This blog contains some simple tips and advice from two regular guys. We're not accountants, financial advisors, or brokers, so follow, ignore, or discuss our ideas as you see fit.

Tuesday, May 27, 2008

Getting more mileage out of your coupons

Posted by Matt

Hello Frugalizers. My apologies for not sharing with you in a while. It hasn't been for lack of topics; that's for sure. My amazingly frugal wife comes up with new tips all the time, including this week's.

Our readers know by now that we try to buy quality, so imagine our surprise when our string trimmer died suddenly after only a few years of service. Leah called the service center and the tech told her that it sounded like the motor on our machine had burned out and that it would be cheaper to buy a new one than to fix the old. This is one of the downsides of the marketplace putting too high of a priority on low prices...we end up buying "disposables" and potentially spend more in the long term buying things multiple times that could (if well built and well maintained) last a lifetime. Now, having said that, let me get off of my soap box and back to helping YOU, dear reader.

We decided that we would replace our string trimmer with a lawn edger, as that is mostly how we had used the last model. (Maybe they are not built for that?) Leah just happened to have a coupon for Lowe's, but with gas topping $4/gallon, didn't want to drive to their nearest store 8.5 miles away. Knowing that "it never hurts to ask", she called the nearest Home Depot (2.3 miles away) and was told that they would honor a Lowe's coupon. I spent a few quick minutes online checking reviews and reading Consumer Reports articles and we had a new edger that very afternoon.

Many businesses offer "price matching" and it is a great way to save money (including product and fuel costs) and time!

Wednesday, May 14, 2008

The Housing Crisis And My First Podcast Recommendation

Posted By Paul

I've recommended quite a few articles but this is my first podcast recommendation.

There is this show I really like on National Public Radio called "This American Life". Each week is a different topic and there is usually 3 or 4 stories relating to the topic.

Last week the episode was called "The Giant Pool of Money" and it's all about the housing crisis. They do a great job of explaining the events that led up to the current housing crisis. They do it in really personal and understandable terms so you don't have to be an economist to follow it. One of my favorite parts of the show is that they first play an excerpt from one of Alan Greenspan's speeches and then summarize Greenspan's statement as:

"Central banker, speak for 'Hey Global pool of money, screw you!'"

It goes on to talk about mortgages, mortgage backed securities, and essentially how all of this came together to create what is being referred to as the housing crisis.

I admit that I'm only half way through it (I listen to it a piece at a time during my morning commute), but so far it's really interesting, and I wanted to let people know about it because I think for the first week or so you can download the entire mp3 for free.

I think it's really worth listening to, here is the link to the episode:

The Giant Pool Of Money

How do you pay YOUR pals?

Posted by Matt

Have you ever made a purchase on eBay? If so, you probably paid for it via PayPal, right? Paypal is a company whose website allows its users to transfer money to each other electronically. I've had an account with PayPal since 2001, but only used it a handful of times, partially due to the limitation of only being able to send money to other PayPal account holders.

Whenever I need to send someone money these days, I can just log into my bank's website and have the bank mail them a check. Easy, right? I was also a recipient of these types of payments when our previous renters added us as a payee in their bank's online bill pay system and then set up a recurring monthly payment. I appreciated the regular payments, but when we got our new renters this year, I thought, "there must be some way to automate this even further." I like to think of myself as efficient; some readers will call me too lazy to even cash a check...it's all the same to me.

Anyway, I wanted to share what I learned. My bank offers an option called "Bank by Mail" and here's how it works:

Our renters added us as a payee in their bank's online bill pay system. For the payee address, they listed my bank's bank-by-mail address (a PO box). They then added our bank account number as the account number for the payee and set up a recurring monthly payment. Each month on a set day, their bank prints and mails a check to my bank. My bank then processes the check and deposits it into my account. (My guess is that banks will eventually set something up to replace the snail mail/paper check part of the process with an Internet transaction of some sort. My bank has gotten as far as allowing me to transfer electronically to other individuals within the same bank already.)

The point of all this is that, after the initial setup, the transfer is completely automatic from the perspective of the sender and recipient. Fantastic as this is, I've only used bank-by-mail in the situation described above, so far. I wasn't too paranoid about giving out my checking account number to our renters, given that I'd already elected to trust them with a house worth over 100 times what I have in that account, but I don't want to share my account numbers with just anyone.

Time will tell whether I find other uses for the system, but I love what it is doing for me so far!

Monday, May 12, 2008

Article: Money and Children

Posted By Paul

The Dollar Stretcher page has a lot of great articles, many of which are contributed by readers.

One that I really liked was an article about raising children on a budget. I really liked some of the tips the author suggested such as including your children in your financial planning, and forgiving yourself if you can't give your kids all of the coolest material things.

I thought it was worth a read:

Money and Children

Watch For The Fees

Posted By Paul

One thing that drives me crazy is paying fees for things when I don't need to. So I try to keep an eye on my accounts for any kind of account fee.

One thing that happened recently is that I have an eTrade account that I used to buy the occasional mutual fund or stock. I have had it for years and never had to pay an account fee on it. I had to pay a one-time fee if I did a trade of course, but that's pretty common with brokerage accounts.

So not too long ago I decided to liquidate most of my stocks and put the money into a nice simple, safe, savings account. I sold almost all of the stocks and transferred the money into my internet savings account, leaving just a small amount in my eTrade account.

This all worked great until I noticed that my eTrade account started charging me a quarterly account maintenance fee. It turned out that my eTrade account didn't have a maintenance fee as long as I kept a certain balance in it. By transferring money out of my eTrade account into my savings account I had gone under that minimum and so the fee activated.

I have had this eTrade account for years so I honestly don't know if this fee structure is new, or if it was like this when I opened it. The important thing was that by reading my statements I was able to spot the fee and do something about it (in this case I opened up a ShareBuilder account that charges no account fees or minimum for a basic account and transferred everything into that).

Even if you think that you're not paying any fees an your various accounts, I highly recommend doing a quick scan of every statement you receive in the mail (or email) to confirm that belief. You never know which account might have changed its fee structure or which of your balances might have shifted so that you now have a fee associated with it.

It's hard to keep track of all of the mailings talking about changes to your account, but I've noticed that if I give my account statements a quick glance I can catch any "surprise" fees that I might be paying. I may pay the fee once, but I never pay it twice.

Wednesday, May 7, 2008

Tracking income and expense with Yodlee

Posted by Matt

This is a topic I've been waiting to post on for a long while now. After lots of looking and testing, I think I've finally found a system for tracking my finances that works for me.

Like most people, I started out with a check register. This was a great way to keep track of what went in and out of my account, but building a budget from the information it contained required a lot of extra effort.

So, I tried out a spreadsheet. Once I put the data into this structured format, it was much easier to categorize and manipulate. In the years since, I've grown to love using spreadsheets, but this method still requires that I manually track every bit of income and expense.

So, the next things I tried were financial software packages (first Quicken 98 and later Microsoft Money) that allowed me to connect my computer directly to the bank to download my transactions. No more data entry! These were both pretty great applications and I'll assume that the refinements that have been added over the last decade are at least partly responsible for their dominance in the market. Unfortunately, not only did I have to pay for the software but back then, I also had to pay the bank a monthly fee to access my account information. Anyone else remember back that far? If it helps, I was downloading the data with a dial-up modem.

So, why haven't I switched back to one of those applications now that free "Internet Banking" has become de rigueur? Well, the short answer is that I'm a picky person. I find that I'm always wanting to "tweak" software and that led me right back to the spreadsheet. There, all my "control issues" are satisfied.

"But wait", you're thinking, "I thought you didn't like doing the data entry?" Well that (finally) is where Yodlee comes in. I'll explain how in a minute, but first, some background information.

Yodlee is a company that provides financial applications to both institutions and consumers. The application I use is called "MoneyCenter" and is essentially an online place to track just about any type of financial account you can think of. Below is a list of the types of accounts that I track with it, but that does not include all of the types of accounts to which it CAN be linked.
  • primary bank checking account
  • Internet savings account
  • mortgage accounts
  • 401k plan
  • 529 college savings plan
  • credit card
  • credit card rewards program

I added these accounts to my "dashboard" by providing my online usernames and passwords. Once they are all in the system, Yodlee automatically connects periodically to keep the information on the website up-to-date for you. This allows a whole host of features, but I'll describe the ones I've been using the most.

Net Worth Statement - this allows me to see my entire financial portfolio in one place. There is even an option to include estimates of equity in holdings that do not have an online account associated with them, like I do with our houses (I just had to; seeing all the associated mortgage debt was too unbearable otherwise). The net worth number is also tracked and graphed over time.

Transactions - here is where I get to finally connect back to my beloved spreadsheets. Yodlee pulls in all of the transactions for my various accounts and I can export them to a spreadsheet. What really helps is that Yodlee can be configured to automatically categorize the transactions. For example, I've specified that any transaction that comes through with a description containing "Pride Disposal" is automatically categorized into my "garbage bill" category. Some categorization even takes place without any work necessary by the user; Yodlee is very good at putting transactions from large restaurant franchises into the "Restaurants/Dining Out" category, for example.

At the end of each month, I log in to Yodlee, make a quick run through the transactions to make sure the categorization is accurate (I'm still refining my categorization rules), and then export the transactions in spreadsheet format. I copy that data into a sheet stored on my computer, which has a series of processing rules to display the categories in a way that makes the most sense to me. Many (most?) people can skip the exporting and spreadsheet tweaking steps as Yodlee has another great feature for organizing your data, namely...

Spending Reports - This is where the site gets fancy. The first thing you see on this screen is a pie chart showing a breakdown of all of your spending, along with a table alongside it that shows the breakdown of your expenses. You can use a variety of filters on the report to limit it to the previous week, month, year, etc. or show the activity from a defined group of accounts. Even cooler: say you are surprised by the dollar amount next to Restaurants (like I usually am)...you can simply click on that category name and instantly see all of the transaction details for that category in the specified time frame. Awesome!

This post is much too long already, so let me just quickly mention some of the other features.

  • Yodlee Bill Pay - pay your bills online
  • Budgeting - set targeted amounts for spending and track progress
  • Alerts - receive emails based on custom rules (large withdrawals, exceeding budgets, etc.)

By using this system, I've reduced the amount of time spent recording/categorizing financial records, while simultaneously gaining instantaneous access to the current and historical status of all of my financial accounts. If you're really nuts about finances and numbers, the tool is worth checking out, especially considering that it is FREE!

I should also mention Mint, though I won't do a detailed review here. I tried out the Mint website because it offers similar functionality to Yodlee (it may even use Yodlee behind the scenes), but also does a very basic analysis of your accounts to find money-saving opportunities. The ones it found for me were invalid and I wasn't that impressed with the site's categorization. Also, it only allowed connections to bank and credit card accounts when I tried it out. Sorry, Mint, you had your shot.
Let me close by acknowledging that not everyone is nearly so obsessed with tracking numbers, but I really believe that everyone should have at least some kind of rudimentary system. Any of the options mentioned above is better than nothing. You have to know where the money is flowing in order to ensure (as I said back in my second post on this site) that you have more money coming in than going out!

Sunday, May 4, 2008

Article: Furniture Liquidation Pitfall

Posted By Paul

Hi Everyone,

I read an article in the Oregonian that was talking about how consumers should be careful when dealing with furniture liquidation sales because sometimes these sales can be filled with furniture from other stores. The idea being that if you are going to a high end furniture store's liquidation and see what looks like a high end couch on sale you might actually be looking at a much cheaper couch from a different store mixed in with the inventory.

Check it out:

Liquidation sales pose pitfalls for consumers

Thursday, May 1, 2008

I-Bonds Now at 0% Fixed Rate?

Posted By Paul

If any of you follow I-Bond rates you may have noticed that today the new rates for the I-Bond came out.

For those of you not familiar with the I-Bond (or savings bonds in general) you can read my original post:

Savings Bonds

The interesting thing is that the fixed rate for any I-Bond purchased in the next 6 months is 0%. I thought that was perhaps a typo or they hadn't updated the info correctly, but it would appear that this is really the case.

So what does this mean? They probably dropped the fixed rate because the inflation rate is so high right now. With the factored in inflation rate that was also published today (2.42%) an I-Bond that you buy today would still earn 4.84% (at least for the next six months until the inflation rate changes).

It also means that the bonds that I bought not too long ago are now making over 6%!

I'm going to keep watching the I-bond rates and once the fixed rate gets up to a decent number again (which might very well be several years) I plan on buying some more. They seem like a pretty decent low-risk place to keep your money, and at least for now they are providing a great return.