Are Internet Savings Accounts on the way out?

Posted by Matt

I received this disappointing bit of news not too long ago:

We are writing to inform you that based on the recent drop by the Federal Reserve, HSBC Direct has adjusted your Online Savings Account rate to 4.25% APY. At 9x the national savings average, you are still earning one of America’s highest savings rates.

I was pretty enthusiastic about my Internet Savings Account when I first signed up, but now I hear that the Fed is likely to drop the rate again soon. How low will HSBC go? Is it time to start exploring new places to keep my savings/emergency fund? I checked other ISA's and HSBC definitely isn't the highest, but I don't want to hop from bank to bank chasing quarter points, either (see more on this from Paul here).

I'm also wondering whether I should put any more money into my savings account at all. It contains plenty of cash to cover most small to medium emergencies, so it might be worthwhile to start thinking again about putting my extra money toward real long-term investments (i.e., bump up my retirement savings rate) or maybe paying extra on the mortgage. Paul and I have debated the latter several times and I don't think we've come up with a really solid answer yet.

Have any of our readers paid off their mortgages early? If so, would you make that same choice again?

Article: Confessions of a Car Salesman

Posted By Paul

Hi Everyone,

I found this really interesting article where Edmunds.com paid a journalist to go "under cover" and become a car salesmen. Once he learned the ropes they had him write an article about his experiences.

It's a long article, but I found it very interesting.

Check it out:

Confessions of a Car Salesman

Cost of Entertainment

Posted By Paul


I've been a member of Blockbuster Online for quite some time now. When Blockbuster launched the program the single disk program cost $9.99 and for that you could have one disk at a time and you could also take a mailed-to-you disk in to any Blockbuster store (there was one conveniently located to us) and trade it in for any in-store disk for free.


Since my wife and I like to watch movies at home this ended up being a great deal.


However, over the last few months Blockbuster has gradually changed their plan and prices. Now our plan costs $11.99 for the one disk plan and we can only exchange it in the store twice a month. This isn't a terrible plan, but it's starting to make me wonder if it's worth it.


Managing entertainment costs is something I try to keep an eye on since it's one of the most obvious ways to save a little money here and there. If the Blockbuster Online costs continue to rise I might just cancel my membership.



Is anyone else out there dealing with this?

Bye bye, cable TV!

Posted by Matt

I think I can finally safely report on the outcome of yet another decision we had to make when we moved into our new house (this won't be the last): namely, the decision of what to do with our cable television service.

In our old house, we subscribed to Comcast's "Expanded Basic" plan, meaning the networks and a few cable channels, but no pay channels or on-demand service. For that, we paid around $45 or $50 per month (after a discount for also subscribing to their Internet service). We have also subscribed to a 4-disc-at-a-time Netflix plan for $24 per month for over two years now and have been very happy with it. I got to the point where I couldn't stand to watch regular TV because the commercials were so intrusive.

So, I was making all of those exciting phone calls to transfer our services to the new house and I thought, why even bother with cable? The only show I was even still watching on TV was "The Office" and I was downloading them afterward anyway. My wife and I both zoned out occasionally to HGTV, but I knew I wouldn't miss that. So, I started exploring alternatives. Comcast was the only cable provider, but there was also the satellite providers DirecTV and Dish Network. The prices were roughly similar with only slight variations in the channel lineup and I dismissed them pretty quickly.

Next, I went out and actually bought an antenna. Yes, the old rabbit ears. I did a bit of research and found that our neighborhood was supposed to have pretty good reception. I talked to a sales rep at Best Buy who told me that the best models in the current generation of antennae have an internal signal amplifier, so I picked one up for about $30 (on-sale, of course). I was very excited when I first hooked it up; we picked up about 20 different HDTV channels and the reception and picture were amazing! Except for when they weren't. Every once in a while, we'd see large swatches of pixels wash across the screen, especially if anyone was walking around the house. One day, we inexplicably lost over half of the channels. We sadly decided to return the antenna. I think that if I were really into network television, I'd probably explore installing a roof antenna, although I suspect our HOA probably wouldn't allow it. No real loss.

The last televison service option I explored is still relatively new: FiOS TV. We decided to use Verizon for our Internet service in the new house to take advantage of their fast new fiber-optic network and learned that our TV could hook up to the same connection. Like the satellite providers, it was still pretty expensive and didn't really have anything that compelling.

So, where did that leave us? We rely totally on Netflix these days for all our television watching. We decided to take some of the money that we were spending on cable previously and bump ourselves up to the 6-disc plan for $35.99 per month. I'm not sure if we'll stay there, but we found that we would occasionally run out of things to watch on the 4 disc plan, mostly due to the weekend postal lag. This is less of a problem now that we are ordering more television shows, as they usually have more content per disc and last longer. Even if we stay with the 6 disc plan, it is still cheaper than cable, and I always feel like we have a lot of choices of things that we actually WANT to watch at home.

The only drawback so far is that our friends with cable aren't able to discuss the current season of shows with us, but that isn't a problem this year.

Just the disc service is adequate for me, but there are two more important features of Netflix I think are worth mentioning. The first is the "Watch Instantly" feature that lets us bypass the USPS and stream some titles directly to our computer screens. I use this for TV shows, because sitting in a chair in front of a computer for 2 hours to watch a movie can get tiresome (especially since I sit in front of a computer for 8 hours a day at work) and it doesn't really work well for more than one person. That does bring me to the second important feature, however: Netflix has announced that they are partnering with hardware manufacturers to bring the download service directly to our televisions.

The cable and satellite companies have resisted user-driven programming for far too long and Netflix is finally helping us achieve the ability to watch what we want, when we want. If you haven't yet, check them out.

Financial Choices, Good vs. Better

Posted By Paul

I was working in the yard and thinking about how I view savings and investing, and my rambling thoughts started to take shape into a set of rules that I call 'Good' and 'Better'. The idea is that in my opinion people spend a lot of time focusing on the wrong financial view.

Good: Focusing on making sure you income is growing.
Better: Focusing on making sure you are living within your means.

I've known a lot of people who were incredibly focused on their incomes. They wanted to make sure that they were constantly making more and more money year after year. Now I certainly agree that income is important (and so is income growth), but I often see that in all that focus on income sometimes people lose sight of the basic idea of living within their means. For example, someone works feverishly to make a great salary and because they work so hard and burn themselves out to make that money they spend lavishly on cars, boats, and all kinds of toys to make the most of the their limited free time. These toys require even more money to maintain the lifestyle so they have to work even harder. The result ends up being that their finances turn into a very fragile house of cards, and just one layoff or recession results in financial ruin.

Good: Bargain hunting to make sure you save money on purchases.
Better: Focusing on simplicity to make sure you don't buy a lot of stuff you don't need.

You ever see the one where someone buys some expensive toy that they really don't need and can't afford, and they work VERY hard to make sure they get a good deal? Remember that getting a great deal on something you don't need is still more expensive that not buying the thing in the first place.

Good: Focusing on finding ways to save pennies here and there.
Better: Focusing on ways to save LARGE amounts of money.

I've always thought it was odd to see people who will save and return their aluminum cans religiously for the nickel deposit on each can but will then turn right around and spend $100 a month on a premium cable package they rarely use, or blow $200 on an impulse buy. I don't mean to say that you're a bad person if you have cable, or if you indulge on a fun purchase. The point I'm trying to make is that it's great to work to save your pennies, but it makes very little sense (cents?) to save your pennies if you're wasting dollars.

Good: Focusing on your investments to make sure that you are getting good returns.
Better: Focusing on making sure you're saving a lot.

It's great to search around and find your best investment based on what you want out of it, but sometimes it can be overwhelming to try to find the perfect investment (mostly because there is no such thing as the perfect investment). Don't worry too much about finding the perfect mutual fund or that CD that gets you .1% more, instead focus on saving the money in the first place. The way I think of it is that if I have $1,000 and spend a lot of time finding a CD that pays me 5% on that $1000 as opposed to 4.9%, the result is that after a year I will have made $1 more. Instead of researching CD's as a way to squeeze every penny, if I could use the time to shave $10 off of my monthly budget then after a year I will have saved an extra $120!

Think refill, not landfill

Posted by Matt

I recently posted about some options for saving money on printer ink, but just found yet another option that I'm pretty happy about. There is a tiny shop very near where I work called Island Inkjet that will refill your inkjet cartridges for you, with several benefits over the other methods I discussed.

Cost

• I had my HP #15 cartridge (black ink) refilled for $15.99. A replacement from HP.com would have cost $29.99.
• I had my HP #78 cartridge (color) refilled for $21.99. The HP replacement would have cost $34.95.

If you read my last post, you know that the least expensive option is still to refill your own cartridges, but convenience has a value, too.

Convenience

• I didn't have to deal with the mess
• The refilling process only took the experts a few minutes
• The refill tech also cleaned the print nozzle on the color cartridge, which I didn't even know was needed.

Expertise

Another thing that you don't get with DIY is the benefit of specialized knowledge and experience. The tech at the shop gave me the exciting news that our older black ink cartridge has twice the capacity of the current cartridges being sold by HP and that the older color cartridge has EIGHT times the capacity of the new ones. Also, they can be refilled up to ten times. I'm certainly glad I didn't recycle the used cartridges and just buy remanufactured ones!

Environment

The last point I have to make is hinted at by the title of this post, which I stole from a sign at Island Inkjet: refilling printer cartridges is a more environmentally friendly option than trashing them. Island Inkjet refilled 2 million cartridges last year, but that is only a small part of the 300 million that are tossed out annually. We can do better!

All in all, I was very satisfied with the process and would recommend this service to anyone.

Gold is going crazy!

Posted By Paul

A long delayed follow up to my earlier post:


Investing In Gold


Some of you may have noticed that the price of gold has been shooting up recently. Apparently as the stock market falls and the word 'recession' starts to pop up many people start to run from securities and instead put their money into gold.


I only own a little bit of gold, but it's nice to see SOMETHING I've invested in going up nicely in recent weeks.


I may have to remember this tendency for gold to increase in value when investors get nervous and perhaps purchase a little more gold in the near future.