiana  $   17,443
Maine  $     6,034
Maryland  $   24,475
Massachusetts  $   73,940
Michigan  $   32,146
Minnesota  $   11,683
Mississippi  $     6,468
Missouri  $   20,421
Montana  $     4,400
Nebraska  $     2,330
Nevada  $     4,436
New Hampshire  $     8,347
New Jersey  $   60,968
New Mexico  $     8,740
New York  $ 129,530
North Carolina  $   18,853
North Dakota  $     2,198
Ohio  $   30,004
Oklahoma  $     9,963
Oregon  $   13,510
Pennsylvania  $   44,738
Rhode Island  $     9,498
South Carolina  $   15,771
South Dakota  $     3,483
Tennessee  $     5,835
Texas  $   42,034
Utah  $     6,478
Vermont  $     3,493
Virginia  $   25,047
Washington  $   27,478
West Virginia  $     7,144
Wisconsin  $   22,319
Wyoming  $     1,514


January 11, 2013

Best of Blogs for Week of January 11th

Every Friday afternoon I share some of the more interesting or notable posts that I have seen in the personal finance blogs and other sources for the past week

USNews via Yahoo lists 6 Career Myths You Shouldn't Fall For

Consumerism Commentary talks about the $1 Trillion Platinum Coin: The Next Episode of Reality TV

Planet Money had a couple interesting topics with  The North Dakota Town Where A One-Bedroom Apartment Rents For $2,100 A Month and Episode 427: LeBron James Is Underpaid   (note those both have audio episodes)

fivecentnickel covers Extreme Couponing Gone Wrong

GetRichSlowly goes against the flow of most personal finance blogs to say Why “follow your passion” is bad advice, and what to do instead (but the article seems mostly rehashing what Ramit Sethi says)

Apex wraps up the rental investing series at FMF with Real Estate 101: Summary   which summarizes and links to all the articles.


January 10, 2013

The Many Ways That The Internet Saves You Money

Recently DQYDJ asked Do You Do More of Your Shopping Online?  and in that discussion they touched on how the internet can save us money.    That got me thinking about all the various ways that the internet can save you money.

Home buying - Multiple websites help you research home buying.  This abundance of information should help you make a more informed purchase and ought to help save money.   Discount real estate services like Redfin also help cuts costs of  home purchases.
Home Mortgages - You can shop around easily on the internet for loan rates and even use a internet based company to apply for a loan.  I refinanced a mortgage once entirely over the internet.
Auto purchases - When shopping for a car you can find the actual dealer invoice at various websites.  This helps you negotiate a better deal at the dealer.   Sites like Craigslist provide a large market for used cars.
Insurance - You may or may not save money with online insurers but you can at least use the internet to fairly easily comparison shop for insurance rates.

Online Bill payment - Before the internet I paid every bill by writing out a check and mailing it out with a stamp.  Now almost all of my bills are paid automatically and often via websites. This saves you the cost of stamps at least as well as time.
Classifieds - Craigslist provides classified advertisement for free and this was something you used to have to pay newspapers to run an ad.
Gasoline - You can use Gasbuddy to find the cheapest gas station near you.   You can also use online maps to plan the most efficient travel routes which also saves gas and time.
Comparison shopping - Before the internet if I wanted to comparison shop I'd have to drive from store to store or at least sit down and call them on the phone.  This was a pretty time consuming process and so you wouldn't do it much.  But with the internet you can very quickly do comparison shopping via a simple google search.
Online Stores - Amazon.com and similar online merchants are often very competitive on pricing versus brick & mortar stores.  You can save money on a variety of items from books, clothing, electronics, music and even groceries.
Groupon and other Coupon sites  - I don't use Groupon a lot myself but I do use it and similar sites on occasion.  You can quite easily save a few bucks here and there with these services.

Cash Back - On top of all the above you can also often get 1% or more cash back with your online purchases via rebate sites like Ebates   (another blatant plug for Ebates!)
Newspapers - Most people no longer buy newspapers and instead get their news free on the internet. 
Textbooks - College students can now use various online services to buy cheap or used textbooks. 
College Education - Online schools can help you save money versus traditional local schools.  Of course this one depends on the schools in question and where you live.  But at least theoretically online training ought to be less costly than traditional universities.  
General learning - If I need to learn how to do something nowadays I often go straight to google.  I recently figured out how to fix a minor problem with our kitchen stove after a quick google search. 
Coupons and discount codes - You can get coupons and discount promotions online very quickly. 
Travel costs : Airfare, Hotels, and rental cars - There are numerous sites to help you save money on travel costs.  You can comparison shop and book airfare online pretty easily and sites like Priceline or Hotwire help you get discount rates.

I'm sure the list goes on and on with other examples of how you can save money.   In fact its hard to think of any part of my spending that isn't a potential area for the Internet to help save money.    Of course the internet also almost always costs you money.  Most people have to pay for an Internet service and then there is the cost of the computer which we may or may not already own.   There are various other ways people spend money related to their internet use as well.  Its also not a given that everyone will take advantage of the savings opportunities that the Internet gives us.

--This article may contain referral links which pay this site a commission for purchases made at the sites.

January 9, 2013

Rental Comp Data for January 2013

Bit over a year ago I wrote an article documenting the Rental Comp Data for November 2011 for our rental properties.   In that article I checked the rental rates via Rentometer.com and documented them for Nov. 2011.   I wanted to keep a record of previous rates so I could see if rates were going up or down.  Its a bit over a year later so I figured it was time to pull the numbers again.

Here is the current data for our rental properties as of January 2013:


2bed* 3bed 1bed 1bed 3bed

house house apt apt house
10% $700 $695 $425 $400 $950
20% $850 $842 $425 $425 $950
median $900 $995 $510 $460 $1,095
80% $1,000 $1,050 $535 $540 $1,225
90% $1,100 $1,100 $625 $620 $1,295
 # prop                23               21               22               24               53
 dist              0.5             0.8             0.6             1.3             0.4

Comparing the current median numbers to the previous Nov. 2011 numbers we have :

Jan-13 $900 $995 $510 $460
Nov-11 $895 $875 $495 $495
change 1%* 14% 3% -7%

For some reason when I did the comps for Nov. 2011 I listed property 'A' as a 3 bedroom but its actually a 2 bedroom.   I don't know if the rent figures for A in Nov. 11 were for a 2 bed or a 3 bed, it could be either.  So comparing the numbers from 11/11 to 1/13 on property A are not apples to apples.  

Previously Rentometer would have up to 1000 properties in a 1-3 mile radius in its comparables.  Now it seems they've switched to having 20-50 properties within a smaller 0.5-1 mile radius.  This may be more accurate even with a smaller sample.  The rents for 5 houses in my own neighborhood are more meaningful comps then the rents for 50 houses 2 miles away.

Here's some general background info on rents :    I wrote about how to set your rent in the past.   You should get data from a variety of sources.  HUD Fair Market Rents, Rentometer.com and Craigslist are all valuable sources of rent rate information.    I also pointed out in a previous article how I think that spending the extra time to research rent rates is important.   I'm just tracking Rentometer numbers here for my reference but I wouldn't stop there when doing your own research.


January 8, 2013

Manufacturing Compensation in USA versus Other Nations

The United States has a very large manufacturing industry which has been on the rebound in recent years.   While manufacturing has grown in China and other lower cost nations in many ways in recent decades, the manufacturing base in the US is still large.   Our wages and benefit costs for manufacturing are relatively high compared to many countries but still significantly cheaper than some nations.  In fact the compensation costs in the US are cheaper than 15 other nations.  

The data is from the BLS report INTERNATIONAL COMPARISONS OF HOURLY COMPENSATION COSTS IN MANUFACTURING, 2011   (PDF version)    Note that the numbers are more than just hourly wages.   The report covers compensation costs which include wages, benefits and some tax related costs too.   You can dive into the full BLS report for more details and a break down of benefit costs too.

Here are the hourly compensation figures per nation :

(click image for full size)

You'll note that China and India are not on that chart.   The BLS report explains this is due to inconsistent or poor data from those nations but it does cover the compensation for them in 2007 or 2008 and its around $1-2 range.   Its likely grown since then as well, but they are both still quite low.

It may be more interesting to see how much each nation has changed from 1997 to 2011.  
(click image for full size)

There we see the U.S. has increased less than everyone but Taiwan.   Costs in the U.S. are still high relative to most of the world but many nations are catching up while our costs grow slower.


January 6, 2013

Retirees Have Higher Income Per Household Member

Here's an interesting fact: The income per household member is higher for people over age 65 compared to the amount for households under age 65.

The numbers are from the Census Table HINC-02. Age of Householder--Households, by Total Money Income in 2011, Type of Household, Race and Hispanic Origin of Householder 

The income per household member for people age 65 or old is $28,330.    For households under age 65 the income per household member is $27,152.

I previously rote about retiree income levels and pointed out that "Median household income for people over 65 years is just $33,118 compared to a median of $50,054 for the entire population."    But households for people over 65 generally have fewer people in them so the income per household member is higher than the general population of people under 65.    Households over age 65 average about 1.77 people while households under age 65 average 2.77 people.    Median income of $33,118 for people over 65 seems bad compared to median income of $50,054 for households under 65 but its not so bad when you keep in mind that the households over 65 have 1 fewer people to support.

The numbers for income per household member are all average figures so they are skewed higher by the people with high earnings. 

Breaking it down by various age groups we see the income trends :

Age group Income per member
15 to 24  $15,509
25 to 29 $21,541
30 to 34 $22,492
35 to 39 $22,944
40 to 44 $25,368
45 to 49 $28,288
50 to 54 $33,110
55 to 59 $36,511
60 to 64 $35,483
65 to 69 $33,212
70 to 74 $28,930
75 and over $24,002

And here that is graphically :

If you look at the income levels per household member the difference between people in their peak working years and the retirees isn't so drastic.   Income levels per household member for older retirees over 75 years old is significantly less than the peak earning years of 55 to 59.   I assume the drop off in incomes for people over 75 is due to people whos pension or retirement benefits haven't kept up with inflation or whos other incomes have dwindled.


January 4, 2013

Best of Blogs for January 4th

Every Friday afternoon I share some of the more interesting or notable posts that I have seen in the personal finance blogs and other sources for the past week

MyMoneyBlog tells us about Free FACT Consumer Reports: Banking, Insurance, and Employment History  and how you can get free reports from a variety of databases that track your info.

slow week...


January 3, 2013

FREE - Variuos Magazine Subscriptions

You can get a free magazine subscription to various titles like the ones listed below.

First follow this link to Mercury Magazines and fill out their survey.
They will send you an email with a $10 gift certificate.
Next you can then get a magazine subscription for $10 or less for free.

One gotcha is that they will sign you up for automatic renewal so you'll have to cancel that before it renews otherwise they'll renew and I assume they'd bill you.

They have various popular titles there under $10 so this can result in a free subscription for magazines such as :

Redbook- 12 issues
Good Housekeeping -12 issues
Reader's Digest -12 issues
Parenting- 22 issues
Seventeen -10 issues
Marie Claire - 12 issues
Esquire -11 issues
Field & Stream- 12 issues
Teen Vogue -10 issues
Details - 10 issues
Motor Trend -12 issues
Harper's Bazaar -10 issues
Coastal Living -10 issues
Hunting -11 issues
Ski - 6 issues
Sport Fishing -9 issues
Bridal Guide -6 issues

I have not tried this deal yet personally and I'm not sure how long it lasts.

I found this deal on Fatwallet

January 2, 2013

Teacher pay versus Firefighter pay by State

Who makes more: teachers or firefighters?    In most places teachers have higher average wages but in some states the firefighters come out ahead.    Nationally elementary teachers average $55,270 and firefighters average $47,720.   In general teachers make more than firefighters nationally.   But some states thats not the case.

I pulled the average wage numbers for firefighters from the May 2011 State Cross-Industry estimates at the BLS Occupational Employment Statistics pages.  The teachers salary figures are from the Teachers Portal.

Heres all the data showing the average annual wages for teachers versus firefighters :

teachers firefighters
Alabama $47,803  $39,200
Alaska $62,918  $50,910
Arizona $47,553  $44,010
Arkansas $46,500  $34,810
California $67,871  $71,030
Colorado $49,228  $53,900
Connecticut $69,165  $55,740
Delaware $57,934  $45,490
Florida $45,732  $50,770
Georgia $52,815  $37,110
Hawaii $55,063  $53,030
Idaho $47,416  $34,260
Illinois $64,509  $47,300
Indiana $50,801  $45,040
Iowa $49,844  $38,700
Kansas $46,598  $39,750
Kentucky $48,908  $32,670
Louisiana $49,006  $31,670
Maine $47,182  $31,720
Maryland $63,960  $57,220
Massachusetts $70,752  $49,240
Michigan $63,940  $44,430
Minnesota $53,680  $33,760
Mississippi $41,975  $31,120
Missouri $45,321  $41,740
Montana $47,132  $41,520
Nebraska $47,368  $41,900
Nevada $53,023  $57,830
New Hampshire $52,792  $43,080
New Jersey $66,612  $70,160
New Mexico $46,888  $35,280
New York $72,708  $61,240
North Carolina $46,605  $31,540
North Dakota $44,807  $46,610
Ohio $56,715  $42,550
Oklahoma $44,343  $36,780
Oregon $56,503  $57,810
Pennsylvania $60,760  $48,920
Rhode Island $60,923  $48,340
South Carolina $47,050  $32,920
South Dakota $39,850  $39,060
Tennessee $45,891  $36,950
Texas $48,638  $45,530
Utah $47,033  $29,290
Vermont $50,141  $35,550
Virginia $48,761  $47,810
Washington $52,926  $63,040
West Virginia $44,260  $33,870
Wisconsin $54,195  $31,040
Wyoming $56,100  $49,780

I highlighted the states where firefighters make more.  

I'm sure theres a ton of reasons that wages differ between the occupations across states.   Demographics will play a role.   Its possible some states have a lot of younger or older people in one occupation who earn low or high wages based on experience.   Work hours and conditions may vary as well.   We don't know if teachers in a given states work 160 days or 180 and if they have average class sizes of 18 kids or 30 kids.   Same kind of thing goes for firefighters who may work more or longer hours and may have higher or lower staffing levels.

OK now lets look at it another taking the ratio of teacher wages / firefighter wages :

T / F 
Washington         0.840
Florida         0.901
Colorado         0.913
Nevada         0.917
New Jersey         0.949
California         0.956
North Dakota         0.961
Oregon         0.977
Virginia         1.020
South Dakota         1.020
Hawaii         1.038
Texas         1.068
Arizona         1.081
Missouri         1.086
Maryland         1.118
Wyoming         1.127
Indiana         1.128
Nebraska         1.131
Montana         1.135
Kansas         1.172
New York         1.187
Oklahoma         1.206
Alabama         1.219
New Hampshire         1.225
Alaska         1.236
Connecticut         1.241
Tennessee         1.242
Pennsylvania         1.242
Rhode Island         1.260
Delaware         1.274
Iowa         1.288
West Virginia         1.307
New Mexico         1.329
Ohio         1.333
Arkansas         1.336
Mississippi         1.349
Illinois         1.364
Idaho         1.384
Vermont         1.410
Georgia         1.423
South Carolina         1.429
Massachusetts         1.437
Michigan         1.439
North Carolina         1.478
Maine         1.487
Kentucky         1.497
Louisiana         1.547
Minnesota         1.590
Utah         1.606
Wisconsin         1.746

You can see there that theres a huge disparity across the states. At one end in Washington state the teachers make about 84% of what firefighters do and in Wisconsin they make 174%.  

Who should make more?   I don't know.  I guess it depends on if you want your kids to be stupid or if you want your house to burn down.


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