Do Not Rollover Your IRA or 401k to State Farm

I just saw an banner advertisement suggesting you 'Talk to a State Farm Agent today about a Rollover IRA'.    My first thought was that they were going to try and sell you an insurance policy or variable annuity for your IRA.   Well its not that bad but their investment options are not good.     The State Farm rollover site talks about their investments and their mutual funds all seem to have 5% loads and moderately high expenses.   For example the State Farm S&P 500 index fund (SNPAX) has a 5% load and a 0.76% fee.     Thats particularly bad for a index fund.    I can see the argument that a load might be worth it if the fund manager does a great job of selecting stocks and out performs the market.   But with an index fund you're paying for a simple index and the manager isn't doing anything special.   Theres zero reason to buy a index fund with a load versus one without.  On top of the load the State Farm fund has a relatively high 0.76% fee.  That may not seem like a lot but it adds up and there are index funds with much lower expense fees.

Instead of buying such a fund through State Farm you should instead seek out a cheap index like the Vanguard 500 Index fund (VFINX).   The Vanguard fund has no load and a very low 0.17% expense ratio.    Lets say you have $10,000 to rollover and you are 35 years old.  If your investment grew at annual rate of 7% a year then here is how the load and expenses for the SNPAX and VFINX funds would compare :

	State Farm	Vanguard
	$10,000	$10,000
less load	$9,500	$10,000
30 yr @7%	$        54,531	$  65,840

With that Vanguard fund you'd end up with 20% more money at retirement compared to the State Farm fund.

You should avoid putting your retirement with a company that only wants to sell you funds with sales loads and high fees.

Do not rollover your IRA to State Farm or any other company with similar investment options.   Instead go with a company like Vanguard that offers very low expense funds or Scottrade, Schwab or Fidelity if you want a wider variety of investment options.


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Go Buy Some Ear Plugs

This topic has nothing really to do with personal finance.


If you don't own some ear plugs then I'd recommend you pick some up next time you have the chance.

You can get a 20 pack of Howard Leight disposable ear plugs on Amazon for little over $3.   Those are disposable versions which would be good to have on hand for the rare use. You'll probably find a box in your local store for similar prices.   I think I've seen them for sale in both the first aid section and the home improvement section.   If you need ear plugs for more extended uses like in the workplace then you may want to invest in some higher quality reusable ones.

A good pair of earplugs like this will get rid of a LOT of noise.  Ear plugs have a NRR spec. which is the Noise Reduction Rating.  So an NRR of 33 would cut the noise level by 33 decibels.   30 decibels is the difference between a vacuum cleaner and a quiet room.

I really wish I'd considered buying ear plugs a long time ago.    There have been several times in my life which I recall where I really could have used ear plugs but simply hadn't thought to buy them ...

• Sleepless nights being tortured by the "plip"  ... "plip" ... "plip" ... "plip" ... ... ....  "plip"... "plip" ...  sound of the dripping rain spout right outside of my bedroom after a rainy/snowy night.  
• That one night in that one hotel that hosted a wedding party that lasted till around midnight or 1AM the night before I had to catch an early morning over seas flight.   I distinctly remember trying to shove rolled up tissues into my ears and ear plugs would have done the trick perfectly.
• Half of the airplane rides I've been on in my life.
• Very loud sporting events, especially in door arenas.

There are lots of other good uses for ear plugs.    You should wear ear plugs to protect your ears from extended exposure to loud noises.  If you work in a  job with a lot of noise then you are probably already familiar with using earplugs at work to avoid noise induced hearing loss.   But most of us have some exposure to loud noises while doing things like mowing our lawns or using a leaf blower or anything along those lines.

Oh, and in case you are objecting because you've heard “You shouldn’t put anything smaller than your elbow in your ear”   You should rest assured that ear plugs are safely designed and will not damage your ears.

Well anyway thats my pitch for buying some ear plugs.   I'd wished someone had told me about something as simple as buhing ear plugs years ago so I could have slept well those nights when the down spout went "plip" ... "plip" ... "plip" ... "plip-plip" ... ... "plip" and drove me insane at 2AM.


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Is Online Shopping Bad for the Environment?

This time of year we've been getting a lot of packages delivered to our house through online shopping and other people shipping us gifts.   Ok to be honest we're always getting lots of packages delivered since we do most of our shopping online nowadays taking advantage of stuff like Amazon Subscribe and Save and other online discounts.   Its convenient to have things delivered to our door.   But I have wondered if those UPS and Fedex trucks driving all around might be wasting a lot of gas.

My initial assumption was that it had to be more efficient for delivery trucks to run routes than for everyone to make individual trips to stores.  

Lets say a truck holds 100 packages and makes 50 stops in its route.   Each individual stop in the route only adds a small incremental amount to the total trip distance.  You might go a couple blocks out of the way to add a house or even have stops fall in between other stops.   The delivery companies will certainly do their best to optimize the trips because they know that saves them gas which improves their profits.   If you took the same 100 packages and had 50 individual people go and get them from a local store you'd have 50 round trips to stores which is certainly many extra miles of wasted gas and time.   

I confirmed my hunch not too long ago when I read about this study on the topic:

Grocery delivery service is greener than driving to the store
They say :
"University of Washington engineers have found that using a grocery delivery service can cut carbon dioxide emissions by at least half when compared with individual household trips to the store."

They have a couple graphics on their site that illustrate the kind of thing that happens in the example I gave.

I looked around a little more to find other sources. 

I also found another study Carnegie Mellon Study Finds Shopping Online Results in Less Environmental Impact

and they say :
"A new study by Carnegie Mellon University's Green Design Institute found that shopping online via Buy.com's e-commerce model reduces environmental impact with 35 percent less energy consumption and carbon dioxide emissions than what is produced in the traditional retail shopping model."


Thats two academic resports that support the claim that online shopping is actually more efficient.

I have confidence that the answer is that online shopping isn't bad for the environment and in fact saves gas over individuals making separate trips to local stores.

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Can you Save Money by Making Your own Soda at Home?

I just saw an add for a $25 promo credit on Amazon if you buy a SodaStream soda maker.:

At the top of the page they advertise the $25 deal :
SodaStream Fountain Jet Home Soda Maker Starter Kit

The $25 promotion expires December 31st.

I've seen these home soda maker devices before but hadn't looked at them too much.    This one is on sale for $69.95 and then with $25 credit that makes the net cost about $45 for the device. 

The starter kit comes with the machine to make the soda.  It also has a rebate form for a 60 liter canister of CO2.  There are some soda mix samples included but I couldn't seem to find much detail on what and how much is included.

Hows it work?  

You buy the machine, you get a CO2 canister and a soda mix.   You then mix water and the soda mix and inject it with CO2 to make your own carbonated beverages.   After buying the machine you also have to buy CO2 and soda mix to make soda.

How much does the soda cost?

The CO2 canisters are $15 for a 60 liter canister.   That comes out to 25¢ per liter.
The soda mix is around $4-6 per packet and will make 12 liters.   I'll go with a middle cost of $5 so we'll call that 42¢ per liter.   Theres some variation there based on the mix you buy.

Your ongoing cost is about 67¢ per liter of soda.   There are 33.8 ounces in a liter and 12 ounces in a typical can of soda.  

This gives a cost of around 24¢ per 12 ounce serving for the CO2 and soda mix.

That is just for the CO2 and the soda mix.    You also have to consider the cost of the machine.   If you make a ton of soda with this thing then the cost of the machine will have less impact on your overall soda cost,, but if you only make a little bit of soda then the machine cost is more significant.

For example.   Lets say you're single and you have 1 soda serving a week and use this thing for 5 years.   Thats going to add up to a total of 52 x 5 = 260 soda servings.    Well the net cost of this machine after the $25 credit and accounting for the $15 worth of CO2 is $30.     That would mean your cost of the machine over all the soda you use equates to an extra 11.5¢ per soda.

On the other hand if you're a family of 6 who consumes 1 serving of soda daily then your consumption is 42 as much and your machine cost is just 0.3¢ per soda.

Giving variable usage its hard to know the exact impact of the machine cost.   We could ballpark it and give a range of total cost of about 24¢ to 36¢ per 12 ounce serving.   That would include the 24¢ for CO2 and mix and then a fraction of a cent to ~12¢ for the machine cost to account for a wide range of usage.

Bottom line cost estimate : 24-36¢ per serving.

Is it a good buy?

Well to figure if a Sodastream is cheaper we have to know how much soda normally costs.

If I go to the store today and buy a 12 pack of Pepsi or Coke I'll pay around $5 or $6.   Thats 42-50¢ per serving.     But sometimes I can get 12 packs for around $3.50 or less.  Thats only about 29¢ per can.   If I were to instead buy the generic store brand soda from Safeway today I could get it for $2.25 or only 18.75¢ per can.

This gives me a range of cost for store soda of 19-50¢ each.

I've got a cost of 24-36¢ for the SodaStream and 19-50¢ for cans of soda.    Whether or not you save money with the SodaStream will depend on what kind of soda you buy and if its on sale versus how much soda you make at home.

You may or may not save money with a SodaStream.  It depends.   But it seems to me that if you're looking to save money you can shop for soda on sale and get a reasonable price that is probably about the same or better than what the SodaStream will cost you.

Other pros and cons

Making soda at home with a SodaStream or similar device will have other benefits or negatives too.

Other benefits of home made soda:
Won't waste unused soda.
soda won't go flat
Lots of flexibility to make custom soda mixes

On the other hand the soda may not be the same quality or taste as some popular brands.   If you want Coke then theres no option to make your own Coke at home and another cola version is just not the same.


Whats the verdict? 

You may or may not save money with a SodaStream.   If you really want to save money then waiting for sales on the cheap store brands are usually the cheapest route.   A SodaStream would give you flexibility to make different mixes of soda and make smaller servings on demand.


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