October 30, 2015

Best of Blogs for Week of October 30th

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

Clark Howard's site has a Work from home guide

DoughRoller has a list of 10 Top Rated Online Colleges     And it isn't just scammy for-profit schools, but instead well regarded public schools mostly.


October 25, 2015

Why Do Restaurant Tip Rates Inflate? Slower Increases in Food Prices & Minimum Wage

A while ago I asked Why Do We Tip So Much?   I'd been puzzled why we used to tip only 10-15% but now the norm is 20%.

Just now a thought occurred to me... maybe the reason the standard expected % rate for tips has gone up is that food costs didn't go up as fast as wages?   Its a possibility.   I mean if a burger cost $1 in 1980 and is now $2 then a 15% tip in 1980 would be 30¢ and 60¢ today.  Just about doubling.   But what if wages tripled in that period?    Tips wouldn't have kept pace with inflation so it would make more sense to have a higher % tip.

In 1984 the 15% tip was typical (noted previously).   Today we expect 20% tips.

What has the cost of restaurant food done in that same period?

For that lets look too data chart from the Fed. :
Consumer food prices (away fro home ) were up ~155% from 1980 to today.

Now compare that to income.  From the census 

In 1984 median income was $10,417 and by 2014 it went up to $28,757.

From the early 80's to today, restaurant food prices went up ~150% and wages went up ~180%.

In 1984 the minimum was $3.35 with a 50% tip credit.   So workers would have gotten $1.67 per hour in tips.  (minimum wage history)    Minimum wage for tipped employers (with the tip credit) has been stuck at $2.13 per hour since 1991 where it is today.

 Median hours worked for waiters and waitresses is around 35 hours a week.  

Nationally today waiters and waitresses average $10.40 an hour.   (BLS data)    With a $2.13 minimum they're getting $8.27 in tips on average.

From an old Occupational Outlook Handbook said that "In 1984, median annual earnings (excluding tips) of full-time waiters and waitresses were $9,400."

I'm finding it hard to believe that annual wages for waiters were that high excluding the tips.    I'm thinking that might be an error and that they probably mean to say including tips instead.

If I start with annual wage of $9,400 in 1984 and then work forwards then it goes as follows:

$9,400 in total wages in 1984 would have been a combination of minimum wage and tips.   Assuming a weekly work week of 35 hours that works out to $5.16 per hour.   Minimum wage in 1984 would be $1.67 so they would have made $3.49 per hour in tips.   Thats then $6351 in tips and $3039 in wages.   Assuming a 15% tip rate then the food served would have to be about $42,340 a year to get to that $6351 tip total.

$42,340 in food in 1984 would then grow to $107,967 per year in 2015.
For the $9,400 in 1984 to grow the same as wages in general that would have to hit $26,320 today.
Minimum wage on 35 hours a week would give just $3913  so they'd have to make $22,407 in tips.
$22,407 in tips a year on $107,967 of food equates to just about ... drum roll.... 20% tip rate today.

So theres my answer :

Due to slower increases in minimum wage pay for tipped employees and slower increases in food costs tips would have to go from 15% to 20% in the past 30 years in order for tipped workers to retain the same relative incomes.


October 23, 2015

Best of Blogs for Week of October 23rd

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

Bloomberg had an article discussing You've Been Offered a Ton of Money. Should You Take It?


October 21, 2015

How Wasteful Is It to Leave The Fridge Door Open

Whenever I see the refrigerator door left open for too long I can almost feel my blood pressure go up.    I react like someone has attached a vacuum hose to my wallet and is sucking $20 bills out of it.    I don't really know why I have such a automatic negative reaction to an open fridge door.   Maybe my parents drilled it into me as a child growing up or maybe I just have a instinctual dislike for what I consider wastefulness.   But turns out its really not all that bad.

I looked at several sources and it seems the consensus agreement is that  leaving the fridge door open a little while too long doesn't waste much energy to be concerned about.

A Reddit thread discussed the topic a while ago.   Someone there did the math to calculate the energy it requires to cool down the air that escapes when you open a fridge door for 20 seconds.  They concluded that it takes "0.0002 USD to heat all that air".    

The Portland General electric utility did a study on wasteful fridge use.  
"It turns that if you never opened the door, they would use about half the annual projected energy consumption listed on the familiar yellow EnergyGuide cards"
They measured how much energy is used by keeping a door open different amounts of time from 5 seconds up to 10 minutes.   Unfortunately (and very annoyingly) they didn't label the actual values so they've just got unlabeled bar graphics.    At least they confirmed that the longer the door is open the more it uses.    But I can't easily tell if its even directly proportional or not.   I zoomed into their graphic using paint and then added gridlines to count the unit height of the bars.   Seems the usage per time isn't proportional.  I figure it roughly :

seconds energy
5 1
10 2
30 2.5
60 3.5
120 6.5
300 20
600 29

They also look at opening and closing the door two times versus leaving the door open for a longer period to see if its better or worse to open and close when you get an item and return it or just leave it open the whole time.

They concluded its better to open and close twice than to leave it open based on their measurements.   Suppose though that it depends on how long you take.   If it only took you 30 seconds total that would be less energy than if you opened and closed for two 10 second intervals based on their data from how much energy it takes to leave a door open a specific period.

Michaelbluejay.com says that :
"Home Energy magazine says door openings account for 7% of fridge energy use, assuming 42 door openings a day.  But the Institute of Food & Agricultural Sciences at the University of Florida (link no longer available) says poor open/close habits waste 50 to 120kWh a year, which would be 10-24% of a 500 kWh/yr. fridge.  They don't say whether this is too-frequent opening, or leaving open too long when opening, or both."

But that seems to contradict what Portland General said when they concluded that half of the energy use is when you never open the door.

So we've got anywhere from 7% to 50% of usage based on opening/closing the door.   That variation may be due to the changes in fridge design.   Maybe as they've gotten more and more efficient they require less energy to remain cold when the door is cold so now opening/closing the door uses up more of the consumption versus the past.  Just a theory.

A Phys.org article Energy mythbusting: The truth about those energy-saving tips cites research from a Michael Blasnik saying :

"the moment you open the door, the cooled air rushes out, and it's a fairly trivial loss, he said. Most of the refrigerator's coldness is held not by the air but by the contents, and those contents won't warm up significantly in the time it takes you to decide between the leftover pizza and last night's meatloaf.
Obviously, leaving the door open all the time would waste energy, because your refrigerator would never stop running, Blasnik said. But closing the refrigerator door quickly will save you a dollar's worth of power a year at most, his research shows."

If we assume that worst case 50% number then thats a few bucks  month.   A full size 24' cubic fridge uses about $90 a year.   Half that is $45 a year.   Thats 12¢ a day roughly.   People open and close their fridge probably a couple dozen times in a day and total usage there is probably more like 1/2¢ per door opening/closing.    If I assume that this is a normalish 10s period and then use the chart Portland General made then we could guess it wastes maybe another 1/2¢ to leave a fridge door open a full minute instead.

Ideally I'd really like to measure it myself by using a kill-a-watt meter to measure actual usage for leaving a door open varying times like Portland General did.   But I don't have the ability to do that easily.  I'm not going to mess with our fridge at home like that just out of curiosity.   Suppose it won't do any real harm but it just isn't convenient.  Maybe next time I have a rental vacant I can do some testing, but that would be an empty fridge and may not be valid comparison.

No matter how I cut it, best or worst case scenario we're talking in the order of anywhere from $1 to $20 a year in total cost from someone leaving fridge doors open for longer periods of time.   It could be as little as 0.02¢ to leave a fridge open 20 seconds to 1/2¢ to leave a fridge open for a full minute.

It of course adds up over time and its not good to leave a fridge open for long periods without reason.   But leaving a fridge open for a minute or so really only costs a fraction of a cent worst case.  Its nothing for me to get bent out of shape about.


October 18, 2015

Free Domino's Pizza Delivery with ShopRunner

I just posted a list of the merchants that offer free Shoprunner shipping.   I noticed Domino's was in the list.   At first it seemed odd to me, but actually it is a nice benefit of Shoprunner.    Domino's normally charges a $2.99 delivery fee for home delivery.   But if you're a Shoprunner member you can get delivery for free.   Thats a $2.99 savings every time you order a pizza.


List of Merchants on ShopRunner

Shoprunner offers free shipping for a coalition of a variety of online merchants.

If you have an American Express card you can get Shoprunner for free.

Below is the current list of merchants participating in Shoprunner.   This list is dynamic and will change over time so best to check Shoprunner to make sure a specific merchant is still in.

Adam's Golf
AEO Factory
AG Jeans
Alexis Bittar
Alice & Olivia
American Eagle
American Giant
Andrew Marc
Babies R Us
Blue Nile
Blue Sky Scrubs
Boston Store
Brooks Brothers
Callaway Apparel
Calvin Klein
Charm & Chain
Chefs Catalog
Cole Haan
David's Cookies
Eastern Mountain Sports
Easy Spirit
Eddie Bauer
Everything But Water
FAO Schwarz
Five Star
Franklin Covey
GH Bass
Gore Apparel
Helly Hansen
Hudson Jeans
Jimmy Jazz
JR Dunn
Lord & Taylor
Lucky Brand
Nascar.com Superstore
Neiman Marcus
Neiman Marcus LastCall
NFL Shop
Nic + Zoe
Nine West
Olly Shoes
Original Penguin
Pennington & Bailes
Perry Ellis
Rebecca Taylor
Reeds Jewelers
Select Blinds
Shop PBS
Sole Society
Stuart Weitzman
Taylor Made
The Jeweler's Wife
The Limited
The Organized Parent
The Perfume Spot
Threads 4 Thought
Tidy Nirvana
Tiger Direct
Tommy Hilfiger
Tory Burch
Toys R Us
Under Armour
Wilson's Leather
Wireless Emporium
World Wide Stereo


October 16, 2015

Best of Blogs for Week of October 16th

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

DQYDJ points out that You Need to Have Savings In Your 20s
because apparently some people actually think otherwise

Dough Roller discusses Student Loan Consolidation vs. Refinancing–Do You Know the Difference?


October 13, 2015

Percent of Income You Should Save If You Start Saving For Retirement At Various Ages

The general rule of thumb I've seen quoted for how much you should save for retirement is usually around 10% or 15% depending on who you ask.   This kind of rule of thumb is based on some assumptions and one of those assumptions is how long you save.    I would expect that the number of years its assumed you work and save into retirement is probably around 30-40 years based on someone working most all of their adult life.   In other words the rule of thumb takes it for granted that you start working at some age like 25 years old and you save the 10-15% your entire working life until you retire around 65.    So it assumes you work 40 years and save 10-15% that whole time and then benefit from the growth of your retirement account over that same 40 year period.   Now this is fine for figuring general retirement plans.    But hey, we all know that a lot of people don't start saving the first day they start working.   Some people end up changing careers, etc and may have to play catch up with retirement savings at a later date.

If you start saving at varying ages then how much of your income should you save towards retirement?

He is the short answer :

age target %
22 10%
25 12%
30 15%
35 19%
40 24%
45 29%
50 37%
55 46%

So simply put if you start saving from $0 on the age in the left column then you ought to try and save the % of your income in the right column.    A 22 year old could target retirement savings of 10% but a 50 year old ought to save 37%.

I figured the table above based on the following assumptions.   a) your income will increase 3% a year, b) your investments will grow at 8% annually, c) you'll use the 4% withdrawal rate at retirement, d) you'll receive social security payments enough to replace 20% of your working income, e) you won't need to replace ~7% of your working income due to lack of social security/medicare taxes during retirement, f) you also wont' need to replace the % of income towards retirement savings

So working through an example.   Say you start your retirement savings at age 35.   If you save 19% of your income then that will grow over 30 years to be enough to replace about 53% of your working income.   Your working income less 7% for SS/medicare, less the 19% savings gives you about 74% of your income to live off during the working years.  If your social security replaces 20% of your working income then replacing 53% of your working income with your retirement savings will give you the same money post retirement that you lived off during working years.


October 9, 2015

Best of Blogs for Week of October 9th

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 points out you can use Plastiq: Pay Tuition, Rent, or Taxes With Credit Card at 1.5% Fee   The 1.5% deal is for Mastercard only.

PlanetMoney talks about healthcare spending in their podcast Episode 655: Pay Patients, Save Money

RetireBy40 celebrates their 5 years Blog Anniversary

October 8, 2015

Cheapish Options for Shutterfly $20 off $20 Deal

Shutterfly has a promotion to get $20 off of an order of $20 or more.   Use promo code FIRSTGIFT now through October 13th.

But theres a big catch,, shipping is not covered.   Shutterfly shipping is kinda pricey.   I think part of their business model is to make profits off shipping and offer steep discount deals on their regular prices.  I mean who doesn't like a 100% off sale ... until you see that shipping is $8.99.     But theres still great products on Shutterfly and $20 off $20 is a good deal as long as the shipping is reasonable.   You can get a variety of personalized photo items for a few books.   Magnets, mugs, prints, etc.

Here's a list of items I found and the net cost (mostly if not entirely the shipping) if you use the current $20 off deal :

1. Metal Book Display Easel for $0.99   (note these seem to have poor reviews)

2. 8-9 custom greeting cards for $5.99
For example the Flurries And Flakes Christmas Card

3. Photo Plates  for $5.99

4. Five 8x10 photo prints for $2.99

5. 133 of the 4x6 prints for $7.99 which works out to 6¢ each

6. 19 5x7 prints for $1.99 or 20 for $2.49 (50¢ for one more print is hardly worth it)

7. Photo mug for $7.99

8. Three 3 x 5 (or 3x3 or 2x3) magnets for $6.49

9. set of 4 2x2 magnets for $3.99 or two sets for $9.22

10.  Two 4.5 x 5 magnets for $5.24 or 3 of them for $8.06

I've bought their photo mugs, magnets and photo books and have been happy with the quality.    The website is pretty good too.


October 2, 2015

Best of Blogs for Week of October 2nd

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

Barry Ritholtz of The Big Picture discusses ‘Never buy a boat’ and other rash financial advice

PlanetMoney has some interesting discussion of price clubs like Costco and the new Jet.com site with their podcast The Anti-Store


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