Lower my cable bill, please?

Posted by Matt

I finally got around to one of the items suggested in an article that Paul mentioned in a recent post, and this is one I'm glad I made time for. I called my cable/Internet provider (Comcast) to let them know that I had been checking out the Dish Network and noticed that the prices there were lower. The rep gave me a long list of reasons why satellite is bad, but finally agreed to give us a discount on both sets of monthly fees. Thanks Money Magazine!

This was a few days ago, so I can't remember how temporary the offer is, but we're moving in a few months anyway. Maybe it will be time to give the Dish Network another look then....

Internet Savings Accounts: the honeymoon is over.

Okay, not really. I'm still in love with my Internet savings account with HSBC. But I just got this notification from them that I thought would be helpful to share:

We are writing to let you know HSBC Direct has adjusted your Online Savings Account interest rate to 4.50% APY*.This rate remains among America’s highest, at 10× the national savings average**—so you can continue to maximize your
savings growth with HSBC Direct, recognized as the “Best Online Savings Account”
by Kiplinger’s Personal Finance.

It was a good reminder that even savings accounts have variable return and that everyone should keep a close eye on ALL of their investments.

Two True Stories Of Living Beyond Your Means

Posted By Paul

I had a friend who was living with his parents and was planning on moving into his first apartment. This friend was a few years younger than me and he had a decent job that certainly earned him enough money to live on his own.

He had done some apartment hunting and found a great place that he really liked. He started telling me about it. He described how each apartment unit had marble countertops and its own security system.

As my friend described all of the cool features of this aparment I started to notice that it sounded considerably nicer than MY first apartment. In fact it sounded considerably nicer than the apartment I had at the time. Out of concern I asked my friend what the rent was.

He told me the price (which was twice what I was paying for rent at the time), and I couldn't hide my gasp of shock at the rent he quoted, so he explained his plan.

His plan was to continue to live at home for about six months and save up a lot of money so that he had a year's worth of rent saved up in the bank and then he'd get the apartment.

This totally blew my mind. I explained how this made very little sense, as all it did was provide a way for my friend to temporarily live beyond his means.

He ended up getting the apartment, stayed there for almost a year, and then had to move because the rent was becoming far too much of a burden. He found a new place, but it was a difficult process because every apartment he looked that was in his price range looked so shabby compared to his super cool, super expensive place.

I had another friend who experienced a similar situation from a different source. When he first started living on his own he didn't make much money (as most of us don't at that time in our lives), so his parents sent him about $500 a month to help with expenses. The problem? After 5 years he was much further along in his career and was making a much better salary but he was still dependent on that $500 a month. When he got a raise instead of maintaining the same frugal lifestyle and weaning himself off of the money from his parents, he would use the money from the raise to get a slightly better car/apartment or whatever.

In essence his parents were letting him get used to always living $500 a month beyond his means. When that money finally ended it was REALLY difficult to do without it even though he was making a perfectly decent salary at the time. After all, who couldn't find use for an extra $500 each month?

So the lesson from all of this is to ALWAYS live within your means. Living beyond your means not only creates a financially unstable situation but it makes it so much harder to actually go back to a "normal" lifestyle once you've gotten used to the one that you can't afford.

Once you get used to that $2000 a month apartment that you can't afford, it's hard to live in the $600 a month apartment that you CAN afford, so just don't do it. Live in the $600 a month apartment you CAN afford and be proud of yourself for really surviving on your own, or if you feel up to it, get the $550 a month or the $500 a month apartment and take pride in the fact that you are consciously being frugal by getting by with a little less space or a few less frills than you need to, and save the extra money for a rainy day.

Amazon makes music easy (finally!)

Posted by Matt
I just found out about the latest (and greatest) music download service from Amazon.com. I can now download:

• single music tracks for 89 cents each or albums for $8.99
• in the mp3 format
• WITHOUT DRM (digital rights management)

If you don't have any firsthand experience with DRM, let's just say it's a pain in the neck. The recording industry wanted it to prevent copyright violations (illegal file sharing), but it ends up really restricting what you can do with your music. For example, I had a large number of music files that I lost access to after I copied them too many times (the DRM-imposed limit was 3 copies and I exceeded it in moving from old computers to new and to a new hard-disk after one failed). I was able to get the files unlocked eventually with help from the companies I purchased the songs from, but it was a messy, painful process.

DRM-free music is long overdue. It's my guess that most of the music downloading population doesn't want to be pirates; I know I don't want to waste time uploading/downloading music with peer-to-peer software at the risk of infecting my computer with viruses/spyware or, worse yet, getting sued by the RIAA. I just want to be able to easily buy songs (not whole albums) and be able to play them whenever and wherever I want.

Getting back to Amazon...I haven't downloaded anything yet, but they appear to have a pretty large (2 million plus songs) and diverse (alternative, jazz, rock, country, classical, opera, hip hop, family, Broadway, etc. etc. ) collection.

So, how is buying music this way frugal, you might ask? Especially since the article referenced by Paul's last post warns you about the costs of filling up your music player with songs? The advantages are:

1. that I don't have to buy a whole album if I only like a few songs from it
2. I don't risk buying an album that I won't like because I can preview the songs before I buy them.

So, if you have a digital music player (and mp3 formats should be compatible with any type), check out Amazon.

An Interesting Article On Hidden Costs

There was an interesting article today on The Dollar Stretcher talking about the hidden costs of purchases:

http://www.stretcher.com/stories/07/07sep24b.cfm

I thought it was a good point to not only consider the actual cost of a purchase but also consider the additional costs related to maintaining or "making the most out of" whatever you buy.

A Web Page On Net Worth

Posted By Paul

There has already been a posting on tracking your net worth. So I won't rehash why I think tracking your net worth is a good idea.

There is an interesting web page based on this idea. It's called Net Worth IQ:

http://www.networthiq.com/

It's a page where you can sign up, enter your financial info, and use the page to track your net worth. You can also choose to make your net worth info public, and you can browse the public profiles of other people.

To be honest, I don't really recommend this page. The net worth tracking system in the web page is fine, but nothing you can't do just as easily in a spreadsheet.

The ability to look at the net worth info of other people is kind of interesting, but I don't find it very useful. We all come from different financial backgrounds, so comparing net worth seems like a pointless exercise. I know it sounds cliche, but when dealing with your net worth you're only in competition with yourself.

But if you're the kind of person who isn't comfortable with spreadsheets, then this sort of web based system might be the right thing for you.

On a personal note, I happened to browse a net worth profile of a user who had essentially no savings, a car loan, and a huge student loan. I realized that was EXACTLY where I was when I first graduated from college. That realization made me proud of how far I had progressed from that time. It also made me feel slightly nostalgic for the days when it was a hugely satisfying accomplishment to have an extra $50 that I could put into may savings account at the end of the month, and balancing my checkbook was an exciting and novel experience.

Budget for fitness without a contract

Posted by Matt

My goal in posting this article is to dissuade at least one person out there from joining a health club. I've belonged to at least three or four different health clubs and have never been happy with any of them. I'll shoulder some of the blame for not doing enough homework to find the right kind of club, but I usually just wanted to find whichever one was closest to my house, figuring that that would make me more likely to stick to my regimen. Given that the larger club chains have the most locations, I usually ended up with one of those and the terrible contracts that came with them.

Most of you probably know how they operate already:

• You pay a huge upfront fee
• You pay a sizable monthly fee (usually around $30/month)
• You are required to pay this membership fee for a period of one or two years (or pay another exorbitant fee to terminate the contract).

Congratulations to the clubs for coming up with such a great business model. Most people gripe about it, but the clubs still seem to find LOTS of people to join. I joined a club several years ago that was just down the street from my house, but I hope it will be the last time I ever make that mistake.

My contract period ended in 2006. Since then, I've been getting letters from the club asking me to come back at a greatly reduced rate; $8.25 month! Why couldn't I have been paying that all along? This is another example of their deviously effective pricing. Obviously, they want you to pay as much as possible, but considering that they are not getting ANY money from me right now, they are trying to bargain with me a bit. If you really decide you want to join a gym, I'd suggest you negotiate the terms. They often run specials where they waive the upfront payment and my experience shows that their pricing is arbitrary and contains a lot of wiggle room.

That being said, I STILL don't think most people should join a gym. If you are like me, you might go regularly for a few weeks or months and then lose interest. Unfortunately, you are locked into that contract and have to pay whether you go or not! Such a waste; I always hated that.

Don't get me wrong, I see the value in keeping active, so here are some alternative suggestions:

1. Find an active hobby. This is what I did. I play indoor soccer now and love playing so much that I almost never miss a game (and I NEVER regret the cost).
2. Clean up your house. This is a two-for-one. Could your house use a little picking up anyway? (If you're spending money on a housekeeping service, shame one you.) I don't know about you, but I often break a sweat when I'm doing a whole house cleaning.
3. Play with your kids (if you've got them). My young son has me running up and down the street with him almost every afternoon.

Another option you might be thinking about is purchasing some fitness equipment for use at home. I know a very small number of people who actually use their home equipment. Take a quick look at Craigslist and count how many treadmills and stair climbers you see listed as "Great condition; hardly used!"

I'd be willing to wager that most expenditures on home equipment are a waste of money, but if you do want to try it out, consider testing yourself first. Try to come up with a comparable exercise that you can do at home without equipment and see if you can stick with that three times a week for a month or two. If so, then a machine might be a safe investment in your health. Or you may just find that you are happy exercising without equipment; win-win.

Just don't join a gym!