The Starbucks Problem

I am in the minority on this, but I don’t get the concept of Starbucks.  I’m not a coffee drinker, so maybe that’s part of it, but I just don’t get it.  If I were given the opportunity to get anything I wanted at Starbucks for free all the time, I still wouldn’t ever go.  The thought is just so negative in my eyes.  To me, Starbucks represents everything about how most people don’t have savings, and live paycheck to paycheck.

If you go to Starbucks, you’ll easily pay $5 or more for a cup of coffee.  I suppose you go there because it’s “convenient.”  I would argue with that though.  Waiting in the long lines makes it incredibly inconvenient, and not efficient at all.  My wife had a gift card a while back, and I had to go stop and get her something while I was out running errands.  I think it took me 15 minutes just to get through the drive through lanes.

If I did drink coffee, I’d make it at home.  Even if you bought an expensive Keurig and drank a cup every day from that, it would still be a fraction of the cost of a trip to Starbucks.  They have every flavor you could imagine, too, so it’s not like you’d have to compromise on taste.  And it takes about 15 seconds to get your cup of coffee, compared to around 15 minutes to go to Starbucks.  You can do other things during those precious 15 seconds if you want, too (grab your coat and put it on, and it’s no waste of time at all).  Yet, with all this real convenience without even needing to leave your house, Starbucks still has a huge line all the time.

If you are one of the millions of people who go to Starbucks even a couple times a week, think about the amount of money you’d save by making your coffee at home.  In fact, if you are a regular Starbucks customer, you probably should take a look at other areas in your life where you are wasting money as well.  You could end up retiring tens of years earlier if you really understand the definition of convenience, and change your way of thinking to be able to save more.

Hacks to Save Even More on Your Cell Phone Bill

As I mentioned previously, you can save a ton of money by switching your cell phone provider to a company like Ting.  We’ve been averaging $39/mo for two phones since we switched, and love the service.  But since we now pay for the minutes we use, I found a way to save even more.

I have my data turned off, and just connect up to WiFi where ever it’s available.  I rarely turn my data on, but there are the rare occasions that I need it (mostly to use my Google Navigation to find out where I’m going.  But you can turn your data back off with that app once you input the address).  I have been using about 10-20mb per month for that service, and I barely even notice I don’t have data without WiFi.

You pay to access data from your cell phone provider, but really rarely need to use that data.  Think about it.  Where are you when you’d actually use the data on your phone most of the time?  You’re probably either at home or at work.  You won’t use the data while you’re driving, because that’s not safe.  There might be the rare times that you use it while you’re in a store, but some stores even have free WiFi (the Home Depot in my area does, for instance, and I’ve just connected to it when I want to use it).  Other than that, you don’t really need it.  So you’re paying a high premium for a rare instance.  So just try turning your data off on your phone for a week, and see how it goes.  You might be surprised at the results.

Ok, so now that you’re connected up to free WiFi when you need it, you can almost eliminate your data usage on Ting.  What about the calls and text messages though?  I’ve got a solution for that as well.  You can make those calls and texts through a third party app that uses VoIP, which basically means it uses your WiFi connection.

To set that up, sign up for a Google Voice number, if you don’t have one already.  Depending on where you live, you might need to get a new number.  You can just start giving that number to people though, and gradually change over once you get used to using it.

Now that you have a Google Voice number, download Talkatone.  The key to this app is that it’ll take your Google Voice number and make the calls over your free WiFi connection.  Google is talking about removing that functionality sometime in the May, but you might be able to do the same thing through the Google Hangout app when they update it at that point in time.  For now, download Talkatone.

Once you install it, just sign into your Google Voice account, and it’ll sync your contacts into the app. You can call and text through the app, so now you can eliminate or drastically reduce your phone calls and text messages you pay to Ting.  You can even download the app on an iPod and use it as your phone for free!  As an added bonus, you can forward your cell phone voicemails to your Google Voice account, and read a transcribed version right in your email, without even needing to touch your phone!

This is what I do, and it works pretty well.  Of course, if someone calls me while I’m not connected to WiFi, Talkatone doesn’t open.  But I have my Google Voice account set to forward to both numbers, so my native app rings in that situation.

Using this technique has saved me some money, and I hope it can save you some too.

Getting Started with YNAB – Credit Card Debt

Since I’ve been using the software for years, I get asked questions about YNAB all the time.  I got asked a good question today that I thought might be useful for people just getting started with YNAB.  That question was “How do I handle credit card debt?”

If you have a balance on your credit card, and you want to pay it off over time, my recommendation is to take the card out of your wallet/purse, and put it somewhere safe in your house.  The idea is to not have it with you when you need to make a purchase, so you don’t use it anymore.  I’ve heard of people locking them up in a safe, or putting it in a bowl of water and freezing it (so you have to have time to think about the purchase while it is thawing out before you can even get the card).  Whatever works for you, just make sure you don’t have the card with you when you make purchases.

Now for the YNAB part.  Since you won’t be using the card, treat it like any other debt.  Put it as an Off Budget account, and create a category for Debt Reduction in your budget.  Pay your card out of what you budget into the Debt Reduction category, and just adjust your balance once a month (or once every few months if you prefer).  Then, when you get it all paid off, move the account to be On Budget, and start tracking your purchases again (once you thaw out your card, of course).

As far as how much to budget in the Debt Reduction category, that all depends.  What we do is make a minimum budget for our essentials, then put everything extra that comes in into that category.  Even extra bonuses and random forms of income that I budget for the existing month goes in there, and I just leave the balance until the beginning of the next month.  Once we do our new budget, I put the extra in the Debt Reduction category, and then make one payment for everything in there.  I repeat that process every month.  It’s been working out well for us since we’ve been doing it a few years ago.

A Better Alternative to Big Cell Phone Companies – Ting

I’ve had a cell phone for 15 years, and I have been with Sprint since the very beginning.  But the last 4 or 5 times I’ve upgraded my phone over the years, the price has continually gone up for the same unlimited service.  I’ve been frustrated, to say the least, when doing an upgrade with Sprint over the past 8-10 years, but stayed with them (I guess you could say I was loyal).  I did look into switching to competitors like AT&T, but their plans were even more expensive (even after the increase  in my new plan).  So I stayed with Sprint.

Over the past year or so, several companies come into my radar that have a different business model.  They make you purchase the phone up front, and then you have no contracts with a lower price point.  After doing months of research, off and on, I finally narrowed down my choice to one that actually got me to leave Sprint.

The company is Ting, and they work on Sprint’s network.  After using them for two weeks so far, the company is already going on my recommended companies page because of how they set themselves apart from the rest.  They have already become one of my favorite companies to work with, based on how they do things.  They charge you for what you actually use on your phone, instead of all the unlimited everything.  The key to what sets them apart is that they automatically adjust each month based on your usage, not keeping you locked into any set pricing plan.  So if you use your phone less one month than normal, they actually charge you LESS!

They break things apart into phone calls, text messages, and data usage, and have different level plans for each.  They clearly state those, and even give you a gauge on your current usage for the month (along with an estimate of what your monthly bill will be, based on your current usage).  It’s so clean and simple, and they even added a super easy-to-use app for Android phones.  One click, and you can quickly see exactly where you stand.  It’s awesome!

And based on our usage over the previous 4 months with Sprint, we’d end up saving roughly $70/mo for using our phones in exactly the same manner.  But we could connect up to wi-fi and our data usage would go way down (we’ve never really paid attention to our usage before, because it’s always been unlimited).  In fact, I’ve even switched my data usage off completely, and only turn it on if I want to use it when I’m not connected to wi-fi.  I kind of like that aspect of it, as strange as it sounds.

Here’s the real kicker though.  Now that we’ve been using them for a month with two phones, it looks like we’re going to be right on the border of paying either $39/mo or $48/mo for the first month.  That’s with TWO phones on the plan!  You share the minutes, and just pay an additional $6/mo for each phone.  And you can set an alert to get an email when you are approaching any of the limits you set, and even shut off data, texts, or phone calls if you really don’t want to go above a certain dollar amount.  So you have full control over what you pay every month, in every sense of the concept.  It’s truly amazing.

I guess there’s multiple kickers (in a good way).  Here’s another one. If you’re already on Sprint, there’s no reason not to switch.  You can use your same phone*, and not even have to reset it to switch companies.  You just get the same network service, same apps on your phone, but you just get a lower price every month.  Still in a contract?  Simply find out how long it’ll take to make up the early termination fee, and you’ll still come out way ahead even if you switch right now.  Ting will even pay for part of your early termination fee as well, which is an added bonus.

In case you couldn’t tell, Ting’s really up there on my list of things I love.  YNAB would be #1, but these guys are coming in a close second.  I’ve just never been so excited to pay a cell phone bill before, and they have changed that.

Want to switch?  Click on this link, and we’ll both get a $25 credit on our next month’s bill.  Why not switch?  It’s been awesome for me so far, and I’ve read a lot of reviews on the company before I switched as well.  They’ve got nothing but glowing reviews from everything I’ve read.

* Check out Ting’s whitelist page for all the Sprint phones that can be brought over.  It’s most of the phones, but there are a few minor exceptions.

Benefits to Living on a Budget: Big Expenses

Since we budget every month, there’s a lot of work that I do to get the budget ready at the beginning of the month.  It seems like things have been getting tighter and tighter with our budget, with two kids now.  For some reason, we’re having a hard time making ends meet right now, and we’re evaluating all sorts of options to get that to change.

But my view of us having a hard time making ends meet isn’t the same as most people’s version.  We just got a bill for our 6 month car insurance that’s due, and I didn’t worry about it at all.  It’s $325, and I just let it go through without a care in the world.  That’s because I’ve been saving every month for the past 6 months to make sure it’s covered.  The same thing goes for other large expenses (Christmas comes to mind right now).  With how “tight” our budget has gotten over the past few months, we’re still saving for Christmas.  So when the time comes to buy presents, we’ll have the money to do it and not worry about it at all (as long as we stick to the Christmas budget we create every year).

If you live on a budget, you plan for all those irregular expenses before they happen.  That makes it a little tougher each month, but a lot easier when the time comes that you completely forgot about a large bill.  These sort of things make me really thankful for us living on a budget.  It’s stressful each month, but a ton easier when tough times come.

So if you haven’t started a budget yet, start reading these posts on creating your first budget.  You’ll be thankful you did when things get rough.

My Honda Fit – Customized!

 

I previously talked about buying a Honda Fit, and adding space to it to be able to use it as a truck.  Well, I’ve done all that, and wanted to show you some pictures of what I customized with my Fit.

Before I get to the pictures, I just want to say how much I love this little car.  It is extremely practical, has a ton of storage space in the back (due to the hatchback design), gets 40mpg with the way I drive (I got the manual transmission), and is a fun little car to drive.  You can change the configuration of the seats so you can fit more in the car than you’d expect, too.  I’ve fit 8 foot long 2X4’s and 4X4’s in the car with the hatch closed simply by folding the back seat and front passenger seats down.  The back seats can fold up as well, leaving room for tall storage.  This is my favorite car I’ve ever owned.

Ok, on to the customizations!  I got the windows tinted, because the sun shined through and was really bright on the kids in the back seat.  I think the car looks better with the tinted windows, and it keeps it cooler in the summer months.
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A view from the side, so you can see the tinted windows (in IL, the front can’t be tinted as much as the back, so that’s why it looks that way).
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A view from the back.P1020398

I got a phone charger/docking station to use my phone as a GPS.  This ends up being even better than a built-in GPS because the maps are automatically updated for free (with Google Navigation), and you can type in the address before you even get to your car, and just plop your phone in the docking station, ready to go.  (You get an added bonus of seeing everything in my garage from this picture)P1020400

My only real complaint about this car was that there was no center console.  There wasn’t even an armrest for the passenger, but Honda has a center console that was an added accessory.  I added that to the purchase of the car, and it makes things much nicer.
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I purchased a hitch online from etrailer.com, and installed it myself.  The wiring for the trailer is run through the trunk, so you don’t see it in this picture.  I use this to haul a trailer and our bikes when we ride.  I also plan on getting a hitch mounted cargo carrier so I can add more space without hauling the trailer around.

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This one is a view of my trailer in action.  I hauled a half ton of dirt to fill in some low spots in our back yard.  My car handled it like a champ!  I also picked up just over a half ton of bricks for my neighbor the same afternoon, so my trailer had double duty that day.IMAG0379

In addition to what I’ve already done, I really want to add a cargo carrier to the back and a roof rack to haul additional items.  I’ll get those two items later on, once we save up some extra money to pay for them.

If you’re thinking about getting a Fit, or a car like it, go for it.  It’ll be one of the best decisions you make with your car purchases.  It’s inexpensive compared to most vehicles, and more practical.  Definitely a smart vehicle purchase.

How to Handle When the Unexpected Happens (Our Garbage Disposal Quit)

One day out of nowhere, our garbage disposal just decided to quit working.  Our house is only 4 years old.  We bought it as a spec house, so we didn’t custom build it, but we are the only ones to ever live in it.

I only mention this because builders sometimes take shortcuts on certain things, and buy the cheapest item for things that don’t matter.  Nobody’s going to make their home buying decision on the type of garbage disposal, so they just pick the cheapest one they can get their hands on.

However, the brand is one I was familiar with, as I’m sure others are as well: InSinkErator.  We had one in our old house that was probably there for 20 years, and we never had a problem with it.  We even left it when we updated the entire kitchen, because it was so reliable.  So when this one quit working, I did a little investigating.

This particular model was the cheapest InSinkErator model at the big box stores, and currently sells for $85.  It also got 3 out of 5 stars, which in my opinion means there are issues with them.  I saw a lot of negative reviews about how this model didn’t last very long.

So when I found out mine bit the dust, I looked at the higher end versions of the same brand at Home Depot and Lowes.  I figured if I got the same brand, I could just reuse the part that’s already attached to the sink, making installation easy.  For one that got good reviews, it would cost $279.  I was NOT expecting to pay that much for a garbage disposal!  It just chops up food into smaller bits.  How could a reliable one cost so much?

So I went to Amazon, and started reading a bunch of reviews.  I ended up settling on a Waste King for $76, which also included free shipping.  It had great reviews, a stronger motor (1/2 HP as opposed to 1/3 HP), and a longer warranty.  It was a different type of connection to the sink, but that was easy enough to take out and replace with the one that came with the kit.  They made an adapter, but then the plumbing wouldn’t line up correctly, so I decided to replace the existing part to the sink.

The whole removal and installation took me and my dad 5 minutes to complete.  We removed the old disposal, including the sink attachment, and installed the new one with no issues.  The plumbing all lined up perfectly, and the installation was super easy.  We didn’t even need any plumber’s putty to put the sink attachment in (the kit included a rubber gasket, which worked great).

The only downside was that, according to Amazon, it would take a week or two before it would be delivered.  In reality, it took two days before it showed up at our doorstep, so that wasn’t even a real issue.  It’s amazing what a difference the Internet has made.  If this happened 10 years ago, I would have just bought a different model of the same brand at one of the big box stores, and paid a lot more.  Doing some research on the Internet saved me a couple hundred dollars.

One side note: the old one might have been able to have been repaired by a professional, but it would have probably cost just as much as the replacement.  I figured it wasn’t worth the hassle in this case.  Doing your research before a purchase usually pays off.

How I Lost $600

I got a little upset yesterday, because of something I did.  Through my work, I have money taken out of my paycheck and put into a Dependent Care FSA with every paycheck.  I do that because our kids go to daycare, and maxing out the dependent care through my work doesn’t even come close to covering the charges.  Since it’s tax-free money, why not take advantage of it?

Since we live on a budget, we budget everything we need into daycare every month.  So I decided that I’d use the money in the FSA to pay down debt.  Every couple of months, I’d take the money out of the account and apply it directly to our debt reduction.

So I don’t pay close attention to it.  I figure the money is there when I need it.  Well, this approach backfired on me.  I checked it in May, and took out the amount in there, and didn’t check it again until a couple days ago.  When I checked it, there was $592 left in the account for 2013, which ironically ended at the end of May.  Of course, I had until July 31st to take the money out, and I checked it in the middle of August.

For those of you that don’t know, the downside to an FSA account is that if you don’t use the money, you lose it.  I was really upset about it, and even said I shouldn’t put money in the FSA since I didn’t take all the money out.  I mean, I lost almost $600!

Then I thought about it some more, and realized that if I didn’t put the money in there at all, I would have paid more than $600.  I saved $3000 in the account, and none of that money was taxed.  If it was taxed at 20%, I would have broke even.  But tax rates are higher than 20%, so I still came out ahead.  So I lost $600, but it still ended up saving me money by putting money in the FSA for the year.

The moral of the story: make sure to check the year end date for your FSA.  A good clue to check it is when you are in an open enrollment period.  If I would have looked then, I would have taken all the money out.  Make sure you keep close tabs on the year end if you use an FSA.  It could save you some serious money!

Cheaper iTunes Replacement – IOMOIO

Do you listen to music, but pay over $1.00 per song on iTunes?  I used to do that, but recently a coworker showed me a new legal site to download music – www.iomoio.com.

When you sign up, you have to enter your credit card info to buy credits you can use toward purchasing music.  That made me a little nervous, but my coworker has been doing it for a while, so I knew the site was legit.  It only costs $0.16 per song, as opposed to the $1.29 iTunes charges.  I decided to try it out.  I bought $32 worth of credits, and got a bonus $12 for buying that amount a the time.  I also noticed that I had a $0.32 credit just for signing up and verifying my email address, so you can purchase two songs for free before you even enter your credit card info.

The real benefit of the site is that it’s organized in a clean manner, similar to iTunes.  It’s easy to search for a song, purchase it, and download it.  If you are syncing your music to iTunes, you just have to go through one more step of adding it through the iTunes user interface (Go to File > Add File to Library).  I usually delete the original after that, as i have iTunes keep my music organized by artist, so it makes a copy when it imports.

So if you’re still using iTunes, try out iomoio.  I like it much better.  If you buy a lot of music, it will save you a ton of money.  Give it a shot for yourself, and leave a comment on what you think!

Personal Finance Links

I haven’t posted some good articles in a while, so I thought it was time.  I wanted to share some interesting articles I’ve read lately with all of you, with my thoughts about them.  Enjoy!

  • YNAB has a great post talking about why you might still add debt to your credit card when first starting out with a budget.  It’s more important to continue using the budget than to try to change all your spending habits right away.  That’s just a guaranteed way to quit using the budget.  They do a great job of explaining that, so take a look.  Here’s an update on that post as well, with a great explanation from a financial “coach”.
  • Mr Money Mustache talks about spenders vs savers.  It’s a great article on the different mindsets between people who spend money and people who save.  I lean more toward the saver side, but do still have some tendencies toward spenders.  I’d like to think that as people grow wiser, they tend to move more toward the savers side.  I try to, but still have plenty of room for improvement.
  • Afford Anything explains that all countries aren’t fueled by debt.  She goes on to explain  that you should be careful about taking out a loan for items most people consider normal (such as a car).  I agree with pretty much everything she says in this article, especially about using debt for leverage.
  • I wanted to put this out out there because I don’t agree with it. 🙂  Trent over at The Simple Dollar talks about comparing costs between new and used cars.  He completely missed the maintenance aspect though.  The problems that develop on a car that’s under 5 years old is essentially non-existent.  The older the vehicle gets, the more parts that fail and need to be replaced.  This is not counting regular, routine maintenance, such as changing the oil and wiper blades, filling up fluids, etc.  The expensive part of car maintenance happens when you need to start replacing parts, such as CV joints failing, spark plugs needing to be replaced, changing the timing belt, etc.  Those happen as the car ages, not when it’s new.  Newer cars have higher insurance rates, but less replacing of parts.  Older cars have cheaper insurance, but you’re paying even more in parts (and labor if you don’t do the work yourself) that need replacing due to age/miles.