Saving Money By Using Google

There are many ways to save money by using the tools provided by Google. I frequently use Google Product Search to compare what different retailers are charging for electronics. Yesterday I was able to use standard Google search to save me $400 on auto repair.

My wife’s car had failed to start on Sunday so we had to have the vehicle towed to our mechanic. The mechanic informed us yesterday that there was some sort of a problem with the theft deterrent system and that only the dealer would be able to properly diagnose and fix it. With that information we were looking at another towing fee and the prospect of several hundred more dollars on a repair.  I don’t like to spend hundreds of dollars on a Monday so I decided to search for some possible answers.

I typed in a brief description of the problem along with the make and model of the car into Google search. One of the top results indicated a recurring issue with the anti-theft system on GM cars. Sometimes the iginition cylinder fails to recognize that the key is in the ignition and stops providing fuel to the engine. One possible fix involved replacing the key cylinder at a cost of several hundred dollars. Another fix I came across involved merely leaving the key turned to the “on” position for ten minutes before trying to start the engine.

I relayed this information to the mechanic, who later tried the trick on the vehicle. The car indeed started. So instead of paying for another tow and a repair my wife drove the car off the mechanics lot today. I’m going to do a bit more research to see if it is worth it to change any parts on the vehicle. But all I’ve seen in the info returned from my searches tells me that replacing parts does not guarantee that the problem won’t occur again.

The moral of the story is simple. Take a little time to do some common sense research prior to spending hundreds of dollars. The web is a tool that can be used to our benefit. And that includes the benefit of providing information that can help us to save money.

Plugging Budget Leaks

I’m at the point where I know that things are going to be getting quite a bit more expensive for my family. We’re moving into a larger house and will have a mortgage for the first time in 18 months. Heating costs alone are likely to put a strain on the budget this winter. So I decided to take a closer look and see where I could cut the fat.

Surprisingly it wasn’t that hard for me to find $100 per month that I could save. Here’s what I cut.

• Netflix – $18 – With our second child here we have barely had time to shower, let along watch a DVD. It will probably be that way until several months after the move. Rather than keep paying I decided to shut it down. We can always rent the occasional movie from cable if we’re itching to see one.
• Sirius Internet Radio – $13 – The subscription allowed me to listen to Howard Stern and some other channels over the internet. I also have an iPod and have found plenty of content between music and podcasts to keep me occupied Sorry Howard!
• AT&T Wireless – $30 – I checked my bill last month and noticed that my wife and I had 10,000 rollover minutes on our family wireless account. I called customer service to see if we could possibly downgrade to a cheaper plan and keep the minutes. AT&T allowed it and will likely take us a couple of years to use those minutes.
• Verizon Telephone – $30 – We’re going with Time Warner Cable phone service in the new house.  The cost of $40 a month is not a teaser rate and we get more features than we were getting on our traditional landline phone.
• Time Warner Cable – $15 – Shut off the subscription to HBO. We haven’t watched it in months and probably won’t until our favorite shows are aired again. We can always start it up again at a later date.

That’s actually $106 per month. Not a bad exchange for an hour of my time going over my bill payments. Once moved we’ll be saving even more because my commute to work shrinks from 55 miles to 15 miles each way.

I know that $106 per month does not sound like much. I’ve found a good use for it though. I’m planning on adding at least that much to our monthly mortgage payment so we can pay it off early and save about $15,000 in interest. How much could you save per month if you took a real close look at your budget?

Taking A Vacation

Seems like I’ve taken a vacation from this blog recently. I was actually taking a vacation altogether with the family. And oh vacations cost money.

Do you go right for the credit card when it comes time to book a vacation? Don’t do it!

When I was in my early 20s I thought nothing of putting a $300 airline ticket and $500 on hotels on the credit card. I’d rationalize that I could pay it off over the next eight months. All the while I would pay interest and buy other stuff that kept the overall balance rising.

Not going to the credit card when you can’t pay for something straight out is a real discipline. Now that I’m conscious of money I always do a few things before taking a vacation.

• Shop around for deals. Hotel, Air Fare and Car Rental are the three biggest expenses on the trips I take. Sites like Orbitz, Expedia, Mobissimo and other make it easier to compare deals on all these things. Sometimes prices for similar services can be radically different without a loss in quality.
• Use reward points for payment. I’ve been traveling on business regularly for the past nine years. And so I have created myself a bank account of reward points for a variety of different brands. I use them when it makes sense. After all, they’re just gathering dust otherwise. On my recent trip I estimate that I saved over $2000 by using points for airline tickets and a hotel stay.
• Consider the cost of meals. If you get a room with some sort of a kitchenette you can save money on meals. You can also save money if the hotel you’re staying at serves breakfast. Breakfast for three at a restaurant can cost about $30 a day. Save that money (or use it for other things) by staying at a hotel that serves breakfast.
• Consider transfer options. Getting to/from the airport can be expensive. Find out if parking is a better deal than taking a cab. If you don’t have a rental car at your destination you should research your public transportation options. In some cities at $5 train ride into town is as good as a $20 cab ride.

Vacations cost money. Vacations can put you deeper in the debt sinkhole. Be smart. Plan ahead. You can take a vacation without going into debt.

Starting A Business Without Debt

Starting a business without debt has to be one of the most challenging financial endeavors known to man. There are a variety of ways to do it and none of them are easy.

You can:

1. Use savings to fund the business.
2. Fund the business with revenue earned.
3. Do a combination of the above.

The trick in doing this is to keep your expenses low enough so that you don’t burn through your savings. Or you need to earn enough revenue to outstrip (or at least match) your expenses.

Making it work most definitely requires a bit of intestinal fortitude and a lot of ingenuity. The use of free or low cost tools and services is a must. After all, you probably can’t afford a $2000 color fax/printer if you’re just getting started. But you could probably bear to use an electronic fax service like K7.net to receive faxes. And you could use a service like VistaPrint for inexpensive color brochures and business cards.

Leveraging the web is a must.  You will need a website, but even if it’s a low cost one it still needs to look professional. WordPress.com is a great place to start a basic business website. Spend a few dollars at GoDaddy and you can have your own domain (www.yourname.com) that points to your WordPress website. You can get free email from Google that meets all of your business need and even supports Microsoft Outlook.

The web isn’t the only place you can save for your business though. I bought a new laptop for my business a few months ago and decided to skip the bloated and expensive Microsoft Office. Instead I purchased Star Office and saved hundreds of dollars. And even as I saved money I didn’t lose features. Star Office does all that Microsoft Office does and more.

There are lots more ways you can save money while not sacrificing the essential professional tools. It takes a little work to find the right tools. And it takes a little time to learn how to use them. But once you do you’ll realize that it is possible to start your business without going into debt.

Tax Day Looms

The tax refund in the United States has to be the most fiscally misunderstood thing ever contrived by this wacky government of ours. You feel good when you get tax money back, right? And then you feel like crap when you have to pay. I don’t blame you.

For years we’ve all been conditioned to think of the tax refund as something of a gift from the government. We treat it as found money. That’s one way to look at it. But there’s another way to look at it that I feel more accurately portrays the situation.

When you are due a tax refund you have basically given the government and interest free loan for all or part of the year. You overpaid. Isn’t it nice of the government to allow you to overpay? If you underpay then you must write a check at tax time. That’s not necessarily a bad thing. I think it’s worse to not have access to money that you might have needed (or could have earned interest on) during the previous year.

The system is such that your tax payment requirements remain a mystery. And since most people have taxes deducted from their pay it’s very hard to know that you’re overpaying. So I can’t blame you for putting too much into the till. You can plan for tax day though.

Whether you’re getting paid back or having to pay out planning for tax time is a serious manner. Here are some of my tips.

1. Plan on filing – There’s no quicker way to screw yourself over then not filing your taxes. If you can’t file on time then you can file for an extension. If you eventually owe money you may have to pay interest.
2. Know what you’re doing – If you’re single and don’t have investments or deductions you should be safe in using a tool like Turbo Tax to complete your taxes. You may even be able to fill out a 1040EZ form and mail it in. If you’re married, have investments and own a home or a business then things will be more complicated. Consider going to a tax professional (not H&R Block and the like) in your area. You may pay $150 to have the taxes prepared but you’ll also get questions answered by someone who should know the rules.
3. Don’t take a loan against your refund – Expected tax refund loans are the latest scam from predatory financial services firms like H&R Block. They front you money for a short period of time against your expected refund. And you pay fees that equal about 20% of the refund for a period that’s usually only a couple of weeks. So if you just wait two weeks for your refund you’ll save yourself a guaranteed 20% (or more) loss.
4. Invest your refund wisely – Paying bills and shoring up savings should be at the top of your list when you get a refund. New televisions or vacations should be off the list.
5. Plan for your tax payments – If you are underpaying your taxes all year then you are building up a debt to the government. So if you’re self employed or do contract work it is very likely that you have underpaid during the year. You should have set aside about 30% of your earnings in a special account to cover your obligations. If you do this right you’ll end up earning interest and getting a refund from yourself. If you’ve been careless then you will have a bill due from the government. Of all the organizations to owe money to the government is the worst.

If you plan for yearly taxes and have realistic expectations then April 15th does not have to be a stressful date. And even if this year was stressful you’ve got an entire 12 months to work towards making 2008 stress free when it come to income taxes.

Financial Aid Scandal No Surprise

While many people think student financial aid companies are heroes riding in on white horses to save the underprivileged I’ve taken an opposing view. I’ve long seen this as a very dirty business.

Financial aid companies team up with universities to give young people and their parents a hard one-two punch to the gut. The ‘elite’ universities scare you into thinking that you can’t succeed without their diploma while the financial aid companies convince people that they can afford the cost of that paper if they spread out the payments between ten and thirty years. Oy vey!

There are two winners and one loser in this scenario. The universities can keep increasing their fees knowing full well that people can continue to pay as long as the financial aid companies are around. The financial aid companies know that they can count on the fear factor to keep students running into their arms for more and more funding. Those who seek education are therefore left thinking that they need to enter this trap. So many do.

If this were the only connection between universities and financial aid companies the water would be scummy enough. Unfortunately the collusion appears to go much deeper than a symbiotic relationship.

It has come to light that a financial aid counselor at Johns Hopkins University was being paid ‘consulting fees’ by a major student loan provider in exchange for making them a preferred lender at the university. The person involved in the scandal has reportedly been put on a paid leave of absence pending investigation.

I quote from the recent Associated Press story, “A student loan company paid consulting fees to a student loan officer at Johns Hopkins University, paid for some of her graduate school tuition, and also paid consulting fees to officials at two other colleges, investigators said Monday.”

I’m sure that more than a few people would love to write this off as an honest misunderstanding or a single rogue financial aid counselor. Those with common sense know better. Where there’s smoke there’s fire. You can bet that financial aid staff at universities all over the country are lining their pockets with money from the big loan outfits. In fact a second university was recently caught taking part in similar practices.

This is real dirty stuff. The best way to prevent people from unfairly lining their pockets in this manner is to plan for educational costs far in advance of the actual need. That means saving money when kids are very small. It also means having realistic expectations about the university that they will attend.

I know that people get scared because they’re convinced that the college you attend and graduate from will determine the rest of their lives. It’s just not true. The quotient for success in business and happiness in life is a complicated one. And I can say for sure that the college someone attends can’t put you on an inside track for those things no matter how prestigious they might be.

Going Into Debt Everyday

I was thinking about this and it really makes sense to me after kicking it around in my head for a few days.

There are a handful of expenses that just about all of us will have in our lifetime. And if we aren’t saving for them we are going into debt.

1. Retirement – Whether we like it our not there will be some point in our lives where we won’t be able to work full time anymore. Don’t kid yourself into thinking that Social Security will cover your expenses if you get to this point in your life.
2. Health Care – No matter how much insurance you have you’re still going to have significant medical expenses over your life time. Its a huge bet to think that you won’t have thousands in out of pocket expenses in the future. Do you want to be the person who takes out a loan to cover the costs of your appendectomy?
3. Education – If you have (or plan on having) children then this bill will come due sooner or later. You may choose to pass the burden on to your kids but doing so just makes it worse for them. The good news is that once your child is born you’ve got approximately 204 months to save up.
4. Housing – There’s no better personal investment and protection against inflation then to have a roof over your head that you own and can afford. The last three words are key there. The goal here is to own a home free and clear. So if you’re renting you can save for a downpayment on a house. If you own with a mortgage you should save up and make extra payments against the principal. If you’re free and clear then save for other stuff.

There are a variety of ways to save for these items and save money on taxes as well. For retirement there is the 401(k) or IRA. For health care their are health savings accounts. For the kids education their are Coverdell ESAs or 529 Savings plans. For housing, there’s the good ole piggy bank. But capital gains tax deductions when you sell your paid off home are very healthy.

Where There Are Long Term Loans There Are Problems

Consider something for a moment. The three expenses that are spiraling out of control for the average person are:

1. Housing
2. Health Care
3. Education

Can anyone deny that these three items are the most important and most expensive things that we pay for in our lifetimes? So it’s a shame that the cost of these things have far outpaced incomes over the last decade.

When I was a kid a person could buy a house in New York for about two times the average income. Now the average home costs 7 to 10 times the average person’s income. It’s ridiculous. Why is that? Over the last ten years mortgage lenders have loosened the requirements for loans and have created exotic methods of purchasing property via loans. Think about the adjustable rate, interest only, no money down mortgage. They’ve done this under the guise of helping people. Now we’re seeing the fall out.

It’s true that there were winners in this game. Some of our parents got out selling their houses for ten times or more what they paid for them. Now the kids turn. It’s ugly. Head over to The Housing Bubble Blog and see what I mean. As the prices rose the mortgage lenders got more creative and cared less about what people could really afford. As a result prices were driven even higher. And now that the bubble is bursting lots of people are getting hit with flying debris.

This post got a little longer than I expected so I’ll keep the rest brief.

Believe it or not health care insurance premiums amount to long term debt. Don’t think so? Add up the premiums that you’ll pay in your lifetime. A modest $200 a month from the forty years between twenty and sixty costs you well over $100,000 if you factor in interest you could have earned if the money had been in the bank. For many people the premiums are higher. And you still have co-payments and other out of pocket costs on top of that. So you’re basically in debt to health care providers the second you’re not covered by someone else’s coverage. You pay when you’re well and you pay more when you’re sick. Doesn’t sound like a good deal to me.

Finally we get educational loans spread out over the course of decades. I just heard that NYU will soon cost $50,000 per year for tuition, room, board and books. Do you really think they could get away with this if there weren’t companies willing to lend you money for ten years or longer. When you say you can’t pay they’ll just send you over to the ’student aid’ office to fill out some forms and sign away your future.

Here’s the bottom line. Everyone makes choices. Sometimes we make bad choices. You can’t always blame the companies that make the risky loans available. And you can’t always curse the system. But somewhere there needs to be the intersection of personal responsibility and corporate consciousness that makes sense. Given the financial situation that many people are in today I have to say that we’re not there yet.

Educational Savings Account

I opened one today for my daughter. I can put in up to $2000 per year and then take out the money tax free to pay for all sorts of educational expenses. Who knows what a basic college education will cost when she’s ready to go 16 years from now?

If I do my part and just put in $150 or so per month my daughter will have about $50,000 waiting for her at the start of college. It may not pay for 100% of the costs but will be a great head start to making sure she doesn’t have to take on debt to get her education.

Succumbing To Desire

I was 100% set in my mind to buy a used car just a couple of days ago. I was ready to save myself $10K which I could have for a rainy day or for my child’s college fund. Then I went to sleep and woke up with doubt in my mind.

I started thinking, “What if the car breaks down?” What if the car only lasts two years and I don’t have the money for a better car two years from now?” So I rationalized myself into a new Honda Civic, paying $8K – $10K more than I originally budgeted. I also spent about $3k more than the other new car I considered, the Ford Focus. That’s the bad news.

The good news is that I took on zero debt in the process. And as a result of that I was able to negotiate a price more than $1500 less than what people (according to Edmunds) are paying for the same car. I got the car below the invoice price., which is something that’s very hard to do if you’re relying on the usual trade in plus a loan.

I also think I did good by staying in the compact sedan class. Would have really been easy to rationalize myself into something bigger and more expensive

This purchase does not put me in any kind of financial jeopardy. But my mindset has become such that I really think about saving $$$ everywhere I can. And now that I’ve made this decision I’m also taking a real close look at what I’m doing to make sure that this isn’t the beginning of a backslide due to my new found debt free status.

As a side note it’s important to point out that the dealership did at one point bring over the financing person because they wanted to find a way for me to get the vehicle right away. They were a little impatient, not wanting to wait for my bank to send a certified check for the balance of the car price. I cut the lady off before she could impart her wisdom on me. “I’m sorry,” I said. “I won’t be taking on any debt today.”