Best of Blogs for Week of May 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

DoughRoller answers Are Dave Ramsey’s Investing ELPs Good for Your Wealth?

No Nonesene Landlord covers Renting to Family Members and Friends
My version is : don't.

DQYDJ made a A Dividend Reinvestment Calculator for EVERY Stock (Including DCA!)

--

Discount Pay as You Go Cell Phones under $5 a month

Long while ago I wrote about getting cell phone service for $5 a month.   But then for quite a while it seemed that such cheap plan rates had disappeared.  Nowadays (based on TV ads) it seems that an unlimited cell phone plan for $40 a month is a great deal.   But lately I've heard about some MNVO's that have some pretty cheap rates and minimum prices.

Here's a few cell phone service providers that I found that can get you service for $5 a month or less:

	minute	Text	MB data	min/mo	Min	Expire	network
Ptel	0.05	0.02	0.10	$5	$10	60	T-mobile
Lyca	0.02	0.04	0.06	$0	$10	no	T-mobile
Spot mobile	0.10	0.05		$1.67	$5	90	T-mobile
H2O	0.05	0.05	0.10	$3.33	$10	90	AT&T
PagePlus	0.10	0.50	0.10	$2.50	$10	120	Verizon

Generally best for light usage

If you use your phone a lot then one of these cheap plans is not for you.   If you talk on the phone just 30 minutes a day thats about 900 minutes a month and that along will cost you a minimum of $18 for the plans below.  If you use a lot of data then you will quickly outspend one of these plans.    Heavy music or video mobile use will pile up data usage quickly.   You can use this calculator at AT&T to estimate your data consumption.    However you're only charged for mobile data so if you use a local wifi network in your home or public area then that data is not going to cost you.   One way to go is to look at your current plan usage levels and then find the maximum amount of phone, text and data you used for a single month in the past 6 months.   Add in a 10% margin to that and you could give get yourself a baseline usage need for yourself.





Expiration periods / minimum monthly rates:

Lycamobile has no expiration period on their prepaid credits.    So if you use it a very small amount in a given month then your monthly charges can be extremely small.    Lyca looks like the best deal in general based on their rates and the lack of an expiration.

Otherwise the providers offer minimum pay-go rates that expire in 60-120 days.    That results in a minimum monthly charge of as low as $1.67 for Spot.


Cheap SIMs on Amazon

If you buy the SIM from the provider then they charge $5-10.    But you can get the SIM cards on Amazon or eBay for next to nothing.   Prices I found on Amazon :

H2O Wireless for $0.01
Lycamobile for $0.01
ptel for $0.99
Spot Mobile for $0.01

Data rounding

If all you want or use is simple phone calling then data isn't an issue.  But if you do want to use a little data or have a smart phone that might do so then then how they figure your data usage can matter a lot here.

Big potential problem with Lycamobile is that they seem to round up any data usage to 200kb.   So if you send one byte a minute then you'll end up paying 200kb a minute and that can add up fast.   Apps which use occasional data for updates or status may do this kind of thing.   You'll have to be real careful there and its probably best to turn off data entirely unless you absolutely need it.   You can then just rely on wifi usage.

Ptel does not round up data and does not charge you till you accumulate 1 cent worth of data usage.   You'd have to check the details on the other plans to see how they handle data usage.


--

Beater Shopping - Borrowing Money to Buy a Car With Better MPG Can Make Sense

If you don't have a lot of money and you're shopping for a beater car you likely find that the cheapest cars usually have pretty poor fuel economy.   I believe people in the car market realize the value of better MPG and are willing to pay a bit of a premium for it and see the problem with a low MPG car and discount its value.   So the end result is that the  cheaper cars often have poor economy.     If you don't have a lot of money this puts you in a poor spot since it seems all you can afford is a car that will cost you more to operate.    I think in this situation it can make sense to borrow some money simply to buy a car with better fuel economy.

Lets look at some examples.   I looked on Craigslist and found a couple cars around $1000.   One was a 1994 Pontiac Grandprix that gets 20 MPG (17/26) and the other is a '94 Ford Explorer 4x4 which gets 17 MPG (15/20).    These are cheap cars and if you don't have much money maybe its all you can get.   But your gasoline bills are going to be pretty high.   If you drive 10,000 miles in a year at $3.50 per gallon then that Grand Prix will run you about $1,750 to fill the tank for just one year.   If you found a car that got 25MPG then it would be $1,400 and a 30MPG car would only cost $1,167. 

Paying a bit more can net you a car with decent mileage.  I found a 1996 Honda for $2000.   That car would get 25 MPG (22/29) and so the gas would run you about $1,400 a year.   So spending $1000 more on the car would save you about $350 a year in gas.  I also found a '99 Chevy Prizm for about $2000 which would get 29 MPG (27/34).   That car would run about $1,207 a year to fuel or about $543 less.

Note that I'm ignoring things like reliability here which of course you'd want to take into account as well.

Can you borrow $1000 somewhere?    Lets say the best you could do is a personal loan at your credit union at 12%.   Thats really high interest so hopefully you've got better options.    If you borrowed an extra $1000 to afford that Prizm with better MPG then your payments over 36 months would be $33 per month.   You'd save more in gas than your payments on the loan would be.     Or if you went with that Honda then your payments and gas savings would be about a wash.


Here lets compare the total cost of my 4 example cars if you look at what you'd pay over 5 years :

	cost	MPG	annual gas	5 year total
Grand Prix	$1,000	20	$1,750	$9,750
Explorer	$1,000	17	$2,059	$11,294
Honda	$2,000	25	$1,400	$9,188
Prizm	$2,000	29	$1,207	$8,222

The last column with the 5 year total includes 5 years worth of gasoline and the cost to buy the car.  For the Honda and Prizm I'm counting $1000 out of pocket and then 36 months forth of $33 payments on that 12% loan.   In the end the more expensive cars with better MPG are going to cost you less even if you finance their purchase at 12%.

Now don't get me wrong, I'm not saying you should borrow $25,000 to get a car with 40MPG.   The point here is that if you're looking for a beater car in the low end and have very limited funds than rather settle for the cheapest car you can find and pay out the nose at gas station, it can make sense to borrow some money to finance a car at the 2nd to bottom rung of the beater pile.

--

Are Solar Panels a Good Investment? (3rd look)

Apparently its been four years since I took my 2nd look at solar panels.    I've heard lately that the cost of solar panels has dropped so I'm looking again.

A calculator  [dead] at FindSolar.com to get a rough estimate of the cost and savings.   They use a cost of $6 per W for the solar installation.


I figured the costs at $4.5 / W and then figured the federal, local and utility incentives myself.   I used a local calculator to figure my electricity savings.   The results for me are :

KW	system cost	incentives	NET	elect save	ROI
1.5	$6,750	$5,925	$825	$217	26%
2	$9,000	$7,900	$1,100	$289	26%
2.5	$11,250	$9,875	$1,375	$361	26%
3	$13,500	$11,850	$1,650	$433	26%
3.5	$15,750	$13,175	$2,575	$506	20%
4	$18,000	$14,200	$3,800	$578	15%
5	$22,500	$16,250	$6,250	$723	12%
6	$27,000	$18,300	$8,700	$867	10%

One of the local incentives has a maximum pay out so the returns max out at about 3 KW installation for me.    A lot of the incentives we get locally are not available to most people.  My state and local utility are pretty generous with the incentives.   If you only get the 30% federal tax credit then your ROI would work out to only about 3.4%.  


For me at least in my area it seems solar installations are definitely now worth it financially.    Of course the math differs depending on local incentives from your state or utility.    If you don't have generous state or utility incentives then the ROI may turn out to be just 3.4% range which isn't a great investment.

--