Solar Update – April 2017

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My favorite time of year has come! The days are longer, the snow seems to be gone for good, and birds are chirping on my way to work. Spring is upon us. I’ve always loved spring and summer, but now I have even more reasons to embrace the seasons. No, not just because the kids are out of school and there will be less traffic. Because it’s sun season! As you know, we got some solar panels last summer and we enjoyed many months of free electricity. It was truly a sad day when I had to pay for my first electric bill in months after the start of a frigid winter. These things will spoil you…

But the sun always shine eventually and, boy is it shining! My March 2017 electric bill was $38. We are retiring the heating for the season and thus expecting a much lower utility usage, until late June when we have to kick on the AC. Even then, I’m thinking that the 12-13 hours of sunlight that summers in New England graces us with should be sufficient to offset the worse of the damage. I might have reached the electric bill break even point. If so, I am looking forward to negative balances (I don’t say that very often) for many months to come so I can run my heat for free in November.

Let’s raise our glasses to sunny days, tax credits, and free electricity.

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No Rest for Dead Presidents: My Dollars aren’t Lazy Bastards

What an awful headline. But I’m not feeling particularly creative today so it will have to do.

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In an introductory investment post, I liken dollars to employees who must work to make my life better. Money has a significant advantage over us when it comes to working and earning potential. We get tired, we need sleep, our loved ones want our attention. Money has none of those conflicts so what reason is there for it to not be working tirelessly to free you from the rat race? In my case, my little dead presidents’ only duty is to slave away to improve my quality of life. Here are some of the ways I make sure they aren’t being lazy little bastards.

I structure my bank accounts deliberately: Some days I can’t even keep track of how many accounts I have. But the complexities of both life and banking regulations do not allow me to simply have a checking and a savings. While I have a checking account for my every day use, that is the lowest yielding account there is. I can’t keep all my money in a checking account. However, the highest yielding bank account is a CD (learn more about CD’s here and here) and there are penalties for early withdrawals. Since emergencies do not wait for CDs to mature, I also have a money market account which provides me with quick access to cash at a much higher rate than a checking but without the potential for a penalty.

I only use cash back credit cards: Your bank is making money off your use of the card, shouldn’t you do the same? My credit card gives me 1.5% cash back on everything I buy and on a monthly basis, the bank runs some specials at various merchants where I get an additional 5-15% cash back. For example, my tail lights went out a few weeks ago. We have both an Auto Zone and an Advanced Auto Parts in our area. However, our credit card company was running a 10% cash back special at Advanced Auto Parts. When it was time for my husband to replace the tail lights, I told him to make sure he went there. He spent $40 and we ended up getting $4.60 back (10% special + the 1.5% we would normally get). Of course, since there is no annual fee and we pay the balance in full every month to avoid interest, we are being paid to use our card.

I get educated: It’s hard to make or save money when you don’t know what benefits or features are available to you. I’ve discussed my solar adventures in the past. We got thousands of dollars in rebates courtesy of the U.S. Government for our investment in solar panels (if you pay taxes, thank you!). Although we would have eventually taken the plunge, we might have missed the opportunity for our big tax credit if we waited too long. There is no guarantee that the program will be available indefinitely or even beyond 2020. We also learned about the energy credits which we are on track to receive quarterly for 10 years. While they are small amounts, they will be offsetting nearly half of the cost of the system. So not only did we get a 30% subsidy, we are also selling some of the credits we produce over a period of time to offset the remaining 70% of the cost. That does not include our actual energy savings which have been pretty substantial (my March 2017 electric bill was $38. I live in a 3,100 square foot house in New England).

I pay debt aggressively: Debt is slavery. It’s crippling because it’s expensive. The best way to handle debt is to get rid of it as quickly as possible. My student loan interest is 5.16%. It makes no sense for me to carry that balance for 10 years (standard repayment) if it’s costing me as much as a moderate investment portfolio would cost. So when I graduated from an MBA program with a balance of $47k and change, I was determine to get rid of it by any means necessary. Two years later, my balance is  $11,600. I have saved myself thousands in interest and the amount that I did have to pay, I have able to deduct it from my taxes. So I have used the money I have in the bank and the money I earned working both my regular job and real estate to cut my balance and reduce my interest.

I keep cash to a minimum: ‘Minimum’ is relative.  It doesn’t mean I only have $1,500 in the bank. I keep a fat emergency fund which correlates with my low risk appetite. The more risk adverse you are, the more money you want available to weather unpleasant unforeseen events. For me that number is a year’s worth of living expenses. Before the recession, the recommended amount was 3 months. After 2008, financial experts were recommending 6 months. I like to be cautious, maybe overly so, thus, I choose 12 months. Anything above that number is invested in various types of projects (or debt payments) that are meant to increase cash flow (or cut my interest expense).

Think of the ways you can make your money work for you. Idle funds are being eaten away by inflation and are not doing anything to improve your bottom line and get you closer to financial freedom. This is the value equivalent of throwing your money away.

De-clutter Challenge

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In a previous post I briefly discussed money challenges and how people use them as extra motivators to either boost savings or pay down debt. Whether you’re saving for a vacation, a house or just want to improve your money management skills, you can never have too many tools or tricks at your disposal. This is why I encourage people to get creative about improving their financial behaviors. Not everyone gets as excited about personal finances as I do, so it doesn’t hurt to find a way to spice it up.

Today’s post is dedicated to the de-clutter challenge.

What is it: This challenge requires a little bit of elbow grease, but besides needing some motivation and patience, it  is not very difficult. We tend to acquire a lot of things over the years and the less we move the more we accumulate. Given that spring is in full swing, I think this timing is appropriate. Regardless of your financial goals, I think anyone can benefit from this activity.

This is spring cleaning with a purpose! Make a pile of everything you have not used in 12 months and separate the pile into 2 more categories. One is what you think you will use in the near future (maybe you broke your arm this winter and that’s why you haven’t used your skis, but you’ll be done with rehab soon and will be hitting the slopes for sure in 2018). The other pile what you don’t foresee yourself using, or anything that you have 2 of (newly weds, this is where you will shine! When I got married, I suddenly ended up with 2, if not 3, of everything. Seriously… I have 2 microwaves & 3 toasters). Take very good pictures from various angles (the more valuable, the better the pictures should be) and post your items on various sites for sale. I use Facebook, Amazon and Letgo. While I generally don’t mind ebay, I do not like that their listings expire every 7 days, making me a slave to continuously have to go back and relist the items.

Outcome: Results will vary, but the more items you have and the better the quality, the higher your revenue will be.

Variations: If you’ve already done that, try the same challenge with unused furniture. This will work well if you live in a college town where young students cannot always afford new furniture.

Why I like it: This is a great way to hit two birds with one stone.

If you love cash and your messy garage has been driving you crazy, this is the challenge for you.

Frugal Fridays: Reception Details

This is my version of throw back Thursday: Some of the best finds from my own days of wedding planning.

reception

It’s the little expenses that creep up on us. That’s what every couple is told to watch out for. You budgeted $2,000 for your dress but the slip is $120, the bra is $80 and a veil is $300. Oh you think that garter is cute? That will be $30. It never ends. And that’s not just your dress. The reception costs will sneak up on you as well. Your keepsake box will run you $15 to $30. Don’t forget taxes, shipping for the things you can’t get in town, etc.

I couldn’t allow the unexpected to bust my budget, so I hunted for deals like a man lost in the Sahara hunts for water. Here are some of my deals:

1) Small gift bags for my favors: less than $70 for 100 from Amazon
2) Matching color tissue papers to stuff them: $9 for 100 from Amazon
3) ‘Mr. & Mrs.’ wood chair hangers: $15 (50% off sale) from Amazon (I never actually used those as I forgot I bought them!)
4) Personalized hanger* – $3.99 (+$10 for shipping). This was a one-day sale. These are usually $19.99-$25.99. from Etsy

*All items except for the hanger were shipped for free, saving me a lot of money as well. 

Wedding Finance Tips: Getting Hitched in the Black

I live in the northeast and spring has officially started, although you really can’t tell just looking at the weather (it’s supposed to be a brisk 25 degree day today). Unlike our more favored friends in the south, true wedding planning doesn’t begin until spring as many brides do not like planning for winter weddings. Because of that, I decided that the change in season should help usher in some new topics: Weddings! At the very least, they will be in season, at most they are expensive and you might find some tips to help you save thousands.

wedding budget

The average cost of a wedding in the US is approximately $25,000. It certainly doesn’t help that, we are not taught to haggle for anything unless we’re buying cars or houses. We see a price tag and we are sure that we either have to pony up or find a store we can afford. However, that’s what the sales people want us to think. If we don’t haggle, they make more money so they’re not going to tell us that we can get any kind of discounts. When it comes to weddings, things are even worse. They play on our emotions to better deplete our bank accounts (or for the more impulsive among us, inflate our credit card balances).

There are many thrifty wedding blogs out there. However, I struggled to find advice that was sensible. It seems that there was very little balance between having a nice wedding and having a cost effective wedding. Some of the advice ranged anywhere from “don’t invite any of your cousins” to “make your own wedding dress”. I felt that some of the tips were not always helpful. What if I like (most of) my cousins and I am not crafty enough to make my own place cards, let alone a wedding dress? Wanting a cost effective wedding doesn’t mean I have to walk down the aisle with paper flowers or ask my guests to bring their own cakes. Furthermore, most people will tell you that what you save in the little DIY projects is not enough to offset the stress of time constraints and the million other things you can’t outsource. The truth is, while weddings are big business, couples still have leverage and that leverage can be used to hold on to some of our hard earned money.

1) Negotiate yesterday, negotiate today, negotiate tomorrow. No price is set in stone. Everything you pay for can be negotiated to a better price or something else of value can be added to your package. Here are some things I negotiated for and got:

  • 10% off the catering
  • Complementary up lights from the venue
  • My photographer had a Picture/Video/Photo booth package. I didn’t care for the photo booth and requested he replace it with a DJ. (He never said that was an option, I asked.)
  • I negotiated for a bigger flush mount album
  • The baker was offering 10% off for anyone who booked their wedding on the day of the wedding show

2) Look for packages. They want and need people to come and spend money. So if you do the leg work for them they will reward you.

  • My groom gets $40 off his tuxedo for every adult rental. There are 7 males in my wedding party. With only 1 boy, the 6 men add up to a free tux for him.
  • My make-up artist will give me a discount for every one of my girls.

3) Remember that you’re not the only one who needs a break. Weddings are expensive for everybody. Not just the bride and groom. Remember that your attendants have to spend a lot of money to be a part of your special day and they are doing you a favor. Be kind to their budget.

  •  My female attendants got 20% off for buying their dresses at the same store I got my dress.
  • I told them what color but I did not impose uniform shoes on them because I wanted them to be able to use what they had in their closet if that option presented itself.

4) Learn to say ‘No’. Unless someone is financially contributing to your wedding, do not allow them to dictate what happens on your day. Many people do not have boundaries and will try to give their 2 cents regarding who should or should not be invited. How this centerpiece would look better than that one, etc.

5) In direct contradiction to #2: be careful with the packages offered. It is important to consider the packages. However, not all of them will be for your benefit. Some packages need to be assessed against other non-wedding related options. Wedding stores tend to have a huge mark up on everything. While something like a bridal gown can’t really be found elsewhere, other things like your shoes and jewelry are easy to purchase from a non-wedding vendor. Because I wasn’t hasty, I was able to discover that the 20% discount offered on accessories from the store I got my dress from was not the best deal in town. I ended up finding my accessories for 1/2 of what the dress maker sells them for.

6) Give yourself time to shop around. We waited too long to get the MOB dress so my mom ended up paying a surcharge for a rush order. On the other hand, I shopped around for my dress, tried them on and knew exactly what I wanted. But because I had time, I was able to wait until there was a tax-free week-end in my state to make the purchase. This tip not only gives you time to find options, but it also gives you the bargaining power. Being pressed for time will stress you out and the people you deal with could take advantage of your situation to upsell you on things you don’t really need.

The tax rate in my state is 6.25%.

7) Remember that some things will only be used for a few hours and are really not all that important. *GASP* Did I just say that there might be something in your wedding that may not be that important? Yup! And I’d say it again. Do you really need to spend $50-60 on a card box? You will use it only for the purpose of collecting congratulatory cards from your guests. Unless Bill Gates is one of your guests and you know his renown generosity might attract a thief so you’re looking to get a finger print scanner hooked to that thing, what’s wrong with a $15 one? Keep it close to you and have one of your parents drop it off in a secure location for you. Once you’ve made your rounds and closed the box it has no more value. Same goes for a garter that your new husband is going to throw at a bunch of guys tackling each other for a piece of your undies. It serves no other purpose and you shouldn’t get anything over $12. There are many small expenses like these that can add up, be mindful.

8) There’s a right way and a wrong way to borrow for your wedding. If you’re putting your wedding on credit, stop. Just. Stop. You probably can’t afford it. Consumer debt is a huge problem in a consumer-driven society. People continue to get things they can’t afford at the expense of necessities. So far I’ve paid for everything on my credit card BUT a) I pay the balance in full every month (resulting in no interest) and I get 1.5 points for every $1 I spend. After 25,000 points (which take 5 years to expire) I get $250 in cash deposited into the account of my choice. So I’m essentially getting paid to use my credit card. If you are getting charged interest at the end of the month and/or you don’t have an incentive from your credit card company, you’re doing it wrong and the wedding is costing you more than you think.

The interest rate on credit cards can be as low as 7% for those with good credit and as much as 21%+ if your credit is not that great.

9) Know your (artistic) limitations. Overconfidence can make you penny wise and pound foolish. The people on etsy and pintrest, make it look easier than it is. Just because you think you can follow instructions from youtube on how to do that elaborate pop-up invitation doesn’t mean it will look the way you want it to. If you end up buying high end paper, ribbons and an industrial grade laser printer only to turn around and have to place a rush order for your invitations because your product was hideous, you end up spending more than you would if you had simply purchased the invitations to begin with. If you got a lifetime membership card to the talentless club at birth like I did, cut your losses and don’t attempt what you most likely cannot do.

I was able to save $150 on my invitations. I talk about that a little more in this post.

10) Cut out transportation costs. If a place of worship is not critical to your wedding proceedings, or if your religious officiant is willing to go anywhere you request, you can eliminate the need for your limo by having your ceremony and reception at the same place. Some places charge you an additional fee for the ceremony set up, so you can probably try to negotiate a further discount on your venue by asking if they will offer you a package deal/price.

Most limo companies run packages between $375-450.

These are you 10 tips for today. I hope they serve you well. They’ve certainly helped me. I am having the wedding I want to have, while savings thousands. Saving doesn’t mean I have to “settle” for things I don’t want. Ultimately, this is a one-day celebration of your love. The rest of your life is what matters most, don’t start it in the red.

10 things everyone should do before 30 to improve their financial lives

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Whether it’s due to helicopter parenting, growing up in rough economic times, or some combination of both, millennials are not thriving economically. It is becoming such a problem from older millennials like myself who have been out on their own for a number of years, that people are actually cashing in on our generation’s lack of preparation. I was listening to an NPR piece about an “adulting school” where young adults can enroll in classes to learn basic skills like folding fitted sheets (seriously!), creating a budget, cooking basic meals, understanding banking, etc. People enroll in those courses because they don’t know where to start. So today, I’m offering you a starting point: a list of what you should have a handle on to ensure a smoother ride. At least, if you do decide to enroll in adulting school, you’ll know exactly what classes will fit your needs.

  1. Have emergency savings of at least $1,000
  2. Be free of credit card debt
  3. Have concrete goals for the short, intermediate and long term
  4. Start saving for retirement
  5. Learn to cook 5 nutritious meals
  6. Learn investment basics
  7. Have a budget and stick to it
  8. Be adequately insured
  9. Give up instant gratification
  10. Improve your credit score

 

Small Habits that will Cost You Over Time

The devil is in the details. That is also true when it comes to money. My own mother has a terrible approach to money which often frustrates me. Most of my attitude towards money comes from watching what she does and being committed to doing the complete opposite. For example, she will often say: “it’s just $10, it’s just $20.” However, it takes 50,000 $20 bills to make $1,000,000.00 While this might sound ridiculous, the point is to show that you have to start somewhere. If you can’t manage to keep control over 1 or 2 $20 bills, how will you ever get to 50 thousand? So pay attention to the details to position yourself for success. Here are some seemingly small details that could change your life if you start paying attention.

  1. Buying lunch every day
  2. Not saving for retirement
  3. Not having an emergency fund
  4. Buying more house than you need
  5. Owning a luxury car
  6. Having less than stellar credit
  7. Not knowing the difference between a need and a want
  8. Being under insured
  9. Not having a budget
  10. Not having short term disability
  11. Failing to network
  12. Failing to avoid late fees
  13. Failing to renegotiate with your providers
  14. Paying full price
  15. Not learning to DIY

These are some of the things that I have found were costing me over time. The small things add up, yet they are the easiest habits to change. What small tweaks can you make today to improve your finances?