Category: Frugal Mindset

Kiplinger’s 70 Ways to Build Wealth

The April 2017 issue of Kiplinger’s Personal Finance magazine recently arrived. It is a special one indeed: celebrating the 70th anniversary of a venerable publication. To commemorate this occasion, the lead article is 70 Ways to Build Wealth. Definitely a worthwhile read for the Frugal and Wise. (Check for the issue at your local library.)

I am pleased to note that, of the 70 actions listed in the magazine, I have, to date, mentioned at least 19 of them on Frugal, Wealthy and Wise. Refer back to Twenty-five to Thrive, 31 Essential, Frugal and Wise Actions and Take These Five Actions Before Year-End.

I certainly cannot claim such ideas as original but neither did I merely copy them from other sources. Any number of fundamental, financial actions can lead to building wealth and living better on less. But there is the satisfaction in knowing what I mention on Frugal, Wealthy and Wise is also being espoused by such a prominent source as Kiplinger’s.

I have been reading Kiplinger’s Personal Finance for at least two decades. It has been influential in my journey towards being a savvy consumer, a shrewd manager of family finances and a builder of wealth. (Kiplinger’s Personal Finance and The Economist are the only two magazines I read.) The introductory rate for a year’s subscription is $15 or less – worth checking out; see if it earns its keep for you.

Words from the Chief
The 70 Ways to Build Wealth article contains 10 saying from Knight Kiplinger, Editor in Chief (page 28). These sayings are comparable to words of wisdom from Warren Buffet, Jack Bogel – or even King Solomon in Proverbs.

1) Wealth creation isn’t a matter of what you earn. It’s how much you save.

2) Your biggest barrier to becoming rich is living like you’re rich before you are.

3) Pay yourself first.

4) No one ever got into trouble by borrowing too little.

5) Conspicuous consumption will make you inconspicuously poor.

6) The key to stock market success isn’t your timing in the market. It’s your time in the market – the longer the better.

7) Diversify, because every asset has its day in the sun – and its day in the doghouse.

8) Keep a cool head when others are losing theirs.

9) Money can’t buy happiness but it can make unhappiness easier to bear.

10) Sharing your wealth with others is more fun than spending it on yourself.

Cheers, Paul

© 2017 Paul J Reimold

The (not so) Ubiquitous Bed, Bath and Beyond Coupons

Getting those 20% discounts at Bed, Bath and Beyond may not last forever.

For as long as most of us can remember, retailer Bed, Bath and Beyond (BB&B) has been plying us with coupons. The most common is the 20% off a single item. But there are also ones for $5 off purchases of $15 or more and $10 off purchases of $30 or more.

Here are some facts and recommendations for utilizing those (formerly) ubiquitous coupons. And making the most of your dollars spent at BB&B:

  • Printed coupons (from newspapers and mailings) have expiration dates. But the expiration dates are largely ignored. I’ve had the local BB&B store accept coupons that expired 10 years ago! Don’t throw out BB&B coupons just because they expired!
  • More than one 20% off coupon can be used at a time; example: if you are purchasing 5 items and have 5 – 20% off coupons, you get 20% off each item, all in a single transaction.
  • Forgot your coupon(s)? You can return later with a receipt and get a refund for the difference.
  • Keep in mind that emailed coupons may be subject to the expiration date.
  • Select the coupon that gives you the most savings. The table below works for purchasing a single item. For multiple items, figure out which combination of coupons saves the most.
Under $15.00 20% Off
$15.00 – $18.75 $5.00 Off
$18.76 – $30.00 20% Off
$30.00 – $37.50 $10 Off
More than $37.50 20% Off
  • Some brands are not eligible for discounts: Wusthof knives and Waterford crystal, for instance.
  • Just because you’re getting 20% off doesn’t mean you’re getting the best deal. Price similar items at Target, Walmat, Boscov’s or Macy’s.
  • Don’t let a coupon ‘burn a hole in your pocket’. In other words, don’t feel compelled to buy something, anything just because you have a coupon.
  • If not using a coupon on some of the items you are purchasing, make sure the prices are in line with other retailers.
  • If you return an item purchased with a coupon, you will be refunded the net cost you paid but will not get to reuse the coupon.
  • Use your BB&B coupons judiciously, i.e. don’t use up your supply purchasing a bunch of $4.00 items. (see next point)
  • The last few years, the supply of BB&B coupons has been scaled WAY BACK. Traditionally they arrived via mail or in the Sunday newspaper. In late 2016, there was even talk that BB&B would eliminate coupons altogether! Apparently, the coupons have been too Keep track of the ones you’ve got!
  • Don’t have any BB&B coupons laying around? Sign up for email and get a one-time 20% off online or in-store.

Do you have a Bed, Bath and Beyond shopping experience to share — please post or send me an email. Meanwhile: be frugal; be wise.

Cheers, Paul

P.S. I tallied our collection of BB&B coupons accumulated over the years: 34 – 20% off, 19 – $5 off, 4 – $10 off. We should be OK for a while.

© 2017 Paul J Reimold

To Pay Cash of Not to Pay Cash: That is the Question

Is it better to pay cash than use credit cards? It depends.

Wikipedia Commons

To pay cash or not to pay cash: that is the question.
Whether ‘tis nobler to charge everything, to gain rebates and frequent flyer points, but to suffer:
The demand of paying balances in full: each and every Month.

Or to take up Arms against a Sea of debts
And by opposing, end them: to pay them in full, to sleep soundly and worry-free
No more shall we carry balances on our credit cards
We shall end the heart-ache of indebtedness.
‘Tis our consumption that must decline
For who should bear the Whips and Scorns of outrageous Interest?

(with my apologies to the Bard)

If Hamlet were amoungst us today, would he contemplate out loud whether to use credit cards or cash? He probably had bigger worries. But the best choice for you, dear readers, depends upon a number of factors.

Personally, I despise cash and use it only when I absolutely have to. For me, paying with cash means forgoing – at a minimum – a 1 ½% rebate, or as much as a 6% rebate on purchases. It’s the hassle factor finding a (fee-free) ATM and dealing with handfuls of left-over pennies, nickels and dimes. But most of all, cash expenditures are difficult and tedious to track. I try to keep meticulous records of our spending. Yet, at year-end, there is usually around $100 cash that I cannot account for!

However, if you carry a month-to-month balances on your credit cards and/or make impulse purchases, cash may be the way to go. Here are pros and cons of each:

Cash Pros:
  • Paying cash is a great method to limit spending – studies prove that paying cash reduces impulse purchases and spending overall
  • Unlike credit cards, if your cash gets lost or stolen, there’s no risk of identity theft (assuming your driver’s license or other documents did not disappear with the cash)
  • Some restaurants and retailers only accept cash
  • Some gas stations offer a cash discount
  • Cash is the ‘universal gift card’ – for tips and presents
Cash Cons:
  • If you lose cash, it’s …. gone.
  • Carrying around lots of cash could make you a target
  • The time and effort required to physically withdraw cash from an ATM or bank. Possible ATM fees
  • If you have lots of cash in your pocket, you may be inclined to spend it all (‘burning a hole in your pocket’)
  • Travel can be much more challenging to arrange: from booking hotel rooms and flights, renting cars, to getting cash in a local currency
  • Cash expenditures are difficult to track. An essential element of being Frugal and Wise is knowing where your money goes
Credit Card Pros:
  • Convenience – a credit card is always in your wallet. It can be used for faster transactions at gas pumps, kiosks and the like
  • Security –a lost or stolen credit card can easily be deactivated and replaced, with no financial loss
  • Rewards, whether cash back rebates (generally a statement credit) or travel points
  • Protection and the ability to dispute charges when in disagreement with a merchant
  • Perks such as extended warranties and rental car insurance
  • Ease of use when traveling abroad (just be sure your card that does not assess foreign transaction fees)
  • Statements that are a record of your expenditures
Credit Card Cons:
  • Very easy to spend too much or buy impulsively. Using credit cards requires considerable self-control
  • If you don’t pay the full monthly balance, you will be subject to interest charges that could really sap your finances
  • ‘Convenience fees’ are sometimes accessed for using a credit card. Example: property taxes, income taxes, vending machines. Be vigilant. A credit card is probably not worth using in these situations
  • The possibility of identity theft or unauthorized use. Regularly checking credit card activity and credit reports is a must do
Recommendations and Takeaways:
  • Although the role of cash is diminishing, it’s virtually impossible to use cash exclusively or credit cards exclusively. We all exist somewhere on a continuum (or blend) between the two
  • If you are faithful paying your credit card balances in full every month, go ahead and use credit cards for the advantages mentioned above. But be sure that you have credit cards that work hard for you. See recommendations in earlier FW&W postings: 31 Essential, Frugal and Wise Actions – 6, My Favorite Things Part I
  • If you currently carry credit card balances, cease using your credit cards until the debts are paid off. That should be one of your highest priorities.
  • Ditto if you are unhappy with your high spending levels and low saving rates.
  • If you do go with cash, utilize the ‘envelope’ method: split it your cash for the month into spending categories, both discretionary and necessary. Once all the cash in a given category – particularly a discretionary category — is spent, similar expenditures will just have to wait until next month

What are your experiences with cash or credit cards? Please let me know.

Cheers, Paul

© 2017 Paul J Reimold

A Tale of Two Jackets

The Brooks Brothers sport coat was fabulous but, I ended up with a splendid jacket from Macy’s, at a tenth the cost.
I left Brooks Brothers empty handed but scored this jacket for $120.

It was the best of bargains. Or it was paying full price. It was a wonderful article of clothing. Or one that’s more than ‘nice enough’. It was a wise purchase. Or one made foolishly and impulsively. It was the hope of replenishing my wardrobe for a modest sum. Or sinking into despair when the credit card comes due. In either case, it was for the season of winter rather than the season of spring. (Apologies to Charles Dickens)

I was in need of a replacement navy sport coat (an essential component of any man’s wardrobe.) On a recent Saturday evening, my wife and I journeyed to the King of Prussia Mall. First stop was Brooks Brothers. Having never shopped at Brooks Brothers, I’ve always been curious whether the quality of their offerings justified the prices.

Well, one of the navy jackets I tried on was 100% cashmere. It fit me well. It looked great! It felt great! For a few moments, I seriously considered purchasing it. It was not on sale but I could get a %15 discount if I just opened a Brooks Brothers charge account…

Then a thought popped into my head: a thought that jarred me back to my proper senses. At $1198, this jacket, a mere article of clothing, cost more than a stainless steel deluxe Weber grill with a built-in searing station! Wow, that just really brought everything back into perspective!

(Full disclosure, I do own a Brooks Brothers jacket, a tweed. My wife bought it for me years ago, at a thrift store for $15. It’s getting a bit ratty now but I still like to wear it for the comfort. And bragging rights.)

Next stop: Macy’s and the men’s winter clearance rack. My wife zeroed in on a Ralph Lauren jacket that’s 75% wool, 20% silk and 5% cashmere. ‘List price’ was $450 before a %60 markdown and an additional 25% off Macy’s purchases that weekend. Final price: $135. But wait, it gets even better. The store did not have the navy color in my size, so we ordered the jacket online. The price online after discounts: $118.49!!! It’s quite nice, but certainly not as spectacular as the Brooks Brothers cashmere. But is the Brooks Brothers jacket ten times better? Probably not, at least for me. Granted the Brooks Brothers jacket does contain 20 times more cashmere.

It can be said: A Tale of Two Jackets concluded with a happy ending.

Takeaways and Lessons Learned:

  1. For many items – clothing, audio gear, bicycles, autos – there is a ‘sweet spot’ of quality and price. Spend less and you give up more quality or features than you save in the lower price. Spend more and there is a rapidly diminishing return on money spent vs. incremental quality and features.
  2. Avoid impulse purchases. For major purchases, sleep on it overnight. What’s a major purchase? That all depends on your current financial circumstances: $20, $50, $100, $250…
  3. To put things into perspective, it’s often helpful to compare the cost of one item to another totally unrelated. Example: the cashmere jacket and a Weber Grill.
  4. The Frugal and Wise are not enamored by status of the retailer or the brand. OK I did end up with a Ralph Lauren jacket. But the brand in no way influenced my purchase (if anything a designer brand is a negative factor, IMO.) Besides, you can buy Ralph Lauren stuff at Kohl’s. (Note there’s nothing wrong with buying certain clothing items at Kohl’s.)

Do you have a tale to tell about fantastic bargains? Please share with other readers.

Cheers, Paul

P.S. Not to worry. I will not be acquiring a stainless-steel Weber Grill anytime soon. The one I trash picked is working just fine.

P.P.S. If you are curious about the $1200 Brooks Brother jacket, here’s the link.

P.P.P.S To refresh your memory, here’s the opening to A Tale of Two Cities:

It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us…

© 2017 Paul J Reimold

31 Essential, Frugal and Wise Actions – 6

Installment 6 of 6

Photo credit: kirstyhall via Foter.com / CC BY-NC

This is the very last installment of 31 Essential Frugal and Wise Actions (sorry that it did not get posted during the Longest Month of the Year.) I hope these 31 suggestions help you get 2017 underway with a terrific start!

  1. Sell unused items on eBay or Craigslist – liquidate your unused, unwanted possessions for cash! Two such avenues are eBay and Craigslist. Note that selling items on either venue takes time and effort – be sure the potential proceeds are worth your time and effort.

Be aware that both eBay and Craigslist have their downsides. Your eBay sales proceeds are greatly eroded by eBay and PayPal fees. Shipping costs may also be a factor. It also takes time to pack and ship your merchandise. With Craigslist, be very careful about whom you deal with. If possible, meet at a public place to complete the transaction. Craigslist is a good alternative way for large items too expensive or bulky for shipping. For either sale venue, you will need to take photos and create your listing. Before listing, check out the competition – listings for similar items as well as sales history. This will give you some idea of how to price and describe your offering..

I recently had a good experience selling printer ink cartridges on eBay – both unopened and used. My home office printer died and of, course, the new printer uses a different type of cartridge. However, the ink cartridge proceeds covered half the cost of the new printer!

  1. Declutter, Donate and Ditch – take arms against your sea of stuff! Go room by room and assess the situation. What items do you use regularly or really want to hang on to? For everything else, separate it into 4 categories (1) things valuable enough they are worth selling on eBay or Craigslist (2) things worth donating or giving away – be sure to get a donation receipt for tax records (3) things not good enough to donate but may have some value, such as building materials or scrap metal – put them out at the curb and wait for someone to pick them up (4) things that simply need to go into the trash or recycling. Decluttering has an intangible benefit as well; you’ll feel much better about your surroundings.
  1. Make sure your credit cards are working hard for you – this recommendation applies only to those who pay credit card balances in full each and every month. Otherwise, paying off credit card debt should be among your highest priorities this year. That being said, you should be able to get, at minimum:
  • 3% rebates on groceries
  • 2% rebates for gas
  • 2% rebates on department stores
  • 1 ½% rebates on everything else
  • No annual fees, or an annual fee that more than pays for itself with increased rewards
  • No foreign transaction fees

OK, it takes more than one card to get all these features. But the combination of just 2 cards: the American Express Blue Cash card and either the Capital One Quicksilver Visa or the Chase Freedom Unlimited Visa will get you there. For more information on credit card deals, check out the FW&W posting My Favorite Things Part I or visit the NerdWallet credit card site. P.S. don’t forget about bonus sign-up offers!

  1. Spend less by shopping less – limiting time spent shopping can reduce spending and maximize your savings. This holds true whether visiting brick and mortar stores or shopping online. If shopping is a recreational activity, perhaps it’s time to find other diversions. When you do shop, have a list and a plan. Resist ‘off-the-list’ impulse purchases. Some people go as far as declaring a spend-free day. Or weekend. Or week. Or even a month! Give it a try.
  1. Find fun things to do on the cheap – you don’t have to spend a lot of money to have a lot of fun. Pack a picnic rather than eating out. Hold a game night with friends. Go walking or hiking. Watch a classic movie on a DVD borrowed from the library. Look for free and discounted cultural events in your community. (for the Philadelphia area, check out phillyfun guide funsavers) You get the picture. Create your own list of fun activities to do this year, on the cheap.

Cheers, Paul

© 2017 Paul J Reimold

Photo credit: kdee64 via Foter.com / CC BY-NC-ND

31 Essential, Frugal and Wise Actions – 4

Installment 4 of 6

Photo credit: kirstyhall via Foter.com / CC BY-NC
Actions 17-22 …
  1. Open a Flexible Spending Account (FSA) – wouldn’t you like to save thousands of dollars annually by paying for everyday expenses pretax rather than post-tax? (For a review of the value of money pretax vs. post-tax, re-read A Penny Saved is NOT a Penny Earned.) To refresh your memory: a dollar post-tax (the net proceeds of your paycheck) could be worth a $1.50 or more pretax (depending upon your tax bracket, state and local taxes). Here’s the skinny on FSAs:
    • FSAs are only offered through employers. If your employer doesn’t have an FSA program, lobby the HR department to set one up. Signing up for an FSA may only be allowed during the benefits open enrollment period. Ask. If you missed getting in on an FSA for 2017, make sure you get signed up in time for 2018!
    • Your FSA is funded through payroll deductions. This lowers your  income used to calculate Federal, Social Security, Medicare, and (in some cases) state/local taxes. It’s a wonderful thing!
    • There are actually 3 separate FSA programs: (1) Out-of-pocket healthcare expenses – for 2017, up to $2600 annually per household (2) Dependent Care/Child Care – $5000 annually per household (3) Parking and public transportation commuting costs – ($255/month) Note: not all employers offer all three.
    • As you incur healthcare, dependent care or commuting expenses, submit documentation to be reimbursed from your FSA. Some programs even provide a debit card for convenience.
    • What if you took advantage of all 3 programs to the max? That would be a total of $10,600 paid pretax. Let’s say that your take-home pay after taxes is only 70 cents on a dollar pretax (pretty common). You would have saved approximately $3200 in taxes!
    • Use it or lose it! The one downside to FSAs. If you don’t spend all the money in your FSA by year end, you lose it! But even if you have to walk away with some money remaining in the FSA, you may still come out ahead on tax savings. In recent years, the Use It or Lose It rules have been relaxed somewhat. Some plans allow you to claim expenses into the first few months of the following year. Others plans allow carrying up to $500 over to the next year.
  1. Open a Health Savings Account (HSA) – FSAs and HSAs easily confused but are actually two completely different programs. But in some respects, an HSA is an FSA on steroids. Here’s the scoop on the differences and HSA advantages:
    • A Health Saving Account can only be used in conjunction with a “high-deductible” health insurance plan. For 2017, a high-deductible policy means a minimum deductible (that you pay) of $1300 per person or $2,600 per family.
    • It’s an either/or choice for an FSA or HSA. They are mutually exclusive. However, you could have an HAS for healthcare and FSAs for dependent care and commuting costs.
    • HSAs do not have a Use It or Lose It provision. You can accumulate funds in an HAS and use them years or even decades later in retirement.
    • HSA contributions may be invested or kept in an interest-bearing account, so the balance grows over time.
    • HSAs can be offered by employers or opened by individuals (provided the high-deductible policy requirement is met).
    • HSAs offer these tax advantages: (1) contributions up to the annual limits are tax deductible (2) earning and appreciation are tax free. (3) withdrawals for medical expenses are tax-free.
    • HSAs have much higher annual contribution limits compared to FSAs.  As of 2017: $3,400 per person or $6,750 per family. If you are over 55, add in an additional $1,000 as a ‘catch-up’ contribution. For couples with no dependents on their health coverage, I recommend maximizing contributions by setting up two individual accounts rather than a single, family account.
    • Contributions can only be made until age 65 (when you become eligible for Medicare.)
  1. Increase 401K/403B contributions – at a minimum, you should be contributing enough to your 401K or 403B to get the full employer match (typically 6% of your salary for a 3% employer match) failure to do so means losing out on a huge sum of money over a lifetime. This year, try to ratchet up your contribution another 1 or 2 percent. Such a small reduction in take-home pay likely will not be missed but could significantly accelerate your retirement savings. (go back and read You can’t spend what you ain’t got: Why You Need to Automate Your Savings.)
  1. Open a Roth IRA – a Roth IRA is beautiful thing indeed! While contributions are made with after-tax dollars, Roth IRA appreciation and retirement withdrawals are tax-free. There is also some flexibility for withdrawing contributions penalty-free prior to retirement (although I wouldn’t recommend it.) Unlike conventional IRAs, there are no minimum withdrawal requirements in retirement. Contribution limits are $5,500 or $6,500 if you are over 50. Be aware: eligibility to contribute to a Roth is phased out or eliminated at higher income levels ($117,000 for singles or $184,000 for couples as of 2017). And how would you contribute to your Roth? With an automatic deduction, of course! (Note, some employer 401K and 403B plans also offer a Roth option.)
  1. Start saving for the children’s college education; open a 529 Plan(s) – money contributed to a 529 grows tax-free. Many states also permit 529 contribution to be deducted from state income tax (but no such luck on federal tax). Generally, as much as $14,000 per child can be contributed each year (limited by federal gift tax exemptions). 529 Plans are administered on a state-by-state basis. However, you are not confined to your state’s plan; you can chose to go ‘out-of-state’ Here’s one article about the Best 529 Plans (Forbes, March 2016)
  1. Set up automatic transfers to a savings account – there are many reasons for bulking up your savings: establishing an emergency fund in case of layoffs or unexpected expenses, saving for a house down payment, saving for a replacement auto or a major appliance, even a vacation. The list goes on. Set up an automatic transfer to the savings account. Better yet, divert part of your paycheck directly to a saving account. A great place to keep said savings account: the Capital One 360 Money Market account. It’s pays 0.60% interest for balances under $10,000 and 1% for balances over $10,000. And it’s FDIC insured.
Photo credit: Foter.com / CC0
Hang in there! Just 6 days to go in January!

© 2017 Paul J Reimold